APPENDIX NO.02

VIETNAM PUBLIC ACCOUNTING STANDARD NO.02 STATEMENTS OF CASH FLOWS (Attached to Decision No. 1676/QD-BTC dated September 01, 09 of the Ministry of Finance)

INTRODUCTION

Vietnam's public accounting standards system has been researched and developed by the Public Accounting Standards Board of the Ministry of Finance to ensure compliance with international accounting practices and conditions. reality of Vietnam. Vietnamese public accounting standards have the same standard symbols as the corresponding international public accounting standards.

Vietnam Public Accounting Standard (VPSAS) No. 02 "Statements of cash flows" Drafted based on International Public Accounting Standard (IPSAS) No "Statements of cash flows" and current regulations on Vietnam's financial and budgetary mechanism. Vietnam Public Accounting Standard No. 02 stipulates the contents consistent with the current legal regulations of Vietnam and the regulations that are expected to be amended and supplemented in the near future. Vietnam Public Accounting Standard No. 2 does not stipulate that the contents of International Public Accounting Standard No. 2 are not suitable for the long-term financial and budgetary mechanism, the addition of regulations will be made on the basis of according to the actual situation in each appropriate period.

The International Public Accounting Standard No. 2 is based on the 2000 edition, revised to be consistent with other international public accounting standards as of December 31, 12, by the Accounting Standards Board. International Public Accounting (IPSASB) promulgated.

Vietnam Public Accounting Standard No. 02 denotes the ordinal number of paragraphs compared to international public accounting standards. For comparison, the reference table of paragraph symbols of Vietnamese public accounting standards compared with the notation of international public accounting standards paragraphs is included with this standard. For matters related to other public accounting standards, Vietnam Public Accounting Standard No. 02 quoted by symbol and name of relevant Vietnamese public accounting standards has been promulgated. For standards that have not been issued, this standard only mentions the name of the standard or related content to be referenced, not the number of the relevant standard as in the international public accounting standard No. 2. Specific citation of the symbol and the standard name will be made after the relevant standards are issued.

By the time of promulgation of Vietnam Public Accounting Standard No. 02 (in 2021), relevant standards that have not been promulgated include:

VPSAS 02 – CASH FLOW REPORT

The process of promulgating and updating Vietnamese public accounting standards No. 02(hereinafter referred to as the Standard)

The version of Vietnamese public accounting standards No. 02 was first issued under Decision No. 1676/QD-BTC dated September 01, 09 of the Minister of Finance.

This Standard takes effect from September 01, 09, and will be applied from September 2021, 01.

Commonly valid standards include:

– Vietnamese Public Accounting Standard No. 01: Presentation of financial statements;

– Vietnamese Public Accounting Standard No. 12: Inventory;

– Vietnam Public Accounting Standard No. 12: Real estate, plant and equipment;

– Vietnamese Public Accounting Standard No. 31: Intangible assets.

VPSAS 02 – CASH FLOW REPORT

CONTENT

The text of Vietnamese Public Accounting Standard No. 02 “Statement of Cash Flows” is presented in paragraphs 1 to 54. All paragraphs are equal.

I. GENERAL PROVISIONS

Purpose

1. The purpose of this standard is to guide the provision of information about an entity's past movements in cash and cash equivalents by means of a statement of cash flows, in which cash flows for the period are reported. divided into regular activities, investing activities and financing activities. To this end, this Standard determines: cash inflows, cash outflows during the reporting period and the cash balance at the reporting date. Information about an entity's cash flows is useful for providing users of the financial statements with information for accountability decision-making purposes. Cash flow information allows users of financial statements to evaluate how an entity generates money for its operations and how it uses that money. Users of financial statements need an understanding of the timing and certainty of cash flows for making decisions and evaluating decisions about resource allocation and sustainability. .

Limit

2. An entity shall prepare a statement of cash flows in accordance with the requirements of this Standard and shall present the statement of cash flows as a separate statement of the financial statements for each financial reporting period.

3. Cash flow information may be useful to users of an entity's financial statements for: assessing the entity's cash flows; assess the entity's compliance with laws and financial regulations, internal spending regulations (including approved budgets), decide whether to provide resources or enter into transactions with the entity or not. In general, users of the report are interested in how an entity generates and uses cash and cash equivalents regardless of the nature of its operations. Whether the units are administrative or non-business units, they need money for the same basic reasons, although their primary revenue-generating activities differ. Units need money to pay for consumed goods and services, pay employees, pay debts, and pay for other operations. Therefore, this standard requires all entities to present the statement of cash flows as a separate statement of the financial statements.

