Decision No. 1602/QD-BTC On the issuance of the financial inspection procedures for construction investment projects

PROCEDURE

FINANCIAL INSPECTION FOR INVESTMENT CONSTRUCTION PROJECTS
(Issued together with Decision No. 1602/QD-BTC dated July 5, 2011 of the Minister of Finance)

A. GENERAL PROVISIONS

1. This procedure specifies the contents and procedures for conducting financial inspections of investment construction projects. This procedure applies to agencies and units within the finance sector.

2. The Heads of agencies and units within the finance sector must comply with the provisions of this inspection procedure when conducting inspections. Depending on the requirements and nature of each inspection, all or part of the contents of this procedure may be applied.

B. PREPARATION AND DECISION TO INSPECT

1. Collecting information

1.1. Draft an outline for collecting information based on the criteria set forth in Clause 2 below.

1.2. Sources of information

- From the agency's database (electronic data, archival documents, monitoring reports); from reports and reflections of mass media (newspapers, radio, television, etc.) and complaints and denunciations from agencies, organizations, and individuals;

- From state management agencies within the finance sector, higher-level management agencies, and other related agencies;

- From direct surveys at the inspected agency or unit.

2. Prepare a survey report

2.1. Overview of the investment project:

- The investor and its superior authority;

- The policy, objectives, scope, nature, and location of the investment project;

- The scale, content, technological solutions, and construction site; plan and progress of the project; main works or sub-works (if any);

- Total investment amount;

- Sources of investment funds;

- Project implementation forms, consulting organizations for project preparation, survey, design, supervision, contractors, etc.;

- Management and operation division in the project (between the Investor, Investor's representative, Project Manager, etc.); organizational structure and functions of the Project Management Board or the unit directly managing and operating the project;

- Tendering methods: Direct tender, limited tender, open tender, self-execution, EPC, etc.

2.2. Implementation status of the investment project:

- Progress according to the plan up to the time of the planned inspection;

- Approved budget estimate, total approved budget estimate, number of tender packages of the project, tender package prices, winning bid prices, tendering methods, winning units; value of economic contracts signed;

- Implementation status of work volume; mobilization and disbursement of investment capital (detailing by each source of capital, detailing the implementation status of work volume value, payment value for each tender package and other costs ...);

- Difficulties, occurrences, adjustments, and supplements during the implementation process;

- Relevant financial policies, regulations, norms, and unit prices. Pay attention to special policies and regulations specifically provided for the project;

- Status of inspections, audits, investigations, and complaint resolution by relevant agencies and organizations related to the project;

- Assessment of prominent issues, potential and signs of violations in the management and use of investment capital. Focus on reviewing and evaluating these issues during the inspection.

2.3. Recommendations:

- Content, period, and scope of the inspection, specifying the key and critical areas, organizations, agencies, units, and individuals to be inspected, checked, and verified;

- Inspection force, time, and timing.

3. Draft an inspection plan

3.1. Purpose and requirements of the inspection:

Clearly define the goals to be achieved after completing the inspection.

3.2. Inspection content:

- Determine the inspection contents; clearly specify the key and critical areas;

- Develop detailed content for each inspection area; methods of proceeding; places to inspect, check, and verify; time for each content.

3.3. Inspection period, inspection duration, and inspected units:

- Inspection period for the entire content or specific areas;

- Duration of the entire inspection according to the Inspection Decision;

- Units to inspect, check, and verify.

3.4. Organization of implementation:

- Assign specific tasks to each member of the inspection team as specified in Point 3.2 of Section B above;

- Delegate responsibilities to the team leader and group leaders (if any);

- Specify principles of cooperation and compliance with procedures and regulations;

- Assign preparatory work for the inspection;

- Supervisor and director of the inspection team.

3.5. Inspection force:

The number of people participating in the inspection includes members, team leader, deputy team leader, group leader of the inspection team at the unit, and officers from other units called upon to join the inspection team as cooperating inspectors (if any).

4. Issue a decision and approve the inspection plan

The person assigned the task is responsible for submitting a draft inspection decision along with the inspection plan and survey report to the authorized person (Head of the State Inspectorate or Head of the State Management Agency) for review and signing to issue the inspection decision and approve the inspection plan.

