Thông tư 09/2016/TT-BTC

CIRCULAR

ON REGULATION ON FINALIZATION OF COMPLETED PROJECTS FUNDED WITH STATE CAPITAL

Pursuant to the Law No. 01/2002/QH11 on State budget dated December 16, 2002;

Pursuant to the Government’s Decree No.60/2003/ND-CP dated June 06, 2006 on elaboration and guideline for implementation of the Law on the State Budget;

Pursuant to the Government's Decree No.32/2015/ND-CP on construction investment management dated March 25, 2015;

Pursuant to the Government's Decree No.37/2015/ND-CP on elaboration of construction contracts dated April 22, 2015;

Pursuant to the Government's Decree No.59/2015/ND-CP on construction project management dated June 18, 2015;

Pursuant to the Government’s Decree No.77/2015/ND-CP dated September 10, 2015 on annual and mid-term public investment plans;

Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013 defining the functions, power, responsibilities and organizational structure of the Ministry of Finance

Upon request of the Director of the Department of Investment,

The Minister of Finance hereby issues this Circular providing regulation on finalization of completed projects funded with State capital.

Chapter I

GENERAL PROVISIONS

Article 1. Scope and subjects of application

1. Scope:

a) This Circular stipulates finalization of State-funded projects which are already completed or permanently cancelled.

State capital includes public investments, credit capital guaranteed by the Government, loans secured by the State’s assets and State-owned enterprises’ development investments.

b) This Circular does not apply to projects whose investment decisions are issued by the Presidents of People’s Committees of communes. The project financial statements and verification of project financial statement shall be carried out in accordance with the Ministry of Finance’s Circular on guideline for management of capital construction investments at communal level. .

2. Subjects of application:

This Circular applies to entities engaging in finalizing State-funded completed projects.

3. This Circular may apply to preparation of finalization reports and verification of finalization of completed project s other than those specified in clause 1 of this Article.

Article 2. Objectives of project finalization

1. Evaluate the achievements of investment and determine the production capacity and value of assets generating from investment.

2. Evaluate the implementation of State’s regulations in the process of investment; define responsibilities of investors, contractors, authorities granting funding and loans, debt control agencies and relevant State management authorities.

3. Complete the State's policies and mechanism; enhance the effectiveness in nationwide investment management.

Article 3. Finalized investments

 Finalized investment is the whole legally actual expenses incurring during the process of construction until the project comes into operation. Legitimate expense is the whole of actual expenses incurring in the process of execution of the approved project, design and cost estimate; concluded contracts (for contractual work), including their revision and supplementation approved intra vires and under regulations of laws. The finalized investments must not exceed the total investment approved or revised under regulations of laws.

Article 4. Finalization of completed component projects, sub-projects; and independent work items

1. Each component project or independent sub-project of any nationally significant project, group A project or program (having separate investment decisions) shall have its financial statement prepared, verified and approved as for an independent project under provisions hereof.

After a nationally significant project, group A projects or program is completed; the regulatory authority and People’s Committee of the province designated to manage the main component project shall submit a consolidated financial statement of the whole project using form 09/QTDA attached hereto to the Prime Minister, Ministry of Finance and Ministry of Planning and Investment, and shall be relieved of auditing, re-verification and re-approval for the financial statements of component projects or sub-projects which are verified and approved under regulations of laws.

2. Where it is necessary to immediately finalize an independent work item or project which is completed and comes into operation, the investor shall, according to the scale, characteristics and construction duration, request the investment decision-maker to review and approval. The final expense for construction of a work item includes construction costs, material costs, consulting fees and other direct costs. After the whole project is finished, the investor shall submit the competent person the financial statement of the whole project in which cost breakdown shall be specified.

Article 5. Finalization of projects funded with ODA and concessional loans by sponsors

1. Finalization of projects funded with ODA and concessional loans by sponsors shall conform to International Treaty on ODA and concessional loans to which the Government or State of the Socialist Republic of Vietnam is a signatory. Where it does not conflict the international agreement on ODA and concessional loans, finalization of projects funded with ODA and concessional loans by sponsors shall conform to clause 2 and 3 of this Article.

2. Construction projects, sub-projects or component projects shall be finalized in accordance with provisions hereof. Technical assistance projects and other projects shall be finalized in accordance with specific provisions of the Ministry of Finance’s Circular on provisions of guideline for approval, verification and notification of annual financial statements for administrative authorities, public service providers and organizations funded with the State budget and budgets at all levels.

3. For any technical assistance project or program its sponsor directly manages the investment and executes the project/program, the investor shall submit the financial statement on domestic counterpart fund that (s)he manages (if any) and record the increasing value of assets corresponding to the investment transferred by the sponsor.

Article 6. Finalization of particular projects

Where it is necessary to promulgate separate regulations on finalization of particular projects specified in Article 42 of the Government’s Decree No.59/2015/ND-CP dated June 18, 2015 on construction investment management, regulatory authority having particular projects shall propose and discuss promulgation of such regulations with the Ministry of Finance .

