Organizing internal control system in budget units under the Ministry of National Defense

In accordance with the military characteristics, the Financial Work Regulations of the Vietnam People's Army allow: In case the commander issues an order that is not in accordance with the regulations, principles, and financial regimes, the financial agency must report to the commander. If the commander still issues the order, the person in charge of the financial agency must carry it out and at the same time report to the higher-level financial agency for resolution. This is different from the relationship between the head and the chief accountant in an administrative unit. This difference greatly affects the control activities. If the commander abuses it, uses orders instead of legal bases and scientific bases to make financial decisions, it is very easy to encounter risks, leading to violations.

In addition, in the budget units under the Ministry of National Defense, emulation movements such as : "logistics sector follows Uncle Ho's teachings"; "Building a good financial management unit"; "The campaign to keep well, use durably, safely and economically" are regularly maintained as factors that positively impact control activities. Because, in the process of maintaining the movements, the steering committees and judges must regularly monitor and evaluate the results to score the emulation, so it is also possible to control the management and use of budgets and assets between units and departments.

2.2.2. Accounting information system

Budget units under the Ministry of National Defense apply the Accounting Regime for Military Budget Units according to Decision 1754/QD-CTC dated July 17, 2006 of the Finance Department. This Accounting Regime is based on the Administrative Accounting Regime issued under Decision 19/2006/QD-BTC dated March 30, 2006 of the Ministry of Finance, with adjustments to suit the characteristics of military budget units. The general situation of the accounting information system is summarized in Table 2.8.

The specific situation on each element of the accounting information system is as follows:

The Accounting Document System includes: 25 documents according to the State Administrative Accounting Regime; 15 documents issued within the Army and 26 documents in other legal documents. Of those documents, only 10 are mandatory forms, the rest are guidance forms. This is a new point compared to the previous Accounting Regime, ensuring consistency but also being suitable for the reality of the unit. ( List of accounting documents is recorded in Appendix III). With the issued list of accounting documents, most units apply it sufficiently to record economic transactions arising in the unit, only a few units with special activities must request the Finance Department to apply forms outside the list.

Table 2.8: Investigation results on the accounting system of budget units under the Ministry of National Defense

STT

Question content about accounting information system	Have	Are not	Don't know	No reply
1	Does the unit apply the military budget unit accounting regime according to Decision 1754/QD-CTC dated July 17, 2006? Are not?	15
2	The system of documents issued in Decision 1754/QD-CTC dated July 17, 2006 is sufficient to reflect all economic transactions arising in the unit?	13	2
3	The unit has a document specifying the assignment of individual responsibilities. personnel in the preparation of documents?		15
4	The unit has regulations and instructions for the use of various types of equipment. voucher form?		15
5	The unit has established a circulation and processing procedure. What are the main types of documents?		15
6	The unit has regulations on where to keep accounting documents and vouchers. math?	11	4
7	Does the accounting system prescribed in Decision 1754/QD-CTC dated July 17, 2006 fully reflect all accounting objects in the unit?	15
8	Does the unit open additional level 2 and level 3 accounts?	9	6
9	Does the unit implement fixed asset accounting on the books? accounting books?		15
10	Is there a need for additional regulations or guidelines? lead?	15
11	Should the management regime of artifacts be changed according to Decision No. Decree 1812/QD-BQP dated December 18, 2002?	6	8		1
12	The unit applies computerized accounting, using use software installed by the Department of Finance?	15
13	Does the unit regularly compare data between accounting books? General ledger and detailed ledger?	15
14	Does the unit regularly compare fund balance and inventory figures with reality? balances with the treasury, bank?	11	2	1	1
15	Does the unit print accounting books every month?	15
16	Is the financial reporting system prescribed in Decision 1754/QD-CTC dated July 17, 2006 consistent with the provide information as required by management?	8	2	5
17	Are financial statements important and necessary for the sole purpose of unit commander?	9	1	5
18	Financial statements are important and very necessary for the organization. superior financial authority?	15
19	The unit has regulations on the time of preparation and place of receipt of the documents. What kind of reports do subordinates send?	14	1

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Source: Compiled from survey documents conducted by the Author (Appendix V)

