Period-End Accounting Tasks (Monthly, Quarterly, Annually)

1. Key Considerations When Closing Books to Prevent Errors

Closing the accounting books is a routine task that every accountant must perform monthly, quarterly, and annually. However, without proper procedures or review steps, errors are inevitable. Below are critical areas to review before preparing financial statements and tax finalizations to avoid adjustments following future audits or tax inspections:

1.1. Cash on Hand

Verify cash sources and ensure the cash balance does not fall into a negative figure.

1.2. Cash in Bank

Collect all bank statements and ensure the bank account balances as of December 31st annually match the balance in Account (AC) 112.

Evaluate if the cash balance is unusually large. If a company has a massive cash reserve while simultaneously incurring interest expenses, those interest expenses may be disallowed for tax purposes.

Reconcile bank balances; they must match exactly. Reconciliation can be done via confirmation letters or bank statements.

1.3. Deductible VAT

Compare the balance of Indicator 43 (VAT carried forward to the next period) on the VAT return with the balance of AC 1331. If input invoices are declared in the exact month/quarter they are issued, these figures will match. Conversely, if input invoices are declared in a different period, the debit balance of AC 1331 will differ from Indicator 43.

1.4. Accounts Receivable and Payable

Reconcile outstanding debts. Any discrepancies must be investigated to determine whether the buyer or seller omitted an entry. This is crucial because delayed recording can lead to tax risks (e.g., delayed revenue recognition results in tax arrears for the unrecorded year; recording this year’s expenses in the following year violates the matching principle, leading to the risk of those expenses being rejected later).

Identify doubtful debts and make provisions according to regulations:

• Overdue 6 to under 12 months: 30%
• 1 to under 2 years: 50%
• 2 to under 3 years: 70%
• 3 years or more: 100%
• Accounting entry: Debit AC 642 / Credit AC 229.
  Refer to Circular 228 for provisioning documentation, noting that a confirmation letter is a mandatory document for the provision to be deductible.

1.5. Employee Advance

Review and reconcile outstanding advances to ensure they are cleared if the corresponding transactions are completed.

1.6. Inventory

Ensure all inbound shipments are recorded and cost of goods sold (COGS) for outbound shipments is calculated.

Never issue more inventory than the currently available quantity.

Reconcile inventory held by customers (consignment).

For construction companies, the detailed balance of AC 154 must match the job-costing ledger (by specific project).

Identify damaged or devalued inventory to set up inventory write-down provisions. The calculation table for this provision must detail the account, inventory name, and item code, usually based directly on the physical count report. The provisioning dossier must strictly adhere to Circular 228 to avoid the risk of the expense being disallowed. Entry: Debit AC 632 / Credit AC 229 (for the difference between the required year-end provision and the existing provision).

1.7. Allocation of Prepaid Expenses

Compare the detailed allocation ledger for AC 242 with the balance of AC 242 on the Trial Balance. Identify which expenses are valid and which are not.

1.8. Fixed Assets

Ensure fixed asset documentation is complete, including invoices proving ownership. For assets like cars or buildings registered under the company’s name, ownership dossiers must comply with legal standards.

According to Circular 45/2013, every new asset must be registered for depreciation (including newly established enterprises or those that have already registered their depreciation method).

Verify if depreciation has been fully charged. Compare the detailed depreciation ledger with the balance of AC 214 on the Trial Balance. Evaluate the validity of the depreciation expenses and conduct physical asset counts to resolve any discrepancies.

1.9. Taxes Payable

Reconcile tax payments during the period with the tax authorities.

Ensure the Business License Tax has been expensed and the payment receipt is collected (Check AC 3338).

For VAT, PIT, and CIT: Verify declarations, tax payment vouchers, and accounting entries to ensure accuracy and completeness (Check AC 3331, AC 3335, and AC 3334 respectively). Pay attention to entries Debit AC 821 / Credit AC 3334, and Debit AC 3334 / Credit AC 111 for quarterly/annual payments.

Collect receipts for any other applicable taxes for proper recording.

1.10. Payroll, Insurances, Trade Union Fees, and PIT

Ensure all salary expenses are fully recorded. The credit balance of AC 334 must match the PIT Finalization Return.

Ensure insurance figures are reconciled and match the Social Insurance agency’s records.

Labor is a massive cost center, especially in manufacturing and construction. Complete and accurate PIT finalization is essential.

Register Personal Tax Codes for unregistered employees and dependents. Note residency status (refer to Circular 111) and authorization conditions for PIT finalization. Crucially, individuals earning income from two or more places are not eligible to authorize the company to finalize their taxes.

1.11. Loans and Borrowings

Review all loan and borrowing agreements, including internal borrowings.

