Circular No. 175/2011/TT-BTC guiding applicable accounting for insurance brokers

• Official number: 175/2011/TT-BTC
• Legislation Type: Circular
• Organization: The Ministry of Finance
• Signer: Tran Xuan Ha
• Issued Date: 05/12/2011

MINISTRY OF FINANCE -------	SOCIALIST REPUBLIC OF VIETNAM Independence – Freedom - Happiness ---------------
No.: 175/2011/TT-BTC	Hanoi, December 05, 2011

CIRCULAR

GUIDING APPLICABLE ACCOUNTING FOR INSURANCE BROKERS

Pursuant to the Accounting Law No.03/2003/QH11 dated 17/06/2003;

Pursuant to the Insurance Business Law No.24/2000/QH10 dated 09/12/2000;

Pursuant to the Law amending and supplementing some Articles of the Insurance Business Law No.61/2010/QH12 dated 24/11/2010;

Pursuant to the Decree No.129/2004/ND-CP dated 31/5/2004 of the Government detailing and guiding the implementation of some Articles of the Law on Accounting applicable to business activities;

Pursuant to the Decree No.118/2008/ND-CP dated 27/11/2008 of the Government regulating functions, duties, powers and organizational structure of Ministry of Finance;

Pursuant to the Decree No.45/2007/ND-CP dated 27/03/2007 of the Government detailing the implementation of some Articles of the Law on Insurance Business;

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Ministry of Finance guides applicable accounting for insurance brokers as follows:

Article 1. Scope of governing and application subjects

1. This Circular prescribes a number of Accounts; financial statement forms applicable to the insurance brokers that are established, and operating under the laws of Vietnam.

2. The contents of accounting not guided in this Circular, the insurance brokers shall comply with enterprise accounting regime issued together with the Decision No.15/2006/QD-BTC dated 20/03/2006 Minister of Finance (hereinafter referred to as the Decision No.15/2006/QD-BTC); the circulars guiding the implementation of accounting standards and the Circulars guiding amendment, supplement to enterprise accounting regime.

Article 2. Regulations on application of system of accounting Accounts

System of accounting Accounts applicable to the insurance brokers shall comply with provisions in the Decision No.15/2006/QD-BTC; Circular No.244/2009/TT-BTC with the following amendments and supplements:

1. Amendment, supplement to accounting Accounts and reflecting contents of accounting Accounts:

1.1. Account 1388 - "Other receivables" reflects the supplement of receivable amounts of premiums of clients as a substitute for insurers, premiums collected as a substitute of the reinsurance assigning companies for the reinsurance receiving companies. Insurance brokers must monitor in detail the premiums collected as a substitute of clients for each insurer and premiums collected as a substitute of the reinsurance assigning companies for each abroad and domestic reinsurance receiving company.

To supplement 4 third grade Accounts of Account 1388 as follows:

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- Account 13882 - receivables of premiums collected as a substitute for domestic reinsurance receiving enterprises;

- Account 13883 - receivables of premiums collected as a substitute for abroad reinsurance receiving enterprises;

- Account 13888 - Other receivables.

To supplement structure and reflecting content of account 138 - Other receivables as follows:

Debit:

- Receivables of premiums collected from insured clients as a substitute for the insurers;

- Receivables of premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises;

- To record increase the receivable amount of premiums collected from clients or of reinsurance assigning enterprises as a substitute due to the change of the insurance range increase leading to the increase of premiums.

Credit:

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- To record decrease the receivable amount of premiums collected as a substitute due to the decrease change of the coverage leading to the decrease of premiums.

+ To record decrease the receivable amount of premiums collected as a substitute when the customers or the insurers cancel the insurance contracts concluded;

+ To record decrease the amount of premiums collected from customers as a substitute for insurers, premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises, upon having decision on forgiving the debts, charges for collecting premiums as a substitute must be collected.

Debit’s balance:

The receivable accounts of premiums as a substitute not yet collected.

1.2. Account 338 - "Other Payables": reflects the supplement for premiums collected from clients as a substitute for and payable to insurers, and for premiums collected from the reinsurance assigning companies as a substitute for and payable to the reinsurance receiving companies.

To supplement 4 third grade Accounts of Account 3388 - "Other payables" as follows:

- Account 33881 - Payables of premiums collected as a substitute for the insurers: Reflect the payable amounts of premiums collected as a substitute for the insurers and the situation of payment for these premiums collected as a substitute.

- Account 33882 - Payables of premiums collected as a substitute for domestic reinsurance receiving enterprises: Reflect the payable amounts of premiums collected as a substitute for the domestic reinsurance receiving enterprises and the situation of payment for these premiums collected as a substitute.

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- Account 33888 – Other payables: Reflect other payable amounts of the unit other than the content of payable amounts that are reflected on the accounts of account 3381 to account 3387 and account 3389.

To supplement structure and reflecting content of account 338 - other payable, as follows:

Debit:

- Transfer of the receivable amount of insurance brokerage commission revenue is deducted of the payable amount of premiums collected as a substitute for the insurers or reinsurance receiving enterprises;

- To record decrease the receivable amount of premiums collected as a substitute due to the decrease change of the coverages leading to the decrease of premiums;

- To record decrease the receivable amount of premiums collected as a substitute when the insured customers concluded or the insurers cancel the insurance contracts concluded;

- To record decrease the receivable amount of premiums collected as a substitute when the insurers or reinsurance receiving enterprises have decided on forgiving receivable debts of premiums of insured customers as prescribed;

- Payment of premiums collected as a substitute for the insurers and reinsurance receiving enterprises.

