Lao People’s Democratic Republic
Peace Independence Democracy Unity Prosperity
Ministry of Finance No.: 531/MoF
Vientiane Capital, Date 26 February 2016
on the Implementation of the Accounting Law
The Minister of Finance hereby issues an Instruction:
Article 1. Objectives
This Instruction is issued to elaborate some articles as stated in the Law on Accounting to be complete and clear, in line with the economic-social growth of the country, the region, and international in each period aiming for the implementation of accounting work to be accurate, transparent, effective, and uniform countrywide.
Article 2. Contents of Instruction
This Instruction shall be implemented simultaneously with Law on Accounting with additional details, mainly on financial reporting standards, accounting work implementation, financial statements, accountant, supervision and inspection of accounting work, uniform, symbol of accounting officials, awards for good performance and measures against violators.
Financial Reporting Standards
Article 3. Implementation of Financial Reporting Standards
Implementing government accounting entities and implementing enterprise accounting entities shall use financial reporting standards to prepare financial statement of their entities in accordance with Article 12 of Law on Accounting that is adopted and announced by the Minister of Finance in each period.
Article 4. Use of Accounting Standards for Implementing Government Accounting Entities
A budget unit, technical and fund administrative organization of the government shall use International Public Sector Accounting Standards based on cash. Ministry of Finance issues on specific implementation periodically for the implementing government accounting entities and relevant sectors in order to move towards implementation of International Public Sector Accounting Standards based on the financial receivable-payable principles step by step as stated in Article 13 of the Law on Accounting.
Article 5. Financial Reporting Standards for Public Interest Enterprises
Public Interest Enterprises shall apply the International Financial Reporting Standards adopted and announced by International Accounting Standards Board in each period.
Public interest enterprises that will implement financial reporting standards for the first time shall notify in writing to the Department of Accounting, Ministry of Finance six months prior to its commencement starting from accounting year based on the following conditions: accounting mechanism, accounting human resource with qualifications as stated in Article 58 of the Law on Accounting. The Department of Accounting considers and provides a response in writing three months prior the end of accounting year.
Article 6. Financial Reporting Standards for non-Public Interest Enterprises
Financial Reporting Standards for non-Public Interest Enterprises are categorized into two levels that are adapted from International Financial Reporting Standards for Small and Medium Enterprises (IFRS for SMEs 2009), which include Financial Reporting Standards for Large, Small and Medium Non-Public Interest Enterprises.
Non-Public Interest SMEs as stated in the law and regulations on SMEs Promotion covering 2/3 of the conditions, mainly in terms of average annual labors, total asset value, and annual revenue shall fuse financial reporting standards for Non-Public Interest SMEs. Regarding Non-Public Interest Enterprises with higher conditions than SMEs shall use financial reporting standards for large Non-Public Interest Enterprises. For enterprises with lower requirements conditions than SMEs shall implement accounting work as stated in specific regulations.
Article 7. Changing for the Use of Financial Reporting Standards
The enterprise can change Financial Reporting Standards with higher standards than Financial Reporting Standards stated in the Law as following:
Enterprises wish to use above-mentioned financial reporting standards shall notify in writing to the Accounting Department, Ministry of Finance, starting from the beginning of accounting year.
Article 8. Consideration for Changing for the Use of Financial Reporting Standards
The Accounting Department, the Ministry of Finance consider changes to use financial reporting standards of enterprises based on accounting mechanism, human resources, internal training plan, consultant, training participation, by giving a written response to enterprises at least three months prior to ending of the accounting period.
Enterprises authorized to use higher level of financial reporting standards shall use financial reporting standards at least five consecutive years.
Enterprises that use financial reporting standards on the closing period with more than or less than two-third of conditions of SMEs as stated in Article 7 of this Instruction, such enterprises can change financial reporting standards for Non-Public Interest SMEs only when the enterprise’s condition is stable for two consecutive years.
