Joint Circular No. 44/2002/TTLT-BTC-BYT guides the financial management mechanism for the Rural Health Project

 

JOINT CIRCULAR

GUIDELINES FOR THE FINANCIAL MANAGEMENT MECHANISM OF THE RURAL HEALTH PROJECT

(USING LOANS FROM THE ASIAN DEVELOPMENT BANK)

CPursuant to Decree No. 17/2001/NĐ-CP dated May 4, 2001 of the Government promulgating the Regulations on management and use of Official Development Assistance funds;
Pursuant to Decree No. 52/1999/NĐ-CP dated July 8, 1999 of the Government promulgating the Regulations on Investment Management and Construction and Decree No. 12/2000/NĐ-CP dated May 5, 2000 of the Government amending and supplementing certain articles of Decree No. 52/1999/NĐ-CP dated July 8, 1999;
Pursuant to Decree No. 90/1998/NĐ-CP dated November 7, 1998 of the Government promulgating the Regulations on Borrowing and Repaying Foreign Debts;
Pursuant to Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the Rural Health Project using loans from the Asian Development Bank;
Pursuant to the loan agreement between the Socialist Republic of Vietnam and the Asian Development Bank (ADB) No. 1777-VIE (SF) dated August 1, 2001;
The Ministry of Finance and the Ministry of Health jointly issue guidelines for the financial management mechanism of the Rural Health Project as follows:

PART I.

GENERAL PROVISIONS

1. Abbreviations and definitions:

In this Circular, the following terms are understood as follows:

1.1 ADB: Asian Development Bank (Asian Development Bank)

1.2 BHYT: Health Insurance

1.3 PMU: Project Management Unit

1.4 Project supervising agency: Ministry of Health

1.5 International organizations:

- WHO: World Health Organization (World Health Organization)

- UNICEF: United Nations Children's Fund (United Nations Children's Fund)

- UNFPA: United Nations Population Fund (United Nations Population Fund)

1.6 Rural Health Project: Is the project invested according to Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the project.

1.7 HCSN: Administrative and Public Services

1.8 HĐND: People's Council

1.9 L/C: Letter of Credit (Letter of Credit)

1.10 Serving bank: Is the selected Investment and Development Bank serving the project.

1.11 NSNN: State Budget

1.12 Provincial budget: Budgets of participating provinces

1.13 Central budget: Central budget

1.14 PMU/ADB: Central Project Management Unit

1.15 PPMU: Provincial Project Management Unit

1.16 Central: Central

1.17 TCKT: Financial Accounting

1.18 Fixed assets: Fixed assets

1.19 Foreign finance: Foreign finance

1.20 UBND: People's Committee

1.22 USD: United States Dollar (United States Dollar)

1.23 VND: Vietnamese Dong

1.24 XDCB: Construction

2. Management principles:

2.1 Budget and capital structure.

The total budget and capital structure are stipulated in Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the Rural Health Project, Loan Agreement ADB No. 1777-VIE (SF) dated August 1, 2001, and other commitment documents for non-reimbursable aid. The Rural Health Project uses the following sources of capital: - ADB loan.

- Non-reimbursable aid from international organizations.

- Counterpart funding from Vietnam including the central budget and provincial budgets participating in the project.

2.2 The ADB loan and non-reimbursable aid are sources of revenue for the State Budget. The Ministry of Finance is responsible for recording revenue in the State Budget, allocating and disbursing funds to the Ministry of Health to implement the approved Rural Health Project. The Ministry of Finance monitors the implementation of the loan and repayment when due.

2.3 The Rural Health Project capital includes investment construction capital and administrative and public services capital. The management and use of capital for the project must comply with commitments in the Loan Agreement, ADB regulations, and current Vietnamese regulations on managing and using investment construction capital and administrative and public services capital.

2.4 The Ministry of Health is responsible for directing the use of capital in accordance with the approved project objectives and content, consistent with the terms committed in the Loan Agreement signed with ADB, non-reimbursable aid commitment documents signed with international organizations, related documents accompanying these agreements, and current Vietnamese regulations.

