Corporate financial regulations – Basic contents

Corporate financial regulations play an important role in managing and operating the financial activities of each enterprise. It not only ensures financial management but also helps businesses operate effectively. In this article, we will detail the basic content, construction and importance of corporate financial regulations.

What are corporate financial regulations?

Corporate financial regulations are not specifically defined in the Law on Enterprise 2020. However, it can be understood that this is a regulation establishing financial and accounting management principles. This regulation synthesizes and specifies policies, regimes and procedures related to finance – accounting, to ensure the financial operations of enterprises are effective and in accordance with the provisions of law.

The necessity of building financial regulations of enterprises

Developing financial regulations is a requirement for every business. Financial regulations help businesses establish a strict, effective and transparent financial management system, while minimizing risks and enhancing competitiveness.

Corporate finance regulations bring many important benefits. Some benefits can be mentioned as follows:

• First, it helps businesses comply with laws on finance, accounting, taxes and other relevant regulations.
• Second, it creates a professional, transparent and responsible working environment, helping to improve financial management efficiency.
• Third, it helps businesses manage financial risks proactively and effectively.
• Finally, it facilitates businesses’ access to capital sources and investment opportunities.

Basic contents of corporate finance regulations

Currently, the Law on Enterprise 2020 and related legal documents do not have specific regulations on financial regulation models in enterprises. Enterprises can design their own financial regulation templates to suit their operational characteristics and management requirements. Or businesses can refer to the financial regulation sample we provide. In general, a corporate financial regulation should include the following contents:

• General regulations: Clearly state the purpose, scope of regulation, subjects of application and related definitions.
• Asset management: Regulations on management of fixed assets, mobile assets, cash, receivables, and inventory.
• Capital management: Regulations on management of equity, loans, and payables.
• Revenue and cost management: Regulations on managing revenue, costs, product and service prices.
• Profit management and profit distribution: Regulations on profit determination, profit distribution, and fund appropriation.
• Financial risk management: Regulations on identification, assessment and management of financial risks.
• Accounting and financial reporting: Regulations on accounting work, preparation and presentation of financial reports.
• Control and audit: Regulations on internal control and independent audit.
• Implementation provisions: Clearly state the enforcement effect, implementation responsibilities and amendments and supplements to the regulations.

How to build corporate financial regulations

Basis for building regulations

Corporate financial regulations need to be built based on the following legal and practical bases:

• Pursuant to the current legal regulations at the time of formulating the regulations;
• Based on the size of the enterprise, the organization of the management apparatus, and the size of the capital source;
• Based on the business’s operating model;
• Based on the operating characteristics of the enterprise.

Regulation development process

The process of developing corporate financial regulations includes the following steps:

Step 1: Identify the department responsible for drafting financial regulations

Finance-related issues mainly belong to the Finance and Accounting Department; Therefore, it is appropriate for this department to be responsible for drafting financial sanctions. In addition, depending on the size and organizational structure of the enterprise, the enterprise can assign the drafting department to a specialized finance and accounting department or establish a drafting committee.

Step 2: Learn related legal documents

The drafting board needs to learn about laws, circulars, decrees, and instructions related to the field and business lines, in accordance with the operating model and organizational structure of the enterprise to create an outline of chapters, sections, and subsections accordingly.

Step 3: Outline and draft.

The next step is to create an outline from preliminary to detailed chapters, articles, sections…; Next, people in the Drafting Board or drafting group can be assigned to be in charge of each section for detailed drafting and comparison with current regulations. If the enterprise belongs to the Group – parent company – subsidiary model, the Financial Regulations need to be consistent with the Financial Regulations of the parent company and Group.

Step 4: Get feedback from relevant departments

After completion, businesses need to get feedback from relevant departments and leaders at all levels.

Step 5: Edit and issue

When adjusting and issuing decisions, businesses need to clearly state the application deadline, implementing departments, and sanctions for violating regulations to ensure compliance with the Regulations.

Consulting services and guidance on building reputable business regulations in Long Phan

Long Phan is a reputable consulting unit. We provide consulting services and guidance on developing corporate regulations, including financial regulations. With a team of experienced experts, we will support customers in building financial regulations suitable to the operating characteristics and management requirements of the business. Specifically, our services are as follows:

• Consulting on the bases for building corporate financial regulations;
• Consulting on the main contents of financial regulations;
• Provide a standard business regulation form with full content;
• Consulting and guidance on drafting corporate financial regulations;
• Review, amend, supplement and complete financial regulations according to customer requirements;
• Detailed instructions on the process of building effective corporate financial regulations;
• Providing reputable business regulation drafting services;
• Consulting on notes to build effective business regulations;
• Consulting and answering other issues related to corporate financial regulations.

Corporate financial regulations are an important tool to manage and administer the financial activities of enterprises. Building a suitable financial regulation will help businesses operate effectively, transparently and in compliance with the law. If you need advice and guidance on building business regulations, please contact Long Phan immediately via the hotline: 0906735386.