What does the year-end financial statement dossier include in Vietnam?

The year-end financial statement is an important document that comprehensively reflects the financial situation and business results of the enterprise after one year of operation. This is not only a basis for businesses to self-evaluate their operational performance but also serves tax authorities, investors and stakeholders in making decisions. However, many businesses still do not know what the year-end financial statement dossier needs to include and what regulations are prepared. Viet An Tax Agent will fully present the components of the year-end financial statement dossier according to current Vietnamese law.

What are financial statements?

Financial statements are not only a tool for synthesizing accounting information, but also an important means to help transmit financial status, profitability and operational efficiency of businesses to important subjects such as business owners, investors, tax authorities, etc  banks and authorities.

According to current regulations, all enterprises of all industries and economic sectors are responsible for preparing and presenting year-end financial statements. For parent companies or corporations with affiliated units, in addition to individual financial statements, they must also make consolidated financial statements at the end of the accounting period to reflect the consolidated financial situation of the whole system.

In particular, state-owned enterprises and enterprises listed on the stock market, in addition to annual financial statements, are also required to prepare additional mid-year financial statements with full content as prescribed, in order to ensure transparency and provide timely information to relevant parties.

Who uses financial statements?

Financial statements are an important source of information for many different audiences, which can be divided into two main groups:

• Audience within the business: Includes business owners and management teams. They use financial statements to capture the company’s financial health, performance, profitability, and financial soundness. Through this, the management has a basis to make strategic decisions, develop orientations and optimize business activities to add value to the business.
• Groups of people outside the enterprise:
  • Investors: Rely on financial statements to assess profitability, risk level, and growth potential, thereby making investment, holding, and divestment decisions.
  • Providers and credit institutions: Pay attention to the solvency and financial stability of the business to decide whether to extend credit, continue to lend, or accept late payment conditions
  • Authorities: Use financial statements to check the level of compliance with the law, determine tax obligations (such as corporate income tax, value-added tax), and monitor the financial activities of the enterprise.
  • Auditor: Assesses the truthfulness and reasonableness of the information in the financial statements, in order to ensure that the reports accurately reflect the financial situation and comply with current accounting standards.

The role of financial statements in Vietnam

The role of financial statements in Vietnam

Financial statements play an essential role in the governance and sustainable development of the business. Some important roles can be mentioned as follows:

• Basis for strategic decision-making: Financial reporting provides managers with a comprehensive view of the current financial situation, thereby detecting trends, potential risks, and development opportunities early. As a result, businesses can make timely and accurate economic decisions, improving operational efficiency and competitiveness
• Effective debt and asset management: Through the analysis of financial fears related to assets, liabilities and equity, financial reporting helps businesses control the debt situation, balance cash flow and limit future financial risks
• Tax support: A clear and accurate financial reporting system will help businesses perform their tax obligations transparently, avoid errors, minimize the risk of being inspected and sanctioned, and save time and costs in the process of tax declaration and finalization.
• Ensuring compliance with the law: The preparation and publication of periodic financial statements is a mandatory requirement as required by law. Fully complying with these regulations not only helps businesses avoid administrative violations but also shows professionalism and responsibility in financial management.
• Enhance transparency and build trust: Financial reporting is an important tool to help investors, partners, credit institutions and customers assess the reliability and growth potential of businesses. The disclosure of transparent financial information will contribute to building reputation, improving image and attracting investment resources from outside.

Annual financial statement dossier for enterprises in Vietnam

According to the provisions of Clause 1, Article 100 of Circular 200/2014/TT-BTC issued by the Ministry of Finance, the annual financial statement dossier that the enterprise needs to make includes the following forms:

Annual financial statement dossier for enterprises in Vietnam

These are mandatory documents, comprehensively reflecting the financial situation, business results and cash flow of the enterprise in a fiscal year, and helping stakeholders evaluate the operational efficiency and development ability of the enterprise.

Annual financial statement dossier for small and medium-sized enterprises in Vietnam

According to the provisions of Article 71 of Circular 133/2016/TT-BTC, the annual financial statement dossier applicable to small and medium-sized enterprises is divided into three main groups, depending on the size and ability to meet the assumption of continuous operation

• For small and medium-sized enterprises that meet the assumption of continuous operation, the dossier includes the required reports:
  • Report on financial situation (Form No. B01a – DNN or choose Form No. B01b – DNN depending on management characteristics
  • Report on business results (Form No. B02 – DNN)
  • Explanatory to the financial statements (Form No. B09 – DNN)

In addition, when submitting financial statements to tax authorities, enterprises need to make additional balance sheets (Form No. F01 – DNN). In addition, the Cash Flow Statement (Form No. B03 – DNN) is not mandatory but is encouraged to be prepared to enhance financial transparency

• For small and medium-sized enterprises that do not meet the assumption of continuous operation, the annual financial statement dossier includes:
  • Report on financial situation (Form No. B01 – DNNKTL)
  • Report on business results (Form No. B01 – DNNKLT)

The cash flow statement (Form No. B03 – DNN) continues to be an optional but recommended report.

• For micro-enterprises, the compulsory annual financial reporting system includes:
  • Report on financial situation (Form No. B01 – DNSN)
  • Report on business results (Form No. B02 – DNSN)
  • Explanation of financial statements (Form No. B09 – DNSN)

The classification and flexibility in choosing forms according to each group of businesses helps to ensure suitability for the size and capacity of accounting, while still meeting the reporting and financial management requirements in accordance with the law.

If you have any difficulties or questions related to financial statements, please contact Viet An Tax Agent for the most specific advice.