Chapter II

SPECIFIC PROVISIONS

Article 7. Project financial statements

1. A financial statement shall be fully and accurately specify:

a) Sources of funding in detail;

b) Total investment and cost breakdown ( costs of compensation, relocation, construction, equipment, project management, consulting and others);

c) Costs of compensation for damage occurred in the process of investment;

d) Expenses allowed not to be included in the value of assets derived from investment

dd) Values of assets derived from the investment

2. Specimens of financial statements:

a) For completed projects, completed independent work items and cancelled projects whose construction workload and equipment installed thereof are accepted, forms1, 02, 03, 04, 05, 06, 07/QTDA attached hereto shall be applicable.

b)For projects financed with the development investment fund (if any) and cancelled projects none of its construction work and equipment installed thereof are accepted, forms 03, 07 and 08/QTDA attached hereto shall be applicable.

3. Project financial statements shall be submitted to the authority in charge of verifying and approving the financial statement , investor’s supervisory authority (if any), debt control agencies to attest the amount of loans granted to the projects and amount of repayment.

Article 8. Application for approval for financial statements

The investor shall submit an application to the authority having the power to approve. The application includes:

1. For completed projects , completed independent work items and cancelled projects having construction work and equipment installed thereof :

a) An original written request prepared by the investor Where the independent auditor is hired , the written request shall specify consistencies, discrepancies between the investor’s contents and independent auditors and reasons for discrepancies ;

b) An original copy of the financial statement as stipulated in Article 7 hereof;

c) Relevant documents as specified in form 02/QTDA (either original copies or certified copies);

d) The financial statements of each specific contracts including original copies of the construction contracts, records of acceptance of completed work by payment schedule; written approval for revisions, supplement and replacement (if any), records of acceptance of the whole contract; contractor’s final contract price spreadsheet (A-B spreadsheet); as-built documents; original or certified true copies of construction logbooks (for contracts covering construction activities); contract closure records where eligible under regulations of laws on contracts and other documents as mutually agreed in the contract;

dd) Records of acceptance of completed projects or independent work items; State competent authority’s written approval for acceptance results (original);

e) An original copy of independent auditor’s report on audited financial statement of the completed project where the independent auditor is hired to carry out auditing;

g) Inspection conclusions, inspection records and auditor’s reports issued by the State audit office and inspecting authority in case the State audit office and inspecting authority carry out inspection and audit of the project; investigation results of law enforcement authorities if the investor commits any violation ; and status reports on completion of these above mentioned documents.

2. For projects financed with the development investment fund (if any) and cancelled projects having none of the construction work completed and equipment installed thereof:

a) An original written request prepared by the investor;

b) An original copy of the financial statement as stipulated in Article 7 hereof;

c) Relevant documents as specified in form 02/QTDA (either original copies or certified copies);

d) The financial statement of each specific contract including original copies of the construction contracts, records of acceptance of completed work by payment schedule; written approval for revisions, supplement and replacement (if any), records of acceptance of the whole contract; final contract price spreadsheet (A-B spreadsheet); contract closure records where eligible under regulations of laws on contract ;

dd) An original copy of independent auditor’s report on financial statement of the completed project where the independent auditor is hired to carry out auditing;

e) Inspection conclusions, inspection records and auditor’s reports issued by the State audit office and inspecting authority in case the State audit office and inspecting authority carry out inspection and audit of the project; investigation results of law enforcement authorities if the investor commits any violation subjected to investigation ; and status reports on completion of these above mentioned documents.

3. In process of verification, investors shall submit other relevant documents serving the purpose of verification of financial statements upon request of the verifying authority.

4. Where the contractor has yet to prepare the financial statement of the contract, the investor shall request the contractor in writing using form 14/QTDA to prepare or complete financial statement within a certain deadline . If the contractor, after receipt of the third written request from the investor, has yet to comply with the investor's request, the investor shall, according to actual available documents, prepare and submit the financial statement ( excluding A-B financial statement spreadsheet) and propose the final amount of payment to the competent authority for approval. The contractor shall pay all incurred damages (if any) and shall be responsible for compliance with the decision on approval for project financial statement issued by the competent authority.

Article 9. The authority to approve financial statements and verifying authorities

1. The authority to approve financial statements:

a) For nationally significant projects and other important projects whose decision on investment is issued by the Prime Minister:

- For projects or component projects financed with public investments: The Heads of Ministries and central authorities have the authority to approve the financial statements of projects or component projects under the management by Ministries and central authorities; the Presidents of the People’s Committees of provinces have the authority to approve the financial statements of projects or component projects under the management of the province; the Presidents of the People's Committee of districts have the authority to approve the financial statements of projects or component projects under the management of the district.

- Investors have the authority to approve the financial statements of projects other than those funded with public investments.

- After finalizing the whole project, Ministries, regulatory authorities and People’s Committee of provinces designated to manage the main component projects shall take charge of submitting the consolidated financial statement of the whole project to the prime Minister, Ministry of Finance and Ministry of Planning and Investment.

b) For other types of projects, the investment decision-maker has the authority to approve the financial statements of completed projects . The Ministers, Heads of Ministerial-level agencies, Governmental agencies, central authorities of trade unions, Presidents of People’s Committees of provinces may be authorized or assigned to approve financial statements of group B and group C projects which are conducted by the immediately subordinate authorities.

2. Verifying authorities:

a) The Departments of Finance shall conduct verification of public investment-funded projects within the management of provinces.

b) The Departments of Finance – Planning shall conduct verification of public investment-funded projects within the management of the district.

c) The person having the authority to approve the financial statements shall assign professional authorities within his/her administration to verify the financial statements of projects of other types prior to approval.

