Circular No. 106/2003/TT-BTC guides the management of capital for basic construction investment at commune and town levels.

CIRCULAR

Guidelines for managing investment capital for basic construction projects under communes and towns

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Pursuant to the State Budget Law No. 01/2002/QH11 adopted by the National Assembly at its second session of the 11th term on December 16, 2002;

Pursuant to the Investment and Construction Management Regulations issued together with Decree No. 52/1999/NĐ-CP dated July 8, 1999, Decree No. 12/2000/NĐ-CP dated May 5, 2000, and Decree No. 07/2003/NĐ-CP dated January 30, 2003 of the Government regarding amendments and supplements to certain articles of the Investment and Construction Management Regulations;

The Ministry of Finance provides guidelines for managing investment capital for basic construction projects under communes and towns as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. This Circular applies to investment projects managed by communes and towns (hereinafter referred to as communes) for constructing new, renovating, and upgrading welfare facilities (schools, health stations, kindergartens, libraries, memorials, sports facilities, etc.) and infrastructure works (bridges, roads, public drainage systems, sidewalks, etc.) using state budget funds approved by the Commune People's Council. Other sources of funding specified in Points 1.2 and 1.3, Section II below are encouraged to be applied according to this Circular.

2. Investment projects managed by commune level must be included in the planning scheme approved by the competent authority and be consistent with the socio-economic development conditions of the commune, and must have complete investment and construction procedures in accordance with current regulations of the State.

3. It is strictly prohibited to implement projects without guaranteed funding sources. Contributions in cash from organizations and individuals; domestic organization support funds; non-refundable aid from foreign organizations and individuals for investment in projects managed by communes must be deposited into the commune’s budget account.

4. The Chairman of the Commune People's Committee must ensure that the management of investment capital is in accordance with the purpose, economical, effective, democratic, transparent, and comply with the financial management system, investment, and construction regulations of the State and specific provisions of this Circular.

5. The Commune Finance Board assists the investor in managing the costs of projects under commune management in accordance with current State regulations and specific provisions of this Circular.

6. Financial agencies at all levels, higher-level investment and construction management agencies, and State Treasury offices directly controlling expenditures according to their assigned functions and responsibilities shall facilitate and guide communes in organizing and implementing investment projects managed by communes in accordance with current State regulations and specific provisions of this Circular.

7. Based on actual circumstances and management capabilities of commune authorities, the Chairman of the Provincial People's Committee, or the People's Committee of a centrally governed city, shall implement appropriate delegation of project management authority to communes in line with the specific conditions of each locality.

II. SOURCES OF INVESTMENT CAPITAL FOR PROJECTS MANAGED BY COMMUNE LEVEL:

1. Sources of central government budget investment capital for projects managed by commune level include:

1.1. State budget funds:

+ Commune-level state budget funds allocated for investment;

+ Support funds from upper-level state budgets for projects managed by commune level.

+ Voluntary contributions from commune residents for specific projects approved by the Commune People's Council and incorporated into the commune budget for management;

1.2. Voluntary contributions from domestic organizations and individuals for investment in projects managed by commune level;

1.3. Non-refundable aid from foreign organizations and individuals for investment in projects managed by commune level;

2. Management of capital raised through voluntary contributions from commune residents, support funds from domestic organizations and individuals (1.2), and non-refundable aid from foreign organizations and individuals (1.3) for investment in projects managed by commune level shall be carried out as follows:

2.1. In cases of monetary contributions: The Finance Board shall collect and deposit into the commune budget account opened at the State Treasury.

2.2. In cases of in-kind contributions:

+ For contributions in materials and labor from commune residents, based on the quantity of materials and labor contributed by residents, the Commune People's Committee shall instruct the Commune Finance Board to convert these contributions into monetary value according to local material prices and the value of public service labor days, and record them as construction expenditure for the project.

+ For in-kind contributions from foreign organizations and individuals for investment in the commune, the Commune People's Committee shall establish a committee to determine the value of the aid and hand over management to the Project Management Board (for projects with established boards) or the Commune Finance Board (for projects without established boards); simultaneously recording construction expenditure for the project.

