Financial statement services in Vietnam

In the context of the growing economy and the increase in competition in the market, effective financial management is a key factor in determining the success of businesses. Financial statements are not only a tool to honestly and transparently reflect the financial situation and business results, but also a basis for businesses to come up with appropriate strategies. However, the preparation of financial statements requires accuracy, high expertise and compliance with legal regulations. Therefore, financial statement services have become an effective solution for businesses, especially small and medium-sized enterprises, to optimize time, cost and quality assurance. The following article will analyze the importance of financial statement services and the benefits they bring to businesses.

What are financial statements?

Financial statement is a system of information related to finance in a specific period of time of an enterprise, presented according to accounting norms, regulations, and standards. By doing so, the business will provide information about assets, cash flow, capital, debt, revenue and expenditure,…

Financial statements apply to all fields and types of enterprises in accordance with the provisions of Vietnamese law. All enterprises are obliged to prepare and submit financial statements accurately and on time, in accordance with the provisions of the Law on accounting and statistics.

What does the financial statement consist of?

Income Statement

The income statement presents a summary of the business’s revenue, assets, and profits over a specific period. This report is the most scrutinized of the various reports, because it shows the financial performance of an entity. Income statements are presented in a certain order, from general to detailed, making it easy for readers to grasp the financial situation of the business.

Balance sheet

The balance sheet presents an overview of the assets, liabilities, and equity of shareholders in a business on a particular date. It can be used to check the liquidity of the business. The balance sheet is divided into two parts:

• The assets section includes everything the business owns, including current assets and fixed assets.
• The liabilities and equity section includes all that the business owes and what is owned by the business owner.

Cash Flow Statement

The Cash Flow Statement presents a comprehensive view of a business’s cash flows related to operations, finances, and investments during an accounting period, which is divided into three main activities:

• Business activities: Reflect cash inflows and cash outflows related to production and business activities of the enterprise, such as collection of sales and service provision, purchase expenses, salary payments, and rent payments,…
• Investment activities: Reflect cash inflows and cash outflows related to the purchase and sale and liquidation of fixed assets, investment in subsidiaries,…
• Financial activities: Reflect cash inflows and cash outflows related to borrowing, debt repayment, and stock issuance,…

Explanation of financial statements

This is an item that is directly attached to the financial statements, analyzing the data and information presented in the above 3 reports. The explanatory notes to financial statements that are narrative of information according to accounting regulations and standards need to be presented truthfully, showing the information and basis for making the selected financial statements and accounting policies,…

Reporting of business results

An income statement (also known as an income statement, profit and loss statement) is a financial statement that reflects the business situation and results of an enterprise in a specific accounting period. This report provides information on the revenue, expenses, profit and loss of the enterprise, helping managers, investors, and stakeholders assess the business situation of the enterprise.

Equity Change Report

The equity change report shows the change in equity in a given period in the most concise and specific way. Accordingly, equity can increase or decrease: Increase arising from owner’s investment and net profit increase in the period, Decrease due to owner’s withdrawal of capital or from net loss in the period.

The Equity Change Report provides information about changes in the equity of the enterprise during the period, thereby helping users of financial statements to better understand the origin of equity and the financial situation of the business.

Purpose of financial statements

According to Article 97 of Circular 200/2014/TT-BTC, the objectives of financial statements include:

• Providing information on the financial, business and cash flow situation of enterprises, meeting the management requirements of enterprise owners, State agencies as well as the useful needs of users in making economic decisions. Financial statements must also provide information on assets, liabilities, equity, revenue, production and business expenses, profits and losses, and distribution of business results,…
• Provide other relevant information in the “Explanation to the Financial Statements” for the purpose of further explaining the indicators reflected in the general financial statements, the applied accounting policies in order to record arising economic operations, prepare and present financial statements.

Who must file financial statements?

When preparing financial statements, accountants must clearly determine which accounting regime their business belongs to so that they can apply accurate financial statements accurately, avoiding possible errors.

Pursuant to the provisions of current Vietnamese law, the accounting regime for micro-enterprises will be applied according to Circular 132/2018/TT-BTC or Circular 133/2016/TT-BTC; while the accounting regime for small and medium-sized enterprises will be applied according to Circular 133/2016/TT-BTC.

In which:

• Micro-sized enterprises are defined as enterprises that pay corporate income tax according to the method of calculation on taxable income and the method according to the percentage of turnover from the sale of goods and services.
• Small and medium-sized enterprises (including micro-sized enterprises) are defined as enterprises in all fields and all economic sectors in accordance with the law on support for small and medium-sized enterprises, except for State enterprises, enterprises owned by the State with more than 50% of charter capital, public companies in accordance with the law on securities, cooperatives and unions of cooperatives in accordance with the provisions of the Law on Cooperatives.