Units directly apply the regulations of the Department of Finance on the purpose, method of preparation and responsibility for recording each type of document to prepare documents arising in the unit, do not issue documents assigning and regulating the responsibilities of each department and individual in preparing documents, do not have specific regulations guiding the use of document forms in the unit, and do not develop a process for circulating and processing main types of documents. The checking and processing of documents is carried out not only in the accounting department but also in other departments (the accounting department checks the procedures for allocating funds, the conditions for budget expenditures and checks all documents transferred by other departments; the agency budget department checks the settlement records of budget expenditures of the professional sectors; the basic construction department checks the settlement records of basic construction works; the unit management department checks the settlement reports of subordinate units; the enterprise management department checks the product payment records of factories). The contents of the checking of accounting documents include: checking the clarity, honesty and completeness of the indicators and elements recorded on the accounting documents; checking the legality and validity of the arising economic and financial activities recorded in the accounting documents; checking the accuracy of data and information on the accounting documents; checking the management, circulation and approval of accounting documents. Through inspection, if violations of policies, regulations, and rules are detected, they will be resolved in two ways: In case of missing elements or incorrect calculations in the voucher, the necessary completion work will be carried out. If there are missing elements, depending on the nature of the incident, they can be corrected or supplemented. If the content of the incident or the amount of the voucher is incorrect, it cannot be corrected but the issuing agency must be required to re-issue it. In case the voucher is over-budgeted, incorrect in content, or violates the regime, standards, and policies issued by the State or the Army, it must be reported to the unit commander or the superior financial agency for handling. In case of lost vouchers, the person in charge of expenditure must make a report on the reason for the loss of the voucher, have a personal commitment about the loss, and make a declaration stating the amount spent, with the signature of the direct supervisor (before authentication, it must be compared with the purchased items or compared with the warehouse receipt). The accounting department is the final place to process accounting documents, but some documents are transferred in the form of summary documents or notices prepared by other departments (without original documents), so after processing, the accounting department only stores the summary documents, while some original records are stored in other departments.

The Accounting Account System includes: 48 accounts, divided into 6 types of double-entry accounts and type 0 (off-balance sheet accounts) including 8 single-entry accounts. Of which, the finance department uses 35 accounts, divisions and equivalent use 37 accounts, regimental level and equivalent use 36 accounts, battalion level use 11 accounts, company level and equivalent use 10 accounts. (Details of accounts applied at each level are reflected in Appendix IV).

With the issued accounting system, most units use it enough to reflect the existing accounting objects, only some units with special characteristics need to add some level 2 detailed accounts to match the accounting objects in the unit. The survey results also show that no unit has organized fixed asset accounting in accounting books, all units believe that, in order to account for fixed assets (TSTC) in the units, the Ministry of National Defense needs to have a document with detailed instructions on how to classify fixed assets and the asset management hierarchy. All units correctly implement the accounting cycle of physical assets after settlement, but believe that the current accounting regulations are inappropriate, because they do not reflect the true nature of the arising economic activities, are ineffective in management, and cause difficulties in data reconciliation. Most units do not have a document regulating the application of a unified accounting system for each level. The choice of accounts is completely given to the subordinate units. Only a few units at the battalion level with large budget expenditures have a document allowing the application of an accounting system at the regimental level.

The accounting system includes two types: general accounting books and detailed accounting books. The general accounting book has only one type of book, "Journal - Ledger", used to record and reflect the economic and financial activities of the unit in chronological order and systematically. The structure of the "Journal - Ledger" form includes two parts: The Journal part reflects the content bases of economic transactions arising in chronological order; The Ledger part reflects the amount of economic transactions arising in the accounting account according to the corresponding relationship. Detailed books include: unit detailed books and account detailed books opened according to the management requirements of each unit. (Details of types of accounting books are recorded in Appendix V). Most units are applying the Journal - Ledger form using accounting software designed and installed by the Department of Finance - Ministry of National Defense. Specifically: 100% of level II and level III budget units have implemented computerized accounting and used it consistently. Particularly, level IV and equivalent budget units have about 90% of units implementing computerized accounting, 10% of units still record manually, company, battalion and equivalent levels have about 25% of units implementing computerized accounting, 75% of units record manually. The sequence of bookkeeping in this form can be summarized in Diagrams 2.8 and 2.9.

Summary table, details

Summary table of accounting documents of the same type

Cash book

Accounting documents

General ledger journal

Detailed accounting books and cards

Financial report

Daily recording Diagram 2.8: Accounting sequence according to

End of month recording

Compare month-end figures

Journal - Ledger Form

(Manual recording)

Accounting documents

ACCOUNTING SOFTWARE

Summary of accounting documents

Financial report

Accounting books

- General ledger

- Detailed ledger

Computer

Daily data entry Diagram 2.9. Accounting sequence

Print month-end reports in Journal - Ledger format

Data synthesis (Units using software)

Units using computerized accounting close the books, print the books, compare the data between the general ledger and the detailed ledger every month, complete administrative procedures and archive them. Only a few units print detailed ledgers quarterly. Every month, units check the funds and compare the balance with the treasury, but most do not process the actual surplus funds (due to the presence of small change during the distribution process). A few units do not carry out the procedure to verify the treasury balance.