III. ESTABLISHING AN INVESTMENT CAPITAL PLAN FOR BASIC CONSTRUCTION:

1. Annual plan:

- Annually, based on investment policies approved by the Commune People's Council (for new projects) and the progress of ongoing projects (for continuing projects), the Commune Finance Board shall prepare the annual investment and construction expenditure plan along with the commune budget draft. Based on the commune budget capacity, the Commune People's Committee shall review and submit the annual investment capital plan for basic construction to the Commune People's Council for approval (according to Form 01 BC/KHĐT). The annual investment capital plan for basic construction of the commune must include the following contents:

+ Total investment capital for the year divided by individual projects and sources of capital (commune-level budget funds, funds raised from organizations and individuals, international organization and aid funds, upper-level budget support funds);

+ Actual volume of work from commencement to December 31 of the reporting year;

+ Volume of work for projects and works that have met settlement conditions but lack guaranteed funding sources;

+ Recommendations.

- The preparation of the commune's basic construction plan is carried out according to the budget preparation process stipulated in Circular No. 60/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance on managing commune budgets and other financial activities of communes, wards, and towns.

- Based on the commune investment capital plans, the County Finance Department shall aggregate (according to Form 02/BC/THKHX) and propose solutions to report to the Chairman of the County People's Committee for resolution within their authority.

2. Quarterly expenditure plan:

Based on the investment capital plan decided by the Chairman of the People's Committee of the Commune and the volume of implementation of the projects, the Project Management Board (for projects with a management board established), or the Commune Financial Department (for projects without a management board established), shall prepare the quarterly investment construction and installation expenditure plan to be submitted to the Chairman of the People's Committee of the Commune for approval. Based on the commune's revenue sources, mobilized capital, support from higher-level state budget..., the Commune Financial Department shall aggregate and determine the quarterly expenditure level for each project and construction work, submit it to the Chairman of the People's Committee of the Commune for decision, and notify the State Treasury where the account is opened as the basis for payment control.

IV. TEMPORARY ADVANCE AND CAPITAL INVESTMENT PAYMENT:

1. Temporary advance:

1.1. Initial project documents for temporary advance:

1.1.1. For projects with an investment amount under 100 million VND:

- Decision approving the design - estimate or detailed estimate approved,

- Decision appointing the tender,

- Economic contract between the project management board and the contractor.

1.1.2. For projects with an investment amount of 100 million VND or more:

- Investment decision attached with the investment report,

- Decision approving the design - estimate,

- Decision appointing the tender, or decision awarding the bid,

- Economic contract between the project management board and the contractor,

- Detailed estimate approved.

1.2. Temporary advance amount:

1.2.1. The temporary advance amount for construction works is 30% of the contract value but not exceeding the annual investment capital plan allocated for construction works.

The temporary advance capital will be recovered when the project or construction work has completed construction works and been paid; the entire temporary advance capital will be recovered when the project or construction work has been paid up to 80% of the contract value for construction works.

1.2.2. The temporary advance amount for equipment is the amount that the investor must pay according to the contract but not exceeding the annual investment capital plan allocated for the package tender. The temporary advance capital will be recovered upon each payment of completed equipment.

1.2.3. Temporary advance amount for other expenses:

- For consulting contracts, temporarily advance 50% of the contract value but not exceeding the annual plan for consulting work.

- For management board expenses, temporarily advance based on the needs of project management but not exceeding the stipulated percentage for management board expenses.

- For other project expenses, temporarily advance based on the requirements of the work and the approved estimate.

1.3. Temporary advance procedure: Based on the temporary advance documents of the Project Management Board (for projects with a management board established) or project documents (for projects without a management board established), the Commune Financial Department shall check and issue a request for temporary advance capital to the State Treasury where the account is opened. Based on the commune's temporary advance documents, within seven working days from receipt of the above documents, the State Treasury shall implement the temporary advance capital for the commune to organize the project implementation.

2. Capital investment payment:

2.1. Payment of completed construction works:

- Completed construction works according to the contract are paid at the value of the quantity accepted in stages, ensuring compliance with technical design and approved estimates, meeting the required quality standards of the project.

- When there is sufficient completed construction work according to the contract to meet payment conditions, the Project Management Board (for projects with a management board established), or the Commune Financial Department (for projects without a management board established) shall prepare the following documents:

+ Acceptance certificate of completed quantity accompanied by calculation of quantity value,

+ Payment voucher,

+ Withdrawal of investment capital document,

+ Explanation document of quantity changes compared to the contract content.

- Based on the documents from the Project Management Board (for projects with a management board established) or project documents (for projects without a management board established), the Commune Financial Department shall check and issue a request for capital investment payment to the State Treasury where the account is opened. Based on the commune's payment documents, within seven working days from receipt of the above documents, the State Treasury shall implement payment control for the contractor; simultaneously recovering the temporary advance.