The inspection decision must clearly state the name of the inspected agency; the content, period, and duration of the inspection; establishment of the inspection team and responsibilities of related organizations and individuals in the inspection work; and send it to relevant agencies and units as prescribed by law.

5. Preparation for implementing the inspection

After the inspection decision is issued, the Head of the Inspection Team shall be responsible for:

5.1. Notifying the inspection plan to the inspected agency or unit:

- The time and place to announce the inspection decision;

- The participants at the meeting to announce the inspection decision;

- The requirements for the inspected unit to prepare and report to the inspection team at the announcement session.

5.2. Holding a team meeting and preparing to implement the inspection:

- The Head of the Inspection Team organizes a meeting with the inspection team to thoroughly understand the approved inspection plan and the implementation plan; discusses specific measures to organize the implementation of the plan; assigns specific tasks to each inspection group and each member of the inspection team.

- Preparing all relevant policy, system, standard, and quota documents related to the inspection content.

- Organizing training sessions for specialized inspections that cover a wide scope and have complex contents...

- Based on assigned tasks, each member completes their detailed plan, which must clearly state the content of work, methods of proceeding, and time frame, and submits it for approval by the Head of the Inspection Team before implementing the inspection.

- Preparing equipment, funds, and other necessary material conditions to serve the activities of the inspection team.

C. CONDUCTING THE INSPECTION

1. Announcing the Inspection Decision

Within the prescribed time limit, the Head of the Inspection Team shall organize a meeting to announce the inspection decision to the inspected agency or unit and related units listed in the Inspection Decision. When announcing the inspection decision, the Head of the Inspection Team shall be responsible for:

- Fully announcing the content of the inspection decision and clearly stating the purpose, requirements, working methods, and inspection plans for each inspected unit.

- Requesting the inspected unit to prepare and provide relevant files and materials for reporting to the inspection team on the contents announced by the Head of the Inspection Team (as stipulated in Point 5.1, Section B of the Procedure) and other necessary contents deemed necessary by the inspection team.

The announcement of the inspection decision must be recorded in a protocol. The protocol shall be signed between the Head of the Inspection Team and the representative of the inspected unit.

2. Conducting the Inspection

2.1. Inspecting the Total Investment Amount

2.1.1. Statistics on procedures and authority for approving the total investment amount (Form No. 01/TTTC-XD); identifying missing procedures, incorrect approvals beyond authority, and causes.

2.1.2. Collecting bases for determining the total investment amount indicators: necessity for investment; investment objectives; scale and capacity of investment; technology and construction methods; structure of items; construction methods; total investment amount; sources of investment capital; project implementation time and other related indicators.

- Identifying investments not in accordance with construction planning or policies;

- Assessing, analyzing, and evaluating the ability to mobilize and recover capital (if applicable).

2.1.3. Statistics on costs forming the total investment amount and determining the method of establishment (Form No. 01/TTTC-XD); determining costs not belonging to the project or another project; selecting to check some cost items significantly affecting the total investment amount, verifying accuracy and lack of basis.

2.1.4. Inspecting adjustments to the total investment amount:

- Reviewing adjustment times, values, and bases; identifying unauthorized approvals, insufficient procedures, and lack of basis; causes of adjustments;

- Selecting to check some adjusted investment cost items, verifying lack of basis, correctness, and compliance with regulations.

2.1.5. Collecting violations in establishing and approving the total investment amount, identifying causes, responsibilities, and proposing recommendations for handling (Form No. 02/TTTC-XD).

2.2. Inspecting the Mobilization, Allocation, and Disbursement of Investment Capital

2.2.1. Collecting sources of capital and deadlines for mobilizing capital according to the approved investment decision.

2.2.2. Inspecting the allocation and distribution of investment capital:

Statistics on capital plans for different periods (initial plan, plans after adjustments) (Form No. 03/TTTC-XD). Determining:

- Causes of capital plan adjustments;

- Procedures for recording capital plans, compliance with regulations on capital distribution; identifying lack of basis, insufficient procedures, and non-compliance with priority procedures when allocating capital, causes;

- Recipients who have been allocated capital plans, those who have not been allocated capital plans (in detail by each source of capital); analyzing reasons why certain items or projects did not receive planned capital allocations;

- Identifying improper capital allocation, misalignment with objectives, and excessive disbursement leading to prolonged project implementation (appropriate conclusions based on each project); causes;

- Bases for project progress and construction progress of items to determine the appropriateness and rationality of allocated investment capital (with particular attention to projects financing from bond issuance or loans).