2.5 The allocation of project expenditure items as either investment construction capital or administrative and public services capital must comply with the provisions of Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the Rural Health Project, which includes: a) Investment construction expenditures:

- Upgrading and basic construction investment for 212 health facilities (13 preventive health centers, 13 health communication and education centers, 13 regional general hospitals, 74 district health centers, and 99 regional multi-specialty clinics). - Supplying medical equipment for the aforementioned 212 health facilities.

b) Administrative and public services expenditures:

- Office equipment and supplies,

- Transportation and travel means (including 14 cars),

- Essential medicines,

- Consulting services,

- Training and teaching materials,

- Information and communication activities,

- Community activities,

- Research, monitoring, and evaluation,

- Operation and maintenance,

- Project staff.

For contingency funds: When used, they will be classified as either investment construction expenditures or administrative and public services expenditures based on specific expenditure items.

2.6 Participating provinces are responsible for arranging sufficient counterpart funding for the project from their provincial budgets to implement the approved project contents.

The Vietnam Investment and Development Bank system serving the project shall carry out procedures to withdraw funds from ADB (including payment methods) to make payments according to the requirements of PMU/ADB and PPMU in accordance with current regulations.

During the implementation process, the serving bank shall enjoy service fees for each transaction generated according to the fee schedule established by the bank, in compliance with the State Bank's regulations on collecting service fees for bank transactions. These service fees are included in the total project investment amount.

2.8 PMU/ADB and PPMU may use the interest accrued on their respective advance accounts to pay for banking service fees, with the remaining interest regularly paid monthly to the State Budget. If the accrued interest is insufficient to cover banking service fees, PMU/ADB and PPMUs shall aggregate the shortfall into the counterpart funding plan and use counterpart funding to pay for banking service fees.

2.7. The Vietnam Investment and Development Bank System shall handle the procedures for withdrawing funds from ADB for the project (including payment methods) in accordance with the requirements of PMU/ADB and PPMU as stipulated by current regulations.

During the implementation process, the serving bank shall be entitled to service fees for each transaction arising according to the fee schedule established by the bank, in compliance with the State Bank's regulations on charging service fees for bank transactions. Such service fees shall be included in the total investment amount of the project.

2.8. PMU/ADB and PPMU may utilize the interest generated on their respective advance payment accounts to cover banking service charges, with the remaining interest to be regularly remitted monthly to the State Budget. In cases where the interest is insufficient to cover banking service costs, PMU/ADB and PPMUs shall consolidate the shortfall into the counterpart fund plan and use the counterpart fund to pay the banking service fees.

PART II.

SPECIFIC PROVISIONS

1. Budget planning for the project:

By July each year, in accordance with regulations on the preparation and examination of the State budget estimate; PPMU and PMU/ADB must prepare the project's budget plan:

1.1 Responsibilities of PPMU:

Prepare the project's budget plan carried out in their respective localities according to the expenditure items and the structure of the project's sources of funding as determined in the Ministry of Health's Investment Decision and the Loan Agreement, following the guidance of PMU/ADB.

The contents of the budget plan include: ADB capital plan, grant aid (if any) from international organizations such as WHO, UNICEF, UNFPA, counterpart capital under the responsibility of the Provincial State Budget according to Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the Rural Health Project and other sources of funding (if any), detailed by work item, according to the nature of the funding source used (investment construction capital, O&M capital) specifically according to the form at Appendix No. 1 of this Circular and Detailed Explanation of Funding Requirements for Work Items. The budget plan prepared by PPMU shall be submitted to provincial competent agencies (Department of Planning and Investment, Department of Finance and Price) for consolidation and submission to the authority with approval power to approve the counterpart budget plan for the project in the provincial budget, and simultaneously sent to PMU/ADB (before July 30) for consolidation of the overall budget plan for the entire project.

1.2 Responsibilities of PMU/ADB:

At the beginning of July each year, PMU/ADB issues a letter guiding the provinces participating in the project to prepare the budget plan for the next year.

By the end of July, consolidate the overall budget plan for the entire project including: ADB capital plan, grant aid from WHO, UNICEF, UNFPA, central government counterpart capital allocated, local government self-balancing counterpart capital and other sources of funding (if any), detailed by work item, according to the nature of the funding source used (investment construction capital, O&M capital) specifically according to the form at Appendix No. 1 of this Circular and Detailed Explanation of Funding Requirements for Work Items. This budget plan is consolidated into the budget plan of the Health Project Management Board before being sent to the Ministry of Health to be included in the general budget estimate of the Ministry of Health sent to the Ministry of Planning and Investment, Ministry of Finance for approval by the Government and National Assembly.

