Independence - Freedom - Happiness LAW ON ACCOUNTING CHAPTER I. General Provisions

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1 NATIONAL ASSEMBLY No QH11 SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness LAW ON ACCOUNTING In order to administer uniformly accounting, ensuring that accountancy is an effective tool for tight management and supervision of all economic and financial activities and provides information completely, accurately, promptly, publicly and transparently to satisfy the requirements for the organization, administration and operation of State bodies, enterprises, organizations and individuals; Pursuant to the 1992 Constitution of the Socialist Republic of Vietnam as amended by Resolution QH10 of Legislature X of the National Assembly at its 10th session on 25 December 2001; This Law governs accounting. CHAPTER I General Provisions Article 1 Governing scope This Law regulates the contents of accounting work and the organization of accounting apparatus, of accounting personnel and of professional accounting activities. Article 2 Applicable entities 1. The entities subject to this Law shall comprise: State bodies, professional entities and organizations using State Budget funding; Professional entities and organizations not using State Budget funding; Enterprises from all economic sectors established and operating pursuant to the law of Vietnam; branches and representative offices of foreign enterprises operating in Vietnam; (d) Co-operatives; (dd) Individual family households and co-operative groups; (e) Accounting personnel and other persons involved in accounting. 2. The Government shall provide specific regulations on the contents of accounting work applicable to representative offices of foreign enterprises operating in Vietnam and to family households and co-operative groups consistent with the fundamental principles stipulated in this Law. Article 3 Applicability of international treaties In the case of any inconsistency between provisions on accounting in an international treaty signed or acceded to by the Socialist Republic of Vietnam and the provisions of this Law, the provisions of such international treaty shall apply.

2 Article 4 Interpretation of terms In this Law, the following terms shall be construed as follows: 1. Accounting means the work of collating, processing, checking, analysing and providing economic and financial information in forms of value, in kind, and labour duration. 2. Financial accounting means the work of collating, processing, checking, analysing and providing economic and financial information in the form of financial reports for entities which have the requirement to use the information of the accounting entity. 3. Management accounting means the work of collating, processing, analysing and providing economic and financial information as required by management and for economic and financial decisions made internally by an accounting entity. 4. Economic and financial transactions means specific activities which arise and which increase or reduce the assets or sources from which assets are formed of an accounting entity. 5. Accounting entity means any entity stipulated in sub-clauses,,, (d) and (dd) of article 2.1 of this Law which prepares financial reports. 6. Accounting period means a period of time fixed from the time an accounting entity commences to post entries in accounting books until the time it ends the posting of entries in accounting books and closes them in order to prepare financial reports. 7. Accounting source documents means papers and materials which contain information reflecting economic and financial transactions which arose and which have been completed, used as the basis for posting entries in accounting books. 8. Accounting data means accounting source documents, accounting books, financial reports, management financial reports, audit reports, reports on accounting inspections and other data relevant to accounting. 9. Accounting regime means regulations and guidelines on accounting in any one sector or on a number of items of specific work, issued by the State administrative body for accounting or by an organization authorized by such body. 10. Accounting inspection means the consideration and assessment of compliance with the laws on accounting and of the truthfulness and accuracy of accounting information and figures. 11. Accountancy practice means activities of providing accountancy services by an organization or individual satisfying all of the standards and conditions for conducting accountancy services. 12. Accounting forms means sample forms for accounting books and the order and methods of posting entries in accounting books and the relationship between such accounting books. 13. Accounting methods mean specific patterns and procedures for carrying out each item of accounting work. Article 5 Accounting duties

3 1. Collation and processing of accounting information and figures in accordance with the subjects and contents of accounting work and in accordance with accounting standards and regimes. 2. Inspection and supervision of items of financial revenue and expenditure, of obligations to receive and to pay debts; inspection of management and use of assets and sources from which assets are formed; and identification and prevention of conduct in breach of the laws on finance and accounting. 3. Analysis of accounting information and figures, provision of advice and proposed solutions servicing management requirements, and making the economic and financial decisions of an accounting entity. 4. Provision of accounting information and figures in accordance with law. Article 6 Accounting requirements 1. To reflect fully economic and financial transactions which arise in accounting source documents, accounting books and financial reports. 2. To reflect accounting information and figures promptly and within the stipulated timelimits. 3. To reflect accounting information and figures clearly, in an easily understood manner, and accurately. 4. To reflect truthfully the status and essence of matters and the content and value of economic and financial transactions. 5. Accounting information and figures shall be reflected continuously as from the time when an economic and financial activity arises up until the time when it terminates, as from the time an accounting entity is established up until the time it terminates operations; and accounting figures in any one period must be continued from the accounting figures of the previous period. 6. To classify and arrange accounting information and figures in order, systematically, and so that they may be compared. Article 7 Accounting principles 1. Asset value shall be calculated according to original price, including expenses of purchasing, loading and unloading, transportation, assembly, processing and other relevant direct expenses incurred up until the asset is in a state ready for use. An accounting entity shall not be permitted to itself adjust an asset value which has already been recorded in the accounting books, except where otherwise provided by law. 2. Accounting regulations and accountancy methods selected must be consistently applied throughout annual accounting periods; and if there is any change in the accounting regulations and accountancy methods selected, an accounting entity must provide an explanatory note in its financial reports. 3. Accounting entities must collate and reflect any financial transactions which arise objectively, fully, truthfully, and in the correct accounting period.