Implementation of Accounting Work
Article 9. Holding Accounts
Holding accounts is the collection, recording, classification and summarization of financial-accounting information including preparing accounting and financial reporting documents by units holding accounts shall ensure full creditability of accounting work as stated in Chapter 1, Part III of the Law on Accounting.
Article 10. Use of Foreign Currencies
Enterprises that use foreign currencies that are not the main currency in business operation are to use exchange rate of final day of accounting year stipulated by commercial banks that they have main transactions with in exchanging currencies for the preparation of financial statements as stated in the financial reporting standards used.
Article 11. Accounting Documents
Accounting documents are main information in the correct implementation of accounting work as stated in Article 24 of the Law on Accounting. The units holding accounts shall pay attention to fully and correctly prepare accounting documents in accordance with regulations.
Article 12. Accounting Manual
Implementing accounting entities shall create specific accounting manual for work implementation works in accordance with Article 25 of the Accounting Law, which includes structure and contents as follows:
Article 13. Financial-Accounting Documentation
Implementing Accounting Entities must prepare finance-accounting documentation, especially it shall include authorization, purchase order, withdrawal request, invoice, cheque, trade instruments, credit, receipt, deliver receipt, import-export tax declaration, bank statement, contractual agreement, memorandum, and so on. Financial-accounting documents shall have correct details with original and copy with signature and name of the authorized persons or person with power attorney.
Article 14. Finance-Accounting Supporting Documents
Supporting documents shall have signature of authorized person or director of implementing accounting entity as stated in Article 20.2 of the Accounting Law as follows:
For electronic signature, it shall follow Law on Electronic Transactions.
Article 15. Chart of Accounts
Chart of Accounts is the systematic classification of accounts with codes and names in appropriate groups, based on which relevant economic-financial of accounting entities as stated below:
Article 16. Accounting Books, Registers, and Trial Balance
Implementing accounting entities shall prepare accounting books, registers, and trail balance in line with the form publicized by Ministry of Finance from time to time.
Implementing government accounting entities shall register journals and registers with accounting sector. Government implementing entities at central level shall register its journal with Accounting Department of the Ministry of Finance, and local level register at Accounting Office of Division of Finance of Province/Prefecture.
Article 17. Financial Statements
In order to have accounting work implementation in line with international financial reporting standards and economic actual condition move to integration with regional and global and provide additional explanation on supporting documents as stated in Article 31 of the Accounting Law, as follows:
The components of financial statement include the following changes:
1. Implementing Government Accounting Enterprise
Financial Statements as stated in Article 31 of The Accounting Law including revenue-expense report for state treasury, cash report, and explanatory notes with accounting principles in line with cash basis under International Public Sector Accounting Standards. At the same time, explanatory notes shall include basic financial position report in line with a separated regulation set forth by Ministry of Finance, which the regulation update from time in order to be prepared to move toward the accrue basis under International Public Sector Accounting Standards.
2. Implementing Accounting Enterprise Entity
Statement of financial position and Statement of Financial Performance as stated in Article 31 of The Accounting Law shall have format in line with financial reporting standards as below:
2.1 Statement of Financial Position shall include current assets, non-current assets, short-term debts, long-term debts, and owner’s equity, unless there are other forms that are more reliable and reasonable.
2.2. Statement of Financial Performance has two forms: based on contents or scope of works in accordance with Financial Report Standards for non-Public Interest Entities. The statement of performance refers to Comprehensive Income Statement and Result Report.
Financial report form for specific activity based on Financial Report Standards for non-Public Interest Entities for Small-Sized and Medium-Size entities shall be set by Ministry of Finance as reference for the implementation.
Separate financial performance statement shall be prepared and submit based on contents, each implementing accounting enterprise can also prepare and submit financial performance report based on scope of works. Consolidated financial performance report shall be prepared based on contents or scope of works.