Where necessary, the competent authority having the authority to approve the financial statement shall establish a verification team which is constituted by representatives of relevant authorities to conduct verification prior to approval.

Article 10. Audit of financial statements of completed projects

1. Where an audit of the financial statement of the completed project is required prior to verification and approval by the approving person; the investor shall select an audit contractor to conduct the audit of financial statement of the completed project as stipulated in regulations of laws on biding and sign the audit agreement as stipulated in contract laws. Investors, independent audit contractors and relevant agencies shall comply with clause 2 and 3 of this Article.

2. Audit contractors in charge of audit of financial statements of completed projects (hereinafter referred to as “audit contractor”) shall be audit firms incorporated in accordance with regulations on establishment and operation of enterprises in Vietnam. Audit contractors shall conform to regulations of laws on independent audit and current auditing practices. After the audit is finished, the audit contractor shall prepare a report on audited financial statement of the completed project in accordance with Vietnam’s Audit Standard in audit of financial statements of completed projects.

3. For projects whose financial statements are audited by the State Audit Office of Vietnam:

a) In case the State Audit Office audits financial statement and releases auditor's reports which contain sufficient required information as stipulated in Article 12 hereof, the verifying authority shall use such auditor’s reports as the basis for verification and independent auditors shall not be necessary.

b) Where the audit conducted by the State Audit Office does not cover all aspects specified in Article 12 hereof, the investor shall select an independent audit contractor to carry out additional audit of unaudited aspects upon request of the approving person. Costs of the additional audit shall be determined similarly to costs of audit of work items and packages as stipulated in point c clause 1 Article 21 hereof. The verifying authority shall use both State office auditor’s report and independent auditor’s report as the basis for verification of the project financial statement.

c) In the event that the State Audit Office decides to carry out the audit after the investor and independent audit contractor sign an audit contract, the audit contract shall be continued as stipulated in the Standards in audit of financial statement of completed project and the concluded contract.

Article 11. Verification of audited financial statement of completed projects

1. Where the independent audit contractor audits the completed project’s financial statement, the verifying authority shall :

a) Verify the legitimacy of the audit contract, scope of audit, procedure and date of audit.

b) Compare the contents of the auditor's report with the regulation and standard in audit of completed projects ‘ financial statements ( currently known as the Vietnam’s audit Standard 1000 – audit of financial statement of completed projects enclosed with the Circular No.67/2015/TT-BTC dated May 08, 2015 by the Ministry of Finance). During the verification, where any incorrectness or deficiency in the contents of the audited financial statement is found, the verifying authority shall notify the investor and the investor shall request the audit contractor to re-audit or conduct an additional audit.

c) Inspect the compliance with relevant legislative documents and legal basis applicable to audit of the project financial statements by the auditor.

d) Review proposals and contents on which the investor disagrees with the independent audit contractor.

dd) Examine the investor and relevant agencies’ obedience to conclusions of inspecting authorities, State Audit Office and law enforcement authorities in case these above mentioned authorities conduct inspection and investigation . Where necessary, the verifying authorities shall request relevant authorities to give opinions in writing prior to submission to the competent person.

2. Where the State Audit Office’s audit covers all contents specified in Article 12 hereof, the verifying authority shall:

a) Compare the State Audit Office's report with the investor’s project financial statement to assess the compliance with regulations of laws by investors and relevant agencies; compare the investor’s figures about final expenses required to be paid and that in the auditor’s report as the basis for requesting the competent authority to consider approving.

b) Examine the investor and relevant agencies’ obedience to conclusions of inspecting authorities, State Audit Office and law enforcement authorities in case these above mentioned authorities conduct inspection and investigation. Where necessary, the verifying authorities request relevant authorities to give opinions in writing prior to submission to the competent person.

Article 12. Verification of unaudited financial statements of completed projects and work items

The verifying authority shall conduct verification of unaudited financial statement of the completed project and work item as stipulated in Article 13, 14, 15, 16, 17 and 18 hereof and prepare a verification report which covers the results of verification of:

1. Legal documents;

2. Sources of finance;

3. Investments;

4. Investment costs not included in asset values;

5. Values of assets derived from investment;

6. Payable and receivable accounts, materials and equipment in stock;

7. The investor and relevant agencies’ obedience to conclusions of inspecting authorities, State Audit Office and law enforcement authorities in case these above mentioned authorities conduct inspection and investigation.

8. Commentaries, evaluation and proposals.

a) Commentaries on obedience to State’s regulations on management of investment, construction and biding; management of investment costs and invested assets; and responsibilities for investment management by specific authorities;

b) Proposals for final amount of payment and measures for addressing relevant issues.

Article 13. Verification of legal documents

According to reports made by using form 02/QTDA and project-related legal documents, the verifying authority shall compare the list and process of preparation of legal documents with that stipulated in regulations and give commentaries on:

1. Process of preparation and approval of documents, the authority to approve;

2. Compliance with process of investment and construction stipulated in the regulations of laws on investment and construction;

3. Compliance with the process of selection of contractors carrying out project packages as stipulated in laws on bidding;

4. Negotiation and conclusion of contracts between the investor and contractors under regulations of laws on contracts; bid award decisions and contract pricing methods prescribed in the award decision by the competent authority .