4 4. Accounting information and figures in annual financial reports of an accounting entity must be publicized pursuant to article 32 of this Law. 5. Accounting entities must use methods to assess assets and to allocate revenue and expenditure in a prudent manner, and shall not falsify the results of their economic and financial activities. 6. State bodies, professional entities and organizations using State Budget funding shall, in addition to implementing the regulations prescribed in clauses 1, 2, 3, 4 and 5 of this article, conduct accounting in accordance with the State Budget table of contents. Article 8 Accounting standards 1. Accounting standards comprise basic accounting principles and methods for posting entries in accounting books and for preparing financial reports. 2. The Ministry of Finance shall regulate accounting standards on the basis of international standards on accounting and the provisions of this Law. Article 9 Accounting subjects 1. Accounting subjects with respect to operating revenue and expenditure of the State Budget, administrative and professional entities; and operations of entities and organizations using State Budget funding shall comprise: (d) Cash, materials and fixed assets; Funding sources, funds; All sums paid within and outside the accounting entity; Revenue and expenditure and settlements of differences in operating revenue and expenditure; (dd) State Budget revenue and expenditure and final balances; (e) (g) (h) (i) Financial investments, State credit facilities; State debts and settlements of State debts; National assets; Other assets relating to the accounting entity. 2. Accounting subjects with respect to operations of entities and organizations not using State Budget funding shall comprise assets and sources from which assets are formed as stipulated in sub-clauses,,, (d) and (i) of clause 1 of this article. 3. Accounting subjects with respect to business operations shall comprise: Fixed assets and current assets; Debts payable and equity of owner;

5 (d) Items of business revenue and expenditure, and other expenditure and income; Taxes and items paid into the State Budget; (dd) Results of business operations and distributions from results of business operations; (e) Other assets relating to the accounting entity. 4. Accounting subjects with respect to banking and credit operations, insurance and securities operations and financial investments outside the provisions in clause 3 of this article shall comprise: Items being financial investments and credit items; All sums paid within and outside the accounting entity; Committed amounts, guarantees and valuable papers. Article 10 Financial accounting, management accounting, general accounting and detailed accounting 1. Accounting at an accounting entity shall comprise financial accounting and management accounting. 2. When an accounting entity conducts the work of financial accounting and management accounting, it must conduct general accounting and detailed accounting. General accounting shall include collating, processing, taking down notes and providing comprehensive information about the economic and financial activities of the accounting entity. General accounting shall use a currency unit in order to reflect the status of assets and sources from which assets are formed and the status and results of economic and financial activities of the accounting entity. Detailed accounting shall include collating, processing, taking down notes and providing detailed information in a currency unit, in a unit of kind, and in a unit of labour duration depending on each specific accounting subject in the accounting entity. Detailed accounting shall provide the explanations for general accounting. Detailed accounting figures must correctly match the general accounting figures during any one accounting period. 3. The Ministry of Finance shall provide guidelines on the applicability of management accounting in conformity with each operational sector.