Implementing accounting entities shall prepare or submit financial performance report showing overall result for separate financial statements or consolidated financial statements in line with financial reporting standards.
Reporting of Financial Statements
Article 18. Timeline for Monthly Financials Statement Reports
Timing for monthly financial statement reporting is stated in Article 44 of The Accounting Law, implementing accounting government entities shall be carried out as follows:
Article 19. Timeline for Preparation of Annual Financial Statement Reports
Timing for annual financial statement reporting is stated in Article 45 of the Accounting Law as follows:
Implementing enterprise accounting entities shall complete preparing their annual financial statement within two (2) months after the closing date of the annual accounts and have them signed by managers and head of accounting to verify correctness of the statements as well as report and send the documents to the relevant sectors.
In the event the enterprise operate or cease its business operation any time during the reporting period less than twelve (12) months shall prepare financial statements in line with the reporting timing standards as well as report and send the document to relevant accounting sectors in a timely manner.
Article 20. Accountability for Financial Statement
Managers or supervisions of relevant implementing accounting entities are directly and completely responsible for the financial statements to be correct, clear, complete, credible, and transparent prepared by their entities, by not refusing and leaving such accountability to their accounting employees, head of accounting or accounting enterprise (if hired). Therefore, managers of the implementing accounting entities shall implement their accounting works in compliance with accounting regulation, such as, hiring accountant with full qualifications, ensure correctness of supporting documents and reports in the accounting books correctly, fully, timely, and in line with the financial reporting standards used by the entity.
Article 21. Accountability of Implementing Accounting Entities for Reporting
Implementing Accounting Entity shall have accountability as stated in Article 47 of The Accounting Law as follows:
Implementing government accounting entity shall have responsibility in details as follow:
Within three (3) months after closing date of annual accounts, implementing enterprise accounting entities shall submit annual financial statements to accounting sector to supervise and inspect accounting work implementation and bookkeeping in the period as stated, supporting the enterprise to hold correct accounting standards in line with accounting regulations, ensuring completeness, accuracy, transparency, timeliness, and submit to tax sectors as reference for supervision and inspection.
Also, any sectors that sets financial statement submission period for its relating entities, then they shall submit based on the rules of such sector.
Article 22. Accountants
Implementing accounting entities hire accountant heads shall ensure it recruit a qualified person with accounting training certificates from Ministry of Finance or relevant ministries recognized by Ministry of Finance as stated in Article 58 of the Accounting Law.
Article 23. Upgrading Accounting Professional Knowledge
Heads of Public Interest Entities and non-Public Interest Entities shall be registered members of Lao Chamber of Professional Accountants and Auditors (LCPAA), to ensure heads of account have continuously upgrade from accounting and audit professionals as stated in Article 58 and 63 of The Accounting Law in order to upgrade accounting and audit profession and regulations to ensure professional quality in preparing financial statements.
Public Interest Entities and non-Public Interest Entities shall support accountant heads for continuously upgrade their professional knowledge by attending trainings with Lao Chamber of Professional Accountants and Auditors (LCPAA). In the event head of the enterprise has no continuously training certificates, it shall not be allowed to work in the position of accounting head.
Supervision and Inspection of Accounting Work Implementation
Article 24. Supervision and Inspection
Referring to Article 79 and 84 of the Accounting Law, Ministry of Finance is directly responsible for the supervision and inspection of accounting work by assigning Department of Accounting as the secretariat for the work supervision and dividing responsibilities for the accounting sector in the country as follows:
The accounting sector shall collect accounting statistics that under its authority in detailed, clear, and repot monthly, periodically, and annually to the above authority from time to time.
Article 25. Accounting Supervision
Department of Accounting, Office of Accounting, District and Municipal Finance Offices have rights and duties in the accounting supervision as stated in Article 80 and 81 of the Accounting Law and additional responsibilities as follows:
Accounting Supervision Organization consider in the issuing of annual accounting monitoring book to implementing enterprise accounting entities regularly on the basis of inspecting financial statements and accounting and/or audit documents in the accounting work implementation of implementing enterprise accounting entities.