Benefits of cash flow information

4. An entity's cash flow information is useful for helping users of financial statements make predictions about: the entity's cash needs, future cash-generating capabilities, and ability financing changes in the functions, missions, and operations of the entity. The statement of cash flows also provides information to the accountable entity about the cash inflows and outflows during the reporting period.

5. The statement of cash flows, when used in conjunction with other financial statements, provides information that enables users of the report to assess changes in an entity's net assets/equity. entity, its financial structure (including liquidity and solvency), and its ability to influence the size and timing of its cash flows to meet operating requirements. of the unit. The cash flow statement also enhances the comparability of the income statements of different entities because it eliminates the effect of using different accounting methods for the same type of transaction and events (if any).

6. Information on past cash flows is often used as an indicator of the size, timing, and certainty of future cash flows. This information is also useful for testing the accuracy of previous predictions about future cash flows.

Define

7. The terms used in this standard have the following meanings:

Investment activities are activities of purchasing, liquidating and transferring long-term assets and other investments, which are not included in cash equivalents.

Financing activities are activities that cause a change in the size and structure of the owner's equity and debt capital of the entity.

Routine activities are activities that are not investing or financing activities.

Control is the control of another entity by an entity when it is responsible for, risks or benefits from participating in another entity, having the ability to influence the activities, nature or size of the entity. of the benefits obtained through its control over another entity.

Cash flow is the inflow and outflow of cash and cash equivalents.

The reporting date is the last day of the reporting period for which the financial statements are prepared.

Cash includes cash on hand and demand deposits.

Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash and that are subject to an insignificant risk of change in value.

Terms defined in other Vietnamese Public Accounting Standards as used in this Standard have the same meanings as in those Standards.

Cash and cash equivalents

8. Cash equivalents are held for the purpose of meeting short-term payment needs rather than for investment or other purposes. An investment is classified as cash equivalent when it can be easily converted into a known amount of cash and there is little risk of changes in value. As a result, an investment is generally classified as cash equivalent only when it has a short maturity, i.e. no more than 3 months from the date of investment. Investments in other entities are not considered cash equivalents unless they are cash equivalent in nature.

9. Bank loans are generally classified under financial activities. Overdrafts (if any) are considered components of cash and cash equivalents.

10. Internal transfers between an entity's cash and cash equivalents are not considered cash flows, as they are part of the entity's cash management activities and not part of its normal operations. investment activities and financing activities. Cash management activities include investing idle cash in cash equivalents.

Economic unit

11. The term “economic entity” is used in this Standard to refer to a collection that includes a controlling entity and all of its controlled entities for financial reporting purposes. .

12. Other terms that can be used interchangeably to refer to an economic unit are “consolidated unit”, “superior accounting unit” and “level I estimate unit”.

13. An economic unit may include units operating for social purposes according to assigned functions, tasks and commercial purposes. For example, the Ministry may include state administrative units that only use the state budget operating according to their assigned functions and tasks, and also public non-business units that both perform assigned tasks and carry out activities at the same time. provide services in accordance with the law.

Future economic benefit or potential service

14. Assets are means for units to perform activities according to their functions and tasks. Assets that are used to directly generate cash inflows are generally considered “future economic benefits”. Assets that are used to provide goods or services that are suitable for the entity's operational purposes but do not directly generate cash inflows are generally considered "potential services". To cover the entire intended use of the asset, this standard uses the term “future economic benefit or potential service” to fully describe the basic characteristics of the asset.

Net assets/equity

15. Net assets/equity is the term used in this Standard to refer to the residual value of assets in the statement of financial position after deducting all liabilities. Net assets/equity can be positive or negative. Other terms may be used interchangeably with the terms net assets/equity, provided that such terms have a clear meaning (e.g. net assets).

II. SPECIFIED

Present the statement of cash flows

16. The statement of cash flows must present the cash flows for the period classified by regular activities, investing activities and financing activities.

17. An entity must present its cash flows from continuing operations, investing activities and financing activities in a manner that is most appropriate to its operations. Classification by activities provides information that helps users of the statement of cash flows assess the impact of these activities on the financial position, as well as the amount of cash and cash equivalents, of the entity. This information is also valuable for assessing the relationship between those activities.

