CIRCULAR No CIRCULAR No. 136/1999/TT-BTC OF NOVEMBER 19, 1999 GUIDING THE INVESTMENT CAPITAL SETTLEMENT Pursuant to the State Budget Law promulgated on March 20, 1996; Pursuant to the Law of May 20, 1998 Amending and Supplementing a Number of Articles of the State Budget Law; Pursuant to the Government�s Decree No.52/1999/ND-CP of July 8, 1999 promulgating the Regulation on Investment and Construction Management; Pursuant to the Government�s Decree No.145/1999/ND-CP of September 20, 1999 on re-organization of the General Department of Development Investment under the Finance Ministry; The Finance Ministry hereby provides the following guidance on the final settlement of investment capital: Part I GENERAL PROVISIONS 1. All investment projects of State agencies and enterprises, after having been completed and put into exploitation and use, shall be subject to the investment capital settlement. Investors shall take responsibility therefor. The investment capital settlement must ensure the contents and time for elaboration, examination and approval as prescribed in this Circular. 2. The to- be settled investment capital is the total lawful expenses made in the course of investment in order to put the project into exploitation and use. The lawful expenses are the expenses made in strict compliance with the signed contract(s) and the ratified cost estimate design, ensuring the conformity with the set criteria, norms, unit prices, financial and accounting regime as well as the relevant current regulations of the State. The to-be settled investment capital shall not exceed the ratified or adjusted (if any) total investment. 3. For projects invested with different capital sources, the settlement must clearly analyze each of such sources. 4. The investment capital settlement report must fully and accurately determine the investment capital amount disbursed annually; and the total investment capital for implementation of the project, including the investment preparation expense, the investment execution preparation expense, the investment execu-tion expense, the production preparation expense, the investor�s loan interests during the investment execution, the insurance expense and other lawful expenses as currently prescribed. The value of damage shall not be accounted into the project�s value or the value of assets handed over for exploitation and use. For long-term investment projects, the investors shall, during the settlement, convert the already disbursed investment capital into the value level at the time of project hand-over for exploitation and use, in order to determine the value of the newly-arising fixed assets as well as the value of the handed-over assets. 5. The investment capital settlement shall serve as basis for evaluation of the investment process and drawing of experiences to enhance the management of investment capital. Part II SPECIFIC PROVISIONS I. CONTENTS OF THE INVESTMENT CAPITAL SETTLEMENT REPORT The contents of the settlement report must conform to each type of project: The completed investment project, the completed planning project, the completed investment preparation project, the group-A project with many component projects or minor projects, and the project using foreign capital. 1. For the completed investment projects: 1.1. Investment capital for project implementation through the years: - The total investment capital for project implementation from the stage of investment preparation to the construction completion and putting of the project into exploitation and use. - Clearly determining each of the investment capital sources for project implementation: State budget capital, State investment credit capital, credit capital guaranteed by the State, development investment capital of State enterprises and other capital sources. - The project investment capital structure includes capital for construction and installation, capital for equipment and capital for other expenses. 1.2. The damage value, which shall not be accounted into the value of handed-over assets: - Damage caused by natural calamities, enemy sabotage and other force majeure circumstances, which are not insured. - The value of the project volume cancelled by decision of the level competent to decide the investment. 1.3. The value of handed-over assets: - The value of newly-arising fixed assets and liquid assets created by investment and handed over for production and use is the total investment capital for project implementation through the years minus the expenses which are not accounted into the project assets� value and reflected according to the actual value and prices for conversion to the price level at the time of hand-over of the project for exploitation and use. The method of conversion to the price level at the time of hand-over shall comply with the Construction Ministry�s guidance after consultation with the Finance Ministry and the Ministry of Planning and Investment. Where the guidance on price conversion method is not available when making the investment capital settlement report, the investor shall send a written request to the Ministry of Construction for such guidance which shall serve as a basis for making the settlement report. - The newly-arising fixed assets shall be classified and evaluated according to the following principles: All expenses related directly to a fixed asset shall be calculated for such asset; the common expenses related to various fixed assets shall be distributed according to the ratio between the direct expense level of each fixed asset and the total direct expenses for all fixed assets. - Where the assets are handed over to different units for use, it is necessary to make a full list and determine the total value of fixed assets and movable assets handed over to each unit. 2. For a completed planning project, the investor shall have to make the planning capital settlement report, which must state sources of capital already received and used according to the cost estimates ratified by the competent level, and be enclosed with the explanation on the project implementation results. 3. For a completed investment preparation project, the investor shall have to make the investment preparation capital settlement report as for the planning project. 4. For a group-A project composed of different component (or minor) projects, when a component (or minor) project is completed, the investor shall have to make the investment capital settlement report as for the group-A project. 