Financial Statements


Pursuant to the Accounting Law dated June 17, 2003;

Pursuant to the Government's Decree No. 129/2004/ND-CP dated May 31, 2004 detailing and guiding the implementation of a number of articles of the Law on Accounting in business activities;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 13, 2013 regulating the functions, tasks, powers and organizational structure of the Ministry of Finance;

At the request of the Director of the Department of Accounting and Auditing Regimes,

The Minister of Finance promulgates a Circular guiding the corporate accounting regime.

1. . Financial statement concept (FINANCIAL STATEMENT)

Financial statements (financial statements) are considered as a system of tables, describing information about the financial, business situation and cash flows of enterprises. Financial statements include consolidated reports on assets, equity and liabilities as well as financial situation and business results in the period of the enterprise. In other words, financial statements are a means of presenting profitability and the state of corporate finance to those interested (investor owners, lenders, tax authorities and authorities…)

According to the law of tax authorities, all enterprises affiliated to sectors and economic sectors must prepare and present annual financial statements. For companies or corporations with affiliated units, in addition to the annual financial statements, they must also carry out consolidated financial statements or consolidated financial statements at the end of the annual accounting period based on the financial statements of affiliated units.

What about state-owned enterprises and companies listed on the stock market? These enterprises in addition to the annual financial statements must be established, these enterprises must set up additional mid-year financial statements (quarterly reports – except for the fourth quarter) in full form. Particularly for state-owned corporations and state-owned enterprises with affiliated accounting units, they must establish consolidated financial statements or consolidated financial statements (mid-year consolidated financial statements are mandatory since 2008).

2. Purpose of financial statements

Financial statements provide full information related to the financial and business situation of enterprises to meet the management requirements of business owners, tax authorities or those wishing to use financial statements to make economic decisions. The financial statements need to provide the business with information about:

  • Equity
  • Liabilities
  • Asset
  • Profit and loss and division of business results
  • Revenue, other income and production and business expenses
  • Cash flows

3. Time to submit financial statements for enterprises

The time for submission of financial statements for enterprises is as follows:

  • State-owned enterprises are regulated as follows:

+ After 20 days for quarterly reports – from the end of the quarter.

+ After 30 days for the year report – after the end of the fiscal year.

  • Corporations, deadlines for sending financial statements:

+ After 45 days for quarterly reports – from the end of the quarter.

+ After 90 days for the year report, from the end of the fiscal year.

  • With affiliated accounting units:

+ To submit quarterly and annual financial statements to superior accounting units according to the time limit prescribed by superior units.

  • Private companies, partnerships:

After 30 days – from the end of the fiscal year.

  • The rest of the companies:

After 90 days from the end of the fiscal year.

4. What Is The Meaning of Financial Statements (FINANCIAL STATEMENTS)

Financial statements (financial statements) are important for the management of enterprises as well as the governing bodies and those interested in the business. This is most evident in the following issues:

  • Financial statements are reports that are presented with a very general, reflecting the most overview of the situation of assets, finances, debts, sources of asset formation and business results in the period of the enterprise.
  • Financial statements provide financial information mainly to assess the situation, results of production and business activities, financial situation of enterprises in the past period, financial statements to support the inspection and supervision of capital use and the ability to mobilize capital into business activities of enterprises.
  • Financial statements are important in analyzing, researching and detecting potential possibilities, in addition to making decisions on management and management of SSD activities or investments of owners, investors, current and future creditors of enterprises.
  • Financial statements are also extremely important grounds for properly evaluating as well as developing economic- technical and financial plans of enterprises to improve the efficiency of capital use, improve the efficiency of exports for enterprises.

Iii. Forms for making financial statements according to Circular 200/2014/TT-BTC

1. . Making a balance sheet when making a report on financial statements according to Circular No. 200/2014/TT-BTC

Circular 200/2014/TT-BTC replaces Decision No. 15/2006/QD-BTC. Here are the instructions to help accountants prepare quarterly financial statements, the right year of the current accounting regime, standards and information on financial statements according to Circular 200/2014/TT-BTC.

I. Financial statement guidelines to follow

According to Article 102 of Circular No. 200/2014/TT-BTC, when making financial statements, accountants must reclassified assets and liabilities that are determined to be long-term in the previous period but have a maturity period of no more than 12 months or a production cycle, Business usually from the time of reporting into short-term. Therefore, from the detailed book of accounts, accountants need to conduct detailed classification according to the principle of presenting the financial statements mentioned above.

1. . Accrual principles

Enterprises must prepare financial statements according to accrual accounting principles, except for information related to cash flows. According to the accrual accounting basis, transactions and events are recorded at the time of arising, not based on the actual time of collection, actual expenditure of money and are recorded in the accounting books and financial statements of the relevant accounting periods.

2. Principles of continuous operation

The financial statements must be made on the basis of the assumption that the business is operating continuously and will continue to operate normally in the near future, unless the business intends and is forced to cease operations or must significantly scale back its operations. If the financial statements are not made on the basis of continuous operations, then this event should be clearly stated, along with the basis used to prepare financial statements and the reasons why the business is not considered to be operating continuously.