2.2.3. Inspecting the disbursement of investment capital:

- Evaluating the extent of capital disbursement according to the capital plan (percentage) for the entire project and detailed by item (if applicable); analyzing reasons for failing to meet the plan; identifying improper advance payments;

- Based on actual mobilization of capital sources, comparing with the plan and mobilization timeline, identify:

+ Unmobilized or under-mobilized or over-mobilized capital compared to the initial plan;

+ Incorrectly mobilized capital sources and timelines, causes.

- Examining procedures for investment capital payment (Form No. 03/TTTC-XD), identifying improper payment procedures.

2.2.4. Summarizing violations in mobilizing, allocating, and disbursing investment capital, identifying causes, responsibilities, and proposing recommendations for handling (Form No. 04/TTTC-XD).

2.3. Inspecting the Preparation of Budget Estimates

2.3.1. Examining procedures and authority for approving budget estimates; identifying incorrect procedures, insufficient procedures, and unauthorized approvals (Form No. 05/TTTC-XD).

Collecting various types of budget estimates in the project: construction, equipment, consulting, other expenses (consulting, design, mine clearance...) (Form No. 05/TTTC-XD); Review the application of adjustment factors for materials, labor, construction machinery; the ratio of costs in the budget estimate. Identify cases where the application of factors and ratios in the budget estimate lacks basis or is incorrect.

2.3.2. Inspect the budget estimate for consulting services and other expenses:

- Review the budget estimates for consulting services and other expenses; request tasks and products from consultants.

- Select to check the budget estimates for some consulting items and other expenses, identify:

+ Work volumes that do not match the outline, task requirements, or actual conditions;

+ Duplicate products that do not meet the required standards or tasks;

+ Incorrectly applied unit prices and percentage rates for various costs;

+ Inappropriate payment recipients in the budget estimate.

2.3.3. Inspect the budget estimate for construction works:

- Regarding quantities:

+ Aggregate quantities within the structure of the project (in design drawings); quantities and tasks outside the structure of the project. Based on quantities within the structure of the project, review and identify incorrectly calculated quantities and tasks outside the structure without basis;

+ Establish related quantities and tasks in the budget estimate; determine original quantities for calculating other quantities; based on original quantities, review and identify incorrectly calculated other quantities without basis;

+ Select to check some quantities in the budget estimate, identify incorrectly calculated quantities, wrong types, or lacking basis.

- Regarding unit prices:

+ Statistic the types of unit prices listed in the State's price notification on the local market and self-constructed provisional unit prices;

+ Determine the reasons, basis, and procedures for setting special and provisional unit prices in the budget estimate; identify cases where unit prices are established and approved without basis, insufficient procedures, or beyond authority;

+ Select to check some unit prices, based on relevant documents and actual project conditions, identify incorrectly calculated unit prices without basis.

- Regarding norms:

+ Statistic the norms stipulated by the State and special construction norms;

+ Gather bases for establishing special norms; identify cases where norms are established without basis;

+ Select to check the establishment and application of norms for some tasks; identify incorrectly applied norms, established without basis or with incomplete or incorrect bases.

2.3.4. Inspect the budget estimate for equipment:

- Statistic the types of equipment and costs formed in the budget estimate.

- Based on project requirements, review and identify budget estimates lacking basis or incorrect types.

- Select to check some types of equipment; identify budget estimates for equipment with incorrect types, lacking basis, or incorrect unit prices.

2.3.5. Inspect the budget estimate for adjustments and supplements:

- Statistic the number of budget adjustments, adjustment procedures, determine the reasons for adjustments, identify missing procedures or beyond authority.

- Check quantities and unit prices; unit prices and norms in adjusted budget estimates according to the inspection procedures for construction project budget estimates (as stated in point 2.3.1, 2.3.2, 2.3.3 Section C of the Procedure).

2.3.6. Summarize violations, consequences, causes, responsibilities in preparing and approving budget estimates, recommend handling measures (Form No. 06/TTTC-XD).