Article 14. Verification of sources of finance

According to the report made by using form 01/QTDA and 03/QTDA , the verifying authority shall:

1. Analyze and compare the actual project financing structure with the expected project financing structure in the approved total investment (form 01/QTDA).

2. Check figures about annual repayments recorded by investor against that recorded by the payment agency (form 03/QTDA).

3. Check the increase and decrease in the investments permitted by the competent authority .

4. Evaluate the compliance with regulations on grant of loans, repayment; management and utilization of sources of finance.

Article 15. Verification of investment costs

On the basis of the approved total investment and report made by using form 04/QTDA, the verifying authority shall conduct verification of costs of compensation and relocation, construction, materials, project management , consulting fees and other expenses as stipulated in the project financing structure.

1. Principles of verification:

a) Verification of the compliance with regulations on construction contracts shall be conducted at the time of execution of the contract and decisions on approval for contractor selection results issued by the competent authority; verification of financial statements shall be carried out based on pricing methods prescribed in construction works (methods of contractor selection shall not affect). Where necessary, the verifying authority shall examine as-built documents to determine the quantities of completed work undergoing the regulatory acceptance.

b)Where costs of temporary construction works, auxiliary works, construction camps for accommodation and execution in the construction site are separately designed and estimated by work item, the verification shall be carried out as for an independent construction package.

c)Where costs of construction of temporary construction works, auxiliary works, construction camps for accommodation and execution in the construction site are included in the estimates of main construction package and are expressed by percentage; the percentage of such costs shall be verified according to the main construction package verification results.

2. Verification of costs of compensation and relocation:

a) Verification of costs for compensation and relocation assistance carried out by the investor or authorities in charge of compensation and site clearance: check the final amount of payment proposed by the investor against cost estimates specified in the compensation and relocation plan which is approved by the competent authority; and check the compensation logbook signed by compensated entities

b) Costs of implementation of compensation and relocation assistance carried out by authorities in charge of compensation and site clearance: the Circular No.74/2015/TT-BTC dated May 15, 2015 by the Ministry of Finance on guideline for preparation of cost estimates, allocation and finalization of costs of implementation of compensation and relocation when land is withdrawn by the State shall apply.

c) Where the compensation and relocation assistance forms a separate sub-project and is independently carried out: the financial statement shall be prepared and verified as for an independent project.

d) Where a work item of compensation and relocation assistance is separated from a project, a compensation and site clearance board shall be set up independently from the project management board: The compensation and site clearance board shall be responsible for preparing and submitting the financial statement on compensation and relocation assistance to the competent authority for approval; and submit the approved financial statement to the project investor for preparation of the project consolidated financial statement. When verifying the project financial statement, costs of compensation and relocation assistance which are approved by the competent authority shall not be repeatedly verified.

dd) Where an infrastructure whose financial statement is approved in writing by the competent authority, the investment cost of the infrastructure shall be determined on the basis of the competent authority’s decision on approval for the financial statement, investor’s written request for payment and payment documentation.

e) Where verification is necessary before requesting the competent authority to approve the infrastructure’s financial statement, the verification shall be carried out similarly to verification of construction costs as stipulated in clause 3 of this Article.

3. Verification of construction costs:

a) Verification of construction costs of packages carried out by the investor as stipulated in regulations of laws on bidding:

In case the investor signs a contract with affiliated units to implement project packages, verification shall be carried out in accordance with point b, c, d, dd and e of this Article.

In case the investor signs an agreement on implementation of the package with its division, the verification shall be conducted as follows:

- Check contents and quantities of work in the investor’s final settlement value proposal against records of work acceptance to determine the quantities of work accepted in accordance with regulations of laws.

- Check unit prices in the investor’s proposal for final settlement value against that in the approved cost estimate;

- The final settlement value equals (=) the quantity of work duly accepted multiplied by (x) the verified unit price.

b) Verification of packages in the form of all-inclusive contracts:

- Check contents and quantities of works in the A-B final settlement price spreadsheet against records of work acceptance and contract requirements to determine the quantity of work duly accepted ;

- Check the unit price in the A-B final settlement price spreadsheet against that in the contract price ; when the contractor fulfills contract requirements and tasks at a certain workload and unit price stipulated in the contract and contract price calculation sheet; the final price shall exactly equal the fixed price stipulated in the signed contract. Work breakdown and the detailed unit price approved by the competent authority shall not be repeatedly calculated.

c) Verification of packages in the form of fixed-price-based contracts:

- Check contents and quantities of work in the A-B final settlement price spreadsheet against that in records of work acceptance and contract requirements to determine the quantity of work duly accepted;

- Check the unit price in the A-B final settlement price spreadsheet against the fixed-price unit stipulated in the contract price calculation sheet and attached documents;

- The final price equals (=) the quantity of accepted work multiplied by (x) the fixed price stipulated in the contract.

d) Verification of packages under the form of adjustable price-based contracts:

- Clearly determine the scope and methods of price adjustment according to contract provisions;

- In case of adjustments to the quantity of work, determine the quantity of the completed work which is duly accepted based on the record of work acceptance;

- In case of adjustments to the unit price, determine the final unit price according to the principle of unit price adjustment;

- Where the unit price is adjusted under the State's policies, the principle of unit price adjustment stipulated in the contract and current regulations of laws shall apply. The unit price shall not be adjusted if the contract execution lasts longer than the duration stipulated in the contract due to contractor’s fault;

- The final price equals (=) the quantity of accepted work multiplied by (x) the final unit price .

dd) Verification of packages in the form of combined price-based contracts:

The contract shall specify the scope of work, work items or specific tasks to which pricing methods such as lump-sum, fixed-price or adjustable price methods are applied. Verification of the contract by part shall be carried out in accordance with point b, c and d of this clause.

e)Verification of incurred costs:

Verification of incurred costs shall be carried out in accordance with regulations on construction contract adjustments.