6 Article 11 Units of calculation to be used in accounting Units of calculation to be used in accounting shall comprise: 1. The currency unit being the Vietnamese dong (for which the national symbol is "dd" and the international symbol is "VND"). If an economic and financial transaction arises in a foreign currency, it must be recorded in the original currency and in Vietnamese dong at the actual exchange rate or recorded in the original currency and converted into Vietnamese dong at the exchange rate announced by the State Bank at the time the transaction arises, except where otherwise provided by law; if the particular type of foreign currency does not have an exchange rate with Vietnamese dong, it must be converted via a type of foreign currency which does have an exchange rate with Vietnamese dong. The basic accounting unit for revenue and expenditure in foreign currency shall be selected from a type of foreign currency which the Ministry of Finance stipulates to be used as a currency unit for accounting but, when financial reports are prepared for use in Vietnam, it must be converted into Vietnamese dong at the exchange rate announced by the State Bank at the time the books are closed to prepare the financial reports, except where otherwise provided by law. 2. Units in kind and units in labour duration are official units of measurement of the Socialist Republic of Vietnam; if other units of measurement are used, they must be converted to official units of measurement of the Socialist Republic of Vietnam. Article 12 Writing and numbering system to be used in accounting 1. The writing system to be used in accounting shall be the Vietnamese language. In the case where a foreign language must be used in accounting source documents, accounting books and financial reports in Vietnam, both the Vietnamese language and the foreign language must be used simultaneously. 2. The numbering system to be used in accounting shall be the Arabian numeral system of 0, 1, 2, 3, 4, 5, 6, 7, 8, 9; a full-stop (.) must be placed after thousands, millions, billions, trillions, and billion billions; and when numbers are written following the above series, they must be preceded by a comma. Article 13 Accounting periods 1. Accounting periods shall comprise annual accounting periods, quarterly accounting periods and monthly accounting periods. An annual accounting period shall be twelve (12) months calculated from the beginning of 1 January until the end of 31 December of the Gregorian calendar. Accounting entities which have their own particular characteristics of operational organization shall be permitted to select an annual accounting period being twelve (12) full months according to the Gregorian calendar commencing from the beginning of the first day of a month at the beginning of any one quarter until the end of the last day of the last month of the previous quarter in the following year, and accounting entities shall notify the financial body for its information. A quarterly accounting period shall be three months calculated from the beginning of the first day of the first month of a quarter until the end of the last day of the last month of the quarter.

7 A monthly accounting period shall be one month calculated from the beginning of the first day until the end of the last day of the month. 2. Accounting periods of newly established accounting entities shall be provided for as follows: The initial accounting period of a newly established enterprise shall be calculated from the date of issuance of its business registration certificate until the end of the last day of the annual accounting period, quarterly accounting period and monthly accounting period in accordance with the provisions in clause 1 of this article. The initial accounting period of other accounting entities shall be calculated from the date of effectiveness recorded in their establishment decision until the end of the last day of the annual accounting period, quarterly accounting period and monthly accounting period in accordance with the provisions in clause 1 of this article. 3. When an accounting entity separates, divides, consolidates, merges, converts its form of ownership, dissolves, is declared bankrupt or reaches the end of its duration of operation, its final annual accounting period shall be calculated from the beginning of the annual accounting period, quarterly accounting period and monthly accounting period in accordance with the provisions in clause 1 of this article until the end of the day prior to the date of effectiveness recorded in the decision on separation, division, consolidation, merger, conversion of form of ownership, dissolution, termination of operation or bankruptcy. 4. In a case where the initial annual accounting period or final annual accounting period is of shorter duration than ninety (90) days, it shall be permitted to add (+) such period to the following annual accounting period, or to add (+) such period to the previous annual accounting period, in order to make up one annual accounting period. The initial annual accounting period or the final annual accounting period must be shorter than fifteen (15) months. Article 14 Conduct which is strictly prohibited 1. Fabrication of accounting data, making a false declaration, colluding with or coercing another person to fabricate accounting data or make a false declaration, or erasing of accounting data. 2. Intentional provision or certification of false accounting information and figures; colluding with or coercing another person to provide or certify false accounting information and figures. 3. To record off the balance sheet assets belonging to an accounting entity or relating to the accounting entity. 4. Destruction or deliberate damage of accounting data prior to expiry of time-limits for archiving stipulated in article 40 of this Law. 5. Promulgation or proclamation of unauthorized accounting standards or accounting regimes.

8 6. Taking advantage of position or powers to threaten or victimize accounting personnel in the conduct of accounting work. 7. Acting concurrently as a person responsible for the management or operation of an accounting entity and as accounting personnel, store-keeper, cashier, purchaser or seller of assets, except in the case of a private enterprise or an individual family household. 8. Appointment of a person who fails to satisfy the standards and conditions stipulated in articles 50 and 53 of this Law to act as accounting personnel or as chief accountant. 9. Other conduct relating to accounting which is strictly prohibited by law. Article 15 Value of accounting data and accounting figures 1. Accounting data and accounting figures shall have legal validity regarding the financial status of an accounting entity and shall be used for the purpose of making public announcements in accordance with law. 2. Accounting data and accounting figures shall provide the bases for formulation of and for consideration and approval of planning, estimated budgets and accounting finalization; and for considering and dealing with breaches of law. Article 16 Responsibility to administer, use and provide accounting information and data 1. Accounting entities shall be responsible to administer, use, preserve and archive accounting data. 2. Accounting entities shall be responsible to provide in a timely manner truthful and transparent accounting information and data to organizations and individuals in accordance with law. CHAPTER II Contents of Accounting Work SECTION I Accounting Vouchers Article 17 Contents of accounting vouchers 1. Accounting vouchers shall contain the following basic particulars: (d) Name and symbol of the accounting voucher; Date on which the accounting voucher is drawn; Name and address of the entity or individual drawing up the accounting voucher; Name and address of the entity or individual receiving the accounting voucher; (dd) Contents of the economic and financial transaction arising;