2.4. Inspect the determination of tender package prices, winning bid prices, and direct award prices:

2.4.1. Inspect the determination of tender package prices:

- Statistic approval procedures and bases for tender package prices; identify missing procedures, bases, or beyond authority, clearly stating the reasons.

- Determine the method for building tender package prices:

+ In cases where tender package prices are determined based on approved budget estimates, the inspection process follows the inspection content of construction project budget estimates (as stated in point 2.3, Section C of the Procedure);

+ In cases where tender package prices are determined based on total investment amounts, the inspection follows the inspection content of total investment amounts (as stated in point 2.1, Section C of the Procedure);

+ In cases where tender package prices are determined based on other regulations: based on calculation methods, select to check for insufficient bases or errors.

2.4.2. Inspect winning bid prices and direct award prices:

- Review approval procedures, bases, and authority for winning bid prices and direct award prices, identify:

+ Missing procedures, bases, or beyond authority, reasons;

+ Winning bid prices exceeding approved tender package prices or exceeding recalculated tender package prices through inspection.

- The inspection content for winning bid prices and direct award prices follows the inspection of determining tender package prices as stated in point 2.4.1, Section C of the Procedure.

2.4.3. Select to check some quantities and unit prices in the winning bid documents, identify incorrect calculations, lack of basis, or errors, following the inspection procedures for budget estimates as stated in point 2.3, Section C of the Procedure, while referencing the Tender Invitation Documents and Bid Submission Documents.

2.5. Inspect the determination of economic contract values:

2.5.1. Examine the bases, factors, and cost items forming the economic contract value; identify contradictions or inaccuracies compared to the winning bid documents and approved bidding results.

2.5.2. Review the bases and contents of economic contracts; identify:

- Review the financial capacity and financial indicators in the bidding documents of the winning bidder; identify financial capacity and financial indicators of the bidder not meeting the criteria in the tender invitation documents;

- Signing economic contracts without sufficient procedures or inconsistent with regulations;

- Contract prices exceeding tender package prices and direct award prices; reasons.

2.5.3. Inspect the implementation of economic contracts:

- Statistic the signing and implementation of economic contracts including indicators: Tender package name (project component); budget estimate value (tender package price); contract value; contract form; amount temporarily advanced and paid; other contract conditions (Form No. 07/TTTC-XD).

In cases where there are adjustments to economic contract prices during contract implementation: collect methods, calculations, and adjustment factors; related contract clauses concerning price adjustments; identify contradictions or errors in calculation methods and adjustment factors.

- Select to check some quantities and work components subject to price adjustments in contract implementation, identify incorrect price adjustments without basis...

2.5.4. Summarize violations, causes, responsibilities, and consequences related to determining contract values and implementing contracts.

2.6. Inspect the completion of capital investment settlement for completed construction projects.

Compile the types of work accepted and settled in the project: construction installation, equipment, consulting, other costs (consulting, land clearance, design, mine clearance...); review the application of adjustment factors for material prices, equipment, labor, construction machinery, and cost ratios in the settlement documents. Identify the application of factors and ratios without basis or incorrect.

2.6.1. Settlement of the value of completed construction installation volume:

Statistic the quantity accepted, the value of the quantity settled for each work, item (Form No. 08/TTTC-XD). Identify overpayment for quantities accepted or underpayment for completed quantities, specify the reasons.

- Inspect the quantity accepted:

+ Collect completion files; review and identify missing files, insufficient legal grounds, specify the reasons.

+ Select to inspect some quantities accepted, similar to inspecting the budgeted quantity (as stated in Point 2.3 Section C of the Procedure). At the same time, based on completion files combined with actual site inspections (if necessary), determine contradictions, assess violations in detail; identify incorrect acceptance of quantity, type, and quality not meeting requirements.

- Inspect the unit price for settlement (for cases settled according to unit price):

+ Review the settlement unit price, identify incorrect settlement unit price compared to the signed contract, specify the reasons.

+ Based on the settlement unit price for completed quantities, combined with the actual implementation of the project, select to inspect the unit price; the inspection content is similar to inspecting the budgeted unit price (as stated in Point 2.3 Section C of the Procedure), inspect economic contract price adjustment (as stated in Point 2.3.5 Section C of the Procedure). Identify incorrect settlement unit price, lacking basis.