For newly established enterprise that are registered under industry and commerce sectors as individual, legal entities, shall have accounting monitoring book from accounting sector on the basis of inspecting information pertaining to capital contribution, sources, and the accounting working implementation plan as reference for supervision and collecting statistics, emphasizing on accounting work implementation of the entities in line with applicable laws each period as stated in Article 6 of the Accounting Law.
Details of supporting documents and reports, Department of Accounting, Ministry of Finance shall issue specific announcement.
Article 26. Collaboration in Supervision and Inspection Work
Ministry of Finance assigns accounting sectors in collaborating with main sectors such as State Budget, National Treasury, Tax, Customs, Industry and Commerce, and other relevant sectors in order to lay out rules and mechanism in the supervision and inspection of implementing government entities, and implementing enterprise accounting entities.
Article 27. Accounting Inspection
In order to implement accounting inspection of implementing enterprise accounting to ensure compliance with the regulation and financial reporting standards as stated in Part 2 of the Accounting Law, inspections authorities shall inspect based on the following steps:
Accounting officials inspect financial statements and relating documents of implementing accounting entities that are submitted to accounting sectors as stated in Article 48 of the Accounting Law as reference in issuing annual accounting record.
Officials of accounting sectors inspect on spot at the office of the implementing accounting entities, mainly on the structure of accounting work, accountant, documents, internal control and audit, financial statement preparation and submission, including management method of documents and accounting information of the entities. After completion of accounting officials, they shall prepare and verify by signing with implementing accounting entities to be an evidence and reference in the monitoring for accounting work implementation of accounting entities.
In the event there is concealing, hiding, destroying, and keeping secret of the financial-accounting information that cause damage to the state, [and] revenue collection, the accounting officials have rights and claim by ordering payment of their income to the state with fines according to the regulations and laws.
Uniform and Logo of Accounting Officials
Article 28. Uniform and Logo of Accounting Officials
Accounting officials have a specific uniform and logo based on their positions for official activities in line with their duties, roles, scope of rights and responsibilities as follows:
For details Department of Accounting is responsible for the implementation.
Awards Good Performance and Measures against Violators
Article 29. Awards Good Performance
Individuals, legal entities, and organizations contribute to implementation of accounting work with actuality, completeness, in accordance with rules of law and this Instruction will receive awards or other policies in accordance with regulations.
Article 30. Measures against Violators
This instruction elaborate Article 97, Chapter X of the Law on Accounting on Measures against Violators of laws and regulations that education or written warnings or fines will be applied as following:
A. Implementing Accounting Government Entities
Implementing Accounting Government Entities shall be penalized as follows:
B. Implementing Accounting Enterprise Entities
Implementing Accounting Enterprise Entities shall be penalized as follows:
C. Head of Accounting
Head of accounting shall be penalized as follows:
D. Accounting Staff
Accounting staff shall be penalized as follows:
E. Accounting and Audit Firm
Accounting and audit firm shall be penalized as follows:
F. Individuals, Legal Entities, and Other Organizations
Individuals, Legal Entities, and Other Organizations shall be penalized as follows:
Article 31. Management of Revenue from Fines
Fines in each case as stated in Article 30 of this Instruction and to be implemented by each accounting sector and other sectors relating to accounting work shall be centrally managed at each level of accounting sector. The forms and methods of calculating fines are to be implemented based on the prescribed forms issued by Ministry of Finance.
Article 32. Implementation
Supervision and audit accounting work, implementing accounting entities, and relevant sectors shall acknowledge and strictly implement this Instruction.
Article 33. Effectiveness
This Instruction on the Implementation of the Law on Accounting is effective from the date of signature.
Minister of Finance
(Signature and stamp)
Dr. Lien Thikeo