2. Approval and announcement of the plan: After being assigned the budget plan by the Government:

2.1.- The Ministry of Health allocates the assigned budget plan to the Project, including the counterpart capital, loan capital, grant aid... according to the expenditure items and according to the nature of the funding source (O&M and investment construction capital). The decision allocating the budget plan to the project must be concurrently sent to the Ministry of Planning and Investment, Ministry of Finance to implement the allocation and monitoring of the use of counterpart capital and loan capital. 2.2.- The People's Committee of the province allocates the counterpart budget plan for the activities of the project in the province. The decision allocating the provincial counterpart budget plan must be sent to the Department of Finance and Price, Provincial Treasury, and simultaneously sent to PMU/ADB.

3. Opening accounts:

3.1. PMU/ADB may open the following accounts:

a) At the service bank:

- A temporary advance account in USD (US dollars) named after the project to receive ADB loan funds.

- An account for deposits to receive non-reimbursable grants from international organizations: WHO, UNICEF, UNFPA (if necessary).

- One deposit account to deposit revenues from the project such as tender document sales proceeds, bid bond, performance bond...

b) At the State Treasury where transactions take place:

One limit account to receive counterpart capital provided by the Central State Budget for the project's activities.

3.2 Participating provinces may open the following accounts:

a) At the branch of the project service bank in the province:

- A provincial temporary advance account in VND to receive ADB temporary advance funds transferred down by PMU/ADB.

- A deposit account to deposit revenues from the project such as: Tender document sales proceeds, bid bond, performance bond, contributions from beneficiaries (if any)...

b) At the Provincial State Treasury:

- An investment capital payment account to carry out the payment of provincial counterpart investment construction capital for the project.

- A limit account to carry out the payment of provincial counterpart O&M capital.

4. Management and allocation of counterpart capital.

The allocation and use of counterpart capital are carried out in accordance with current domestic regulations consistent with the progress of loan and grant disbursement of the project.

4.1 Counterpart investment construction capital:

Based on the approved state budget counterpart estimate, the Department of Finance and Price transfers the counterpart investment construction capital to PPMU through the Provincial State Treasury in accordance with current regulations on the management and allocation of investment construction capital.

4.2 Counterpart O&M capital:

Based on the approved counterpart capital estimate and the progress of loan disbursement, the Ministry of Finance notifies and transfers the counterpart O&M capital to the Ministry of Health. The Ministry of Health allocates the counterpart capital to PMU/ADB to implement the project in line with the loan drawdown schedule.

The Departments of Finance and Price of participating provinces transfer the allocated counterpart capital (for expenditure items funded by the provincial budget) according to the approved estimate to implement the project in line with the loan repayment ratio specified in the Loan Agreement.

5. Management of loan drawdowns and payment of ADB loans

All procedures and forms of foreign drawdowns and payments from the temporary advance account are carried out in accordance with current regulations of the Ministry of Finance, guidelines for Decree No. 17/2001/NĐ-CP dated May 4, 2001 of the Government promulgating the Regulations on the Management and Use of Official Development Assistance, and comply with ADB disbursement principles.

Payments from ADB loan funds must strictly follow the financing ratios for each project component as stipulated in the Loan Agreement and project legal documents..

Drawdowns through the temporary advance account

Depending on the requirements and nature of each payment, the following withdrawal methods may be applied: Withdrawal and payment through advance payment accounts, direct payment, refund procedures, and commitment letters.

A1. First drawdown to the central temporary advance account:

A. Based on the temporary advance account limit specified in the Loan Agreement of 3,000,000 USD (Three million US dollars), PMU/ADB sends the following documents to the Ministry of Finance (Budget Department)::

- A letter requesting a drawdown

- A drawdown application form and statements according to ADB's format, clearly stating the planned expenditures for the next six months.

- Request letter for fund withdrawal

- Withdrawal application form and account statements in the format provided by ADB, specifying the expenditure plan for the next six months.

Within five working days from the date of receiving complete and valid files, the Ministry of Finance (Department of State Budget) shall issue a document accepting the request to withdraw funds from the PMU/ADB account and the serving bank. Within two working days from the date of the Ministry of Finance's opinion, the serving bank and PMU/ADB shall sign the withdrawal form to send to ADB. ADB shall examine and approve the transfer of funds into the central provisional account.

A2. Withdrawal of funds to the provincial provisional account for the first time:

The Ministry of Health and the Ministry of Finance shall agree on the ceiling amount on the provincial provisional account with a total amount of VND 500,000,000.

