At what time of year do state-owned companies close their accounting books? And is it necessary to do so before preparing financial statements?

What is the purpose of closing accounting books in state-owned companies?

According to Clause 7, Article 5 of Circular 107/2017/TT-BTC, the regulations on closing accounting books are as follows: after:

Closing accounting books is the act of adding up books to calculate the total amount arising on the Debit side, the Credit side and the ending balance of each accounting account or the total amount of revenue, expenditure, fund balance, import, export, and inventory.

What procedures do state-owned companies follow to close accounting books?

The procedure for closing accounting books is carried out according to the provisions of Point b, Clause 7, Article 5 of Circular 107/2017/TT-BTC as follows:

(1) For manual bookkeeping:

Step 1: Check and compare before closing accounting books

– At the end of the accounting period, after reflecting all the accounting documents arising during the period in the accounting books, compare the data on the accounting documents (if necessary) with the recorded data, between the data of related accounting books to ensure the correct match between the data on the accounting documents and the recorded data and between the accounting books. Proceed to add up the arising numbers on the General Ledger and detailed accounting books.

– From detailed accounting books and cards, create a detailed summary table for accounts that must be recorded on many books or many book pages.

– Proceed to add up the Debit and Credit amounts of all accounts on the Ledger or Journal – Ledger to ensure the data matches correctly and is equal to the total amount. Then compare the data in the Ledger with the data in the detailed accounting book or detailed summary sheet, between the accountant’s data and the treasurer’s and warehouse keeper’s data. After ensuring the correct match, the accounting books will be closed. In case there is a difference, the cause must be determined and the difference handled until the match is correct.

Step 2: Close the book

– When closing the books, a horizontal line must be drawn under the line recording the last transaction of the accounting period. Then write “Add the numbers arising during the month” below the drawn line;

– Continue writing the line “Ending balance” (month, quarter, year);

– Continue writing the line “Add accumulated arising numbers from previous months” from the beginning of the quarter;

– Continue writing the line “Total accumulated arising numbers from the beginning of the year”;

The line “Ending balance” is calculated as follows:

After calculating the balance of each account, any account with a Debit balance is recorded in the Debit column, and any account with a Credit balance is recorded in the Credit column.

– Finally, draw two consecutive lines to finish closing the book.

– Particularly for some detailed books that have columns for Debit, Credit and “Balance” columns (or import, export, “remaining” or revenue, expenditure, “fund balance”…), the balance column data (remaining or outstanding) is recorded in the “Ending balance” line of the “Balance” column or the “Fund balance” column, or the “Remaining” column.

After closing the accounting books, the bookkeeper must sign below 2 lines, the chief accountant or the person in charge of accounting checking to ensure accuracy and balance will sign for confirmation. Then submit it to the Head of the unit for inspection and approval to confirm the legality of the accounting book closing data.

(2) For computerized bookkeeping:

Setting up the accounting book closing process on accounting software needs to ensure and demonstrate book closing principles in case of manual accounting book recording.

We see that closing accounting books can be done manually or on a computer and must ensure compliance with the provisions of law on procedures for closing accounting books.

Do state-owned companies need to close accounting books before preparing financial reports?

Pursuant to Point a, Clause 7, Article 5 of Circular 107/2017/TT-BTC stipulates the accounting book closing period as follows:

– The cash book must be closed at the end of each day. After closing the books, a comparison must be made between the accountant’s cash book with the cashier’s cash book and the cash in the safe to ensure accuracy and match. On the last day of the month, a cash fund inventory must be prepared. After inventory, the cash fund inventory is saved with the cash accounting book on the last day of the month.

– Bank and treasury deposit books must be closed at the end of the month to compare data with banks and treasury; The data comparison table with the bank and treasury (with confirmation from the bank and treasury) is kept with the monthly bank and treasury deposit book.

– The accounting unit must close the accounting books at the end of the annual accounting period, before preparing financial statements.

– In addition, the accounting unit must close the accounting books in cases of unexpected inventory or other cases as prescribed by law.

Thus, we see that the time to close accounting books according to regulations is at the end of the annual accounting period, before preparing financial statements. Besides, in case there is an unexpected inventory, you are also responsible for closing the accounting books according to regulations.