9 (e) (g) Quantity, unit price and monetary sum of the economic and financial transaction recorded in figures; and the total monetary sum of an accounting voucher used to receive or pay money shall be recorded in figures and in words. The signature and full name of the person drawing up the accounting voucher, of the person approving it, and of the persons involved in the accounting voucher. 2. In addition to the basic particulars stipulated in clause 1 of this article, an accounting voucher may contain other additional particulars depending on its particular type. Article 18 Electronic vouchers 1. An electronic voucher shall be deemed to be an accounting voucher containing the particulars stipulated in article 17 of this Law, which is expressed in the form of electronic data, and which is encoded and is not able to be changed during the process of transmission via a computer network or on an information-carrying object, such as a compact tape, compact disc or any type of payment card. 2. The Government shall provide detailed regulations on electronic vouchers. Article 19 Preparing accounting vouchers 1. Accounting vouchers shall be prepared for all economic and financial transactions which arise and which relate to the operation of an accounting entity. An accounting voucher shall only be prepared on one occasion for each economic and financial transaction. 2. The particulars on an accounting voucher shall be completed clearly, fully, promptly and accurately in accordance with the contents prescribed on the sample form. If no sample form has yet been provided for an accounting voucher, an accounting entity may itself prepare the accounting voucher which must contain all of the particulars stipulated in article 17 of this Law. 3. The contents of an economic and financial transaction recorded on an accounting voucher may not be abbreviated, erased or altered; an ink pen must be used for writing, figures and letters must be written consecutively and uninterruptedly, and blank spaces must be crossed out with diagonal lines; any voucher which has been erased or altered shall be invalid for payment purposes and for posting entries in accounting books. When an incorrect entry is made on an accounting voucher form, it must be cancelled by writing diagonal lines on the incorrect voucher. 4. An accounting voucher must be prepared in a sufficient number of copies as stipulated by the regulations. If multiple copies of an accounting voucher must be prepared for one economic and financial transaction, the contents of each copy must be the same. In the case of an accounting voucher prepared by any of the accounting entities prescribed in sub-clauses,, and (d) of article 2.1 of this Law in order to conduct a transaction with an organization or individual outside the accounting entity, the copy delivered to the external party must be sealed by the accounting entity. 5. The person drawing up an accounting voucher, the person approving it and other signatories shall be liable for the contents of the accounting voucher. 6. An accounting voucher which is prepared in the form of an electronic voucher must comply with the provisions of article 18 of this Law and with clauses 1 and 2 of this

10 article. Electronic vouchers must be printed out and archived in accordance with the provisions of article 40 of this Law. Article 20 Signing accounting vouchers 1. Accounting vouchers must contain all necessary signatures. Signatures on accounting vouchers must be written with an ink pen. Accounting vouchers may not be signed in red ink or by affixing a seal with an engraved signature. Any one signatory must use the same signature on all accounting vouchers. 2. A signature on an accounting voucher must be the signature of the person authorized to sign or of his or her authorized delegate. It shall be strictly prohibited for an accounting voucher to be signed prior to the signatory having recorded on it all of the particulars for which he or she is responsible. 3. An accounting voucher for the disbursement of monies must be signed by the person authorized to approve the disbursement and by the chief accountant or authorized person prior to the disbursement being made. Signatures on accounting vouchers used for the disbursement of monies must be signed on each copy. 4. Electronic vouchers shall contain electronic signatures in accordance with law. Article 21 Invoices for sale of goods 1. When an individual or organization sells goods or provides services, it must prepare a sales invoice and deliver it to the customer. In the case of a retail sale of goods or provision of services below the stipulated monetary level, if the purchaser of the goods does not require a sales invoice, it shall not be necessary to prepare same. The Government shall provide detailed regulations on the circumstances of sales and on the monetary level of sales for which an invoice is not required to be prepared. 2. When an individual or organization purchases goods or when it is provided with services, it shall have the right to require the seller or the service provider to prepare a sales invoice and to deliver it to such individual or organization. 3. Sales invoices shall be expressed in the following forms: (d) Invoices on a pre-printed form; Invoices printed from a computer; Electronic invoices; Stamps, tickets and cards bearing a pre-printed price. 4. The Ministry of Finance shall provide regulations on sample invoice forms and on organization of printing, issuance and use of sales invoices. Any individual or organization printing its own sales invoices must have written approval from the competent financial body prior to implementation. 5. Any individual or organization selling goods or providing services without preparing or delivering a sales invoice or preparing an invoice which fails to comply with the provisions in articles 19 and 20 of this Law and with clauses 1, 2, 3 and 4 of this article shall be dealt with in accordance with law.