Credit:

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- Payables of premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises;

- Payables of premiums collected from customers or from reinsurance assigning enterprises as a substitute due to the increase change of the coverage leading to the increase of premiums.

Credit Balance:

Payables of premiums collected as a substitute.

1.3. To supplement Account 416 - "Mandatory reserve fund"

This account is used to reflect the current number and situation of appropriation and use of the mandatory reserve fund of the insurance brokers.

The mandatory reserve fund is appropriated of after-CIT profit.

The appropriation and use of the mandatory reserve fund are made in accordance with regulations of financial regime for the insurance brokers.

The structure and reflecting content of Accounts 416 - mandatory reserve fund:

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The amount of mandatory reserve fund decreased due to the insurance brokers’ use of mandatory reserve fund in accordance with regulations of financial regime.

Credit:

The amount of mandatory reserve fund increased due to annual appropriation.

Credit Balance:

The mandatory reserve fund is available at the end of period.

1.4. To amend the second grade Accounts of Account 511 - "Revenue of sale of goods and provision of services". Account 511 includes 3 second grade accounts as follows:

- Account 5111 - Revenue of insurance brokerage commissions;

- Account 5113 - Revenue of provision of consulting services;

- Account 5118 - Other revenues.

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1.6. To rename Account 532 - "Price deduction of sold goods" into "Decrease of insurance brokerage commissions."

1.7. To supplement Account 624 - "Direct costs of insurance brokerage business." This account has 4 second grade accounts as follows:

- Account 6241 - The costs of insurance brokerage;

- Account 6242 – Expenses for purchasing professional liability insurance;

- Account 6243 - Expenses for operating consulting services;

- Account 6248 - Other expenses.

2. Not to use some following accounting accounts:

2.1. Not to use the accounts in the balance sheet as follows:

- Account 1385 - Receivables of equitization;

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- Account 155 - The finished products;

- Account 156 - Goods;

- Account 157 - Goods on consignment;

- Account 158 ​​– Goods in bonded warehouses;

- Account 161 – Working expenses;

- Account 2147 - Depreciation of investment real estate;

- Account 217 - Investment real estate;

- Account 337 - Payment according to the progress of the plan of construction contract;

- Account 3385 - Payables of equitization;

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- Account 461 - Working funding sources;

- Account 466 - Sources of funding formed fixed assets;

- Account 5114 - Subsidizing revenue;

- Account 5117 - Revenue of investment real estate business;

- Account 512 - Revenue of internal sales;

- Account 521 - Commercial discounts;

- Account 611 - Purchases;

- Account 621 - Costs of direct raw materials, materials;

- Account 622 - Costs of direct labor;

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- Account 627 - Cost of general production;

- Account 631 - Cost of production;

- Account 641 - Cost of sales.

2.2. Not to use accounts out of the accounting Balance Sheet as follows:

- Account 003 - Goods received for sale as a substitute, on consignment, collateral;

- Account 008 - The spending estimates for the works, projects.

List of accounting Accounts system applied to the insurance brokers according to Appendix No.01 attached to this Circular.

Article 3. Accounting for mandatory reserve fund

Accounting for mandatory reserve fund uses Account 416 - mandatory reserve fund.

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1. End of a fiscal year, determine the number of mandatory reserve fund required to appropriate under the financial regime, record:

Debit - Account 421 - Undistributed profit

Credit - Account 416 - Mandatory reserve fund

2. Upon use of the mandatory reserve fund, record:

Debit - Account 416 - Mandatory reserve fund

Credit - the relevant Accounts.

Article 4. Accounting for the revenues of sales and provision of services

Accounting for the revenues of sales and provision of services uses Account 511 - Revenues of sales and provision of services.

This account is used to reflect revenue of insurance brokerage commissions, revenue of provision of consulting services, and other revenues of the insurance brokers.

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1.1. The time of recording revenue of brokerage commissions of insurance brokers:

The time of recording revenue of insurance brokerage commissions means when an insurance contract is effective and documents relating to insurance contract has been completed. Insurance broker records that revenue of brokerage commissions does not depend on money have been collected or not.

1.2. Insurance brokers must monitor in detail revenue of insurance brokerage commission collected from insurers and reinsurance receiving enterprises to meet management requirements.

1.3. Net revenue of providing insurance brokerage services that the enterprise is obtained during the accounting period with a position lower than revenue of sales and provision of service, initially record due to the causes: returning of insurance brokerage commissions or decrease of the insurance brokerage commissions.

1.4. Revenue of insurance brokerage commissions can increase or decrease when required the adjustment to the contract of insurance and insurance brokerage contract because the customers change their coverage. In case of increasing scope of insurance leading to increase revenue of insurance brokerage commissions, accounting records Debit - the Accounts 112, 131,…  Credit - the Account 5111; in case of decreasing coverage leading to decrease revenue of insurance brokerage commissions, accounting records Debit - the Accounts 5111, Credit - Accounts 111, 112, 131, ...

1.5. The refunds of insurance brokerage commissions or decrease of insurance brokerage commissions are the revenue deductions and are tracked separately on Account 531, "Returning of the insurance brokerage commissions," and Account 532 "Decrease of insurance brokerage commissions ", end of the period transferred into Account 511 for calculating net revenue.

2. Account 511 – Revenue of sale of goods and provision of services, has 3 second grade accounts:

- Account 5111 – Revenue of insurance brokerage commissions: Reflects revenue and net revenue of insurance brokerage activity in an accounting period of enterprise.

Account 5111 has 2 third grade accounts:

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+ Account 51112 - Reinsurance brokerage commissions.

- Account 5113 - Revenues of provision of consulting services: Reflects revenue and net revenue of volume of advisory services provided for customers in an accounting period.

