Other parties use assets to generate income, royalties, etc. These costs arise in the form of cash and cash equivalents, inventories, depreciation of machinery and equipment. Other costs include costs other than production and business costs arising in the normal course of business operations of the enterprise such as: costs of liquidation and sale of fixed assets, fines from customers for breach of contract, etc.
For joint stock companies when using loan capital to implement investment projects, loan interest is included in the enterprise's expenses and is included in the cost of goods or services. Therefore, in order for the enterprise to make a profit, the decision to borrow capital by the owner agency, in addition to being within its authority, must demonstrate reasonableness, in which the signing of the loan contract must be based on a feasible investment project, and the agreement on loan costs must be for the benefit of the company. Loan capital is allocated by the enterprise for use according to the approved budget. In principle, the use of loan capital must be strictly managed. Therefore, the enterprise's accounting organization plays a role in collecting and processing information on contract payments as a basis for determining the cost of goods and services. In addition, depending on the lending entity, the use of loan capital is also controlled by the lender. In the case of enterprises using loans from the State budget, the process of using loan capital is also controlled by authorized agencies. In case the investment project decision is under the authority of the owner agency, after these agencies approve the loan and asset purchase contracts, the representative and the executive agency are obliged to implement them. The owner agency shall issue a Charter or Resolution, internal regulations clearly defining the responsibilities of the manager and executive as well as the implementation process. The legal representative may be the Chairman of the Board of Directors if the company's Charter stipulates. In case it is not stipulated, the representative is the Director or General Director who signs the contract on behalf of the company and signs the documents.
payment documents as the person approving the payment together with the chief accountant [Clause 3, Article 20, 14]. The representative participates in the process of using capital, assets and determining business costs, prices of products, goods or services. The ultimate purpose is to limit the abuse of the position of the legal representative to sign contracts and approve payment documents...
During the implementation of an investment project, the owner agency and the management agency are responsible for supervising the implementation of the project by the executive agency. In practice, some violations by the Director or General Director often occur, such as: Choosing an unqualified contract partner, signing a contract to receive commission for an individual causing damage to the company... The competent authority within the enterprise supervises compliance with the law based on the report on revenue and expenditure results in project implementation prepared by the accounting organization. Supervision activities are only effective when internal inspection and supervision processes are completed. This is the basis for comparison to determine the responsibility of the management and executive agency. Therefore, with transparent financial information, when the manager and executive comply with the law, the Charter, internal procedures, and fulfill their honest obligations for the public interest, if the investment project fails, they must be exempted from responsibility.
According to tax law
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Accounting for Revenue, Expenses and Business Results from a Management Accounting Perspective
According to the Law on Corporate Income Tax 2008, amended and supplemented in 2013, and Decree 218/2013/ND-CP detailing and guiding the implementation of the Law on Corporate Income Tax, deductible expenses when determining taxable income must ensure the following principles: Actual expenses related to production and business activities, expenses with sufficient invoices and legal documents according to the provisions of law, and in cases where each invoice for goods and services has a value of 20 million VND or more, there must be a non-cash payment document, except for expenses for national defense and security, HIV/AIDS prevention, Party organizations, etc. [Article 9].
Expenses that are not deductible when determining taxable income are implemented according to the provisions of Clause 2, Article 9 of the Law on Corporate Income Tax 2008, such as: Expenses that do not satisfy the conditions specified in Clause 1 of this Article, except for the value of losses due to natural disasters, epidemics and other force majeure events that are not compensated; fines for administrative violations; expenses offset by other funding sources; business management expenses allocated by foreign enterprises to permanent establishments in Vietnam exceeding the level calculated according to the allocation method prescribed by Vietnamese law; expenses exceeding the level prescribed by law on provisioning; expenses for raw materials, materials, fuel, energy and goods exceeding the consumption norms established by enterprises, notified to tax authorities and actual warehouse prices; Interest payments on loans for production and business of entities other than credit institutions or economic organizations exceeding 150% of the basic interest rate announced by the State Bank of Vietnam at the time of borrowing; depreciation of fixed assets not in accordance with the provisions of law; advance deductions for expenses not in accordance with the provisions of law; salaries and wages of private enterprise owners; remuneration paid to enterprise founders who are not directly involved in production and business management; salaries, wages, and other accounting amounts to be paid to employees but not actually paid or without invoices or documents as prescribed by law; interest payments on loans corresponding to the remaining charter capital; input VAT that has been deducted, value added tax paid according to the deduction method, corporate income tax; advertising, marketing, promotion, brokerage commission expenses; reception, celebration, and conference expenses; marketing support expenses, cost support expenses, payment discounts; Expenses for newspapers and magazines donated by press agencies directly related to production and business activities exceeding 10% of total deductible expenses; for newly established enterprises, the portion of expenses exceeding 15%
within the first three years from the date of establishment. Total deductible expenses do not include expenses specified in this point; for commercial activities, total deductible expenses do not include the purchase price of goods sold; sponsorship, except for sponsorship for education, healthcare, overcoming the consequences of natural disasters and building charity houses for the poor as prescribed by law.