Within the scope of the ceiling amount of the provisional account determined for each province and the budget plan for the next quarter, PPMU shall issue a letter requesting PMU/ADB to transfer funds into the provincial provisional account. Within five days from the date of receipt of the request letter from PPMU, PMU/ADB shall deduct funds from the central provisional account, convert them into Vietnamese dong, and transfer them to the provincial provisional account.

A3. Payment from the central provisional account:

When there is a payment request for contractors; suppliers of goods, consulting services, and regular expenses of PMU/ADB, after acceptance, quantity inspection, and verification of payment documents in accordance with current regulations and calculation of the payable amount based on the specified ratio, PMU/ADB shall request the serving bank to deduct funds from the central provisional account to pay the beneficiary.

Within five working days after withdrawing funds from the provisional account for payment, PMU/ADB shall submit payment documents in accordance with current regulations to the State Treasury where the transaction takes place for the State Treasury to conduct expenditure control in accordance with regulations. Within five working days, based on the results of the document review, the State Treasury shall confirm the completed work volume on the Invoice or Payment Schedule or Advance Payment Request Form (according to the State Treasury model) while making the corresponding counterpart payment (if applicable).

In cases of one-time payments or final payments under contracts, PMU/ADB shall submit documents and payment vouchers to the State Treasury for pre-payment verification and confirmation that the documents meet the payment conditions before paying the beneficiary.

Within five working days from the date of receipt of complete and valid documents, the State Treasury shall review the documents and confirm the completed work volume as meeting the payment conditions (and make the corresponding counterpart payment if applicable). Based on the State Treasury's confirmation, PMU/ADB shall request the serving bank to pay from the central provisional account to the beneficiary.

The Invoice or Payment Schedule with the State Treasury's confirmation is one of the bases for PMU/ADB to process supplementary provisional account top-ups at the central level.

A4. Payment from the provincial provisional account.

When there is a request to withdraw funds from the provincial provisional account to cover project activities implemented by the province, PPMU shall submit documents and vouchers to the provincial State Treasury for expenditure control including:

- A letter requesting payment

- Relevant documentation and vouchers in accordance with current regulations on the payment of construction investment funds or state budget expenditure funds.

Within five working days from the date of receipt of complete and valid documents, based on the results of the document review, the provincial State Treasury shall confirm the completed work volume on the Invoice or Payment Schedule or Advance Payment Request Form (according to the State Treasury model) while making the corresponding counterpart payment (if applicable).

PPMU shall send the serving bank branch a payment request along with the Invoice or Payment Schedule or Advance Payment Request Form confirmed by the provincial State Treasury to deduct funds from the provincial provisional account to pay the beneficiary.

The Invoice, Payment Schedule with the confirmation of the provincial State Treasury is one of the bases for PPMU to process supplementary provisional account top-ups at the provincial level and simultaneously serves as a basis for PMU/ADB to process supplementary provisional account top-ups at the central level.

A5. Supplementary top-up of the central provisional account:

The principle of supplementary withdrawal from the provisional account is the actual expenditure principle, the Project can only withdraw supplementary funds for amounts already paid out.

Monthly or when the central provisional account has been spent up to 20% of the ceiling amount stipulated, PMU/ADB may implement supplementary withdrawals from the central provisional account.

To withdraw supplementary funds from the provisional account, PMU/ADB shall submit the following documents to the Ministry of Finance (Department of State Budget):

- A letter requesting supplementary withdrawal from the provisional account.

- The withdrawal form and related documents, statements as prescribed by ADB.

- A copy of the expenditure statement prepared by PMU/ADB showing the amounts already withdrawn from the provisional account, accompanied by copies of invoices, payment schedules, advance payment requests (with confirmation from the State Treasury).

- A copy of the provisional account statement prepared by the serving bank.

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of State Budget) shall issue an approval document sent to PMU/ADB and the serving bank.

Within two working days from the date of the Ministry of Finance's opinion, the serving bank and PMU/ADB shall sign the withdrawal form to send to ADB. ADB shall examine and approve the transfer of supplementary funds into the central provisional account.

Funds transferred down to the provincial provisional account will be supplemented when PPMU submits withdrawal documents and vouchers for supplementary top-ups of the provincial provisional account.

A6. Supplementary top-up of the provincial provisional account:

Monthly or when the provincial provisional account has been spent up to 50% of the ceiling amount stipulated, PPMU must process supplementary top-ups of the provincial provisional account to PMU/ADB including:

- A letter to PMU/ADB requesting supplementary top-ups of the provisional account.

