Joint Circular No. 44/2002/TTLT/BTC-BYT guiding the financial management mechanism for the rural health project (using Asian Development Bank loans)

JOINT CIRCULAR

Guidelines for the financial management mechanism of the rural health project (using loans from the Asian Development Bank)

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Pursuant 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 and Construction Management 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 1:

GENERAL PROVISIONS

1. Abbreviations and definitions:

In this Circular, the following terms shall be understood as follows:

1.1 ADB: Asian Development Bank (Asian Development Bank)

1.2 BHYT: Health Insurance

1.3 Ban QLDA: Project Management Board

1.4 Project management agency for the Rural Health Project: The 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 Development and Investment Bank to serve the project.

1.11 NSNN: State Budget

1.12 NSĐP: Provincial budgets participating in the project

1.13 NSTW: Central Budget

1.14 PMU/ADB: Central Project Management Board

1.15 PPMU: Provincial Project Management Board

1.16 TW: Central

1.17 TCKT: Financial Accounting

1.18 TSCĐ: Fixed Assets

1.19 TCĐN: Foreign Financial Affairs

1.20 UBND: People's Committee

1.21 USD: United States Dollar (US Dollar)

1.22 VND: Vietnamese Dong

1.23 XDCB: Basic Construction

2. Management principles:

2.1 Funding and capital structure.

Total funding 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 funds:

- ADB loan.

- Non-reimbursable aid from international organizations.

- Counterpart funds of Vietnam including the Central Budget and provincial budgets participating in the project.

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

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

2.4 The Ministry of Health is responsible for directing the use of funds for the intended purposes and contents of the approved project in accordance with the terms committed in the Loan Agreement signed with ADB, 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 basic construction funds or administrative and public service funds 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 basic construction expenditures:

- Upgrading and constructing basic infrastructure for 212 healthcare facilities (13 preventive healthcare centers, 13 health communication and education centers, 13 regional general hospitals, 74 district health centers, and 99 regional multi-specialty clinics).

- Providing medical equipment for the aforementioned 212 healthcare facilities.

b) Administrative and public service 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,

- Operations and maintenance,

- Project staff.

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

2.6 Participating provinces are responsible for allocating sufficient counterpart funds for the project from their provincial budget to implement the approved project contents.

2.7. The Vietnam Development and Investment Bank serving the project shall handle procedures for withdrawing funds from ADB (including payment methods) to make payments as required by PMU/ADB and PPMU in accordance with current regulations.

During the implementation process, the serving bank shall charge service fees for each transaction generated according to the fee schedule established by the bank, consistent with the State Bank's regulations on charging 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 advance accounts to pay bank service charges, with the remaining interest being regularly paid monthly to the State Budget. If the accrued interest is insufficient to cover bank service charges, PMU/ADB and PPMU shall aggregate the shortfall into the counterpart fund plan and use the counterpart fund to pay bank service fees.

Part II:

SPECIFIC PROVISIONS

1. Planning project funds:

By July each year, in accordance with regulations on preparing and reviewing state budget estimates; PPMU and PMU/ADB must prepare plans for project funds:

1.1 Responsibilities of PPMU:

Prepare the project funding plan for implementation in their locality according to the expenditure items and funding sources determined in the Ministry of Health's investment decision and the Loan Agreement, guided by PMU/ADB.

The contents of the capital plan include: the ADB capital plan, international organization aid (if any) from WHO, UNICEF, UNFPA, the counterpart capital plan under the responsibility of the State Budget as per Decision No. 664/QĐ-TTg dated May 30, 2001 of the Prime Minister approving the Rural Health Project and other sources of capital (if any), detailed according to project items, according to the nature of the capital used (investment construction capital, recurrent capital) specifically according to the form at Appendix No. 1 of this Circular and the Detailed Capital Requirement Statement for each project item.

The capital plan prepared by the PPMU is sent to provincial competent agencies (Department of Planning and Investment, Department of Finance and Price) for consolidation and submission to the authority with approval power for the approval of the counterpart capital plan for the project in the provincial budget, and simultaneously sent to PMU/ADB (before July 30) for consolidation of the overall capital plan for the entire project.

1.2 Responsibilities of PMU/ADB:

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

By the end of July, consolidate the overall capital plan for the entire project including: the ADB capital plan, aid capital from WHO, UNICEF, UNFPA, central government counterpart capital, local government self-balancing counterpart capital, and other sources of capital (if any), detailed according to project items, according to the nature of the capital used (recurrent capital and investment construction capital) specifically according to the form at Appendix No. 1 of this Circular and the Detailed Capital Requirement Statement for each project item. This capital plan is consolidated into the capital plan of the Health Project Management Board before being submitted to the Ministry of Health for consolidation into the general budget estimate of the Ministry of Health to be submitted to the Ministry of Planning and Investment, the Ministry of Finance for approval by the Government and the National Assembly.