Accordingly, Clause 5, Article 1 of the Law amending and supplementing a number of articles of the Law on Corporate Income Tax 2013 stipulates a number of cases of non-deductible expenses: Expenses exceeding the level prescribed by law on provisioning; payment of interest on loans corresponding to the remaining charter capital, according to the capital contribution schedule stated in the enterprise's charter; interest on loans recorded in asset value; interest on loans to implement contracts for oil and gas exploration and exploitation; expenses for advertising, marketing, promotion, brokerage commissions (excluding insurance commissions prescribed by law on insurance business, commissions for agents selling goods at the right price, commissions paid to distributors of multi-level marketing enterprises); expenses for reception, ceremonies, conferences; expenses for marketing support, expenses for supporting costs directly related to production and business activities exceeding 15% of total deductible expenses; Business expenses: Banking, insurance, lottery, securities and some other specific business activities as prescribed by the Ministry of Finance; Late tax payment as prescribed by the Law on Tax Administration; expenses directly related to the issuance of shares (except for shares classified as liabilities) and dividends of shares (except for dividends of shares classified as liabilities), purchase and sale of treasury stocks and other expenses directly related to the increase or decrease of the enterprise's equity; expenses for remuneration, salaries, wages and other allowances for employees, members of the Board of Directors, Board of Supervisors, etc.
2.2. Specific features of revenue and cost management within a joint stock company
It can be seen that a Joint Stock Company is a typical type of enterprise subject to the regulation of the Securities Law. Therefore, the management of revenue and expenses of this type of enterprise
This type of company also has specific characteristics that are different from other types of businesses. Specifically:
2.2.1. About revenue management
According to the provisions of the Securities Law 2006, amended and supplemented in 2010, the management of revenue of a joint stock company, in addition to complying with the Law on Accounting, the Law on Taxation and related documents, must also be subject to the regulation of the Securities Law. This is a characteristic that leads to the difference in revenue management of a joint stock company compared to other types of enterprises. Because a joint stock company is a type of enterprise that has the right to issue securities to raise capital. Therefore, according to the Securities Law 2006, amended and supplemented in 2010, it is stipulated that public companies must periodically disclose information on audited financial statements, semi-annual financial statements reviewed by an independent auditing company or an approved auditing organization, and quarterly financial statements [Point a, Clause 1, Article 101]. Basically, this provision shows that public companies are obliged to provide honest financial information. In addition, in our country, according to Decree No. 17/2012/ND-CP dated March 13, 2012 of the Government detailing and guiding the implementation of a number of articles of the Law on Independent Auditing, enterprises whose annual financial statements are required by law to be audited by auditing enterprises or branches of foreign auditing enterprises in Vietnam include: Enterprises with foreign investment capital, credit institutions established and operating under the Law on Credit Institutions 2010 including branches of foreign banks in Vietnam; financial institutions, insurance enterprises, reinsurance enterprises, insurance brokerage enterprises, public companies, issuing organizations and securities trading organizations. According to Decree No. 17/2012/ND-CP, enterprises in which listed organizations, issuing organizations and securities trading organizations hold 20% or more of voting rights at the end of the fiscal year must be audited.