- Copies of expenditures from the provincial provisional account and copies of Invoices, Payment Schedules with confirmation from the provincial State Treasury.

- A copy of the provisional account statement at the provincial branch of the serving bank.

Within five working days from the date of receipt of complete and valid documents, PMU/ADB shall process the transfer of funds from the central provisional account to the provincial provisional account.

The documents and vouchers submitted by PPMU for supplementary top-ups of the provincial provisional account also serve as documents for PMU/ADB to prepare supplementary withdrawal forms for the central provisional account.

B. Direct payment:

This is a payment method at the request of the project, ADB will directly transfer payment to the contractor, supplier. This method is usually applied in cases of progress payments for large construction contracts, consulting contracts, or payments for small import contracts without the need to open a Letter of Credit.

To withdraw funds for direct payment, PMU/ADB sends the following documents to the Ministry of Finance (Department of State Budget):

- A letter requesting withdrawal of funds for direct payment.

- The withdrawal form and accompanying bank statements according to ADB's format.

- Contract and the decision approving the contract by the competent authority (to be sent once).

- Non-objection letter (No objection) from ADB (if it is a type of contract requiring prior approval from ADB).

- Performance guarantee and advance payment guarantee (if making advance payments).

- Invoice or payment request from the contractor or supplier.

- Price list or payment schedule, application for advance payment with confirmation from the State Treasury.

(+) When making direct payments at the request of PPMU, PPMU is responsible for providing all the above-mentioned documents to PMU/ADB (except for the letter, withdrawal form, and accompanying bank statements prepared by PMU/ADB).

(+) The verification of payment documents to obtain confirmation from the State Treasury shall be carried out in accordance with current domestic regulations on payment of investment capital for public works or state-owned enterprises' capital.

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of State Budget) issues a document approving the withdrawal and sends it to PMU/ADB and the serving bank. In special cases, the Ministry of Finance may require the project to provide additional explanatory documents.

Within two working days from the date of the Ministry of Finance's opinion, the serving bank and PMU/ADB sign the withdrawal form and send it to ADB. ADB will consider and approve the transfer of funds directly to the contractor or supplier.

C. Procedures for Refunding Funds:

The refunding procedure is a method where ADB refunds money for legitimate expenditures made by the project according to the Loan Agreement, which are paid using budget funds or self-financing. This method is usually applied in cases of small procurement payments or certain construction project components.

To withdraw funds under the refunding procedure, PMU/ADB sends the following documents to the Ministry of Finance (Department of State Budget):

- A letter requesting withdrawal under the refunding procedure.

- The withdrawal form and accompanying bank statements according to ADB's format. The withdrawal form must include the full name and account number of the beneficiary unit that has previously advanced the funds for the refund.

- Contract and the decision approving the contract by the competent authority (to be sent once).

- Non-objection letter from ADB (if it is a type of contract requiring prior approval from ADB).

- Invoice or payment request from the contractor or supplier.

- Price list or payment schedule, application for advance payment with confirmation from the State Treasury and other documents proving the amount paid.

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of State Budget) shall issue an approval document sent to PMU/ADB and the serving bank.

Within two working days from the date of the Ministry of Finance's opinion, the serving bank and PMU/ADB will process the issuance of the Letter of Credit and sign the withdrawal form to request ADB to issue a guarantee letter. ADB will consider and approve the issuance of the guarantee letter.

For withdrawals under the refunding procedure for amounts previously paid by the state budget (or from budget-originated funds), the refunded amount must be deposited into the budget where the advance was made.

For withdrawals under the refunding procedure for amounts previously paid by the Project Owner using self-financing (or credit, or other sources of funding), the Project Owner may use the refunded amount according to current financial management regulations.

D. Guarantee Letter Procedure:

The guarantee letter procedure is a method where, upon the project's request, ADB issues a guarantee letter ensuring payment to a commercial bank for the amount to be paid through a Letter of Credit. This method is typically applied when goods imported under a contract are to be paid for via a Letter of Credit.

To withdraw funds under the guarantee letter procedure, PMU/ADB sends the following documents to the Ministry of Finance (Department of State Budget):

- A letter requesting the issuance of a Letter of Credit.

- The withdrawal form and accompanying bank statements according to ADB's format.

- Contract and the decision approving the contract by the competent authority.