The Accounting Reporting System includes monthly reports, quarterly reports, and annual reports, which are prescribed for each level. There are 21 types of financial reports for the finance department, 19 types for the division level, 18 types for the regiment level, and 2 types for the battalion and company levels (details of financial reports are in Appendix VI). Most of the surveyed units believe that the current financial reporting system is relatively suitable for the information provision requirements for financial management of the superior financial agency. All units have specific regulations and strictly comply with the time limit for submitting each type of report. However, most units believe that accounting reports (Balance Sheet and detailed balances of Accounts 312, 311, 331) only meet the need to provide information to the superior financial agency on the status of allocation, settlement of expenses, financial management, and assets of subordinate units. It is not suitable for providing information to the unit commander to direct and manage the budget. In reality, the commander needs timely information on the total budget, the amount spent, the amount settled, the amount spent but not settled for each type of budget, of each agency, unit, and the capital fund revenue and expenditure situation. These figures are only available when preparing quarterly business budget settlement reports, so accounting reports do not meet the need to provide timely information. Moreover, the commander is not equipped with the knowledge of finance and accounting to read, understand, and analyze the figures on the balance sheet. On the other hand, units do not make payment for operational expenses after the expenditure is completed (usually paid quarterly), some expenditures are still reflected in the balance of account 312 but have actually been completed, if only looking at the balance of account 312 to assess the budget settlement situation, it is not really accurate.

2.2.3. Control procedures

The internal audit procedures applied in budget units under the Ministry of National Defense must be developed on the basis of the State Budget Law, the Accounting Law, the State Audit Law and a number of regulations of the Government and ministries and functional branches, while thoroughly implementing the principles of assignment, division of tasks; authorization, approval and non-concurrent holding of positions. Based on the State's financial management regulations, the Ministry of National Defense has issued the Charter on Financial Work of the Vietnam People's Army, which stipulates financial management, including: Management of accounts

salary, allowances, subsidies, food allowances; management of professional expenses; management of construction investment capital; management of corporate finance; price management; management of production activities, economic activities and other revenues in the budget unit; management of local budget for national defense; management of social insurance fund; management of unit funds; management of cash and other assets in the unit. The Financial Work Regulations of the Vietnam People's Army are the foundation for units to design control procedures to apply in the unit and are shown in Table 2.6.

Table 2.9: Investigation results on control procedures of budget units under the Ministry of National Defense

STT

Question content about control procedures	Have	Are not	Don't know	No reply
1	The unit has a leadership charter of the Party Committee for the work. financial cooperation?	15
2	The unit command has a document assigning work. in the unit command?	15
3	Agencies and units with written assignment of work for departments and individuals?	6	8	1
4	Agencies and units have established working regulations. Are not?	9	5		1
5	Does each individual have a job description?		15
6	Does the unit have financial management regulations?		15
7	Does the unit have regulations on managing construction investment capital?	11	4
8	Unit has regulations on importing and purchasing international goods. room?	7	5	1	2
9	Does the unit have economic production regulations?	6	5	2	2
10	Does the unit have regulations on the use of fund capital?	15
11	Unit with written authorization to sign and approve the contents related to spending, budget use?	11	4
12	The unit commander has written authorization for the head. Does the finance department sign the transaction account with the treasury, and some other content?	15

Source: Compiled from survey documents conducted by the Author (Appendix V)

The investigation results show that all units have a leadership regulation of the Party Committee on financial work, a document assigning work to the unit command board, a regulation on the use of the unit's capital fund, a document authorizing the head of the finance department (office) to sign the account holder to transact with the treasury and bank, and a document authorizing the signing of some other contents, such as receipts, payments, settlement confirmations, budget notifications, but not in writing. For large-scale units, the commander often has a document authorizing

Deputy Chief of Staff and Chief of Departments are allowed to sign contracts and advance payment papers.

Money, documents for settlement of expenses using the unit's seal, small-scale units only have the scope of authorization up to the deputy level. For functional departments, only a few departments have working regulations, documents assigning work to departments and individuals, the remaining more than half of the departments do not have documents assigning work to departments and individuals. The departments do not have individual job descriptions. All units do not develop internal financial management regulations, some units have developed regulations on capital management for basic construction investment, defense procurement, production regulations, and economic activities.

The establishment of internal control procedures basically complies with the principles: assignment, division of tasks; authorization, approval and non-examination. Specifically:

With the principle of division of labor and assignment of tasks

First of all, in the Party Committee's Leadership Regulations on financial work, this is considered the main principle in the process of managing and operating the budget and assets of unit leaders and commanders. The Regulations define:

Financial work is under the direct leadership of Party committees at all levels: implemented according to the principle of collective leadership, assigning individual responsibilities. Unit commanders and financial agencies at all levels must absolutely obey the leadership of their Party committees, be subject to supervision of financial management and use by competent authorities; strictly comply with financial principles, and advise Party committees on financial leadership. [35, p.10].

The leadership regulations of the Party Committee on financial work in units have fully implemented the principles of assignment and division of tasks, in which the responsibilities of Party Committees at all levels are defined as:

Lead the work of making, implementing the annual budget estimates and finalizing the budget; approve the revenue and expenditure contents from the unit's revenue sources; decide on policies and directions for using the State and Military budgets to ensure tasks; plan, train, arrange and use the financial staff in the units; every 6 months, the Party Committee directly listens to the commander report on the financial management and use of the unit. [35, p.14].

Leadership content includes:

Educate and thoroughly educate cadres and soldiers to strictly comply with the Party's guidelines and policies, the State's laws, and the Army's regulations.

Organizing internal control system in budget units under the Ministry of National Defense - 13

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