Annual financial statements [Clause 3, Article 15]. It can be seen that the result of the audit activity for a JSC that is required to be audited is the audit report. This report is prepared by the auditor, giving his/her opinion based on data and evidence verifying the information in the financial statements according to Vietnamese accounting standards to conclude that the financial statements have honestly reflected the revenue, expenses and financial situation of the company. This is the "closest" source of information confirming the financial status of the JSC to serve as a basis for creditors, investors and partners to judge and establish securities trading transactions.
In addition, Circular No. 121/2012/TT-BTC stipulates that the Supervisory Board has the right to select and propose to the General Meeting of Shareholders to approve an independent auditing organization to audit financial statements [Clause 5, Article 22] and the right to request the participation of an independent auditor in supporting the supervisory activities of the Supervisory Board in public companies [Clause 3, Article 2].
From these regulations, it can be seen that revenue management of JSCs according to the Securities Law marks the important role of independent auditing companies and auditors for public companies, which is recorded in the financial statements after being audited. At the same time, the disclosure of information on audited financial statements is a mandatory condition and a characteristic in revenue management of the type of JSC.
2.2.2. On cost management
Also according to the Securities Law 2006, amended and supplemented in 2010, cost management is clearly shown in capital mobilization from owners and from bond issuance activities. Joint Stock Companies can increase their charter capital by issuing shares through private offering and public offering. Thereby reducing costs and creating conditions for existing shareholders, including managers and executives, to hold shares. Different from the provisions of
The current Enterprise Law, cost management according to international practices as well as the Securities Law show that the interests of investors are guaranteed by legal provisions on conditions for offering, procedures for announcement and the content of the offering information are closely checked and monitored by the State Securities Commission. The information announced at the time of offering is the basis for assessing the financial status as well as the profitability of the investment projects of the joint stock company. The requirement to ensure the accuracy and honesty of data in financial statements is not mentioned in the current Enterprise Law, but for public joint stock companies, this provision is mandatory due to the characteristics of public companies where shareholders fluctuate daily and shareholders cannot understand the business like shareholders in non-public companies. Therefore, the offering to effective shareholders for public companies, especially listed companies, must meet the standards of information transparency and share quality. Specifically, financial statements must be audited to protect investors' right to access accurate and honest information as mentioned in the Securities Law 2006, amended and supplemented in 2010. Only then can investors be protected, market order ensured, and the principles of free transfer of shares and reasonable use of costs to increase profits can be ensured.
2.3. Regulations on profit management in joint stock companies
2.3.1. Determine profit
At point 9, Article 4 of the current Enterprise Law stipulates that dividends (share income) are the net profit paid for each share in cash or other assets from the company's remaining profits after fulfilling financial obligations.
* Forms of dividend payment
Every year, the Board of Directors of a company makes decisions on dividend distribution and the total amount of profit to be distributed to shareholders. There are many forms of
Dividend payment method, can be in cash, in company shares or in other assets as prescribed in the Company Charter [Clause 2, Article 93 of the current Enterprise Law]. But the most common form is to pay dividends in cash. Accordingly, if paid in cash, it must be made in Vietnamese Dong and can be paid by check or postal money order to the permanent address of the shareholder. Or dividends can be paid by bank transfer when the company has enough details about the shareholder's bank to be able to transfer directly to the shareholder's bank account. If the company has transferred money according to the correct details, it will not be responsible for any damage arising from that damage unless the two parties have another agreement.
* Dividend payment process
When the Board of Directors announces a dividend distribution, it must simultaneously prepare a list of shareholders who are entitled to receive dividends, determine the dividend amount paid for each share, and must not exceed 30 days [Clause 3, Article 93 of the current Enterprise Law]. The notice of dividend payment must be sent by registered mail to the registered addresses of all shareholders at least fifteen days before the dividend payment. The notice must clearly state the name of the company; full name, permanent address, nationality, ID card number, passport or other legal personal identification of the individual shareholder; for organizations, the name, permanent address, establishment decision or business registration book of the shareholder; the dividend amount for each share and the total amount of dividends that the shareholder is entitled to receive, the time and method of dividend payment; full name and signature of the Chairman of the Board of Directors and the legal representative of the company.
In case a shareholder transfers his/her shares between the time of completion of the shareholder list and the time of dividend payment, the transferor shall be the person receiving the dividend from the company.