4. Verification of equipment costs:

a) Verification of construction costs of packages carried out by the investor as stipulated in regulations of laws on bidding:

In case the investor signs a contract for implementation of a project package with an affiliated unit , verification shall be carried out in accordance with point b, c, d, dd and e of this Article.

In case the investor signs an agreement on implementation of the package with its division , the verification shall be conducted as follows:

- Check the equipment on the list, its category, origin, quality, configuration and price proposed to be finalized against that in the acceptance record and approved equipment cost estimate to determine the final cost of such equipment;

- Verification of costs of processing and installation of processed equipment shall be carried out according to the approved cost estimate and acceptance record. The final settlement value equals (=) the quantity of work duly accepted multiplied by (x) the verified unit price;

- Relevant costs such as costs of transport of equipment to the construction site, warehousing, maintenance and others.

b) Verification of packages in the form of all-inclusive contracts: Check the list of equipment, equipment category, origin, quality, configuration and price in the A-B final price spreadsheet against that in the contract, contract price calculation sheet and work acceptance records. If all contract requirements and tasks are fulfilled at the certain workload in accordance with contract provisions , the final price shall exactly equal the price in the signed contract. The detailed unit price approved by the competent authority shall not be re-calculated.

c) Verification of packages in the form of fixed price-based contracts:

- Check the list of equipment, equipment category, origin, quality, configuration and price in the A-B final price spreadsheet against that in the contract, contract price calculation sheets, work acceptance records and contract requirements for determination of the quantity of duly-accepted work;

- Check the unit price in the A-B final price spreadsheet against the fixed price in the contract price calculation sheet.

- The final price equals (=) the quantity of duly-accepted work multiplied by (x) the fixed unit price;

d) Verification of packages under the form of adjustable price-based contracts:

- Clearly determine the scope and methods of price adjustment according to specific contract provisions;

- In case of adjustments to the quantity of work, determine the completed work which is duly accepted according to the record of work acceptance;

- In case of adjustments to the unit price, determine the final unit price according to the principle of unit price adjustment;

- Where the unit price is adjusted under the State's policies, the principle of unit price adjustment stipulated in the contract and current regulations of laws shall apply.

dd) Verification of packages in the form of combined price-based contracts:
The contract shall specify the scope of work, work items or specific tasks to which pricing methods such as lump sum, fixed-price or adjustable price methods are applied. Verification of the contract by part shall be carried out in accordance with point b, c and d clause 4 of this Article.

e)Verification of incurred costs:

Verification of incurred costs shall be carried out in accordance with regulations on construction contract adjustments.

5. Verification of project management costs

a) As for projects funded with the State budget and Government bonds: regulations stipulated in the Ministry of Finance’s Circular on management and allocation of costs of management of projects funded with State budget and Government bonds shall apply.

b) As for projects funded with extrabudgetary funds: consulting fees and costs of project management implemented by the investor and management board shall be finalized as per the limits stipulated in the State competent authority ‘s announcement or approved cost estimate.

c) Where the project is managed by the investor and single project management board, the legitimacy and validity of payment documentation shall be verified in accordance with regulations applicable to administrative and public service providers After the project is finished, the management board shall be responsible for asset management under the Law on the management and use of State-owned property and guidance documents.

6. Verification of construction consulting fees and other expenses

a) For consulting fees and other expenses expressed as a percentage: check regulations on the limit by percentage applied to determine the prices of each tasks.

b) As for consulting fees and other expenses specified in the detailed estimate which is already approved: check the proposed final prices against the approved estimate and evaluate the reasonableness of such expenses.

c) As for consulting fees and consulting fees under time-based contracts: determine the amount of payable by multiplying the unit price as agreed by the investor and contractor by the actual working time (by month/hour/day/week).Travel expenses, survey costs, office rents and other expenses shall be verified on the basis of payment methods ( valid invoices or unit price-based contracts)

Article 16. Verification of investment costs not included in asset values

1. Damages due to force majeure events permissible to excluded from the value of assets shall be verified as follows:

a) Damages shall be determined according to State’s regulatory principles and procedures for assessment of damages;

b) The damages specified in the damage assessment record shall be examined, certified and processed by the investor, contractors, supervisors and insurers.

2. Verification of investments not generating assets to obtain the competent authority’s permission not to include such investments in asset values, includes the verification of investments in provision of training for management authorities and community and central project management board's overheads not directly generating assets which are formed and transferred to local authorities.

Article 17. Values of assets generated from investment

1. The quantities and values of assets generated from investments in independent work items, projects or works including current assets and fixed assets shall be determined;

2. Project management costs, consulting fees and other expenses for the whole project which are made breakdown by specific fixed assets shall be allocated on the principle that a direct cost of a fixed asset shall be allocated for such fixed asset; and the general cost generating multiple fixed assets shall be allocated by the ratio of each fixed asset’s direct cost to the total direct cost of the whole fixed assets.