2.2. Payment of completed equipment:

- Completed equipment to be paid must meet the following conditions: the equipment list must match the approved investment decision, included in the assigned investment plan, and in the economic contract between the management board and the supplier.

- To be paid the contract value of equipment, the Project Management Board (for projects with a management board established), or the Commune Financial Department (for projects without a management board established) shall prepare the following documents:

+ Invoice and delivery note,

+ Acceptance certificate and handover record between the management board and the supplier,

+ Withdrawal of capital document.

- Based on the documents from the Project Management Board (for projects with a management board established) or project documents (for projects without a management board established), the Commune Financial Department shall check and issue a request for capital investment payment to the State Treasury where the account is opened. Based on the commune's payment documents, within seven working days from receipt of the above documents, the State Treasury shall implement payment control for the contractor; simultaneously recovering the temporary advance.

2.3. Payment of other costs for consulting contracts:

- For approved investment reports: Paid 100% according to the signed contract value in accordance with the national regulations on consulting cost rates.

- For technical design and estimate: Design and estimate preparation costs are paid after acceptance ensuring compliance with current national standards on design, included in the economic contract, and in the annual plan.

When there is completed work of the consulting contract, the Project Management Board (for projects with a management board established), or the Commune Financial Department (for projects without a management board established) shall prepare the following documents:

+ Acceptance certificate,

+ Payment voucher,

+ Withdrawal of capital document.

2.4. Payment of other costs such as land registration fees, compensation for land clearance, design and estimate review costs, insurance costs... The Project Management Board (for projects with a management board established), or the Commune Financial Department (for projects without a management board established) shall prepare a detailed list of expenditures with relevant supporting documents.

- Based on the documents from the Project Management Board (for projects with a management board established) or project documents (for projects without a management board established), the Commune Financial Department shall check and issue a request for capital investment payment to the State Treasury where the account is opened. Based on the commune's payment documents, within seven working days from receipt of the above documents, the State Treasury shall implement payment control for the commune; simultaneously recovering the temporary advance.

V. REPORTING SYSTEM, SETTLEMENT, AND INSPECTION REGIME:

1. Reporting System:

- Quarterly, every six months, nine months, and annually, the People's Committee of the commune shall prepare reports on the implementation of investment volume and capital disbursement to be submitted to the People's Council of the commune and the Financial Department of the district (in accordance with Form No. 03 BC/TH). Quarterly, six-monthly, and nine-monthly reports shall be submitted on the fifth day of the first month of each quarter, while annual reports shall be submitted on January 10th of the following year. The reports must analyze and evaluate the implementation of plans, investment results during the period, capital usage, existing issues, and propose measures for resolution.

- The Commune Finance Office shall be responsible for preparing reports on the finalization of investment capital for completed projects within its management scope on a semi-annual and annual basis, to be submitted to the People's Council of the commune, the Commune Audit Board, and the Financial Department of the district according to Model No. 02/THQTX attached; the semi-annual report for the first half of the year must be submitted no later than July 10th, and the full-year report must be submitted no later than January 15th of the following year.

- Based on the reports on the implementation of investment by the commune, the Financial Department of the district shall be responsible for preparing consolidated reports to be submitted to the People's Committee of the county and proposing solutions for existing issues (in accordance with Form No. 04 BC/THKHX).

2. Finalizing Investment Capital for Completed Projects:

2.1. All investment projects managed by the commune that have been completed and handed over for use must prepare finalization reports, undergo review, and obtain approval for the finalization of investment capital in accordance with the current Investment Management Regulations and specific provisions set forth in this Circular.

2.2. The documentation for finalizing investment capital for completed projects includes:

- Finalization reports on investment capital according to Forms No. 01/QTDAX and 02/QTDAX attached to this Circular.

- Relevant legal documents including: Investment Decision, preliminary design - budget estimate, Tender Assignment Decision (or tender acceptance if applicable), and supplementary documents (if any).

- Finalization volumes A-B of each contract package accompanied by: Economic contracts, technical acceptance records, phase-by-phase quantity acceptance payment records, contract termination records between the project sponsor and contractors, participating units and individuals, and other relevant documents.

- Design documents, completion records (if any);

- Approved design estimates, tender estimates (if any);

The documentation for finalizing investment capital for completed projects shall be prepared in one original copy and kept at the People's Committee of the commune office in accordance with the current file retention regulations.