3. Key principles and gatherings

Each key item must be presented separately in the financial statements, non-essential items are not presented separately but are gathered into items of the same nature. According to the principle of information importance, the business does not necessarily have to comply with the provisions on the presentation of financial statements of specific accounting standards if such information is not of a critical nature.

4. Principles of consistency

The presentation and classification of items in the financial statements must be consistent from year to year, unless:

  • There is a significant change in the nature of the operations of the business or when reviewing the presentation of financial statements shows that it is necessary to change in order to be able to more rationally present transactions and events.
  • Another accounting standard requires a change in presentation.

5. Clearing principles

  • Assets and liabilities must be presented separately; Clearing only if assets and liabilities involve the same object, have a fast turnaround, arising from transactions and events of the same type.
  • When making a consolidated balance sheet between superior units and subordinate units without legal status, the superior unit must exclude all balances of items arising from internal transactions between the superior unit and the subordinate unit, between subordinate units (Offset revenue, other income and expenses).

+ Cleared according to the provisions of another accounting standard

+ Some transactions outside the normal production and business activities of the enterprise are cleared when receiving transactions and presenting financial statements.

6. The principle is comparable.

According to the principle of being comparable between accounting periods, in the following financial statements: Balance sheet, report on business results; The cash flow report must present the figures on a comparable basis between reporting periods.

  • Important information must be accounted for to help readers properly understand the financial situation of the business
  • The indicators do not have data, the business does not have to be presented on the balance sheet. Enterprises are allowed to actively re-beat the order number but must not change the code of the reporting indicators.

II. 5 steps to prepare financial statements according to Circular 200/2014/TT-BTC

Step 1: Collect documents arising in the fiscal year, check and compare documents gathered with periodicly declared tax reports submitted to tax authorities (right or wrong declaration contents, lack of invoices …)

Due to the major change in the account system between Circular 200/2014/TT-BTC and decision 15/2006/QD-BTC, there should be a balance conversion as guided in Article 126 of Circular 200/2014/TT-BTC.

Step 2: Review the accounting pens for documents on a monthly basis as prescribed. In terms of revenue, note clearly distinguishing sales revenue, financial operating revenue, other income. In terms of costs, distinguish clearly and properly record in the items of capital price, sales cost, management costs, financial operating expenses, other expenses.

Step 3: Classify assets and classify liabilities in accordance with regulations: Assets and liabilities on the balance sheet must be presented in the short and long term. Assets or liabilities with maturity periods of 12 months or less are classified as short-term. Assets and liabilities that are not classified as short-term are classified as long-term.

Step 4: The financial statements of the enterprise must present the contents of the basis for making and presenting the financial statements and specific accounting policies selected and applied to transactions and important events; Present the information in accordance with the provisions of accounting standards not yet presented in other financial statements.

Step 5: The basis for making financial statements are the previous financial statements (Balance Sheet, Business Results Report, Cash Flow Statement, Financial Statement Statement), General Accounting Books, detailed accounting books and other detailed accounting documents.

finance according to Circular 200

Business accountants need to pay attention to some points after making a balance sheet:

  • Adhering to the general principle of making and presenting financial statements
  • Assets and liabilities are presented in short and long term, depending on the term of the business cycle of the enterprise and divided into short-term, long-term according to the principle:

Assets and liabilities are recovered or paid within 12 months of the time the report is classified as short-term.

Assets and liabilities recovered or paid for 12 months or more from the time the report is classified as a long-term

  • Where businesses do not clearly distinguish between short-term and long-term, assets and debts are presented in a diminishing liquidity.
  • When making a balance sheet, the enterprise shall base on documents such as:

+ General accounting books

+ Detailed accounting books, cards or detailed summary tables

+ Previous year's balance sheet

2. Making a report on business results according to Circular 200/2014/TT-BTC

The report on business results will reflect the situation and results of the business activities of the business: The main business activities and results from the financial and other activities of the enterprise

Enterprises need to exclude revenues, incomes and expenses arising from internal transactions when making reports on business results between enterprises and subordinate units

Enterprises base on the following documents to prepare business results report:

  • Report on the business results of the previous year
  • General accounting books and detailed ledgers in the period used for accounts from type 5 to type 9

3. Making cash flow statements when making financial statements according to Circular No. 200/2014/TT-BTC

The preparation and presentation of annual cash flow statements and mid-year accounting periods should comply with the provisions of the accounting standards "Cash Flow Statements" and accounting standards "mid-year financial statements"

Businesses should note that the indicators without data are not presented and the enterprise is re-evaluated the number in order but must not change the code of the indicators

The cash flow report is made in two direct or indirect methods, the enterprise can choose the right method for their business.

4. Explanation of financial statements when making financial statements according to Circular 200/2014/TT-BTC

Financial statements are used to analyze in detail the data information presented in the balance sheet, business results report, cash flow statement as well as other information as required by accounting standards

The financial statements include the following:

  • Information on the basis of the preparation and presentation of financial statements and specific accounting policies selected and applicable to transactions and important events
  • Presentation of information in accordance with the provisions of accounting standards not yet presented in other financial statements
  • Provide additional information that has not been presented in other financial statements.