Regulations on accounting work in case of conversion of type or form of ownership according to Vietnamese law

1. Does an accounting unit that has a converted form of ownership need to inventory assets in accordance with the law?

In Article 40 of the 2015 Accounting Law, the regulations on asset inventory are as follows:

(1) Asset inventory means weighing, measuring, measuring, and counting quantities; confirm and evaluate the quality and value of assets and available capital at the time of inventory to check and compare with data in accounting books.

(2) The accounting unit must inventory assets in the following cases:

– At the end of the annual accounting period;

– The accounting unit is divided, separated, consolidated, merged, dissolved, terminates operations, goes bankrupt or is sold or leased;

– The accounting unit is converted to its type or form of ownership property;

– Occurrence of fire, flood and other unusual damages;

– Reassessment of property according to the decision of a competent state authority;

– Other cases as prescribed by law.

(3) After inventorying assets, the accounting unit must prepare a report summarizing the results of the inventory. In case there is a difference between the actual inventory data and the data recorded in the accounting books, the accounting unit must determine the cause and must reflect the difference and handling results in the accounting books before preparing the financial statements.

(4) The inventory must accurately reflect the actual assets and sources of asset formation. The person who prepares and signs the report summarizing the inventory results must be responsible for the inventory results.

Thus, in case the accounting unit is converted to ownership, it is necessary to conduct an inventory of assets in accordance with the law.

2. How to preserve and store accounting documents?

Pursuant to Article 41 of the Accounting Law 2015, which regulates the preservation and storage of accounting documents as follows:

(1) Accounting documents must be fully and safely preserved by the accounting unit during use and storage.

(2) In case accounting documents are temporarily detained or confiscated, there must be a record attached with a copy of those accounting documents; If accounting documents are lost or destroyed, there must be a record accompanied by a copy of the document or a confirmation.

(3) Accounting documents must be archived within 12 months from the end of the annual accounting period or the end of accounting work.

(4) The legal representative of the accounting unit is responsible for organizing the preservation and storage of accounting documents.

(5) Accounting documents must be archived for the following period:

– At least 05 years for accounting documents used for management and operation of the accounting unit, including accounting documents not directly used to record accounting books and prepare financial reports;

– At least 10 years for accounting documents used directly to record accounting books and prepare financial reports Main documents, accounting books and annual financial statements, unless otherwise prescribed by law;

– Permanently archive historical accounting documents with important economic, security and national defense significance.

(6) The Government specifies each type of accounting document that must be archived, the storage period, and the time to calculate the storage period specified in Clause 5 of this Article. Storage location and procedures for destroying archived accounting documents.

3. How is accounting work in case of ownership conversion?

According to Article 47 of the Accounting Law 2015, accounting work in case of ownership conversion is regulated as follows:

“Article 47. Accounting work in case of conversion of type or form of ownership

1. Accounting unit Accounts converted to type or form of ownership must perform the following tasks:

a) Close accounting books, inventory assets, determine unpaid debts, prepare financial reports;

b) Hand over all assets and unpaid debts, prepare handover records and record accounting books according to the handover minutes;

c) Hand over all assets accounting data for the post-conversion accounting unit.

2. The post-conversion accounting unit, based on the handover record, opens accounting books and records accounting books according to the provisions of this Law.”