3. For assets which are transferred for the use of multiple entities, the values and list of such assets transferred to each specific entity shall be determined.

Article 18. Verification of payable and receivable accounts, materials and equipment in stock (inventory)

1. Verification of payable and receivable accounts:

- According to the investment verification results, notify the payment situation to contractors to clearly determine payables and receivables by right debtor and creditor;

- Review and propose actions against revenues which have yet to be submitted to the budget, deposit balance and cash balance;

2. Examination and determination of costs of inventory:

- Check the prices of such inventory against figures collected from stocktaking;

- Review and propose investor’s actions against such inventory;

- According to the project management board’s stocktaking record updated up to the date of preparation of the financial statement, determine the quantity and value of the remaining assets in order to transfer to users or tackle under regulations of laws in case the project is managed by the investor or single project management board.

Article 19. Verification of projects financed with development investment funds(if any) and permanently-cancelled projects having none of the construction work completed and equipment installed thereof:

1. Verify legal documents.

2. Verify actual sources of finance.

3. Check the actual investment costs and incurred expenses against the approved cost estimates and State's standards and norms.

4. Verify the project payable and receivable accounts.

5. Verify unused accounts and investments not generating assets to obtain the competent authority’s permission not to include them in asset values.

6. Verify quantities and values of assets generated from investments (if any).

Article 20. Approval for financial statements

1. After verifying the financial statement, the verifying authority shall submit an application for approval for the financial statement of the completed project to the competent authority. The application includes:

a) A verification report

b) A draft decision on approval for the project financial statement and other attached documents submitted by the investor.

c) Where the verification team is established, the verifying persons shall submit the verification report to the verification team; the verification team shall submit the completed verification to the approving person, thereafter.

d) Documents submitted by the investor (attached);

- Investor’s written request for approval of the financial statement;

- A financial statement of the completed project;

- An auditor’s report (if any);

- Inspection conclusions, inspection records and auditor’s reports issued by the State audit office and inspecting authority in case the State audit office and inspecting authority carry out inspection and audit ; investigation results of law enforcement authorities if the investor commits any violation subjected to investigation ; and status reports on the compliance with these above-mentioned conclusions.

2. The verification report includes the following main contents:

a) Project description and decisions related to the investment issued by the competent authority.

b)Briefs of verification results presented in the order stipulated herein.

c) Proposals for final prices.

d) Proposals for action against issues in relation to sources of finance, assets, payable and receivable accounts after finalizing the project.

3. The draft decision on approval for project financial statement shall be made by using form 10/QTDA attached hereto.

4. The decision on approval for the project financial statement shall be submitted to the investor, entities receiving assets, investor’s superior authorities, creditors, the Ministry of Finance (for nationally significant projects, other important projects whose investment decision is issued by the Prime Minister and Group A projects funded with the State budget) and investment decision-making authority.

Article 21. Costs of financial statement verification, approval and independent audit

1. Determination of costs of financial statement verification, approval and independent audit

Costs of verification, approval and independent audit of financial statements of a completed project shall be determined according to the approved (or revised) total investment and the regulatory percentage stipulated in the following table – Costs of financial statement verification, approval and independent audit:

a) The cost of verification and approval (K_TTPD) and cost of independent audit (K_KT) shall be determined according to the following function:

Where:

+ Ki: Amount of cost of verification and approval for the financial statement of the verified project (unit: %);

+ Ka: Amount of cost of verification and approval for the financial statement of the immediately superior project ( unit: %)

+Kb: Amount of cost of verification and approval for the financial statement of the immediately inferior project ( unit: %)

+Gi: Total investment of the verified project, unit: billion dong;

+Ga: Total investment of the immediately superior project, unit: billion dong;

+Gb: Total investment of the immediately superior project, unit: billion dong;

b) Costs of verification and approval for project financial statement and costs of project audit shall be determined as follows:

+ The maximum cost of verification and approval for the project financial statement equals (=) = K_i-TTPD % multiplied by (x ) the total investment

+ The maximum audit cost equals (=) K_i-KT % multiplied by (x) the total investment plus (+) VAT

+The minimum cost of verification and approval is five hundred thousand dong and minimum audit cost equals (=) one million dong plus (+) VAT.

c) Cost of verification and approval for the financial statement , audit costs of a work item or project package shall be determined according to the following function:

d) Where the equipment cost constitutes at least 51% of the project total investment , the cost of verification and approval for project financial statement and audit cost shall be equal to 70% of that prescribed in clause 1 of this Article.

dd) Where the project financial statement is audited, the cost of verification and approval for the project financial statement shall equal 50% of that prescribed in clause 1 of this Article.

e) Audit costs and costs of verification and approval for financial statement of subprojects and component projects of nationally significant project and group A project shall be determined as for independent projects.

g) The maximum audit cost and cost of verification and approval for the financial statement of independent subprojects and projects for compensation and relocation assistance shall equal 70% of that prescribed in clause 1 of this Article.

