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THE MINISTRY
OF FINANCE
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SOCIALIST
REPUBLIC OF VIETNAM
Independence- Freedom- Happiness
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No.136/1999/TT-BTC
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Hanoi,
November 19, 1999
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CIRCULAR
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.
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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.
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- 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.
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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.
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- 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 may changes; difficulties and
advantages in the course 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:
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- 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
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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 of decrease.
- Examining the application of the State's norms
and unit prices to each type of expense in each period.
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1.4. Examining the value of the completed
equipment volume:
- Examining the equipments 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:
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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.
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Before approving the investment capital
settlements of the completed projects, it is necessary to examine the
investment capital settlement report 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 Patty 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:
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- 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 is 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
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- 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:
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+ 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
agency(ies)
V. TIME FOR ELABORATION
EXAMINATION AND APPROVAL OF THE INVESTMENT CAPITAL SETTLEMENT
1. For group-A projects:
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- The time for examination of the settlement
shall not exceed 4 months after the receipt of a complete and valid dossier of
investment capital settlement report as stipulated in Section II of this
Circular.
- The time for approval of the investment
capital settlement shall not exceed 1 month after the receipt of a dossier of
the already examined settlement report.
2. For the other projects:
- The time for completing elaboration of the
investment capital settlement report shall not exceed 3 months after the
project is completed and put into exploitation and use.
- The time for examination of the settlement
shall not exceed 2 months for group-B projects and 1 month for group-C
projects, after receipt of a complete and valid dossier of investment capital
settlement report.
- The time for approval of the investment
capital settlement shall not exceed 15 days.
3. In special cases: The prolongation of the
time for elaboration, examination and approval of investment capital
settlements shall be decided by the persons competent to approve such
settlements.
VI. EXPENSES FOR EXAMINATION
AND APPROVAL OF THE INVESTMENT CAPITAL SETTLEMENT
1. The expense for examination and approval of
investment capital settlement of a completed project shall be accounted into
other expenses in the project's ratified total cost estimate and shall be
managed and used by the agency in charge of the settlement examination.
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2.1. On the basis of the total investment and
characteristics of each project, the expense for examination and approval of
investment capital settlement of the completed project shall be calculated in
percentages (%) of the total investment level of the project as follows:
Percentage (%)
Total investment (billion VND)
≤1
> 1-5
> 5-10
> 10-100
> 100-500
> 500-1,000
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0.08
0.05
0.04
Absolute deduction level (million dong)
VND 1 mil.
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VND 8 mil.
≥VND10 mil.
≥VND 80 mil.
≥VND 250 mil.
VND 400 mil.
2.2. For a group-A project composed of different
component (or minor) projects, the expense deduction level for examination and approval
of the settlement of the completed component (or minor) projects shall be
calculated according to the following formula:
The deduction
level for the
component
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The deduction
level for
the whole
project
The total investment
of the component (minor) project
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x
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x
80 %
The total
investment of the project
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2.4. For a project with capital for equipment
accounting for over 75% of the total investment, the expense deduction level
for the settlement examination and approval shall be equal to 50% of the
corresponding expense level or percentage stipulated at Point 2, Section VI of
this Circular.
2.5. The expenses for examination and approval
of investment capital settlements of the completed projects mentioned at Points
2.1; 2.2; 2.3 and 2.4, Section VI, shall also include the expenses for
settlement examination and approval, and the auditing expense (if any).
The settlement examination and approval expenses
shall be distributed to the following types of work:
- At most 10% for approval of the investment
capital settlement.
- At least 90% for examination of the investment
capital settlement.
Where an independent auditing organization is
hired to audit the settlement report, the auditing expense shall not exceed
75%.
3. Management and use of the settlement
examination and approval expenses
3.1. On the basis of the estimated expenses for
examination and approval of the investment capital settlement of a completed
project, the investor shall make payment to the agency in charge of the
settlement examination. In case of hiring an auditing agency to audit the
settlement report, the investor shall make payment to the auditing agency
according to the signed contract; the remaining expenses shall be paid to the
agency in charge of the settlement examination.
3.2. The agency in charge of examination of the
investment capital settlement shall draw up a estimate of expenses nor the
settlement examination and approval and submit it to the person competent to
approve the settlement for ratification in order to have a basis for use. The
agency in charge of examination of the investment capital settlement shall have
to manage, use and settle the settlement examination and approval expenses in
strict compliance with the ratified estimate as well as the current financial
and accounting regime.
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- The expense for the auditing agency according
to the signed contract (if any).
- The expense for remuneration payment to
members of the consultancy team for investment capital settlement examination.
- The payment to domestic and foreign
organizations and/or individuals that examine the settlement at the request of
the agency in charge of examination and approval of the investment capital
settlement (if any).
- The expense for work trip allowances,
stationery, translation, printing, conferences, workshops and other expenses
for the settlement examination and approval work.
VII. RESPONSIBILIES OF THE
INVESTOR AND RELEVANT AGENCIES
1. The investor:
- To coordinate with the contracting units to
settle problems on the received materials and equipment, the debt payment and
the other arising problems according to the signed contracts.
- To examine the settlement of the value of
contracts (on construction and installation, material and equipment supply
and/or consultancy) which are completed by the contracting units.
- To inventory and evaluate the remaining assets
of the project management board in order to hand them over to the units for
production, use or liquidation to recover capital.
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- To compare and certify the already settled
capital amount or the borrowed capital, debts and assets transferred between
the relevant agencies.
- To draw up the investment capital settlement
report of the completed project on schedule and with the contents stipulated in
this Circular, and take responsibility for the accuracy of data and documents
in the investment capital settlement report.
- To provide all documents related to the
investment capital settlement at the request of the settlement examining
agency.
- To sign the auditing contract with the lawful
auditing agencies after the person competent to approve the settlement issues a
decision thereon.
2. The contracting units (for consultancy,
construction and installation and equipment supply):
To coordinate with the investor in definitely settling
the remaining problems according to the contract, to provide and take legal
liability for data and documents related to the investor's investment capital
settlement report.
3. The State Treasury, the agency(ies) lending
investment capital and providing guaranty for investment credit capital:
To compare and certify the already settled
investment capital under the loan or guaranty for the completed project within
the amount of capital subject to management, settlement, loan and/or guaranty.
4. The agency examining and approving the
investment capital settlement:
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- To guide and direct the investor to settle
problems arising in the course of making the investment capital settlement
report.
- To organize the examination of the investment
capital settlement of the project's investment capital.
- To request the investor to provide documents
related to the settlement of the project's investment capital.
- To be answerable for the results of
examination of the investment capital settlement or the re-examination results
(for projects where auditing organizations are hired to conduct the audit).
- To approve the investment capital settlement
the completed project under its competence.
Part III
IMPLEMENTATION PROVISIONS
This Circular takes effect after its signing and
replaces the earlier legal documents guiding the investment capital settlement.
The State encourages enterprises and non-State economic organizations to draw
up the investment capital settlement reports according to the provisions of
this Circular.
In the course of implementation, if any problems
arise, the ministries, branches and localities are requested to report them to
the Finance Ministry for study, supplement and/or amendment.
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FOR THE
MINISTER OF FINANCE
VICE MINISTER
Le Thi Bang Tam