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

2.1. The Ministry of Health allocates the assigned capital plan for the Project, including the counterpart capital, loan capital, aid capital... according to expenditure categories and according to the nature of the capital (recurrent capital and investment construction capital). The decision on allocating the capital plan for the project must be concurrently sent to the Ministry of Planning and Investment, the Ministry of Finance for implementation of counterpart capital disbursement and monitoring and control of loan capital usage.

2.2. The People's Committee of the province allocates the counterpart capital plan for the activities of the project in the province. The decision on allocating the provincial counterpart capital plan must be sent to the Department of Finance and Price, the Provincial Treasury, and concurrently sent to PMU/ADB.

3. Opening accounts:

3.1. PMU/ADB opens the following accounts:

a) At the servicing bank:

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

- A deposit account to receive non-repayable aid from international organizations: WHO, UNICEF, UNFPA (if necessary).

- One deposit account to deposit revenues at 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 Treasury for the project's activities.

3.2 Participating provinces open the following accounts:

a) At the branch of the servicing bank of the province:

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

- A deposit account to deposit revenues at 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 implement the payment of provincial counterpart investment construction capital for the project.

- A limit account to implement the payment of provincial counterpart recurrent capital.

4. Management and disbursement of counterpart capital.

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

4.1 Counterpart capital for investment construction:

Based on the approved state budget counterpart capital 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 management and disbursement of investment construction capital.

4.2 Counterpart recurrent capital:

Based on the approved counterpart capital estimate and the disbursement progress of loan funds, the Ministry of Finance notifies and transfers the counterpart recurrent capital to the Ministry of Health. The Ministry of Health disburses the counterpart capital to PMU/ADB to implement the project consistent with the loan withdrawal schedule.

The Departments of Finance and Price of participating provinces transfer the counterpart capital allocation for PPMU (for contents funded from the provincial budget) according to the approved budget to implement the project consistent with the loan repayment ratio stipulated in the Loan Agreement.

5. Management of loan withdrawal, disbursement, and payment from ADB.

All procedures and forms of withdrawing and paying from abroad and from the 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 Management and Use of Official Development Assistance, and comply with ADB disbursement principles.

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.

Payments from ADB loan funds must be made strictly in accordance with the financing ratios for each project item specified in the Loan Agreement and the project's legal documents.

A. WITHDRAWAL AND PAYMENT THROUGH THE ADVANCE ACCOUNT:

A1. First withdrawal to the central advance account:

Based on the 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 (Department of Foreign Capital):

- A letter requesting withdrawal of funds

- A request for withdrawal and relevant statements according to ADB's format, clearly stating the spending plan for the next six months.

Within five working days from receiving complete and valid documents, the Ministry of Finance (Department of Foreign Capital) issues a document accepting the request for withdrawal and sends it to PMU/ADB and the servicing bank. Within two working days from the Ministry of Finance's opinion, the servicing bank and PMU/ADB sign the withdrawal request and send it to ADB. ADB considers and accepts, then transfers the money into the central advance account.

A2. First withdrawal to the provincial advance account:

The Ministry of Health and the Ministry of Finance jointly determine the ceiling on the provincial advance account in Vietnamese Dong at 500,000,000 VND.

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

A3. Payment from the Central Advance Account:

When there is a payment request for contractors; suppliers of goods, consulting services, and regular expenses of PMU/ADB, after acceptance, quantity verification, and compliance with current regulations on payment vouchers, PMU/ADB shall request the Bank to deduct funds from the central advance account to pay the beneficiary.

Within five working days after withdrawing funds from the advance account for payment, PMU/ADB shall submit payment documentation in accordance with current regulations to the State Treasury where the transaction takes place for the State Treasury to implement expenditure control as prescribed. Within five working days, based on the results of the documentation review, the State Treasury shall confirm the completed work volume as eligible for payment on the Invoice or Payment Schedule or Provisional Payment Request form (as provided by the State Treasury) and simultaneously make the counterpart payment (if applicable).

In cases of one-time payments or final payments under contracts, PMU/ADB shall submit documentation in accordance with regulations to the State Treasury for pre-payment verification and confirmation that the documentation meets the conditions for payment before paying the beneficiary.

Within five working days from the date of receiving complete and valid documentation, the State Treasury shall review the documentation, confirm the completed work volume as eligible for payment (and simultaneously make the counterpart payment if applicable). Based on the confirmation of the State Treasury, PMU/ADB shall request the Bank to pay from the central advance account to the beneficiary.