- Inspect the settlement quota: similar to the content of inspecting the quota in the budget as stated in Point 2.3.3 Section C of the Procedure.

2.6.2. Settlement of the value of completed equipment volume:

+ Prepare a statistical table of equipment categories and origins of accepted equipment and equipment according to tender documents and winning bids.

- Compare and verify the categories, types, and origins of accepted equipment and equipment according to tender documents and winning bids, identify incorrect acceptance of type and quantity. Determine the reasons clearly.

- Select to inspect some equipment combined with actual site inspections (if necessary) regarding quantity and unit price, identify incorrect acceptance of equipment in reality, incorrect type, and incorrect settlement unit price.

2.6.3. Inspect the settlement of other expenses:

- Statistic other types of expenses settled; review the settlement methods and procedures for each type, settlement procedures for other expenses (Form No. 09/TTTC-XD). Determine missing procedures, incorrect calculation methods.

- Based on actual implementation and completion files, select to inspect some parts of other expenses, identify incorrect calculations regarding quantity, ratio, quota, unit price, and incorrect settlement objects.

- For other expenses with objects, unit prices, and contents inspected like budget inspection, settlement of completed volumes (as stated in Points 2.3.2 and 2.6.1 Section C of the Procedure).

2.6.4. Summarize violations, determine causes, responsibilities, and consequences related to settlement of completed volumes (Form No. 09/TTTC-XD).

2.7. Inspect compliance with regulations during the final investment phase:

2.7.1. Inspect determination of debt handling:

- Compile investment capital from various sources settled for the project; detailed settlement for each work, object; implementation costs proposed for final settlement.

- Determine discrepancies in financial data through inspection, identify actual payments and debts, discrepancies, and issues with debts.

- Select to inspect some debts, identify insufficient basis and incorrect accounting.

2.7.2. Inspect surplus materials and equipment value:

- Compile quantities, types, and values of surplus materials and equipment purchased. Identify incorrect procurement of materials and equipment in terms of quantity and type compared to actual needs.

- Determine the reasons:

+ Surplus materials and equipment, their value;

+ Discrepancies in quantities of materials and equipment compared to actual inventory, the value of discrepancies.

2.7.3. Inspect the final settlement process of the project:

- Statistic procedures and legal documents required for final settlement of the project. Identify missing procedures and documents, reasons.

- Determine the project completion time; the time of project handover for use; identify delays in final settlement and project implementation slower than planned, reasons.

- The inspection content of the final settlement value is similar to the procedure for inspecting the settlement of completed volumes, debt inspection, and surplus materials and equipment (as stated in Points 2.6, 2.7.1, 2.7.2 Section C of the Procedure).

- Determine the actual final settlement value of the project through inspection; reasons for discrepancies (if any) (Form No. 10/TTTC-XD).

2.7.4. Summarize violations, determine causes, responsibilities, and effectiveness (Form No. 10/TTTC-XD).

2.8. Inspect project effectiveness:

- Compile investment objectives, project costs, project investment capital sources, expected outcomes, actual effectiveness. Identify:

+ Failure to achieve project objectives, reasons;

+ Inability to utilize capacity and effectiveness as planned; Reasons.

- Evaluate and analyze the project's ability to recover capital (if it is a project requiring capital recovery).

D. CONCLUSION OF INSPECTION

1. Report on inspection results and draft Inspection Conclusion:

Upon completion of inspection at each inspected entity according to the inspection decision, the Chief Inspector prepares, reviews, and signs the Inspection Record with the inspected entity within the inspection period as directed by the person assigned to direct the Inspection Team. The record clearly states the situation, correct and incorrect aspects compared to legal provisions.

Within the prescribed timeframe, the Chief Inspector prepares the report on inspection results, signs, and sends it to the person who decided on the inspection along with the draft inspection conclusion.

The report on the inspection results clearly states the outcomes of the work according to the approved inspection plan, the explanations provided by the inspected entity; proposes recommendations for handling matters related to economics, administrative actions, and laws with the inspected entity; proposes recommendations to the direct superior management agency and other state management agencies involved.