2.3. Reviewing and Approving Finalization:

2.3.1. When a construction project is completed and handed over for use, no later than two months thereafter, the Project Management Board (for projects with established management boards) or the Commune Finance Office (for projects without established management boards) must complete the finalization report on investment capital and submit it to the Commune Finance Office for review. No later than one month thereafter, the Commune Finance Office must complete the review of the finalization report and submit it to the Chairman of the People's Committee of the commune for approval.

2.3.2. The content of the review (audit) and the content of the Report on the Results of the Review (Audit Report) of the finalization of investment capital shall be in accordance with the attached Appendix.

2.4. The decision approving the finalization of investment capital for completed projects shall be sent to the following agencies and units:

- Project Management Board,

- Commune Finance Office,

- State Treasury of the district,

- Financial Department of the district,

- Commune Audit Board.

2.5. The cost of reviewing and approving the finalization of investment capital for completed projects shall be calculated at 0.15% of the total investment amount of the project (with a minimum of 100,000 VND) and shall be included in other costs in the total value of the finalization of investment capital of the project.

3. Inspection: Periodically or unexpectedly, the Financial Department of the district shall directly organize inspections or instruct the Commune Audit Board to inspect, supervise, and evaluate investment projects managed by the commune; simultaneously reporting to the competent authority as prescribed.

VI. RESPONSIBILITIES OF THE RELATED AUTHORITIES:

1. Provincial People's Committees:

- Direct the People's Committees of the districts and functional agencies in the province to guide the People's Committees of the communes in managing investment projects.

- Implement the delegation of investment authority to communes based on the specific conditions of the locality regarding the level and capacity of commune-level management staff.

- Direct the finance sector to organize training to enhance the management capacity of commune-level staff.

2. District People's Committees: Implement state management of investment; direct the functional agencies of the district and the People's Committees of the communes to manage investment projects in accordance with the current national regulations and the provisions of this Circular.

3. District Financial Departments: Shall be responsible for guiding and directing the Commune Finance Offices and Project Management Boards to perform financial management functions in accordance with the prescribed regulations.

4. Commune People's Committees: Shall implement project management in accordance with the Investment Management Regulations and Construction Regulations, and the guidance documents of the competent authorities.

- Hire consulting organizations to prepare investment reports, designs, and budgets; organize supervision and monitoring of construction projects; manage materials, assets, and project investment funds.

- Shall be responsible for the accuracy of the completion documentation and quantities of construction works proposed for payment.

- Organize the receipt, payment, and use of investment funds in accordance with regulations.

- Implement the reporting and finalization of investment capital for projects as prescribed.

5. Project Management Boards: Based on the specific conditions of the project and the capacity and qualifications of the supporting staff, project management shall be carried out in one of the following two cases:

- The project sponsor directly manages the project without establishing a Project Management Board, instead utilizing staff from functional departments (Commune Finance Office, committee members,...) of the People's Committee of the commune to manage the project. The Commune Finance Office shall be responsible for managing the investment project in accordance with the current national regulations and specific provisions of this Circular.

- The Chairman of the People's Committee of the commune decides to establish a Project Management Board to manage the project.

The Commune Project Management Board shall be responsible for managing the project from the design and budget preparation stage through to the completion of the project, handover for use, and finalization of investment capital for completed projects. The Project Management Board shall carry out investment and construction management in accordance with the current national regulations and specific provisions of this Circular.

6. The construction supervision board: The construction supervision board of the commune shall be established upon the approval of the Commune People's Council and decided by the Chairman of the Commune People's Committee. The construction investment supervision board of the commune shall consist of two to three members who are knowledgeable about technical aspects to carry out the supervision of construction works.

The construction supervision board is responsible for comprehensively supervising all stages of the investment and construction process of projects, from the investment preparation stage until the completion and handover for use; monitoring the material usage standards; supervising the capital utilization process of the project.

7. The State Treasury branch where the account is opened shall implement the control and payment of investment capital in accordance with regulations; confirm the amount of capital paid, comment on the payment situation; settle the annual investment capital with the commune in accordance with the regulations on state budget settlement.

VII. IMPLEMENTATION PROVISIONS:

This Circular takes effect fifteen days after its publication in the Official Gazette, replacing Circular No. 49/2001/TT-BTC dated June 26, 2001 of the Ministry of Finance guiding the management, payment, and settlement of investment capital for construction works under the jurisdiction of communes and towns.