2. Management and use of costs of verification and approval for financial statements:

a) When carrying out verification, the verifying authority shall send the investor a written request for payment of costs of verification and approval for the financial statement at the percentage prescribed in clause 1 of this Article. The cost of verification and approval for financial statement is constituted by the following elements:

- Time-based or fixed wages/salaries of persons directly verifying and approving the financial statement ;

- Costs of specialists or consulting organizations verifying the project financial statement in case the verifying authority hire consulting organizations or specialists under time-based contracts;

- Expenses for business trips, costs of office stationery , printing, translation service, seminars computers and equipment serving the purpose of verification and approval for the financial statement;

- Other expenses related to project finalization.

b) The verifying authority shall be entitled to use verification and approval fees for purposes specified in point a of this clause at the ratio stipulated in clause 1 of this Article. The remaining amount of fees for verification and approval of the financial statement of the current year shall be entitled to use in the following year.

3. Costs of verification and approval of the financial statement and audit cost shall be categorized into the miscellaneous expenses.

4. Where the investor hires an independent auditor to audit the financial statement of a completed project, except for unfinished quantities of work; the investor, according to the contract provisions and reality, shall adjust the independent audit cost decreased at the ratio corresponding to the quantities of unfinished work.

Article 22. Deadline for approval for financial statements

The deadline for submission of the application for approval for the financial statement to the approving person shall be started from the date on which the project handover record is signed. Time for verification and approval of financial statement shall be calculated from the date of receipt of the valid financial statements as stipulated in Article 8 hereof. The deadline is set as follows:

Article 23. Reporting regime

1. For projects under the management of central authorities:

a) The investor shall submit a first-half-year project financial statement using form 12/QTDA and an annual project financial statement to the investor’s superior authority and the verifying authority by July 10 of the audited year and by January 20 of the immediately succeeding year, respectively.

b) The verifying authority that is a subordinate of a regulatory authority shall submit a first-half-year consolidated project financial statement using form 11/QTDA and an annual consolidated project financial statement to the regulatory authority by July 15 of the audited year and by January 20 of the immediately succeeding year, respectively.

c) Ministries, Ministerial-level agencies, Governmental agencies, State-owned Corporation or Groups shall submit first-half-year consolidated project financial statements and annual consolidated financial statements using form 11/QTDA to the Ministry of Finance by July 20 of the reported year and by January 30 of the immediately succeeding year .

2. For projects under the management of local authorities:

a) The investor shall submit a first-half-year project financial statement using form 12/QTDA to the investor’s superior authority and the verifying authority by July 10 of the reported year and an annual project financial statement by January 15 of the immediately succeeding year.

b) The Departments of Finance-Planning of districts shall submit first-half-year consolidated project financial statements and annual consolidated financial statements using form 11/QTDA to the Department of Finance by July 15 of the reported year and by January 20 of the immediately succeeding year, respectively.

c) The Department of Finance shall submit a first-half-year consolidated project financial statement and annual consolidated project financial statements made by using form 11/QTDA to the Ministry of Finance by July 20 of the reported year and by January 30 of the immediately succeeding year, respectively.

3. The Ministry of Finance shall submit an annual consolidated project financial statement of nationwide completed projects using form 11/QTDA to the Government.

Article 24. Inspection

1. The Ministry of Finance shall conduct the periodic and surprised inspections of finalization of nationwide completed projects of regulatory authorities. Where any violation against finalization of the completed project committed by any person approving the project financial statement, investor, project management board or contractor is found during the inspection, the Ministry of Finance shall record such violation in writing and request the competent authority to deal with such violations in accordance with regulations of laws.

2. The Ministry of Finance shall take charge of controlling the quality of project financial statement audit services as stipulated in Circular No.157/2014/TT-BTC on audit service quality control dated October 23, 2014 by the Ministry of Finance.

3. Financial authorities at all level shall Periodically or surprisingly inspect the finalization of completed projects by agencies within the authority. Where any violation against finalization of the completed project committed by any person approving the project financial statement, investor, project management board or contractor is found during the inspection, record such violation in writing and request the competent authority to deal with in accordance with regulations of laws. Regulatory authorities shall submit status reports on inspection of finalization of completed projects to the Ministry of Finance.

Article 25. Actions against violations

1. Entities committing violations against provisions on verification of project financial statements hereof which lead to waste of state fund shall be subjected to penalties under regulations of laws.

2. Investors and project management boards violating provisions of finalization of completed projects shall be subjected to penalties as prescribed in Article 18 of the Government’s Decree No.121/2013/ND-CP dated October 10, 2013 on sanction of administrative violation in construction activities; real estate business; operation, production and business of building materials; management of infrastructure, housing and office development.

3. Contractors violating provisions of finalization of completed projects shall be subjected to penalties as prescribed in Article 31 of the Government’s Decree No.121/2013/ND-CP dated October 10, 2013 on sanction of administrative violation in construction activities; real estate business; operation, production and business of building materials; management of infrastructure, housing and office development

4. The authority and procedure for taking actions against violations are as follows:

a) For violations stipulated in clause 1 of this Article, the Government’s Decree No.81/2013/ND-CP dated July 19, 2013 on elaboration of a number of Articles and measures for enforcement of the Law on Actions Against Administrative Violations shall apply.

b) For violations stipulated in clause 1 and 2 of this Article, the Government’s Decree No.121/2013/ND-CP dated October 10, 2013 on sanction of administrative violation in construction activities; real estate business; operation, production and business of building materials; management of infrastructure, housing and office development shall apply.

5. The investors’ superior authorities shall not award new projects to investors and project management boards who delay to submit the project financial statement in 24 months or longer as stipulated in Article 22 hereof.