- Non-objection letter from ADB (if it is a type of contract requiring prior approval from ADB).

- Performance guarantee and advance payment guarantee (if required).

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of State Budget) shall issue an approval document sent to PMU/ADB and the serving bank.

Within two working days from the date of the Ministry of Finance's opinion, the serving bank and PMU/ADB will process the issuance of the Letter of Credit and sign the withdrawal form to request ADB to issue a guarantee letter. ADB will consider and approve the issuance of the guarantee letter.

During the implementation of the procedures for withdrawing and disbursing ADB loan funds as stated in Point 5 above, after completing the work, PMU/ADB must send a copy of the Ministry of Finance's approval to the Ministry of Health (Department of Financial Management) for consolidation and monitoring..

6. Expenditure Standards Applied to the Project:

The project applies expenditure standards as prescribed in Decision No. 112/2001/QD-BTC dated November 9, 2001, issued by the Minister of Finance on the issuance of some expenditure standards applicable to projects using Official Development Assistance (ODA) loans, current state regulations, and the expenditure standards attached to this Circular.(Annex 2).

7. Management of Non-Reimbursable Aid from International Organizations:

Non-reimbursable aid from international organizations for the Rural Health Project is used in accordance with Circular No. 70/2001/TT-BTC dated August 24, 2001, issued by the Ministry of Finance on guiding the financial management system of the state for non-reimbursable aid, based on the approved project content and current regulations.

8. Accounting System for the Project

8.1 Accounting Documents System

The accounting vouchers system applicable to the Project Management Units at all levels using ADB loan funds includes two types:

The accounting document system of Vietnam is implemented according to the current accounting document system of Vietnam.

List of accounting documents and materials according to ADB's management requirements (Annex 3)

8.2 Accounting Ledger Form:

To unify throughout the project, PMU/ADB and PPMUs are encouraged to use the General Journal ledger form to serve financial audit work, annual settlement report compilation, and overall project settlement, while facilitating computer use in project accounting.

8.3 Accounting Account System:

Based on the expenditure items and contents of each expenditure item in the signed Loan Agreement with ADB, the Rural Health Project must use the Accounting Account System according to the model of the Project Management Board with分级处理上述文本的翻译任务，确保每个段落都准确无误地转换成标准的英文法律术语。请继续处理剩余部分：

9. Management of Project Assets:

The project assets must be managed and utilized in accordance with the regulations governing state asset management. Project Management Units (PMUs) must organize the establishment of accounting books to monitor and calculate depreciation of fixed assets, and establish usage rules that ensure assets are used for their intended purposes effectively. For transportation equipment, the project shall not alter the purpose of the assets. Annually, all levels of PMUs must conduct asset inventory checks to determine the condition of the assets and comply with regular maintenance regulations.

PMU/ADB is responsible for guiding subordinate PMUs on the management and utilization of assets assigned to individuals (bicycles, motorcycles, personal computers, mobile phones, etc.).

During the use of project assets, if they become damaged beyond repair or if repairs are economically unfeasible and ineffective, the relevant PMUs must establish a Committee and prepare a record recommending the liquidation of the assets. Only upon approval by the competent authority in writing can the PMU reduce the asset value in the accounting records.

10. Reporting, inspection, auditing, and settlement system for projects:

10.1. Reporting System:

Monthly, the provincial branch of the project service bank sends account statements of the provincial advance payment account to the subordinate PMUs and the provincial State Treasury.

The project service bank sends account statements of the advance payment account to PMU/ADB and the Ministry of Finance (Department of State Budget).

Account statements of the provincial branch of the project service bank and the central-level project service bank must clearly show transactions and interest accrued in the month, the use of interest, and the date of transferring remaining interest to the State budget.

On the 5th day of each month, subordinate PMUs send a quick report to PMU/ADB regarding the receipt and use of project funds, including recommendations to the competent authorities for resolving issues encountered during project participation.

Quarterly, PMU/ADB is responsible for compiling quick reports from the entire project to be submitted to the Project Management Board and the Ministry of Health for monitoring and coordinating with relevant authorities to resolve difficulties during project implementation.

Monthly, PMU/ADB reports to the Ministry of Health, the Ministry of Finance (Department of State Budget, Department of State Financial Management, Investment Department), the Ministry of Planning and Investment, and ADB on the progress of the project, the use of loan and grant funds, and domestic counterpart funds. The report should detail:

- Progress and quality of project implementation compared to objectives.