Account 5113 is applied as a financial mechanism that allows insurance brokers to be provided insurance consulting services for its customers and proceeds of consultancy services are not included in premiums.

- Account 5118 - Other Revenues: This account is used to reflect the revenues other than revenues reflected in the accounts 5111, 5113.

3. Accounting method of a number of mainly economic professions:

3.1. When having an arising of revenue of brokerage commissions of original insurance contract between insurers with insured clients, record:

Debit - Accounts 111, 112, 131, ... (total payment cost)

Credit - Account 511 – Revenue of sale of goods and provision of services

Credit - Account 3331 - Payable VAT (33311) (if any).

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Debit - Accounts 111, 112, 131, ...

Credit - Account 511 - Revenue of sale of goods and provision of services

3.3. Where the clients change their coverage leading to change the premiums and insurance brokerage commission revenue, accounting records:

- In case of increasing coverage leading to increase of insurance brokerage commissions revenue, record:

Debit - Accounts 111, 112, 131, ... (total payment cost)

Credit - Account 511 - Revenue of sale of goods and provision of services (5111)

Credit - Account 3331 - Payable VAT (33311) (if any).

- In case of decreasing coverage making premiums decrease so that insurance brokerage commissions revenue is recorded decrease, then record reversely the above book entry:

Debit - Account 511 - Revenue of sale of goods and provision of services (5111)

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Credit - Accounts 111, 112, 131 ...

3.4. End of the accounting period, transfer the returning of insurance brokerage commissions arisen in the period, and subtract in actual revenue in period to determine the net revenue, record:

Debit - Account 511 - Revenue of sale of goods and provision of services

Credit - Account 531 – Returning of insurance brokerage commissions

3.5. End of the accounting period, transfer the Decreases of insurance brokerage commissions arisen in the period, and subtract in actual revenue in period to determine the net revenue, record:

Debit - Account 511 - Revenue of sale of goods and provision of services

Credit - Account 532 – Decrease of insurance brokerage commissions

3.6. End of the accounting period, transfer net revenue to Account 911 "Determination of business results", record:

Debit - Account 511 - Revenue of sale of goods and provision of services

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Article 5. Accounting for the refunds of insurance brokerage commissions

Accounting reflecting the refunds of insurance brokerage commissions uses Account 531 - Returning of insurance brokerage commissions.

This account is used to reflect the brokerage commissions required to be paid back to the insurers or reinsurance receiving enterprises because the customers or the insurers cancel the insurance contracts that had been signed so insurers have to return the premiums and the insurance brokers must return insurance brokerage commissions to the insurers or the insurance brokers. The insurance brokerage commissions required to return as reflected on this account will adjust revenue of insurance brokerage commissions actually paid in the business period to calculate net revenue which was made during the reporting period.

During the period, the brokerage commissions required to be paid back is reflected on the Debit - Account 531 "Returning of insurance brokerage commissions." End of period, the total value of the returning of insurance brokerage commissions is transferred to the account of revenue of sale of goods and provision of service to determine the net revenue of the reporting period.

The structure and reflecting content of the Accounts 531 – Returning of insurance brokerage commissions

Debit:

The amount of insurance brokerage commissions arisen in the period must be reimbursed to the insurers or reinsurance receiving enterprise.

Credit:

The transfer of insurance brokerage commissions arisen in the period must be reimbursed to the Debit - Account 511 "Revenue of sale of goods and provision of services" to determine the net revenue in the reporting period.

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Accounting method of a number of mainly economic profession:

1. When an insurance brokerage enterprise determines the insurance brokerage commission required to be paid to the insurers or reinsurance receiving enterprises because the customers or the insurers cancel the insurance contracts that had been signed so the insurers shall return the premiums and insurance brokers shall repay brokerage commissions, record:

Debit - Account 531 – Returning of insurance brokerage commissions

Debit - Account 3331 - Payable VAT (33311) (Number of VAT of the insurance brokerage commissions to be returned (if any)

Credit - Accounts 111, 112, 131, ...

2. End of accounting period, transfer the entire amount of insurance brokerage commissions incurred in the period into account of revenue of sale of goods and provision of services, record:

Debit - Account 511 - Revenue of sale of goods and provision of services (5111)

Credit - Account 531 – Returning of insurance brokerage commissions.

Article 6. Accounting for the Decreases of insurance brokerage commissions

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This account is used to reflect the insurance brokerage commission to be decreased because the insurance brokerage enterprises required to return the insurers or reinsurance receiving enterprises in the cases the insurers or reinsurance receiving enterprises must reduce premiums due to pay an amount when ending the insurance contract that customers are not got accidents, loss or due to maintain a long term relationship between the insurers with their customers, or reduce for the customers because it cannot conduct the commitment on training of the insurance risk and the other cases committed in the contracts. Only reflect into this account the reduced amounts of brokerage commissions outside bill after the end of the contract, i.e., decrease the insurance commissions after the bill has been issued.

Not to reflect into Account 532 the brokerage commission charges because customers reduce the coverage making the premiums decrease leading to decrease of revenue of insurance brokerage commissions.

During the period, decrease of insurance brokerage commissions is reflected on the Debit - Account 532 "Decrease of insurance brokerage commissions." End of period, total value of decrease of insurance brokerage commissions is transferred to the account of revenue of sale of goods and provision of service to determine the net revenue of the reporting period.

The structure and reflecting content of the Account 532 – Decrease of insurance brokerage commissions

Debit:

The decreases of insurance brokerage commissions incurred in the period.

Credit:

To transfer decrease of insurance brokerage commissions incurred in the period to Account 511 "Revenue of sale of goods and provision of services" to determine the net revenue in the reporting period.

Account 532 has no ending balance.