11 Article 22 Management and use of accounting vouchers 1. Information and figures on accounting vouchers shall provide the basis for posting entries in accounting books. 2. Accounting vouchers must be arranged in accordance with their economic contents and in chronological order and must be safely preserved in accordance with law. 3. Only authorized State bodies shall have the right to retain temporarily, confiscate or seal up accounting vouchers. In the case of temporary retention or confiscation of an accounting voucher, the competent State body must make a copy of the temporarily retained or confiscated voucher and sign confirmation on the copy; and at the same time it shall prepare minutes specifying the reason for the temporary retention or confiscation and the quantity of each type of accounting voucher which was temporarily retained or confiscated, and sign and seal the minutes. 4. Any competent State body which seals up accounting vouchers must prepare minutes specifying the reason and the quantity of each type of voucher which was sealed up, and the minutes must be signed and sealed. SECTION II Accounting Accounts and Accounting Books Article 23 Accounting accounts and charts of accounts 1. Accounting accounts shall be used to classify and systemize economic and financial transactions in accordance with their economic contents. 2. A chart of accounts shall include all accounting accounts which are required to be used. All accounting entities must use a chart of accounts. 3. The Ministry of Finance shall provide detailed regulations on accounting accounts and charts of accounts. Article 24 Selection of chart of accounts to be adopted 1. Accounting entities shall, on the basis of the charts of accounts stipulated by the Ministry of Finance, select a chart of accounts applicable at the entity. 2. Accounting entities may sub-divide their selected accounting accounts in order to service management requirements of the entity. Article 25 Accounting books and systems of accounting books 1. Accounting books shall be used to post entries, and to systemize and retain all economic and financial transactions which have arisen and which relate to the accounting entity. 2. Accounting books shall specify the name of the accounting entity; the name of the book, the date on which the book was opened and the date on which it is closed; the signature of the person establishing the book, of the chief accountant and of the legal representative of the accounting entity; the number of pages; and the seal affixed between the edges of adjoining pages.

12 3. Accounting books shall contain the following basic particulars: (d) Dates on which entries are posted; Symbol and date of the accounting voucher used as the basis for the entry in the accounting book; Summary of contents of the economic and financial transaction arising; Monetary sum of the economic and financial transaction arising which is posted in the accounting accounts; (dd) Balance at the beginning of the period, monetary sum arising in the period, and balance at the end of the period. 4. Accounting books shall comprise general accounting books and detailed accounting books. 5. The Ministry of Finance shall provide specific regulations on accounting forms, on systems of accounting books and on accounting books. Article 26 Selection of system of accounting books to be adopted 1. Each accounting entity shall have only one system of accounting books for any one annual accounting period. 2. Accounting entities shall, on the basis of the regulations of the Ministry of Finance on systems of accounting books, select a system of accounting books applicable to the entity. 3. An accounting entity may sub-divide the selected accounting books in order to service management requirements. Article 27 Opening, posting entries in, and closing accounting books 1. Accounting books must be opened at the beginning of an annual accounting period; and newly established accounting entities must open their accounting books as from the date of their establishment. 2. Accounting entities shall rely on accounting vouchers in order to post entries in the accounting books. 3. Entries must be posted in the accounting books promptly, clearly and fully in accordance with the items and headings in the books. Information and data posted in the accounting books must be accurate, truthful and correct in terms of the accounting vouchers. 4. Entries must be posted in accounting books in the chronological order in which economic and financial transactions arise. Information and data posted in the books of the following year must continue on from the information and data recorded in the books of the immediately preceding year. Entries must be posted in accounting books consecutively, as from the date the books are opened up until the date the books are closed.

13 5. Information and figures posted in accounting books must be written with an ink pen; additional entries must not be inserted either above or below existing entries; entries must not be made one on top of the other, or by omitting a blank line; and when entries are posted up to the end of a page, the total of the figures on that page must be added and those total figures carried forward to the following page. 6. Accounting entities shall close their accounting books at the end of an accounting period prior to preparing financial reports and in other cases in which the law stipulates that accounting books must be closed. 7. Accounting entities may make entries in their accounting books by hand or by computer. Where accounting entries are made in accounting books by computer, the regulations on accounting books in articles 25 and 26 of this Law and in clauses 1, 2, 3, 4 and 6 of this article must be complied with. When computerized accounting books are closed, they must be printed out on paper and bound into separate books for each annual accounting period. Article 28 Corrections to accounting books 1. When an entry made by hand in an accounting book is discovered to be an error, it may not be erased so as to lose the mark of the incorrect information or data, but shall be corrected by one of the following three methods: Amendment entry method means recording a correction by ruling a straight line through the incorrect entry and writing the correct figures or words above, with the signature of the chief accountant alongside; Negative entry method means recording a negative number and re-writing the incorrect number in red ink or in brackets and then writing the correct number, with the signature of the chief accountant alongside; Additional entry method means preparing a "voucher recording additional figures" and recording the difference which makes up the correct number. 2. If an error is discovered in an accounting book prior to lodging the annual financial report with the competent State body, the error in the accounting book must be corrected in that year. 3. If an error is discovered in an accounting book after the annual financial report has been lodged with the competent State body, the error must be corrected in the accounting book of the year in which the error is discovered and a note made on the last line of the accounting book for the year in which the error was made. 4. Corrections to accounting books when entries are made by computer: If an error is discovered prior to lodging an annual financial report with the competent State body, the error shall be corrected directly on the computer in the accounting book for that year. If an error is discovered after an annual financial report has already been lodged with the competent State body, the error must be corrected directly on the computer in the accounting book for the year in which the error is discovered and