The Invoice or Payment Schedule with the confirmation of the State Treasury is one of the bases for PMU/ADB to process additional funding for the central advance account.

A4. Payment from the Provincial Advance Account.

When there is a payment request from the provincial advance account to fund project activities implemented by the province, PPMU shall submit documentation to the State Treasury of the province 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 receiving complete and valid documentation, based on the results of the documentation review, the State Treasury of the province shall confirm the completed work volume as eligible for payment on the Invoice or Payment Schedule or Provisional Payment Request form (as provided by the State Treasury) and simultaneously make the counterpart payment (if applicable).

PPMU shall send the Branch of the Bank serving the request for payment along with the Invoice or Payment Schedule or Provisional Payment Request form confirmed by the State Treasury of the province to deduct funds from the provincial advance account to pay the beneficiary.

The Invoice, Payment Schedule with the confirmation of the State Treasury of the province is one of the bases for PPMU to process additional funding for the provincial advance account and simultaneously serves as a basis for PMU/ADB to process additional funding for the central advance account.

A5. Additional Funding for the Central Advance Account:

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

Monthly or when the central advance account has been spent up to 20% of the ceiling limit, PMU/ADB may apply for additional funding for the central advance account.

To apply for additional funding for the advance account, PMU/ADB shall submit the following documents to the Ministry of Finance (Department of Budget):

- Letter requesting additional funding for the advance account.

- Withdrawal application and related documentation as prescribed by ADB.

- Statement of expenditures made from the advance account by PMU/ADB, accompanied by copies of invoices, payment schedules, and provisional payment requests (with confirmation from the State Treasury).

- Statement of the advance account balance prepared by the Bank serving the account.

Within five working days from the date of receiving complete and valid documentation, the Ministry of Finance (Department of Budget) shall issue a document approving the request and send it to PMU/ADB and the Bank serving the account.

Within two working days from the date of the Ministry of Finance's approval, the Bank serving the account and PMU/ADB shall sign the withdrawal application and send it to ADB. ADB will consider and approve the transfer of additional funds into the central advance account.

Funds transferred down to the provincial advance account will be eligible for additional withdrawal when PPMU submits the necessary documentation for additional funding for the provincial advance account.

A6. Additional Funding for the Provincial Advance Account:

Monthly or when the provincial advance account has been spent up to 50% of the ceiling limit, PPMU must process additional funding for the provincial advance account and submit it to PMU/ADB, including:

- Letter requesting additional funding for the provincial advance account.

- Statement of expenditures from the provincial advance account and copies of invoices, payment schedules with confirmation from the State Treasury of the province.

- Statement of the provincial advance account balance prepared by the Branch of the Bank serving the account in the province.

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

The documentation submitted by PPMU for additional funding for the provincial advance account also serves as the documentation for PMU/ADB to prepare the application for additional funding for the central advance account.

B. DIRECT PAYMENT:

This is a payment method at the request of the project, where ADB will directly transfer payment to the contractor or supplier. This method is typically applied in cases of progress payments for large construction contracts, consultancy contracts, or payments for small import contracts that do not require the issuance of a Letter of Credit.

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

- Letter requesting withdrawal of funds for direct payment.

- Withdrawal application and related statements as prescribed by ADB.

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

- Non-objection letter (No Objection) from ADB (if required for contracts needing prior ADB approval).

- Performance guarantee and advance payment guarantee (if applicable for advance payments).

- Invoice or payment request from the contractor or supplier.

- The price list or payment schedule, advance payment request already confirmed by the State Treasury.

(+) When making direct payments at the request of the Project Management Unit (PMU), the PMU is responsible for providing all the above-mentioned documents to the Project Management Unit/Asian Development Bank (PMU/ADB) (except for letters, withdrawal forms, and accompanying statements prepared by the PMU/ADB).

(+) The control of payment vouchers to obtain confirmation from the State Treasury shall be carried out in accordance with the current domestic regulations on the payment of capital for construction works or state-owned capital.

Within five working days from the date of receipt of complete and valid documents, the Ministry of Finance (Department of Budget) will issue a written approval sent to the 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 time of the Ministry of Finance's opinion, the serving bank and the PMU/ADB will sign the withdrawal form and send it to the Asian Development Bank (ADB). ADB will consider approving and transferring funds directly to the contractor or supplier.

C. PROCEDURES FOR REFUNDING FUNDS:

Refunding procedures are a form where ADB refunds money to the project for legitimate expenditures made according to the loan agreement, which were paid using budget funds or own capital. This form is usually applied in small procurement payments or certain construction work payment items.