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1. In the period, when the decreases of insurance brokerage commissions are incurred, record:

Debit - Account 532 – Decrease of insurance brokerage commissions

Debit - Account 3331 - Payable VAT (33311) (Number of VAT of decrease of insurance brokerage commissions) (if any)

Credit - Accounts 111, 112, 131, ...

2. End of the accounting period, transfer the entire decreases of insurance brokerage commissions incurred in the period into revenue of sale of goods and provision of services, record:

Debit - Account 511 - Revenue of sale of goods and provision of services (5111)

Credit - Account 532 - Decrease of insurance brokerage commissions.

Article 7. Accounting of direct cost of insurance brokerage business

To supplement Account 624 - Direct cost of insurance brokerage business.

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Accounting principle of this account:

Only account into this account the costs directly related to the insurance brokerage business activity such as costs for individuals and organizations involved in cooperation of insurance brokerage; the costs of purchasing professional liability insurance; consultancy costs for insurance buyers in the risk assessment, selection of the type of insurance, the insurers that the proceeds derived from this consulting service is not in the premiums and other expenses related to contract performance of insurance brokerage.

The structure and reflecting content of the Account 624 - direct cost of insurance brokerage business.

Debit:

Direct costs incurred in the period of the insurance brokerage business activity.

Credit:

- The revenues are recorded decrease of costs of insurance brokerage activities (if any);

- Transfer direct expenses of insurance brokerage business into Account 911 to determine the business results.

Account 624 has no ending balance.

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- Account 6241 - The cost of the insurance brokerage cooperation: Reflects the costs for individuals and organizations participating in insurance brokerage cooperation, ...

- Account 6242 – Cost of purchasing professional liability insurance: Reflects the expenses the enterprises are required to spend for purchasing professional liability insurance for the insurance brokerage business activity.

- Account 6243 - Expenses for consulting services: Reflects the consulting expenses for the insurance buyers in the risk assessment, selection of type of insurance, terms and conditions, premiums schedule and insurers, ...

- Account 6248 - Other expenses: reflects the expenses other than expenses reflected in the accounts 6241, 6242 and 6243.

Accounting method of a number of mainly economic professions:

1. When the expenses directly related to the insurance brokerage, consulting activities are incurred, record:

Debit - Account 624 – Direct expenses of insurance brokerage business

Debit - Account 133 - VAT is deductible (if deductible)

Credit - Accounts 111, 112, 331, ...

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Debit - Account 624 - Direct expenses of insurance brokerage business

Debit - Account 133 - VAT is deductible (if deductible)

Credit - Account 3338 – Other payables (contractor tax details)

Credit - Accounts 111, 112, 331 (Payable costs to the enterprises participate in cooperation of insurance brokerage).

3. Period purchase of professional liability insurance, record:

Debit - Account 624 - Direct expenses of insurance brokerage business

Debit - Account 133 - VAT is deductible (if any)

Credit - Accounts 111, 112, ...

4. In case of advance appropriation for purchase of professional liability insurance, record:

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Credit - Account 335 - Payable expenses.

- When spending money for purchasing professional liability insurance, record:

Debit - Account 335 - Payable expenses

Debit - Account 133 - VAT is deductible (if any)

Credit - Accounts 111, 112.

5. In case of paying in advance for purchasing professional liability insurance for many accounting period, record:

Debit - Accounts 142, 242

Debit - Account 133 - VAT is deductible (if any)

Credit - Accounts 111, 112

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Debit - Account 624 - Direct expenses of insurance brokerage business

Credit - Account 142 - Short-term prepaid expenses

Credit - Account 242 - Long-term prepaid expenses.

6. In case of having the revenues recorded decrease in direct expenses, record:

Debit - Accounts 111, 112, ...

Credit - Account 624 - Direct expenses of insurance brokerage business.

7. End of accounting period, transfer direct expenses of insurance brokerage business into the Debit - Account 911 to determine the business results, record:

Debit - Account 911 - Determination of business results

Credit - Account 624 - Direct expenses of insurance brokerage business

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1. Accounting brokerage activities for the original insurance contract between insurers and their insured clients

1.1. Where insurance brokers do not collect premiums from insured customers as a substitute for insurers

- When revenue of the brokerage contract between the insurers and their insured customers is arisen, accounting to recognize revenue of insurance brokerage commissions:

Debit - Accounts 111, 112 (total payment amount) (In case of receiving brokerage commissions of the insurers)

Debit - Account 131 - Receivable from customers (In case of not yet receiving brokerage commissions of the insurers)

Credit - Account 511 – Revenue of sale of goods and provision of services (5111)

Credit - Account 3331 - Payable VAT (33311) (if any)

.- In case of increasing coverage making premiums increase leading to insurance brokerage commissions increased, record:

Debit - Accounts 111, 112, 131, ... (total payment cost)

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Credit - Account 3331 - Payable VAT (33311) (if any).

- In case of decreasing coverage making premiums decrease leading to insurance brokerage commissions decreased, record:

Debit - Account 511 - Revenue of sale of goods and provision of services (5111)

Debit - Account 3331 - Payable VAT (33311) (if any)

Credit - Accounts 111, 112, 131, ...

1.2. Where insurance brokers collect premiums from insured customers as a substitute for insurers

- To reflect revenue of receivable insurance brokerage commissions of the insurers, record:

Debit - Accounts 111, 112 (total payment amount) (In case of receiving brokerage commissions of the insurers)

Debit - Account 131 - Receivable from customers (In case of not yet receiving brokerage commissions of the insurers) (insurer details)

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Credit - Account 3331 - Payable VAT (33311) (if any).