5. For investment projects using foreign capital, when they are completed, in addition to the settlement reports to be elaborated, examined and approved according to the provisions of this Circular, the investors shall also have to draw up a separate investment capital settlement report at the request of international organizations inscribed in the loan agreement(s) (if any). II. DOSSIERS OF INVESTMENT CAPITAL SETTLEMENT REPORT 1. A dossier of investment capital settlement report for a completed project shall include: - The legal documents: Stating legal bases for project investment. - The sum-up report on the settlement of the completed investment capital: giving an overview on the project investment situation and results as well as the remaining problems and investor�s proposed solution thereof. - The report on investment execution through the years: reflecting the situation on the use of investment capital from the time of investment preparation to the completion of the project and putting it into exploitation and use. - The report on the disbursement of investment capital according to the completed works: reflecting the disbursement of investment capital for each work in case the project is composed of 2 or more works. - The report on the amount and value of the newly-arising fixed assets: reflecting the amount and value of each of the newly-arising fixed assets according to the conversion prices and classified by the use subjects. - The report on the amount and value of the handed-over movable assets: reflecting the amount and value of assets according to the conversion prices of each type of raw material, material, fuel, accessory and labor tool, which fail to meet the fixed assets� standards, and other expenses belonging to the liquid assets which are handed over to the units for use. - The debt situation: reflecting the loans and debts (to be recovered and paid) which have not been settled by the time of investment capital settlement, and proposing remedial measures. - The table of comparison and certification of data on investment capital payment by the State treasury and the capital-lending agency(ies): Where the payment for a project is made by different State treasuries, the comparison and certification by each treasury is required. - The explanation on the investment capital settlement report: reflecting the project�s major changes; difficulties and advantages in the course of project implementation, and proposing remedial measures. - The minutes (copy) on the general pre-acceptance test or the minutes on the pre-acceptance test for project hand-over between the investor and the contractor. - The minutes (if any) on the asset hand-over between the investor and the other using unit(s). In the course of examining the investment capital settlement, if deeming it necessary, the settlement examining agency may ask the investor to provide other documents related to the project�s investment capital settlement. 2. Dossiers of investment capital settlement reports for planning projects and investment preparation projects shall include: - The legal documents - The sum-up report on the final settlement of the completed investment capital - The report on the investment execution situation through the years - The report on the debt situation - The table of comparison and certification of data on investment capital payment by the State treasury(ies) or the capital-lending agency(ies). 3. For investment projects requiring only investment reports, when they are completed, investors shall have to elaborate only reports on the settlement of the completed investment capital, which shall be attached with the minutes on the project pre-acceptance test between the investors and the contractors. 4. Requirements on dossiers of investment capital settlement report An investment capital settlement report must be complete and strictly comply with the model reports suited to each type of project as prescribed at Points 1, 2 and 3 of this Section. The data in the model reports must be clear while the proposals must be concrete, brief and easy to understand. A dossier of investment capital settlement report must contain all signatures of the chief accountant; the head of the project management board (for projects with management boards); the project executive manager (for projects implemented in form of project executive manager) and the investor. III. EXAMINATION OF THE INVESTMENT CAPITAL SETTLEMENT 1. Contents of examination of the investment capital settlement 1.1. Examining the legality of investment in the project construction: - Examining, comparing lists and contents of legal documents in the project dossier, ensuring their conformity with the State�s current regulations. - Examining the legality of economic contracts concluded between the investor and the contractors (on consultancy, construction and installation, material and equipment supply). 1.2. Examining the investment capital amount disbursed annually - Examining every source of capital annually invested in the implementation of the project, compared with the capital source structure already defined in the investment decision and the annual investment plans. - Analyzing, comparing the structure of the disbursed investment capital (for construction and installation, equipment and other expenses) with the investment capital structure stated in the investment decision and the ratified total cost estimates. 1.3. Examining the value of the completed construction and installation volume - Examining the value of the project�s construction and installation volume proposed for the settlement against the value of the ratified cost estimates and determining the causes of such increase or decrease. - Examining the application of the State�s norms and unit prices to each type of expense in each period. - Considering the pre-acceptance test minutes in order to determine the construction and installation expenses for the settlement. 1.4. Examining the value of the completed equipment volume: - Examining the equipment�s compatibility with the list, type, quantity, technical specifications and prices stated in the investment decision and the signed economic contracts. - Examining the purchasing, processing and manufacturing prices of equipment. - Examining the equipment-related expenses: transportation expense, preservation expense. 1.5. Examining other expenses by comparing the capital amount proposed for the settlement of each type of expenses with the ratified cost estimates and the current regime on management of other expenses in investment and construction. 1.6. Examining the value of damage not calculated in the project value: - The value of damage caused by natural calamities, enemy sabotage and other force majeure circumstances, which are not insured. - The value of project volume canceled by decision of the level deciding the investment. 