14 a note made on the last line of the accounting book for the year in which the error was made. Corrections to accounting books when entries are made by computer shall be implemented by the methods stipulated in sub-clause or of clause 1 of this article. SECTION III Financial Reports Article 29 Financial reports 1. Financial reports shall be prepared in accordance with the accounting standards and accounting regimes used in order to provide an overall view and explanation of the economic and financial status of an accounting entity. 2. Financial reports of accounting entities which operate within State Budget revenue and expenses, of administrative bodies, professional entities and organizations using State Budget funding, and of professional entities and organizations not using State Budget funding shall comprise: (d) Balance sheet; Profit and loss statement; Explanatory notes to the financial report; Other reports required by law. 3. Financial reports of accounting entities which conduct business operations shall comprise: (d) Balance sheet; Profit and loss statement; Cash flow report; Explanatory notes to the financial report. 4. The Ministry of Finance shall provide specific regulations on financial reports for each operational sector. Article 30 Preparation of financial reports 1. Accounting entities shall prepare financial reports at the end of annual accounting periods; where the law stipulates that financial reports shall be prepared according to other accounting periods, accounting entities shall prepare their financial reports according to such accounting periods. 2. Financial reports shall be prepared on the basis of the figures after the accounting books have been closed. Higher level accounting entities shall prepare general financial reports

15 or consolidated financial reports based on the financial reports of all of the accounting entities within such higher level accounting entity. 3. Financial reports must be prepared with the correct contents and methods and must be presented consistently in all accounting periods; if a financial report is presented in a different method from that used in another accounting period, it must contain a clear explanation of the reason for this. 4. Financial reports must be signed by the person preparing them, by the chief accountant and by the legal representative of the accounting entity. Signatories to financial reports shall be liable for their contents. Article 31 Time-limits for lodging financial reports 1. Annual financial reports of an accounting entity must be lodged with the competent State body within a time-limit of ninety (90) days from the date on which the annual accounting period ends in accordance with law; and time-limits for lodging State Budget accounting finalization reports shall be implemented in accordance with regulations of the Government. 2. The Government shall provide specific regulations on time-limits for lodging financial reports and State Budget accounting finalization reports for each operational sector and for each management level. Article 32 Contents of financial reports to be publicized 1. In the case of accounting entities which operate within State Budget revenue and expenditure, of administrative bodies, professional entities and organizations using State Budget funding, and of professional entities and organizations not using State Budget funding, the following contents of financial reports shall be publicized: (d) Accounting entities which operate within State Budget revenue and expenditure shall publicize their annual accounting finalization of State Budget revenue and expenditure; Accounting entities being administrative bodies, professional entities and organizations using State Budget funding shall publicize their annual accounting finalization of State Budget revenue and expenditure and other financial revenue and expenditure; Accounting entities being professional entities and organizations not using State Budget funding shall publicize their annual accounting finalization of financial revenue and expenditure; Accounting entities which use items of capital contribution from the public shall publicize their objectives for raising capital, their use of capital contributed, the entities which contributed capital, the amount raised, the results of use, and accounting finalization of revenue and expenditure of each item of capital contribution. 2. Accounting entities which conduct business operations shall publicize the following contents of financial reports: Status of assets, debts payable and equity of owner;