- To reflect the amount of premiums that the insurance broker collect of insured customers as a substitute for and payable for insurers, record:

Debit - Account 138 - Other receivables (1388) (details of the premiums to collect of customers as a substitute for the insurers)

Credit - Account 338 – Other payables (33881) (details payable for the insurers on the premiums collected as a substitute for the insurers).

- To reflect increase the receivable amount and increase the payable amount on the premiums collected as a substitute for the insurers when increasing coverage leads to premiums increased, record:

Debit - Account 138 - Other receivables (1388) (details of the premiums collected from customers as a substitute for the insurers)

Credit - Account 338 – Other payables (33881) (details payable for the insurers on the premiums collected as a substitute for the insurers).

At the same time reflect increase revenue of insurance brokerage commissions, record:

Debit - Accounts 111, 112, 131, ... (total payment cost)

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Credit - Account 3331 - Payable VAT (33311) (if any)

- To reflect decrease the receivable amount and decrease the payable amount on the premiums collected as a substitute for the insurers when decreasing coverage leads to premiums decreased, record:

Debit - Account 338 – Other payables (33881) (details payable for the insurers on the premiums collected as a substitute for the insurers).

Credit - Account 138 - Other receivables (1388) (details of the premiums collected from customers as a substitute for the insurers)

At the same time reflect decrease revenue of insurance brokerage commissions, record:

Debit - Account 511 - Revenue of sale of goods and provision of services (5111)

Debit - Account 3331 - Payable VAT (33311) (if any)

Credit - Accounts 111, 112, 131, ... (total payment cost)

- When the insurance brokers collected premiums from customers as a substitute for insurers, record:

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Credit - Account 138 - Other receivables (1388) (details of the premiums collected from customers as a substitute for the insurers).

- When the insurance brokers determined revenue of brokerage commissions are deducted of the payable amount of the premiums collected as a substitute for insurers (including VAT), accounting records:

Debit - Account 338 – Other payables (details payable for the insurers on the premiums collected as a substitute for the insurers) (33881)

Credit - Account 131 - Receivable from customers (insurer’s details)

- When paying premiums collected from customers as a substitute for the insurers, record:

Debit - Account 338 - Other payables (details payable for the insurers on the premiums collected from customers as a substitute for the insurers) (33881)

Credit - Accounts 111, 112 ...

- In case the customers or the insurers cancel the insurance contracts concluded with the insurers so insurance broker must repay the brokerage commissions to the insurers, based on notices of the insurers and other related documents, accounting records decrease of revenues of insurance brokerage commissions:

Debit - Account 531 – Returning of insurance brokerage commissions

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Credit - Accounts 111, 112, 131

Also record decrease of the number of the premiums collected from customers as a substitute for the insurers:

Debit - Account 338 - Other payables (details payable for the insurers on the premiums collected from customers as a substitute for the insurers) (33881)

Credit - Account 138 - Other receivables (details of the premiums collected from customers as a substitute for the insurers).

- When the insurers decide to handle forgiving of debt receivable on premiums from insured customers under the provisions, based on the notice of debt forgiving handling of the insurers and other relevant documents and accounting records decrease of the premiums collected from customers as a substitute for the insurers:

Debit - Account 338 - Other payables (details payable for the insurers on the premiums collected from customers as a substitute for the insurers) (33881)

Credit - Account 138 - Other receivables (details of the premiums collected from customers as a substitute for the insurers).

2. Accounting of brokerage activity for reinsurance contracts between reinsurance assigning enterprises and domestic, abroad reinsurance receiving enterprises

2.1. Where insurance brokers do not collect premiums from reinsurance assigning enterprises as a substitute for the domestic, abroad reinsurance receiving enterprises

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Debit - Accounts 111, 112 (total amount of insurance brokerage commissions) (in case of receiving brokerage commissions from reinsurance receiving enterprises) (Detail of reinsurance receiving enterprises)

Debit - Account 131 - Receivable from customers (total amount of insurance brokerage commissions) (in case of not yet receiving brokerage commissions from reinsurance receiving enterprises) (Detail of reinsurance receiving enterprises)

Credit - Account 511 – Revenue of sale of goods and provision of services (5111.)

- Accounting increase or decrease of revenue of sale of insurance brokerage commissions due to increase, decrease of coverage leading to increase, decrease of premiums, accounting similar to section 1.2 of Article 8 of this Circular.

2.2. Where insurance brokers collect premiums from reinsurance assigning enterprises as a substitute for the domestic, abroad reinsurance receiving enterprises.

- To reflect revenue of insurance brokerage commissions that insurance brokers are required to collect of the reinsurance receiving enterprises, record:

Debit - Accounts 111, 112 (in case of receiving brokerage commissions from reinsurance receiving enterprises)

Debit - Account 131 - Receivable from customers (In case of not yet receiving brokerage commissions from reinsurance receiving enterprises) (Detail of reinsurance receiving enterprises)

Credit - Account 511 – Revenue of sale of goods and provision of services (5111).

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+ In case the insurance brokers collect premiums from reinsurance assigning enterprises as a substitute for domestic reinsurance receiving enterprises, accounting reflects the premiums collected from reinsurance assigning enterprises as a substitute for and payable to domestic reinsurance receiving enterprises, record:

Debit - Account 138 - Other receivables (1388) (Detail of premiums collected from reinsurance assigning enterprises as a substitute for domestic reinsurance receiving enterprises)

Credit - Account 338 – Other payables (33882) (Payable details on the premiums collected as a substitute for domestic reinsurance receiving enterprises).