1.7. Examining the evaluation of assets handed over for exploitation and use by different units: Examining the determination of actual value of the annual investment and the value converted into the price level at the time of handing over the assets, including the newly-arising fixed assets and movable assets, for exploitation and use. 1.8. Examining the situation on debts, materials and equipment in stock: - Debts to-be recovered and to be repaid - The value of materials and equipment in stock - The value of assets of the project management board. 1.9. For project volumes and/or work carried out in form of bidding, the settlement examination should focus on the following contents: - Examining the legal documents related to the investment project, bid organization, bidding results and the approval thereof. - Examining the value proposed for settlement on the basis of the bid winning prices. - Examining the volume and value arising outside the bid packages, determining the causes of such decrease or increase. After examining the investment capital settlement report, the settlement examining agency shall have to send a report thereon to the agency competent to approve the settlement. 2. Agencies examining the investment capital settlements: Before approving the investment capital settlements of the completed projects, it is necessary to examine the investment capital settlement reports according to the following assignment of responsibilities: - For group-A projects: The Ministry of Finance shall assume the prime responsibility for organization of examination. - For the other projects: + For the centrally-run projects, the agencies with function to assist the ministers (heads of the ministerial-level agencies, the agencies attached to the Government, the central bodies of mass organizations, the Party Central Committee�s Commission for Financial Management, the chairmen of the managing boards of State corporations) shall assume the prime responsibility for examination. + For the locally-run projects, the provincial/municipal Finance-Pricing Departments shall assume the prime responsibility in organization of examination. In case of necessity, the Finance Ministry and the agencies competent to approve the settlements may set up consultancy teams to assist them in the examination of settlements before approving them: - The consultancy teams for examination of investment capital settlements of group-A projects shall be set up by decision of the Finance Minister and composed of representatives of the Ministry of Planning and Investment, the Ministry of Construction, the branch-managing ministries, the relevant ministries, and the People�s Committees of the provinces and centrally-run cities (for the locally-run projects). - For the other projects, the establishment of the consultancy teams for examination of investment capital settlements shall be decided by the agencies competent to approve the investment capital settlements. 3. Form of organizing the examination of investment capital settlement report: The person competent to approve the settlement (stipulated at Point 1, Section IV of this Circular) shall decide the form of examining the investment capital settlement. The agency competent to approve the settlement shall have to issue a decision assigning the task of examination to the functional agency to examine the investment capital settlement. - Where the agency competent to approve the settlement decides to hire an independent auditing organization to audit the investment capital settlement report, the investor shall sign an auditing contract with the independent auditing organization lawfully operating in Vietnam, which shall conduct the audit according to the contents and auditing fee levels set by the agency competent to approve the settlement. The auditing organization shall take responsibility before law for the auditing results. The functional agency of (or attached to) the level competent to approve the settlement shall re-examine the auditing results; the contents of such re-examination shall include: - Examining the auditing results� compatibility with the auditing contract and the contents of investment capital settlement examination stipulated in this Circular. - Examining the legal bases for investment and construction management promulgated by the competent State management agencies, which have been used in audit by the auditing organization such as standards and regulations; construction rules; construction designing procedures and process; regulations on the management of project quality; system of norms and unit prices; and mechanism for the management of investment capital allocation and settlement. - Re-examining the discrepant results of the auditing report and the investment capital settlement report made by the investor. - Examining the investor�s proposals as well as proposals of the independent auditing organization. Where the project has been audited, if the agency competent to approve the settlement or the law enforcement agency detects that the value of investment capital proposed for the settlement is incorrect with the error rate of 1.5% (for group-A projects), 2% (for group-B projects) or 3% (for group- C projects) or more, the auditing agency shall take material responsibility for damage caused by the wrong auditing results; serious cases shall be handled according to the current law provisions. IV. APPROVAL OF THE INVESTMENT CAPITAL SETTLEMENT 1. Competence to approve the investment capital settlement - The investment capital settlements of group-A projects shall be approved by the Finance Minister under the Prime Minister�s authorization. - For the other projects, the persons competent to decide investment shall also be the persons competent to approve the capital investment settlements. 2. Agencies receiving the approved investment capital settlements: A copy of the written approval of the completed project�s investment capital settlement must be sent to each of the following agencies: 2.1. For group-A projects: - The Finance Ministry - The superior level of the investor - The branch-managing ministry - The investment capital- paying and -lending agency(ies) 2.2. For the other projects: - For the centrally-run projects + The investment-deciding agency + The Finance Ministry + The investment capital- paying and -lending agency(ies) - For the locally-run projects + The investment-deciding agency + The finance agency of the same level which has decided the investment + The investment capital- paying and -lending agenc

Circular 136/1999/TT-BTC