16 (d) Profit and loss statement; Setting up funds and use of funds; Income of employees. 3. When the financial reports of an accounting entity which has been audited are publicized, the conclusion of the auditing organization must be enclosed. Article 33 Forms and time-limits for publicizing financial reports 1. Financial reports shall be publicized in the following forms: (d) By issuing them as a printed publication; By announcing them in the form of a letter; By displaying them; By other forms in accordance with law. 2. Accounting entities which operate within State Budget revenue and expenditure shall publicize their annual financial reports within a time-limit of sixty (60) days from the date of approval by the competent body. 3. Accounting entities being administrative bodies, professional entities and organizations which use State Budget funding, professional entities and organizations not using State Budget funding, and accounting entities which use items of capital contribution from the public shall publicize their annual financial reports within a time-limit of thirty (30) days from the date of approval by the competent body. 4. Accounting entities which conduct business operations shall publicize their annual financial reports within a time-limit of one hundred and twenty (120) days from the date on which an annual accounting period ends. Article 34 Auditing of financial reports 1. Annual financial reports of an accounting entity which the law requires to be audited must be audited prior to submission to the competent State body and prior to publicizing. 2. When an accounting entity is audited it must fully comply with the laws on auditing. 3. When financial reports which have been audited are submitted to the competent State body as stipulated in article 31 of this Law, the audit report must be enclosed.

17 SECTION IV Accounting Inspections Article 35 Accounting inspections Accounting entities shall be subject to an accounting inspection by the competent State body, but there shall not be more than one inspection in a year with respect to the same matters. An accounting inspection shall only be conducted when there is a decision from the authorized level in accordance with law. Article 36 Contents of accounting inspections 1. The contents of accounting inspections shall comprise: (d) Inspection of implementation of the contents of accounting work; Inspection of the organization of the accounting apparatus and accounting personnel; Inspection of the organization of management and operation of professional accounting; Inspection of compliance with other laws on accounting. 2. The contents of an accounting inspection shall be specified in the inspection decision. Article 37 Rights and responsibilities of accounting inspection teams 1. When an accounting inspection is conducted, the inspection team must present the inspection decision. An inspection team shall have the right to require the accounting entity which is being inspected to provide accounting data relevant to the contents of the accounting inspection and to provide explanations when necessary. 2. At the end of an accounting inspection, the inspection team must prepare minutes of the accounting inspection and deliver one copy to the accounting entity; if any breaches of the laws on accounting are identified, they shall be dealt with in accordance with authority, or the file shall be transferred to the competent State body to deal with the breach in accordance with law. 3. The head of an accounting inspection team shall be liable for the conclusions of the inspection. 4. Accounting inspection teams must comply with the order, contents, scope and duration of the inspection, shall not adversely affect normal activities and shall not harass the accounting entity which is being inspected. Article 38 Responsibilities and rights of accounting entities being inspected 1. An accounting entity which is being inspected shall be responsible: To provide the inspection team with accounting data relevant to the contents of the accounting inspection and to explain its contents on request by the inspection team;

18 To implement the conclusions of the accounting inspection team. 2. An accounting entity which is being inspected shall have the right: To refuse an inspection if it considers that the inspection is unauthorized or that the inspection contents are contrary to the provisions in article 36 of this Law; To lodge a complaint about the conclusions of an accounting inspection team with the competent body which made the inspection decision; if the accounting entity disagrees with the decision of such body, it shall do so in accordance with the provisions of law. SECTION V Inventory of Assets, Preservation and Archiving of Accounting Data Article 39 Inventory of assets 1. To take an inventory of assets means to weigh, measure and count numbers; and to determine and assess the quality and value of current assets and capital funds at the time of taking the inventory in order to check and make comparisons with figures in the accounting books. 2. Accounting entities must take an inventory of assets in the following circumstances: (d) Prior to preparing financial reports at the end of an annual accounting period; Upon division, demerger, consolidation, merger, dissolution, termination of operation, bankruptcy; or upon purchase, sale, contractual management or lease of the enterprise; Upon conversion of form of ownership of the enterprise; Upon occurrence of a fire or flood or any unusual loss and damage; (dd) Upon re-valuation of assets pursuant to a decision of a competent State body; (e) In other circumstances as stipulated by law. 3. After taking an inventory of assets, an accounting entity shall prepare a report with overall conclusions of the inventory. If there is a difference between the actual figures in the inventory and the figures entered in the accounting books, the accounting entity must determine the reasons and record the differences and the results of dealing with them in the accounting books prior to preparation of financial reports. 4. An inventory of assets must record correctly the actual assets and sources from which assets are formed. The person preparing and signing the report with overall conclusions of the inventory shall be liable for the conclusions of the inventory. Article 40 Preservation and archiving of accounting data 1. Accounting entities shall preserve fully and safely accounting data during the process of its use and archiving.