+ In case the insurance brokers collect premiums from reinsurance assigning enterprises as a substitute for abroad reinsurance receiving enterprises, accounting reflects the amount of premiums collected from reinsurance assigning enterprises as a substitute for and payable for abroad reinsurance receiving enterprises and payable contractor taxes, record:

Debit - Account 138 - Other receivables (1388) (Detail of premiums collected from reinsurance assigning enterprises as a substitute for abroad reinsurance receiving enterprises) (including premiums collected as a substitute and contractor tax)

Credit - Account 338 – Other payables (33883) (Payable details on the premiums collected as a substitute for abroad reinsurance receiving enterprises).

Credit - Account 3338 - Other taxes (Details of the payable contractor tax).

When the insurance brokers substitute to pay for foreign reinsurance receiving enterprises the contractor tax into the state budget, record:

Debit - Account 3338 - Other taxes (Details of the payable contractor tax)

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- When the insurance brokers collected premiums from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises, record:

Debit - Accounts 111, 112

Credit - Account 138 - Other receivables (1388) (Details of premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises).

- End of month or end of accounting period, when the insurance brokers determine the revenue of insurance brokerage commissions deducted from the payables of premiums collected as a substitute for reinsurance receiving enterprises, record:

Debit - Account 338 – Other payables (33882, 33883) (Payable details on the premium collected as a substitute for reinsurance receiving enterprises).

Credit - Account 131 - Receivable from customers (Details of reinsurance receiving enterprises).

- When paying premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises, accounting records:

Debit - Account 338 – Other payables (33882, 33883) (Payable details on the premium collected as a substitute for reinsurance receiving enterprises).

Credit - Accounts 111, 112

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Debit - Account 531 – Returning of insurance brokerage commissions

Credit - Accounts 111, 112, 131.

Also record decrease the premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises:

Debit - Account 338 – Other payables (33882, 33883) (Payable details on the premiums collected as a substitute for reinsurance receiving enterprises).

Credit - Account 138 - Other receivables (1388) (Details of premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises).

- When reinsurance receiving enterprises decide on handling forgiving of receivable debt on reinsurance receiving cost of reinsurance assigning enterprises in accordance with provisions, based on notice of handling forgiving of debt of the reinsurance receiving enterprises and relevant documents, accounting records decrease of the premiums collected from reinsurance assigning enterprises as a substitute for receiving enterprises:

Debit - Account 338 - Other payables (33882, 33883) (Payable details on the premiums collected as a substitute for reinsurance receiving enterprises).

Credit - Account 138 - Other receivables (1388) (Details of premiums collected from reinsurance assigning enterprises as a substitute for reinsurance receiving enterprises).

3. Accounting for insurance brokerage cooperation activities:

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3.1.1. Where domestic insurance brokers sign brokerage contracts, collect brokerage fees and pay a part of brokerage fees for foreign brokers:

a) General provisions:

- Domestic insurance brokers directly sign insurance brokerage contracts with the insurers or reinsurance receiving enterprises. Domestic insurance brokers and foreign insurance brokers will sign a separate agreement of cooperation stipulating the specific terms and conditions of each party. In this case, the insurance brokers record total revenues of insurance brokerage commissions arising from insurance brokerage contracts and insurance brokerage. The amount that domestic insurance brokers pay for the foreign insurance brokers as agreed in the cooperation contract of insurance brokerage is recorded into costs;

- Domestic insurance brokers are responsible for withholding receivable contractor tax of foreign insurance brokers to pay into the Vietnam state budget in accordance with provisions of the law on contractor tax.

b) Accounting for the specific professions:

- When the revenue of brokerage contracts between the domestic insurance brokers and the insurers or reinsurance receiving enterprises is arisen, accounting reflects total revenues of insurance brokerage commissions under a receivable contract of insurance brokerage of the insurers or reinsurance receiving enterprises, record:

Debit - Accounts 111, 112 (Details of insurer or reinsurance receiving enterprise) (in case of receiving insurance brokerage commissions)

Debit - Account 131 - Receivable from customers (Details of insurer or reinsurance receiving enterprise) (In case of not yet receiving insurance brokerage commissions)

Credit - Account 511 – Revenue of sale of goods and provision of services (5111)

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- Insurance brokers determine the amount payable to the foreign enterprise of insurance brokerage cooperation, accounting records:

Debit - Account 624 - Direct expenses of insurance brokerage business (6241)

Credit - Account 331 - Payable to sellers (Details of foreign insurance brokers)

Credit - Account 3338 - Other taxes (details of the contractor tax)

- When the domestic brokers pay money to the foreign insurance brokers (withheld contractor tax to substitute to pay for foreign brokers), accounting records:

Debit - Account 331 - Payable to sellers (Details of foreign insurance brokers)

Credit - Account 112 - Deposits in banks.

3.1.2. Where foreign insurance brokers sign brokerage contracts, collect brokerage fees and pay a part of brokerage commission for domestic insurance brokers

When the domestic insurance brokers determined the receivable insurance brokerage revenue of the foreign insurance brokers in brokerage cooperation activities in the insurance groups under the cooperation agreements, accounting of domestic insurance brokers after receiving revenue of insurance brokerage cooperation commissions records:

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Credit - Account 511 – Revenue of sale of goods and provision of services (5111)

Credit - Account 333 - Taxes and amounts payable to the State (if any) (details of payable tax).

3.2. Accounting for insurance brokerage cooperation activities arising between the enterprises cooperating domestic insurance brokerage:

Where the domestic insurance brokers together co-operate insurance brokerage for a contract of insurance; in which it is agreed that a broker plays the role of a contactor of insurance brokerage, collects brokerage fees and pays a part of insurance brokerage fees to other domestic insurance brokerage cooperation enterprise.

