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State financial statements: Reliable information on national finance

09:41 | 10/01/2020

VCN- 2019 is the first year that the State Treasury has developed a nationwide financial statement and will submit it to the National Assembly in May 2020. Could you please tell us what the State Treasury has prepared forthe State financial statements?  

state financial statements reliable information on national finance
Mr. Ta Anh Tuan

Performing the function of State General Accountant and according to the provisions of the Accounting Law 2015, Decree 25/2017/ND-CP dated March 14, 2017 of the Government, 2019 is the first year that the State Treasury has performed the State financial statementfor fiscal year 2018. The entire State Treasury system has focused on preparing the necessary conditions to implement this task.

Regarding the development of legal documents, the formulation of a legal framework for the preparation of State financial statements has been implemented by the Ministry of Finance since the approval of the State General Accounting Scheme and has been basically completed by 2018. Particularly in 2019, the State Treasury has submitted to the Ministry of Finance's leaders to issue official documents detailing the State financial statements to ministries, central agencies and localities.

Specifically,documents guiding units at provincial level 1in localities, central government, units under the Ministry of Finance, specific units such as the Ministry of Public Security, the Ministry of Defense, and the State Bank of Vietnam, Vietnam General Confederation of Labor, Vietnam Social Insurance; professional guidance documents in the State Treasury system on the implementation of the financial statements of 2018, answering a number of problems in the preparation of financial statements of the State Treasury and guidelines for the preparation of the 2018 Cash Flow Report.

Since 2018, the units of the State Treasury have actively built an information system, especially building a professional process to access the financial information supply reports bythe units. The State Treasury also cooperates in testing users and piloting the functions of the system. At the same time, support the information providers and the State Treasury units to deploy the use of the system.

With the efforts of units of the State Treasury agency, from June 10, 2019, the State Treasury system officially operated the function of receiving financial information on the portal of the General Accounting System. After that, until July 22, 2019, it officially operated the function of professional handling and summarizing the State Financial Statements.

What are the difficulties and advantages of the State Treasury when performing the State Financial Statements, sir?

The State Accounting General is a new function of the State Treasury system. Therefore, the work of making State Financial Statement will encounterboth difficulties and advantages.

In terms of advantages, during the implementation process, the State Treasury received close attention and guidance from the Ministry of Finance's leaders and the coordination of related agencies and units. This creates favorable conditions for the State Treasury to complete the plan. In addition, the officers who work on summarizing and preparing the financial statements of the State Treasury system from the Central level (Department of State Accounting) to localities (State Accounting Department) have shown their determination in research and exchange of information to successfully complete the assigned task.

However, the implementation of the first State financial statements of the State Treasury, as well as in Vietnam in recent years, still faces some difficulties. Because it is the first year, both the State Treasury system and external units have no experience and lack of in-depth understanding about the preparation of State Financial Statements. Financial information is also not complete and accurate. For example, in terms of public assets, especially inadequate infrastructure assets, the monitoring of transaction discrimination in the state sector has not been drastic.

Moreover, the preparation time for the implementation is not long, while it is necessary to simultaneously build mechanisms, processes, information systems, training guides, synthesis and preparation of State Audit Reports. The work must also be done in order to ensure compliance with the schedule specified in the Law and Decree.

state financial statements reliable information on national finance

What are your expectations on the role of Vietnam's first State Financial Statements?

The State financial statements summarize and explain the state’s financial situation, the results of state financial activities and cash flow from state financial activities on a national and local scale. The State financial statements reflect the information on the income, expenses and financial performance of the State (state budget and non-state budget). At the same time, it reflects the situation of cash flow including cash inflows and outflows from major activities, investment activities and financial activities of the State.

The preparation and publication of the State Budget Statements enhances the transparency andaccountability of the national financial system and is consistent with international integration practices and trends. The State financial statements play an important role in the economic and financial management of the country, attracting the attention of many users. For each object, there are different views on the information on the State financial statements to make decisions that suit their requirements.

Specifically, with leaders, managers and policymakers, it is one of the tools for analyzing and assessing the current situation and managing all resources, obligations and situation of the use of State resources (public assets, public debt, income and expenses). From there, giving appropriate directions, solutions and decisions to ensure that state assets and resources are invested, allocated and used in the most reasonable, balanced and effective manner for all aspects of the socio-economic life of the country. Not only that, but it also helps to strictly manage the borrowing and maintain the stability and sustainability of the state.

TheState financial statements help people see their obligation to contribute to the State through tax payments; supervise and evaluate the efficiency of the State in the use of tax to perform the State's tasks and ensure the legitimate rights and obligations of the people. At the same time, inspect and supervise other economic and financial activities of the State, especially income (in addition to tax revenues), State expenses, public debt and the management and use of public property.

For international financial institutions, rating agencies, investors and donors, State financial statements are a reliable measure for international financial institutions and rating organizations to assess their capacity and credibility innational finances. This is one of the basic factors that helps investors and donors making investment decisions, supporting localities in particular and the economy in general.

Thank you Sir!

Dr. Nguyen Duc Do, Deputy Director of Economic and Financial Institute, Ministry of Finance: People have the opportunity to supervise

The State financial statements are a new step in the management and administration of the Government, meeting modern management requirements, in accordance with accounting standards and international practices. In the current economic context, it is necessary to have a clean state budget to ensure the efficient operation of the economy, avoiding putting the economy into a debt repayment crisis, causing inflation due to indiscriminate spending, or pushing interest rates to stagnate the economy. Therefore, it is necessary to understand the State's sources of revenue, spending and debt. This requires detailed transparency and requirements in accordance with financial accounting standards issued by international agencies.

Not only that, when information on State assets and currencies is made public, people will pay more attention. Meanwhile, the heads of budget-using agencies will have to be cautious in using their budget. Instead, they have to manage more closely to reduce losses and corruption.

For the State financial statements, the State will have more tools to manage and people have more opportunities to monitor and know the truth about national finance. At the same time, publicizing the financial statements of each locality is also a basis for assessing the competitiveness index of each locality, ensuring transparency and publicity.

According to many economic experts, the State's disclosure of financial statements is a practical need, not only for the people anddomestic business community, but also for foreign investors and international organizations. If such information is provided fully and reliably, it will be easier to attract foreign investment. At the same time, the State will be able to borrow in favorable conditions such as terms, interest rate and loan amount.

PhD. Nguyen Minh Thao, Head of Business Environment and Competitiveness Department, Central Institute of Economic Management and Economics (Ciem): The basis for transparent upgrading

The State financial statements will help international investors better understand the potential of the business market in Vietnam. With official information, investors can grasp the field that the State's allocated capital is focusing on, thereby making the right investment decision. The more transparent the information, the less the risk to investors. For our country, this will be the basis for upgrading the level of transparency in assessing the competitiveness index.

By Thuy Linh/KieuOanh