The draft Inspection Conclusion reflects the general situation, the content of the conclusion, and recommendations for handling. Each item of the conclusion must specify the incident, correct and incorrect bases, causes, responsibilities, forms of handling, and deadlines for compliance.

The head of the inspection team organizes the participation opinions of the members of the inspection team on the report on the inspection results and the draft Inspection Conclusion. Participation opinions must be in writing and recorded in the inspection file. Recommendations from the head of the team and the members of the inspection team are implemented in accordance with the provisions of the law.

2. Issuing and circulating the Inspection Conclusion:

Within the time limit prescribed by law on inspections, the person issuing the decision to inspect examines and issues the Inspection Conclusion.

During the examination process, the person issuing the inspection conclusion may request the head of the inspection team and the inspected entities to provide explanations, supplement materials, and evidence regarding issues that have not been clearly concluded.

Before issuing the Inspection Conclusion, the person issuing the inspection decision or the person entrusted with organizing work with the inspected entity reviews the draft Inspection Conclusion. The meeting must be documented with records of the opinions of all parties involved.

The Inspection Conclusion is sent to the inspected entity and made public in accordance with the provisions of the Law on Inspections and specific regulations of the Ministry of Finance.

3. Handing over and storing the inspection file:

After circulating the Inspection Conclusion within the specified time limit, the head of the team is responsible for handing over the inspection file to the relevant departments or individuals assigned tasks under the law and the regulations of the agency.

The handover of files and documents must be documented in a record and stored together with the inspection file.

4. Meeting to draw lessons from the inspection team:

Within the prescribed time, the head of the team is responsible for convening a meeting of team members to review experiences, evaluate the strengths and weaknesses of the inspection from the preparation stage to the handover of files and documents, draw lessons learned; propose rewards for those who perform well and handle officials who have committed violations.

The meeting to draw lessons must be documented in a record and stored in the inspection file.

 

Form number: 01/TTTC-XD

PROCEDURES AND AUTHORITY FOR APPROVING THE TOTAL INVESTMENT COST

Project Name:

 

Note:

Column 1: Record serial number

Column 2: Record name of procedure and name of cost item

Column 3: Record name of approving authority

Column 4: Record value of cost item according to the Investment Decision

Column 5: Mark with x if the procedure exists

Column 6: Record the reason for the absence of the procedure

 

Form number: 02/TTTC-XD

SUMMARY OF VIOLATIONS IN CONSTRUCTION AND APPROVAL OF TOTAL INVESTMENT COST

Project Name:

 

Note:

Column 1: Record serial number

Column 2: Record name of violation

Column 3: Record value of violation

Column 4: Record cause of violation

Column 5: Record name of responsible authority for the violation

Column 6: Record consequences caused by the violation.

Form number: 03/TTTC-XD

COMPREHENSIVE SITUATION OF FUNDS RAISING, ALLOCATION, AND DISBURSEMENT FOR INVESTMENT CAPITAL

Project Name:

Unit of measurement:

 

Note:

Column 1: Record serial number

Column 2: Record name of investment cost, package, or work item

Columns 3, 4, 5: Record according to the approved fund plan (details of each source)

Column 6: Record total planned funds

Columns 7, 8, 9: Record actual disbursed funds

Column 10: Record total actual disbursed funds

Columns 11, 12, 13, 14: Record the ratio of disbursed funds to planned funds (percentage)

Column 15: Record reasons for low or high disbursement compared to the planned funds

Form number: 04/TTTC-XD

SUMMARY OF VIOLATIONS IN RAISING, ALLOCATING, AND DISBURSING FUNDS

Project Name:

 

Note:

Column 1: Record serial number

Column 2: Record name of violation in raising, allocating, and disbursing funds

Column 3: Record value

Column 4: Record cause of violation

Column 5: Record consequence of violation

 

Form number: 05/TTTC-XD

PROCEDURES AND AUTHORITY FOR APPROVING ESTIMATES

Project Name:

Unit of measurement: ...

 

Note:

Column 1: Record serial number

Column 2: Record type of estimate

Column 3: Record value of estimate

Columns 4, 5, 6: Record according to the approval decision of the Estimate or Design

Column 7: Mark with x if the procedure exists

Column 8: Record reason for missing procedure