- When revenue of the brokerage contract between the domestic insurance brokers with the insurers or reinsurance receiving enterprises is arisen, accounting in the broker playing the role of a contactor of insurance brokerage reflects the total insurance brokerage commission revenues under the receivable brokerage contract of the insurers or reinsurance receiving enterprises, record:

Debit - Accounts 111, 112 (Details of insurer or reinsurance receiving enterprise) (in case of receiving insurance brokerage commissions)

Debit - Account 131 - Receivable from customers (Details of insurer or reinsurance receiving enterprise) (In case of not yet receiving insurance brokerage commissions)

Credit - Account 511 - Revenue of sale of goods and provision of services (5111)

Credit - Account 3331 - Payable VAT (33311) (if payable VAT).

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Debit - Account 624 – Direct expenses of insurance brokers business (6241)

Credit - Account 331 - Payable to sellers (Details of domestic insurance brokers).

- When the domestic insurance brokers playing the role of a contactor of insurance brokerage pay the amount of insurance brokerage fees to domestic insurance brokerage cooperation enterprises, accounting records:

Debit - Account 331 - Payable to sellers (Details of domestic insurance brokers)

Credit - Accounts 111, 112

Article 9. The system of annual financial statements and mid-year financial statements

1. The annual financial statements

System of annual financial statements applied to the insurance brokers includes 4 following report tables:

- Accounting Balance sheet.

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- Cash Flow Statement

- Explanation of the financial statements

Form No.B 01 - DNMG

Form No.B 02 - DNMG

Form No.B 03 - DNMG

Form No.B 09 - DNMG

2. Mid-year financial statements

Insurance brokers must prepare 4 tables of mid-year financial statements under the full form as follows:

- Mid-term accounting balance sheet (full form)

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- Mid-term Report of business operation result (full form)

Form No.B 02a - DNMG

- Mid-term Cash Flow Statement (full form)

Form No.B 03a - DNMG

- Selected explanation of the financial statements

Form No.B 09a - DNMG

Article 10. Forms of financial statements applied to the insurance brokerage enterprises

1. The annual financial report form (see Appendix 02)

2. Form of mid-year financial statements (See Appendix 03)

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Article 11. The content and method of preparation of financial statements

1. The content and method of preparation of accounting Balance sheet (Form No.B 01 - DNMG) (See Appendix 02).

This Circular guides the content and method of preparation of the indicators related to the characteristics of the insurance brokers. The other indicators (items), the enterprises follow the current enterprise accounting regime (enterprise accounting regime issued Decision No.15/2006/QD-BTC dated 20/03/2006 of Ministry of Finance and the Circulars guide the amendment, supplement of the enterprise accounting regime).

- Data recorded in column 5 "Year beginning number" of this year's report is based on the figures recorded in column 4 "Year ending number" of each indicator of this report of last year;

- Data recorded in column 4 "Year ending number" of this report at the date of ending the annual accounting period, is guided as follows:

Receivable from customers (Code 131)

This indicator reflects the remaining receivable amount of the insurers, reinsurance receiving enterprises and other customers with payment term of less than 1 year at the time of reporting. Data to be recorded in the indicator "receivable from customers" based on the total detailed outstanding balance of the account 131 "receivable from customers" opened by each customer in the detailed accounting book Account 131, detailing receivables from short term customers.

Other receivables (Code 135)

This indicator reflects the receivables of premiums substituted to collect for original insurers, reinsurance receiving enterprises and other receivables from related objects at the time of reporting. Data to be recorded in the indicator "other receivables" is the total outstanding debt of the Accounts: Account1388, Account 334, and Account 338 on detailed accounting book of Accounts 1388, 334, 338, detailing short-term receivables.

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This indicator reflects the remaining receivable amounts of the insurers, reinsurance receiving enterprises for other customers classified as long-term assets at the time of reporting. Data to be recorded in the indicator "Long-term receivables from customers" is based on the details of the outstanding balance of account 131 "receivables from customers", opened in details by each customer for the receivables from customers are classified as long-term assets.

Other long-term receivables (Code 218)

Reflect the receivables of premiums substituted to collect for original insurers, reinsurance receiving enterprises and other receivables from related objects classified as long-term assets, deposits, long-term deposit, the long-term advances for the sellers (if any). Data to be recorded in the indicator "other long-term receivables" is the total detailed outstanding balance of the Accounts: 138, 244, 331, 338 (details of the other long-term receivables) on the accounting books detailing the accounts 1388, 244, 331, 338.

Payable to sellers (Code 312)

Reflect the amount payable to individuals and organizations co-participating in insurance brokerage, on the purchase of professional liability insurance and other sellers with a payment term of less than one year or under a business cycle at the reporting time. Data to be recorded in the indicator "Payable to the sellers" is a detailed balance of Account 331 "Payable to sells" are classified as short-term opened for each seller on the detailed accounting book of Account 331.

Taxes and amounts payable to the State (Code 314)

Reflect the total amounts that enterprises must pay to the State at the time of reporting, including the taxes (including contractor tax), fees and charges, others. Data to be recorded in the indicator "Taxes and amounts payable to the State" is a detailed balance of Account 333 "Taxes and amounts payable to the State" on accounting book detailing Account 333.

Other short-term payables (Code 319)

Reflect the short-term payables of premiums substituted to collect for original insurers, reinsurance receiving enterprises and other payables other than the payable liabilities which have been reflected in the above indicators, such as the value of surplus assets of unknown causes, payable to the social insurance agencies, ... Data to be recorded in the indicator "Other short-term payables" is the total credit balance of Account 338 "Other payables", Account 138 "Other receivables" on the detailed accounting book of Account: 338, 138 (not included the other payables which are classified as long-term payable liabilities).