18. A single transaction can involve cash flows from many different activities. For example, when payment of a loan includes both principal and interest, the interest may be classified as routine activities and the principal loan as classified into the financial activities of the entity.

Regular activities

19. The value of net cash flows arising from recurring activities is a basic indicator that the activities of an entity are secured from the following sources:

(a) Taxes collected (directly or indirectly); or

(b) Receipts from the sale or provision of services by the entity.

The value of net cash flows also indicates the entity's ability to maintain normal operations; ability to pay debts; pays profits or distributions to owners and makes new investments without external financing.

Cash flows from regular operations on the national or provincial state financial statements provide information on the extent of funding for regular activities of the Government (or local authorities). method) from taxes and fees.

Information about cash flows from past regular activities, when used in combination with other information, helps users of the financial statements predict future cash flows from regular activities.

20. Cash flows from regular operations arise primarily from the entity's major cash-generating activities. Examples of major cash flows from routine operations include:

(a) Collection of taxes, fees and fines;

(b) Proceeds from the sale of goods and provision of services by the entity;

(c) Proceeds from aid or transfer revenues, funds received from the allocated budget;

(d) Proceeds from royalties, fees, commissions and other revenues;

(e) Operating funding for other public entities (excluding loans);

(f) Expenses for the purchase of goods and services;

(g) Employee expenses and payments on behalf of employees;

(h) Collection of premiums and payment of insurance claims, commissions and other benefits from the policyholder (for insurers);

(i) Tax payments on property taxes and income taxes related to regular operations;

(j) Revenues and disbursements of contracts held for business purposes;

(k) Revenue and expenditure from non-recurring activities;

(l) Revenue or expenditure arising from the settlement of legal disputes.

Some transactions, such as the sale of real estate, machinery and equipment, may result in a gain or loss that is included in the surplus or deficit for the period. Cash flows from these transactions are considered cash flows from investing activities. However, money spent on construction or acquisition of assets to be leased back to another entity and then sold (according to the provisions of Vietnamese Public Accounting Standard No. “Real Estate, Plant and Equipment”) is the cash flow from regular operations. Proceeds from the rental and sale of these properties are also cash flows from regular operations.

21. Where the law allows an entity to hold securities and loans for business purposes, investments, like inventories, are purchased for the specific purpose of purchasing. for resale. Therefore, cash flows arising from the trading of these trading securities are considered as cash flows from regular activities. Similarly, advances and loans made by public financial institutions are often classified as routine activities as they relate to their principal cash-generating activities.

Investment activities

22. A separate presentation of cash flows from investing activities is important because they reflect cash flows indicative of resources expected to contribute to the entity's future operations. Only cash flows spent to create assets recognized in an entity's statement of financial position are eligible to be classified as investing activities. Examples of major cash flows from investing activities include:

(a) Expenses for the acquisition and construction of real estate, plant, equipment, intangible assets and other long-term assets. These expenses include those related to capitalized implementation costs and construction in progress;

(b) Proceeds from liquidation and sale of real estate, plant, equipment, intangible assets and other long-term assets;

(c) Expenses for acquisition of equity or debt instruments of other entities and capital contribution to joint ventures (except for purchases of instruments which are considered cash equivalents or are held for the purpose of joint ventures). business);

(d) Proceeds from the sale of debt and equity instruments by other entities and the recovery of capital contributions to joint ventures (other than proceeds from the sale of instruments considered to be cash equivalents or instruments held for trading purposes);

(e) Loan advances and loans to other entities (except for advances and loans made by public financial institutions);

(f) Repayment of advances and loans (except for advances and loans from public financial institutions);

(g) Money spent on investment activities to contribute capital to other entities;

(h) Proceeds from investment activities to contribute capital to other entities.

Financial activities

23. The separate presentation of cash flows from financing activities is important because it is useful in predicting the likelihood of future cash flows from the parties that have financed the entity. Examples of major cash flows from financing activities include:

(a) Proceeds from issuance of promissory notes, loans, bonds, mortgaged loans, and other short-term and long-term loans;

(b) Loan repayments;

(c) Payment by the lessee to reduce the outstanding balance related to the finance lease.

Cash flow statement from routine activity

24. An entity must report cash flows from regular operations by one of the following methods:

(a) The direct method, which presents the cash inflows and outflows from the entity's regular operations; or

(b) The indirect method, in which the surplus or deficit is adjusted for the effect of non-cash transactions; any deferred or accrual recognition of past or future receipts or payments and revenues or expenses attributable to investing or financing activities.