Article 26. Responsibilities for finalizing completed projects

1. Investors' responsibilities:

Every investor shall:

a) Accelerate and request contractors to finalize contracts under regulations of laws.

b) Prepare , retain and submit completed project financial statements to the competent authority to punctually approved as stipulated in Article 22 hereof; provide sufficient relevant documents upon request of auditors as the audit and verification of project financial statement are carried out.

c) Take on legal responsibilities for the legitimacy of the financial statements and the accuracy of figures therein, quantities of work included in the financial statement accepted by the investor and contractor , and the consistency of unit price stipulated in the contract by the contractor and investor.

d) After the project financial statement is approved, in case the amount of cost in the approved financial statement is less than that of capital disbursed , the investor shall recall the excessive disbursed investments from contractors and suppliers to submit to the State budget; in case the amount of cost in the approved financial statement is greater than that of investments disbursed, the investor shall additionally pay to contractors and suppliers according to the approved financial statement.

dd) Take on responsibilities for withdrawing the whole advance under regulations of laws.

2. Contractors’ responsibilities:

Every contractor shall:

a)Prepare contract financial statements and actual costs of performance of contract signed with the investor under regulations of laws on construction contracts after finishing scope of work prescribed in the contract; take on responsibilities for the accuracy of figures and legitimacy of relevant documents included in the financial statement.

b) Cooperate with the investor in radical settlement of uncompleted work according to the contract, fully and punctually return the amount of excessive advances.

c) Comply with the decision on approval for the project financial statement issued by the competent authority.

3. Responsibilities of audit contractors
Every audit contractor and auditor shall:

a) Comply with principles on independent auditing, take on responsibilities, obligations and exercise rights as stipulated in the regulations of laws on independent audit.

b) Take on legal responsibilities for the audit contents and results in the independent auditor’s report on project financial statement towards customers and users.

4. Responsibilities of debt control agencies
Every debt control agency shall:

a) Examine, collate and attest the amount of loans paid and granted for investment in projects under the State’s regulations; give commentaries, evaluation and proposals to the authority verifying and approving projects financial statements using form 03/QTDA.

b) Accelerate investors to process account payable and receivables according to the approved financial statement, withdraw the whole advance and finally settle accounts used for projects whose financial statement is approved under regulations of laws.

5. Responsibilities of authorities verifying and approving project financial statements:
a) Instruct, inspect and accelerate investors to punctually and sufficiently prepare project financial statements using prescribed forms. The verifying authority shall be relieved from t responsibilities for the accuracy of quantities of accepted work included in the financial statement by the investor and constructor, the estimated unit price approved by the competent authority and bid unit price .

b) Thoroughly verify completed project financial statements; instruct the investor to address issues arising from finalization of completed projects; take legal responsibilities for the results of verification of financial statements submitted by the investor.

6. Responsibilities of regulatory authorities:

a) Instruct, inspect and accelerate investors and entities within the administration to prepare financial statements of completed projects under regulations of laws.

b) Punctually approve the financial statements and arrange sufficient sources of finance for projects whose financial statement is approved

c) Accelerate and simplify legal procedures to facilitate the settlement of debt and accounts of projects after the financial statement is approved.

7. Responsibilities of financial authorities at all level:

a) The Ministry of Finance shall take on responsibilities towards the Government for synchronously implementing the State management of investment finalization , providing guideline for preparation of project financial statement and inspecting the finalization of nationwide investments and completed projects. Where any violation in relation to verification and approval for financial statements is found. The Ministry of Finance has the power to request the approving authority to correct mistakes, deal with and propose actions against violations in accordance with regulations of laws.

b) Financial institutes at all level shall instruct, accelerate and inspect the finalization of investments and completed projects within the administration. Financial institutes have the authority to deal with or propose actions against violations in relation to finalization of investments and completed projects.

8. Responsibilities of other authorities:

Entities verifying and assessing engineering design, construction drawings, cost estimates and bid results, and competent persons having the authority to approve the investment projects, cost estimates and general estimates (if any) shall take full responsibilities for the precision of quantities, reasonableness of unit prices stipulated in the verification reports .

Chapter III

IMPLEMENTATION

Article 27. Transitional provisions

Projects that are in progress of finalization shall be deal with as follows: Projects and work items whose financial statements are submitted to the verifying authority before the effective date of this Circular shall conform to Circular No.19/2011/TT-BTC dated February 14, 2011 by the Ministry of Finance on settlement of State-funded completed projects and Circular No.04/2014/TT-BTC dated January 02, 2014 by the Ministry of Finance on procedure for verification of financial statement of State-funded projects; projects and work items whose financial statements are submitted to the verifying authority after the effective date of this Circular shall conform to provisions hereof.

Article 28. Implementation

1. This Circular comes into effects from March 05, 2016 and replaces the Circular No. Circular No.19/2011/TT-BTC dated February 14, 2011 by the Ministry of Finance on settlement of State-funded completed projects and Circular No.04/2014/TT-BTC dated January 02, 2014 by the Ministry of Finance on procedure for verification of financial statement of State-funded projects.

2. If legislative documents referred to this Circular are amended , supplemented and replaced, the new ones shall apply.

3. Any issue and difficulty arising in connection with implementation of this Circular should be promptly reported to the Ministry of Finance./.