Circular No. 53/2016/TT- BTC amending and supplementing some articles of Circular No.

25 March 2016
PwC Vietnam NewsBrief
Circular No. 53/2016/TT- BTC
amending and supplementing
some articles of Circular No.
200/2014/TT-BTC - Guidance on
corporate accounting
On 21 March 2016, the Ministry of Finance (“MOF”) issued
Circular No. 53/2016/TT-BTC (“Circular 53”), which amends
some articles of Circular No. 200/2014/TT-BTC (“Circular 200”)
dated 22 December 2014 providing guidance on the Vietnamese
Corporate Accounting System. Circular 53 came to effect on 21
March 2016 and is applicable to fiscal years begining on or after 1
January 2016. However, enterprises can choose to apply
those changes relating foreign exchange rate for the
fiscal year beginning 1 January 2015.
The key changes of Circular 53 are summarised as below:
1. Changes relating to exchange rate
a) Using approximate exchange rate:
According to Item 3 , Article 1 of Circular 53 , in addition to
existing regulations guiding the use of the actual exchange rate for
recognising transactions in foreign currencies under Item 1.3,
Article 69 of Circular 200 , enterprises now can choose to apply
actual exchange rate as defined as below:
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Accounting treatment for transactions in foreign currencies:
• Actual exchange rate that is the rate approximating the average transfer exchange rate of
the buying and selling rates of the commercial bank where an enterprise most frequently
trades. The approximate exchange rate must ensure its disparity does not exceed +/- 1%
compared with the average transfer exchange rate. The average transfer exchange rate is
determined daily or weekly or monthly based on the average between the daily buying
transfer rate and selling transfer rate of the commercial bank.
However, the use of approximate rate must ensure that there is no material effect on
the financial position and business performance of the accounting period.
With this amendment allowing the use of approximate rate, enterprises have been
provided a more flexible option in their daily accounting work instead of applying
respective buying and selling rates as specified previously in Circular 200.
Revaluation of balances denominated in foreign currencies at the date of
financial statements:
If enterprises use the approximate exchange rate to account for transactions denominated
in foreign currencies in the accounting period, the enterprises must use the transfer rate of
the commercial banks where they most frequently trade to revalue balances denominated
in foreign currencies at end of the accounting period. The transfer rate can be the buying
or selling rate or average transfer rate of the commercial banks.
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b) Using actual exchange rate
Circular 53 also mentions about using actual exchange rate for credit entries of cash and
accounts receivable and debit entries of accounts payable in foreign currencies. In this
case, the recognition of foreign exchange differences in the accounting period is made
either at the time of the transactions or periodically depending on the characteristics of the
business operations and business management requirements.
At end of the accounting period, the revaluation of the balances of these accounts shall be
made as follows:
• For those monetary items denominated in foreign currencies which have no balance in
their original currencies, enterprises must transfer the entire foreign exchange
differences arising in the period to financial income/expense respectively.
• For those monetary items denominated in foreign currencies which still have balance in
their original currencies, enterprises must revalue these balances and recognise
unrealised foreign exchange differences in compliance with the current guidance stated
in Item 4.2, Article 69 of Circular 200.
c) Consistent principle in the selection of exchange rate
Enterprises must clearly disclose the selection of applicable exchange rate in the Notes to
financial statements and ensure it is on a consistent principle.
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2. Changes relating to liquidation or transfer
of trading securities
Circular 53 also allows to use first in first out method
or weighted average method to replace the rolling
weighted average method in determining cost of
trading securities upon liquidation or sale.
Enterprises need to consistently apply the selected
method to calculate cost of trading securities during
the fiscal year. In case of changing the selected
method, enterprises must disclose the change
sufficiently in the Notes to financial statements
according to the current accounting standards.