To withdraw funds through the refunding procedure, the PMU/ADB must submit the following documents to the Ministry of Finance (Department of Budget):

- A letter requesting withdrawal in the form of a refund.

- Withdrawal forms and statements according to ADB's model. The withdrawal form must include the full name and account number of the beneficiary unit that has advanced the expenditure for the refund.

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

- A non-objection letter from ADB (if it is a contract type requiring ADB's prior consent).

- Invoice or payment request from the contractor or supplier.

- Price list or payment schedule, advance payment request already confirmed by the State Treasury and other documents proving the amount paid.

Within five working days from the date of receiving complete and valid documentation, the Ministry of Finance (Department of Budget) shall issue a document approving the request and send it to PMU/ADB and the Bank serving the account.

Within two working days from the time of the Ministry of Finance's opinion, the serving bank and the PMU/ADB will process the withdrawal form and send it to ADB requesting issuance of a refund. ADB will consider approving and issuing the refund.

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

For withdrawals under the refunding procedure for amounts previously paid from the project owner's own capital (or credit funds, or other sources), the project owner can use the refunded amount according to current financial management regulations.

D. PROCEDURES FOR LETTER OF GUARANTEE:

Letter of guarantee procedures involve the project requesting ADB to issue a letter of guarantee to ensure payment to commercial banks for amounts to be settled via a Letter of Credit (LC). This form is typically applied when imported goods listed in the contract are to be paid for via LC.

To withdraw funds through the letter of guarantee procedure, the PMU/ADB must submit the following documents to the Ministry of Finance (Department of Budget):

- A letter requesting the opening of an LC.

- Withdrawal forms and statements according to ADB's model.

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

- A non-objection letter from ADB (if it is a contract type requiring ADB's prior consent).

- Performance bond, advance payment bond (if required).

Within five working days from the date of receiving complete and valid documentation, the Ministry of Finance (Department of Budget) shall issue a document approving the request and send it to PMU/ADB and the Bank serving the account.

Within two working days from the time of the Ministry of Finance's opinion, the serving bank and the PMU/ADB will process the opening of the LC and sign the withdrawal form to send to ADB requesting issuance of a letter of guarantee. ADB will consider approving and issuing the letter of guarantee.

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

6. EXPENSE LIMITS APPLICABLE TO THE PROJECT:

The project applies expense limits as prescribed in Decision No. 112/2001/QD-BTC dated November 9, 2001, issued by the Minister of Finance regarding the issuance of some expense limits applicable to projects using Official Development Assistance (ODA) loans, current state regulations, and expense limits attached to this Circular (Annex 2). 7. MANAGEMENT OF NON-REFUNDABLE ASSISTANCE FROM INTERNATIONAL ORGANIZATIONS:

Non-refundable assistance from international organizations for the Rural Health Project shall be used in accordance with Circular No. 70/2001/TT-BTC dated August 24, 2001, issued by the Ministry of Finance on "Guidelines for Financial Management of State Funds for Non-Refundable Assistance," based on the approved project content and current documents.

8. ACCOUNTING SYSTEM FOR THE PROJECT:

8.1. ACCOUNTING DOCUMENTATION SYSTEM:

The accounting documentation system of Vietnam is applied according to the current accounting documentation system of Vietnam.

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

List of accounting documents and materials according to ADB's management requirements

(Annex 3) 8.2 FORMS OF ACCOUNT BOOKS:

To unify throughout the project, it is encouraged for the PMU/ADB and the Project Management Units (PMUs) to use the General Journal form of accounting books 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 categories and contents of expenditures stipulated in the signed loan agreement with ADB, the Rural Health Project must use an accounting account system according to the model of the Project Management Board with分级管理系统。各级项目管理办公室应根据会计凭证目录和账簿目录选择必要的会计凭证和账簿，以充分反映项目中发生的经济内容。

Based on the categories of expenditures and the contents of each expenditure item under the signed loan agreement with ADB, the Rural Health Project must use the Accounting Account System according to the Project Management Board model with分级管理。文件和凭证应保留在各级项目管理委员会中，各项目管理委员会根据会计凭证目录和账簿目录选择必要的凭证和账簿，以满足全面反映项目发生的经济内容的要求。

9. PROJECT ASSET MANAGEMENT:

Project assets must be managed and utilized in accordance with the asset management system for public assets. Project Management Boards must organize the establishment of ledgers to track assets, calculate depreciation of fixed assets, establish usage rules to ensure assets are used for their intended purposes effectively. For transportation equipment, the project is not allowed to change the purpose of the assets. Each year, the Project Management Boards at various levels must organize asset inventory checks, determine the condition of the assets, and comply with regular maintenance systems for assets.