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This indicator reflects the long-term payable liabilities of premiums substituted to collect for original insurers, reinsurance receiving enterprises and other payables such as: amounts that enterprises received for escrow, long-term deposit of other units at the time of reporting. Data to be recorded in the indicator "other long-term payables" is the total detailed credit balance of account 338 "Other payable" and Account 344 "Receive for escrow, long-term deposit" on accounting Book of Account 344 and accounting book detailing Account 338 (detailed long-term payables).

Mandatory reserve fund (Code 423)

This indicator reflects the mandatory reserve fund that has not been used at the time of reporting. Data to be recorded in the indicator "mandatory reserve fund" is the credit balance of account 416 - "mandatory reserve fund" on accounting book of Account 416.

2. The content and method of preparation of reports of business operation results (Form No.B 02 - DNMG)

This Circular guides the content and method of preparation of the indicators (items) with amendments and supplements to record figures into column 4 "This year" of this report of this year. The indicators (items) without amendments and supplements shall be made according to the current enterprise accounting regime (enterprise accounting regime issued Decision No.15/2006/QD-BTC on 20/3 /2006 of the Ministry of Finance and Circular guiding amendments to enterprise accounting regime).

- Figures recorded in column 5 "Last year" of this report of this year are based on the figures recorded in column 4 "This year" of each corresponding indicator of this report of last year.

- The content and method of preparation of the indicators recorded in column 4 "this year", as follows:

Revenue of sale of goods and provision of services (Code 01)

This indicator reflects the total revenue from insurance brokerage commission, consulting services and other revenues in the reporting year of the insurance brokers.

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Revenue deductions (Code 02)

This indicator reflects the total of amounts recorded as Decreases in total revenue in the year, including: Returning of insurance brokerage commissions and decrease of insurance brokerage commissions.

Figures to be recorded in this indicator is the accumulative number arising in the Debit of Account 511 "Revenue of sales of goods and provision of services" corresponding to Credit of the accounts 111, 112, 131 (in case of the change of coverage making premiums decrease leading to insurance brokerage commissions decreased), Account 531, "Returning of insurance brokerage commissions" and Account 532 "Decrease of insurance brokerage commissions" in the reporting period on the accounting book of accounts 111, 112, 131, 511, 531, 532.

Net revenue of sale of goods and provision of services (Code 10)

This indicator reflects revenue of goods and provision of services after deducting the revenue Decreases in the reporting year.

Code 10 = Code 01 - Code 02

Prime cost of goods sold (Code 11)

This indicator reflects the total direct cost of insurance brokerage business and other costs which are included in the prime cost or reduced prime cost of goods sold during the reporting period.

Figures to be recorded in this indicator is the accumulative number arising in the Credit of Account 624 "direct costs of insurance brokerage business" and Account 632 "Prime Cost of goods sold" in the reporting period corresponding to the Debit of Account 911 "Determination of business results" on the accounting books of Accounts 624, 632, 911.

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This indicator reflects the difference between the net revenue of sale of goods and service provision with prime cost of goods sold arising during the reporting period.

Code 20 = Code 10 - Code 11

3. The content and method of preparation of explanation of financial statements (Form No.B 09-DNMG)

This Circular supplements some contents of the explanation of financial statements in accordance with the insurance brokers. The indicators (items) without amendments and supplements shall be made according to the current enterprise accounting regime (enterprise accounting regime issued Decision No.15/2006/QD-BTC on 20/3/2006 of the Ministry of Finance and the Circulars guiding amendments, supplements to enterprise accounting regime).

In Section V - Additional information for items presented in the accounting balance sheet is amended and supplemented a number of contents as follows:

- At Point 03 – The other short-term receivables: To supplement receivable indicator of explanation of premiums collected in short-term as a substitute for the insurers, domestic, abroad reinsurance receiving enterprises.

- At Point 07 The other long-term receivables: To supplement receivable indicator of explanation of premiums collected in long-term as a substitute for the insurers, domestic, abroad reinsurance receiving enterprises.

- At Point 16 - Taxes and amounts payable to State: To supplement indicator of explanation of contractor tax.

- At Point 18 - Other short-term payables: To supplement receivable indicator of explanation of premiums collected in short-term as a substitute for the insurers, domestic, abroad reinsurance receiving enterprises.

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In Section VI - Additional information for items presented in the reports of business operation result is amended and supplemented a number of contents as follows:

Point 1 - Total revenue of sale of goods and provision of services: In particular, sale revenue is changed into the revenue of insurance brokerage commission.

Point 2 – Decrease of revenue: Supplements: Decrease of insurance brokerage commissions; Returning of insurance brokerage commissions.
Point 3 - Net revenue of sale of goods and provision of services: to add target of Net revenue of insurance brokerage commissions.

Point 4 – Prime cost of goods sold: To add the direct costs of insurance brokerage business, including insurance brokerage expenses; expense for purchase of professional liability insurance; cost of consultancy services provided.

4. The content and method of preparation of cash flows report; the content and method of preparation of the mid-year financial statements shall comply with the current enterprise accounting regime (enterprise accounting regime issued under Decision No.15/2006/QD-BTC dated 20/03/2006 of the Ministry of Finance and the Circulars guiding the amendments, supplements to the enterprise Accounting regime).

Article 12. Effect and implementation organization

1. This Circular takes effect 45 days from the signing date.

2. Director of Department of the Accounting and Auditing, Director of Insurance Supervisory Authority, Directors of the insurance brokers and heads of concerned units shall implement this Circular.

3. In the process of implementing this Circular, if any difficulties arise, the units should reflect to the Ministry of Finance for study and settlement./.

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FOR MINISTER
DEPUTY MINISTER




Tran Xuan Ha