Thus, the declaration and submission of financial statements of enterprises must comply with the following regulations:

• Micro, small or medium-sized enterprises can apply to submit annual financial statements according to Circular 133/2016/TT-BTC.
• Particularly for large enterprises, the submission of annual financial statements will be applied according to Circular 200/2014/TT-BTC.

Regulations on penalties for late submission of financial statements

According to the provisions of Decree 41/2018/ND-CP on the penalty for late submission of financial statements, it will be calculated based on the number of days overdue compared to the official submission deadline, specifically as follows:

• Late submission and publicity of financial statements for less than 03 months compared to the prescribed time limit, Failure to declare financial statements for less than 03 months compared to the prescribed time limit, Accounting improperly according to regulations on accounting accounts: 5,000,000 – 10,000,000 VND.
• Declaring and reporting financial statements with incomplete contents as prescribed, Delaying the submission of financial statements to state agencies for 03 months or more compared to the prescribed time limit, Failing to attach audit reports when submitting financial statements and when disclosing financial statements (for cases required by law to be audited): 10,000,000 – 20,000,000 VND.
• Disclosure of untruthful financial statements, provision and publication of financial statements with inconsistent data in an accounting period: 20,000,000 – 30,000,000 VND.
• Failure to submit financial statements (FS) to competent state agencies: 40,000,000 – 50,000,000 VND

Benefits of using year-end financial statement services in Viet An Law

If your business is experiencing fluctuations in terms of accounting personnel at the end of the year, has a small and medium-sized production and business scale, directors and accounting departments do not have experience in preparing financial statements and explaining data to the tax authorities, the year-end financial statement service from Viet An tax agent is a choice that you should consider. When using the service, customers will gain the following significant benefits:

• Cost-effective savings: Significant salary costs are saved when hiring an accounting department.
• Optimize CIT costs: Viet An tax agent will be responsible for advising businesses when preparing financial statements in the most profitable way.
• Ensure reports are submitted on time: Viet An’s tax agent will be responsible for ensuring the progress of submitting financial statements and is responsible for all data that Viet An implements.
• Data on the books is guaranteed to be accurate: With a team of experienced accountants, Viet An tax agent ensures that accounting data will be processed and presented correctly.

What documents do businesses need to provide when using year-end financial statement services?

Customers who wish to use the year-end financial statement service of Viet An tax agent need to provide the following data items:

• Output and input VAT invoices used for tax declaration in the fiscal year.
• Contracts and invoices for sale of goods and services;
• Invoices of enterprises that have been wrongly issued, canceled or recovered in the declaration period;
• Contracts that have collected and paid money but have not yet issued invoices or received invoices in the declaration period.
• Vouchers of payment of charges, fees and other documents exclusive of VAT;
• The payroll and CCCD information of each person serve as a basis for PIT finalization.
• Documents of social insurance payment for employees;
• Bank account statements for 12 months in the financial year.
• The balance sheet of the previous year serves as a basis for declaring the balance at the beginning of this year.
• Loan and debt repayment documents arising in the declaration period;
• Confirm year-end debts with suppliers and customers.

Tasks of Viet An Tax Agent when receiving year-end financial statement services

• Collect invoices and vouchers from previous years (if necessary) from the enterprise.
• Collect about the circular applied when preparing financial statements as well as the method of depreciation of fixed assets being implemented.
• Review the submitted VAT returns, make additional declarations and adjust them (if any).
• Review documents and books, classify what are reasonable costs/unreasonable costs.
• Preparation of CCDC allocation tables, prepaid costs.
• Check salary costs, salaries on which social insurance premiums are paid and the number of employees participating in social insurance contributions according to C12. Advising businesses on taxable and non-taxable allowances to optimize costs for businesses.
• Accounting for output and input invoices, reviewing debts on separate accounting software.
• Discuss with businesses about receivables, payables, interest expenses and related transactions (if any).
• Responsible for accounting bank deposits in accordance with the bank’s sub-books.
• Advise and distinguish the expenses that will be excluded in the finalization.
• Carrying forward at the end of the period, as a basis for completing the set of financial statements.
• Print books and arrange documents to be transferred to customers.

Commitment to work responsibilities

Comply with the law and ensure progress

Viet An Tax Agent is committed to making financial statements for customers in accordance with accounting laws, minimizing risks for businesses and ensuring the timely submission of financial statements to the tax authority.

Be responsible for the numbers on the report

Viet An tax agent will be responsible for accounting to the tax authorities for the financial statements that we are in charge of when requested.

Financial consulting and optimization for businesses

In addition to the responsibility of making reports based on available data, Viet An tax agent will advise businesses to minimize risks as well as present financial statements in a way that is beneficial for businesses to use for the purpose of borrowing capital or bidding.

The above is Viet An Law’s advice on financial reporting services. If you have any related questions or need support, please contact Viet An Law for the best support!