25. Entities are encouraged to report cash flows from regular operations using the direct method. The direct method provides information useful in estimating future cash flows, and also information that the indirect method does not provide. According to the direct method, information about cash inflows and outflows is mainly collected:

(a) From the entity's accounting books; or

(b) By adjusting for revenue and operating expenses (for a public financial institution, interest or similar revenue, interest and similar expenses) and other items in the income statement. motion for:

(i) Changes in inventories, accounts receivable and payable during the period;

(ii) Non-cash items;

(iii) Other items affecting cash flows from investing or financing activities.

26. An entity that reports cash flows from recurrent activities using the direct method is also encouraged to provide a table that compares the surplus/deficit from recurrent activities with the net cash flows from recurring activities. This balance sheet may be part of the statement of cash flows or presented in the notes to the financial statements.

27. According to the indirect method, net cash flows from regular activities are determined by taking the surplus or deficit in the adjusted period for the amounts:

(a) Changes in inventories, accounts receivable and payable during the period;

(b) Non-cash items such as depreciation, allowance, deferred tax payable, unrealized gain and loss due to exchange differences, undistributed surplus from associates and interests of the parties capital contribution does not hold control; and

(c) All other items (which affect cash flows) are cash flows from investing or financing activities.

Statement of cash flows from investing and financing activities

28. An entity must separately present key items of total inflows and outflows from investing and financing activities, less cash flows that are reported on a net basis as referred to in paragraphs 29 and 32 of this standard.

Cash flow statement on a net basis

29. An entity may report on a net basis the following cash flows from regular operations, investing activities or financing activities:

(a) Collecting and acting on behalf of transactions, taxpayers, or other beneficiaries. In these cases, the cash flows reflect activities of other parties that are not those of the entity;

(b) Collection and disbursement of funds with fast turnover, large amounts and short maturities.

30. Paragraph 29(a) deals only with transactions where the entity has control over the cash balance, for example the following receipts and payments:

(a) Collected tax money is not retained for use under the collection regulation mechanism between levels;

(b) Collection of time deposits and return of time deposits of a public financial institution;

(c) The amount of capital held by an investment fund or trust fund for a client;

(d) Collect and return rent to the owner of the rental property.

31. Examples of cash receipts and payments referred to in paragraph 29(b) include payments related to:

(a) Buying and selling investments;

(b) Other short-term loans, such as loans with maturities not exceeding 3 months.

32. Cash flows arising from the following activities of a public financial institution may be reported on a net basis:

(a) Time deposit receipts and payments with fixed maturity dates;

(b) Deposits and withdrawals from other financial institutions;

(c) Advances, loans and repayments, loan recovery to customers and other trading partners.

Cash flow in foreign currency

33. Cash flows arising from transactions in foreign currencies are recorded in Vietnam Dong by applying the exchange rate between Vietnam Dong and the foreign currency at the date of the cash flows.

34. The cash flows of the controlled entity operating overseas must be translated at the exchange rate between Vietnam dong and foreign currency at the date of the cash flows.

35. Cash flows in foreign currencies must be reported in a manner consistent with Vietnamese public accounting standards regarding the effects of changes in exchange rates.

36. Unrealized gains/losses due to changes in exchange rates are not cash flows. However, the effect of changes in foreign exchange rates on cash and cash equivalents of foreign currency that is being held or matured should be disclosed in the statement of cash flows for reconciliation purposes. opening and closing balances of cash and cash equivalents. This entry is presented separately from the cash flows from the entity's regular operations, investing activities and financing activities. This entry includes any differences (if any) as a result of such cash flows reported at the exchange rate at the end of the period.

Interest and dividends or the like

37. Cash flows relating to interest and dividends or similar payments received and paid by the entity must be presented separately. Each of these items is classified as recurrent, investing or financing activities on a consistent basis between the reporting periods.

38. Total interest paid during the period must be reported on the statement of cash flows regardless of whether they are recognized as expenses for the period on the income statement or capitalized as required by the standards. Vietnamese public accounting standards on borrowing costs.

39. For public financial institutions, interest paid, interest and dividends or similar received are generally classified as cash flows from regular operations. However, there is no consensus on how to classify these cash flows to other entities. An entity may classify interest paid, interest and dividends or similar received as cash flows from regular operations because they participate in determining the surplus or deficit for the period. In addition, interest paid, interest and dividends or similar received can also be classified as cash flows from financing activities or investing activities because it is the cost of raising financial resources. or investment income.