19 2. Accounting data which is archived shall be original copies. Where accounting data is temporarily retained or confiscated, minutes must be attached to copies or to confirmation; and if accounting data is lost or destroyed, minutes must be attached to copies or to confirmation. 3. Accounting data must be placed in the archives within a time-limit of twelve (12) months from the date on which an annual accounting period ends or accounting work concludes. 4. The legal representative of an accounting entity shall be liable to organize the preservation and archiving of accounting data. 5. Accounting data must be archived for the following periods: A minimum period of five years applicable to accounting data used for management or operation of the accounting entity, including accounting vouchers not used directly to post entries in the accounting books and to write financial reports; A minimum period of ten (10) years applicable to accounting data used directly to post entries in the accounting books and to write financial reports, annual accounting books and financial reports, except where otherwise provided by law; Accounting data in the nature of a historical record, or which is significant in terms of economics, national security and defence, shall be permanently archived. 6. The Government shall provide specific regulations on each type of accounting data which must be archived, the periods for which it must be archived, the commencement time for calculation of the archiving period provided for in clause 5 of this article, the locations for archives and the procedures for destruction of archived accounting data. Article 41 Accounting work in cases where accounting data is lost or destroyed When accounting data is discovered to be lost or destroyed, an accounting entity shall undertake immediately the following work: 1. Check, confirm and prepare minutes on the number, status quo and causes of lost or destroyed accounting data, and notify the relevant organizations and individuals and the competent State body; 2. Organize restoration of damaged accounting data; 3. Contact the organizations and individuals involved in the transactions recorded in the accounting data and figures in order to take copies or to re-verify the accounting data; 4. With respect to accounting data which relates to assets and which are not able to be restored by the methods stipulated in clauses 2 and 3 of this article, an inventory of the assets must be taken in order to re-draw the accounting data which was lost or destroyed. SECTION VI

20 Accounting Work in Cases of Division, Demerger, Consolidation, Merger, Conversion of Form of Ownership, Dissolution, Termination of Operation or Declaration of Bankrupt of Accounting Entity Article 42 Accounting work in case of division of accounting entity 1. Where an accounting entity divides to form new accounting entities, it shall undertake the following work: Close its accounting books, take an inventory of assets, determine unpaid debts and prepare a financial report; Divide the assets and unpaid debts, prepare minutes of hand-over, and post entries in the accounting books in accordance with such minutes; Hand over accounting data relating to assets and unpaid debts to the new entities. 2. The newly established accounting entities shall, on the basis of the minutes of handover, open their accounting books and post entries in them in accordance with the provisions of this Law. Article 43 Accounting work in case of demerger of accounting entity 1. Where a section of an accounting entity demerges to form a new accounting entity, the following work shall be undertaken: An inventory of assets and a determination of unpaid debts of the section which is demerging; Hand-over of assets and unpaid debts of the section which is demerging, preparation of minutes of hand-over, and posting entries in the accounting books in accordance with such minutes; Hand-over of accounting data relating to assets and unpaid debts to the new accounting entity; any accounting data which is not handed over shall be archived by the accounting entity which is demerging in accordance with article 40 of this Law. 2. The newly established accounting entity shall, on the basis of the minutes of hand-over, open its accounting books and post entries in them in accordance with law. Article 44 Accounting work in case of consolidation of accounting entities 1. Where accounting entities consolidate to form a new accounting entity, each consolidating accounting entity shall undertake the following work: Close its accounting books, take an inventory of assets, determine unpaid debts and prepare a financial report; Hand over all assets and unpaid debts, prepare minutes of handover, and post entries in the accounting books in accordance with such minutes; Hand over all accounting data to the consolidated accounting entity.

21 2. The consolidated accounting entity shall undertake the following work: Open accounting books and post entries in them in accordance with the minutes of hand-over; Collate the financial reports of the consolidating accounting entities into one financial report of the consolidated accounting entity. Article 45 Accounting work in case of merger of accounting entity 1. Where an accounting entity merges into another accounting entity, it shall undertake the following work: Close its accounting books, take an inventory of assets, determine unpaid debts and prepare a financial report; Hand over all assets and unpaid debts, prepare minutes of hand-over, and post entries in the accounting books in accordance with such minutes; Hand over all accounting data to the merged accounting entity. 2. The merged accounting entity shall, on the basis of the minutes of hand-over, post entries in the accounting books in accordance with the provisions of this Law. Article 46 Accounting work in case of conversion of form of ownership 1. Where an accounting entity converts its form of ownership, it shall undertake the following work: Close its accounting books, take an inventory of assets, determine unpaid debts and prepare a financial report; Hand over all assets and unpaid debts, prepare minutes of hand-over, and post entries in the accounting books in accordance with such minutes; Hand over all accounting data to the accounting entity under the new form of ownership. 2. The accounting entity under the new form of ownership shall, on the basis of the minutes of hand-over, post entries in its accounting books in accordance with the provisions of this Law. Article 47 Accounting work in case of dissolution, termination of operation, or bankruptcy 1. Where an accounting entity is dissolved or terminates its operation, it shall undertake the following work: Close its accounting books, take an inventory of assets, determine unpaid debts and prepare a financial report; Open an accounting book to monitor economic and financial transactions relating to the dissolution or termination of operation;