The PMU/ADB is responsible for guiding the PMUs on the management and use of assets allocated to individuals (such as bicycles, motorcycles, personal computers, mobile phones...).

During the use of project assets, if such assets become irreparably damaged or cannot be repaired economically and effectively, the Project Management Board at all levels must establish a Committee and prepare a memorandum recommending the liquidation of the asset. Only upon written approval from the competent authority for the asset liquidation can the Project Management Board record the reduction of the asset in the accounting books.

10. Reporting, inspection, auditing, and settlement of projects:

10.1. Reporting system:

Monthly, the Branch Bank serving the provincial project sends a statement of the provincial advance account to the PPMU and the Provincial State Treasury.

The Bank serving the project sends a statement of the advance account to PMU/ADB and the Ministry of Finance (Department of Financial Management).

The statements of the advance accounts of the Branch Bank serving the provincial project and the Central Bank serving the project must clearly show all transactions and interest generated in the month, the situation of interest usage, and the date of transferring remaining interest to the State Budget.

On the 5th day of each month, the PPMUs send a quick report to PMU/ADB on the receipt and use of project funds, including recommendations to the competent authorities for handling difficulties encountered during project participation.

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

Monthly, PMU/ADB reports to the Ministry of Health, the Ministry of Finance (Department of Financial Management, Department of Budget, Department of Investment), the Ministry of Planning and Investment, and ADB on the project's progress, loan fund usage, aid fund usage, and domestic counterpart fund usage. 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 accordance with Vietnamese regulations and ADB rules.

- Proposal for the six-month deployment 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 found contrary to the Agreement and project legal documents, the Ministry of Finance will suspend fund issuance until violations are resolved by competent authorities.

Health Ministry functional agencies will cooperate with PMU/ADB to conduct surprise inspections in participating provinces regarding project contents and tasks, project progress, operational difficulties, identify causes, and recommend solutions to higher levels.

10.3. Auditing:

Annually, the entire financial activity of the project must be audited by an independent auditing agency in compliance with state regulations, loan agreements, and aid commitments. The audit report must be sent to the Ministry of Health and the Ministry of Finance and serves as a basis for considering additional withdrawals to the advance account or withdrawing funds from the advance account for payments, and also evaluates project implementation..

10.4. Settlement:

PMU/ADB and PPMU must prepare financial reports to ADB and settlement reports to the Ministry of Health for consolidation and submission to the Ministry of Finance. For PMU/ADB, apart from preparing management and implementation reports, it must also prepare consolidated financial reports and settlements from its own reports and those of the PPMUs.

Financial reports and settlements must provide comprehensive, truthful, and timely information about the financial status and developments of the project. All financial reports and settlements are based on up-to-date, accurate, and consistent 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 and participating units (PMU/ADB and PPMUs) in accordance with current regulations.

a) For budgetary funds:

- Responsibilities of the PPMUs:

Annually, the PPMUs are responsible for preparing a comprehensive settlement report on all borrowed funds, aid funds, counterpart funds, and other revenues (if any) within the public service sector according to the Accounting System for Budgetary Funds issued by Decision No. 999-TC/QĐ/CĐKT dated November 2, 1996, by the Minister of Finance. Counterpart funds and other revenues (if any) are sent to the Provincial Department of Finance and Prices for review and inclusion in the provincial comprehensive settlement report. After approval by the Provincial Department of Finance and Prices, the PPMU must report to PMU/ADB for consolidation. For non-reimbursable loans and aid, the settlement report is sent to PMU/ADB for review and consolidation before reporting to the project management authority.

- Responsibilities of PMU/ADB:

Annually, PMU/ADB is responsible for reporting the settlement of project management and implementation funds at PMU/ADB, including ADB loans, non-reimbursable aid from international organizations, counterpart funds provided by the central government, 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 the annual settlement report of the project before consolidating it into the unit's comprehensive settlement report to be submitted to the finance authority.

b) For investment construction funds:

PMU/ADB and PPMUs settle according to Circular No. 70/2000/TT-BTC dated July 17, 2000, of the Ministry of Finance on "Guidelines for Capital Settlement." PPMUs submit the settlement report to PMU/ADB for review and consolidation, which is then reported to the Ministry of Health for approval and submission to the Ministry of Finance.

Part 3:

IMPLEMENTING PROVISIONS

This Circular takes effect fifteen days after the date of issuance. During implementation, any issues should be promptly reflected to the Rural Health Project Management Board and the Serving Bank to the Ministry of Finance (Department of Foreign Finance) and the Ministry of Health (Department of Financial Accounting) for study and supplementation.