- Existing issues leading to delayed disbursement, causes, and corrective measures.

- Withdrawal and payment of funds in compliance with Vietnamese regulations and ADB requirements.

- Proposals for the six-month implementation plan.

10.2. Inspection:

Regularly and unexpectedly, the Ministry of Finance and the Ministry of Health will inspect the project's implementation and fund usage (domestic and foreign). If misuse of funds is discovered contrary to the Agreement and project legal documents, the Ministry of Finance will suspend funding until violations are addressed by the competent authorities.

Health Ministry functional agencies will cooperate with PMU/ADB to conduct surprise inspections at participating provinces regarding project content and tasks, project progress, operational challenges, identify causes, and recommend solutions to higher authorities.

10.3. Auditing:

Annually, the entire financial activity of the project must be audited by an independent auditing agency in accordance with national regulations, loan agreements, and aid commitments. The audit report must be sent to the Ministry of Health, the Ministry of Finance, and serves as a basis for considering additional fund withdrawals for advance accounts or withdrawing funds from advance accounts for payments, and also evaluates project implementation. Financial reports and settlements must provide comprehensive, truthful, and timely information about the financial status of the project. All financial reports and settlements are based on up-to-date, accurate, and consistent accounting data and documents..

10.4. Settlement:

PMU/ADB and subordinate PMUs must submit financial reports to ADB and settlement reports to the Ministry of Health for consolidation and submission to the Ministry of Finance. Specifically, PMU/ADB, in addition to reporting on project management activities and project implementation, must compile consolidated financial reports and settlements from its own reports and those of subordinate PMUs.

Financial reports and settlements must fully, truthfully, and promptly reflect the financial dynamics and current status of the project. All financial reports and settlements are prepared based on a complete, accurate, and unified set of accounting data and documents.

The content, calculation methods, and presentation formats of indicators in each report must be uniformly guided by PMU/ADB for implementing units and participants (PMU/ADB and subordinate PMUs) in accordance with current regulations.

a) For State Budgetary Funds:

- Responsibilities of subordinate PMUs:

Annually, subordinate PMUs are responsible for preparing final settlement reports for all loans, grants, domestic counterpart funds, and other revenues (if any) within the public service sector according to the Accounting System for State Budgetary Funds issued by Decision No. 999-TC/QĐ/CĐKT dated November 2, 1996, of the Minister of Finance. For domestic counterpart funds and other revenues (if any), these must be sent to the Provincial Department of Finance and Price for consolidation into the provincial final settlement report. After approval by the Provincial Department of Finance and Price, subordinate PMUs must report to PMU/ADB for consolidation. For non-reimbursable loans and grants, final settlement reports must be sent to PMU/ADB for review and consolidation before submission to the project management authority.

- Responsibilities of PMU/ADB:

Annually, PMU/ADB is responsible for preparing final settlement reports for project management and implementation funds, including ADB loans, non-reimbursable grants from international organizations, domestic counterpart funds provided by the State, and other revenues at PMU/ADB, in accordance with Decision No. 999-TC/QĐ/CĐKT dated November 2, 1996.

- Responsibilities of the project management authority:

Review and approve annual final settlement reports of the project before consolidating them into the unit's final settlement report to be submitted to the finance authority.

b) For Construction Investment Funds:

PMU/ADB and subordinate PMUs must settle accounts in accordance with Circular No. 70/2000/TT-BTC dated July 17, 2000, of the Ministry of Finance on "Guidelines for Final Settlement of Investment Funds." Subordinate PMUs must send final settlement reports to PMU/ADB for review and consolidation, which will then be reported to the Ministry of Health for approval and submission to the Ministry of Finance.

PART III

IMPLEMENTING PROVISIONS

This Circular shall take effect fifteen days from the date of issuance. During implementation, if there are any difficulties, the Rural Health Project Management Board and the Bank shall promptly report to the Ministry of Finance (Department of Foreign Financial Affairs) and the Ministry of Health (Department of Accounting and Finance) for study and supplementation.

Place of Receipt:

- Office of the Government (for comments)

- Ministry of Planning and Investment

- State Bank of Vietnam,

- Vietnam Investment and Development Bank

- State Treasury

- Rural Health Project Management Board (Central)

- People's Committees of provinces participating in the project

- Legal Department of the Ministry of Finance, Ministry of Health

- To be filed with the Ministry of Finance, Ministry of Health.