1.12. Revenue

Identify Corporate Income Tax (CIT) taxable revenue, which includes sales, financial, and other revenues.

Maintain a tracking file for realized exchange rate differences for each payment to reconcile and record into AC 515 if a realized exchange gain occurs. Note that unrealized exchange rate gains from the year-end revaluation are not considered CIT-taxable revenue.

1.13. Cost of Goods Sold (COGS)

For commercial activities: The basis for COGS is the detailed Inventory In/Out/Balance ledger. Verify formulas and data to avoid formula errors causing COGS discrepancies.

For import/export activities: Rely on the tracking file for the cost of imported goods to check for errors.

For manufacturing activities: Base COGS on production norms. Check if material inputs exceed norms (causing negative variances) and adjust flexibly if needed.

Manufacturing overheads require valid and legitimate invoices.

Ensure COGS is fully recorded, aggregated, and transferred. Compare the COGS-to-Revenue ratio year-over-year; any abnormal spikes or drops require investigation.

1.14. Selling and Administrative Expenses

Verify that all expenses are backed by valid and legitimate invoices.

Monitor capped expenses (e.g., entertainment, conferences). If they exceed the cap (previously 15% of total deductible expenses, though regulations on this specific cap have evolved, so verify current laws), prepare a tracking spreadsheet to manage deductible amounts easily.

1.15. Financial Expenses

Evaluate the proportion of interest expense within total financial expenses.

If the company has a massive cash surplus but incurs interest expenses, these may be disallowed during a tax audit unless a strong business justification is provided.

Track realized exchange rate losses for each payment and record them in AC 635. Unrealized exchange rate losses from year-end revaluations are disallowed when calculating CIT.

1.16. Closing Entries (Period-End Transfers)

Closing entries are usually automated by accounting software. However, you must manually review to ensure Accounts Type 5 through Type 9 have zero balances. Once reconciled, export the data to the HTKK (Tax Declaration Support) software.

Required Year-End Reports:

Financial Statements: Balance Sheet (Form B01-DN), Income Statement (Form B02-DN), Cash Flow Statement (Form B03-DN), and Notes to the Financial Statements (Form B09-DN).

Tax Reports: PIT Finalization Report and CIT Finalization Report.

Pay annual CIT if profitable. If profitable, prepare Appendix 03-2A to carry forward prior years’ losses.

2. Additional Task Management for Tax Accountants

To minimize unnecessary omissions, tax accountants should structure their workflow around these timelines:

2.1. Beginning-of-Year Tasks

• Declare and pay the Business License Tax (Deadline: January 31st). New companies must file and pay within 30 days of receiving their business license. If there’s a change in charter capital, the deadline is December 31st of the year the change occurs.
• Submit the VAT and PIT returns for December or Q4 of the previous year (Deadline: Jan 20th for monthly filers, Jan 30th for quarterly filers).
• Submit the provisional CIT return and the Invoice Usage Report for Q4 of the previous year.
• Submit Financial Statements, CIT Finalization, and PIT Finalization for the previous year (Deadline: March 31st).

2.2. Daily Tasks

• Record, collect, process, and archive invoices/vouchers: Gather all relevant input/output invoices for economic transactions. Verify their legality, validity, and rationality. Handle incorrectly written or illegal VAT invoices immediately per Circular 39/2014/TT-BTC. Draft necessary receipts, payment vouchers, sales invoices, and goods issue notes.
• Update ledgers: Update cash books, bank deposit books, and other necessary ledgers.
• Archiving rules: Non-accounting documents are kept for 5 years; accounting documents used for recording are kept for 10 years; documents of special importance are kept permanently.

2.3. Monthly Tasks

• File monthly VAT and PIT returns (if applicable). Output invoices must be declared in the month they occur. Input invoices have no strict time limit but must be declared before a tax inspection decision is issued.
• File other tax returns if applicable.
• Submit the monthly Invoice Usage Report (for businesses operating under 12 months).
• Deadline: The 20th of the following month (applies to both the return and the tax payment).

2.4. Quarterly Tasks

• File quarterly VAT, provisional CIT, PIT returns, and the quarterly Invoice Usage Report.
• Deadline: The 30th of the first month of the following quarter.

2.5. Year-End Tasks

• File tax reports for the final month/Q4.
• Prepare annual PIT and CIT Finalization reports.
• Conduct physical counts of cash, inventory, and fixed assets; reconcile debts.
• Finalize accounting books and reconcile detailed/general ledgers.
• Prepare the full set of Annual Financial Statements (Balance Sheet, Income Statement, Cash Flow Statement, Notes, and Trial Balance).
• Print, sign, and securely archive all accounting books and vouchers.