40. Dividends or similar payments paid can be classified as cash flows from financing activities because it is the cost of raising financial resources. In addition, dividends or similar payments paid may also be classified as cash flows from recurrent activities to help users of the report assess the ability of the entity to pay these amounts from cash flows from operate regularly.

Corporate income tax

41. Cash flows arising from corporate income tax should be presented separately and classified under the going concern activities of the entity, unless there is a clear basis for classification into financing activities and investing activities.

42. Some activities of units in the public sector are also subject to the same tax liability as those of other units in the field of production and business. For example, some production and business activities of goods and services of public non-business units are subject to corporate income tax.

43. Corporate income tax arising from transactions that increase cash flows are classified as recurrent activities, investing activities and financing activities on the statement of cash flows. While a tax expense can be easily distinguished from investing or financing activities, the cash flows associated with that tax may not be readily identifiable, which may arise in periods other than those incurred. cash flow of that transaction. As a result, taxes paid are generally classified as cash flows from regular operations. However, when it is possible to determine the taxable cash flows of a particular transaction that generate cash flows that are classified as investing or financing activities, that tax cash flow must also be classified as an investment activity. appropriate investment or financial performance. When tax cash flows are allocated to multiple activities, an entity must present the total amount of tax paid.

Investments in controlled entities, joint ventures, associates

44. For investors as prescribed by law, when accounting for an investment in a joint venture, associate or controlled entity using the equity method or the historical cost method, the investor The investment is limited to the presentation on the cash flow statement of cash flows between the entity and the investee, for example dividends or similar payments or advances.

45. For reporting an interest in a joint venture or associate using the equity method, the entity presents in the statement of cash flows the cash flows relating to investments in the joint venture, as well as cash flow on distributions, other revenues and expenditures between the entity and the joint venture or associate.

Non-cash transactions

46. Investment and financial transactions that do not directly use cash or cash equivalents are not presented in the statement of cash flows. The entity should disclose these transactions in the financial statements to ensure that appropriate information is provided to the users of the reports about such investment and financing activities.

47. Many investment and financial activities, although affecting the capital structure and assets of the entity, do not have a direct effect on current cash flows. The exclusion of non-cash transactions from the statement of cash flows is consistent with the objective of the report because these items are not related to the cash flows of the current reporting period. Examples of non-monetary transactions:

(a) Exchange property for another, or purchase property by taking on debt directly, or through a finance lease;

(b) Converting debt into equity.

Components of cash and cash equivalents

48. An entity must present the cash and cash equivalents components on the statement of cash flows and must compare the amounts in the statement of cash flows with the equivalent items in the statement of financial position.

49. Due to the diversity of money management methods and banking transaction mechanisms, in order to conform to Vietnamese public accounting standard No. 01 “Presentation of financial statements”, an entity must disclose information about the accounting policies used to determine its detailed cash and cash equivalents.

50. The effect of any change in the policies used to determine the detailed items of cash and cash equivalents must be reported in accordance with Vietnamese public accounting standards on accounting policies, changes in accounting estimates and errors.

Other explanations

51. The entity must disclose, together with the management's explanation in the Notes to the financial statements, the value of large amounts of cash and cash equivalents held by the entity but the economic unit is not used.

52. In many cases, an entity holds an amount of cash and cash equivalents, but the economic unit is not allowed to use this amount. For example, cash and cash equivalents held by an entity subject to strict foreign exchange controls or restrictive legislation that prohibits the use of the controlling entity or other controlled entities within the economic entity. this amount in the usual way.

53. Other additional information may help readers better understand the financial position and solvency of the entity. Information that is encouraged to be presented in conjunction with the interpretations in the notes to the financial statements may include:

(a) The amount of undisbursed loans that the entity can use for its future regular operations and to pay for its capital commitments, and specify any restrictions on the use of these loans;

(b) The quantity and nature of the restricted funds.

54. A statement of cash flows can help users of the report understand the relationship between an entity's activities or programs and budgetary information. Vietnamese Public Accounting Standard No. 01 “Presentation of financial statements” refers to the comparison between actual and estimated figures.

Reference table of paragraphs of Vietnamese public accounting standards compared with paragraphs of international public accounting standards