Circular No. 66-TC/ĐTPT guiding the settlement of construction investment capital

 CIRCULAR

Guidelines for Finalizing State Investment Capital for Construction Projects

 

Pursuant to the State Budget Law issued on March 20, 1996;

Pursuant to Decree No. 42-CP dated July 16, 1996 of the Government on the issuance of the Management Regulations for Investment and Construction;

Pursuant to Circular No. 04/TTLB dated September 10, 1996 of the Joint Ministries of Construction, Planning and Investment, and Finance guiding the implementation of the Management Regulations for Investment and Construction issued together with Decree No. 42/CP dated July 16, 1996 of the Government, the Ministry of Finance guides the finalization of state investment capital for construction projects as follows:

Part 1:

GENERAL PROVISIONS

1. The investment capital to be finalized is the entire legitimate cost incurred during the investment process to put into operation. Legitimate costs are those in accordance with signed contracts and approved budgets, ensuring compliance with state financial accounting regulations and subject to audit upon request of the competent authority deciding on investment.

2. Investors of investment projects and design planning projects funded by all sources of state investment must prepare annual accounting reports on investment capital implementation and finalization reports on investment capital for completed projects (works or project components).

3. When finalizing investment projects funded by multiple sources, each source of capital must be clearly analyzed.

4. Finalization reports on investment capital must accurately determine the amount of investment capital implemented annually; the total investment capital spent on constructing works; the value of assets handed over for production and use. For projects spanning multiple years, when finalizing investment capital, investors must convert the investment capital implemented in previous years to the price level at the time of handover for production and use to determine the new fixed asset value increase and the value of assets handed over.

5. Finalization of investment capital must ensure the time, content, and procedures for preparation, review, and approval as stipulated in this Circular.

6. Through the work of finalizing investment capital, evaluate the results of the investment process, draw lessons to enhance investment capital management.

Part II:

 SPECIFIC PROVISIONS

A. CONTENTS OF ACCOUNTING AND FINALIZATION REPORTS ON INVESTMENT CAPITAL

I. Annual Accounting Report on Investment Capital Implementation

1. At the end of the plan year, the investor must prepare an annual accounting report on investment capital implementation and send it to the capital disbursing and lending agencies, and the investment decision-making agency. The accounting report includes the following contents:

1.1. Implementation situation of investment in the plan year:

- Value of volume of work completed in the plan year and cumulative from the start date.

- Amount of capital disbursed and lent for payment in the plan year and cumulative from the start date.

- Value of volume of work completed but not yet paid.

1.2. Sources of investment capital from the State budget and other sources.

1.3. Costs of the Project Management Board and other costs in the plan year and cumulative from the start date.

1.4. Completed works or project components put into production and use in the plan year.

2. The annual accounting report on investment capital implementation must analyze and assess the implementation of the plan and investment results in the year, difficulties, issues, and propose solutions.

II. Finalization Report on Investment Capital for Completed Projects (Works or Project Components)

1. When a project (work or project component) is completed, the investor must prepare a finalization report on investment capital and submit it to the capital disbursing and lending agencies, and the investment decision-making agency. In cases where consulting organizations are hired to prepare the finalization report on investment capital, permission from the investment decision-making agency is required. The finalization report on investment capital for completed projects (works or project components) includes the following contents:

- Total investment capital implemented throughout the project from the investment preparation phase to the completion of construction and putting the project into production and use.

- Sources of capital: state budget capital, preferential credit capital from the state, foreign loans, national investment support fund capital, bank loans, state enterprise capital, joint venture capital with foreign countries, people's contribution capital...

- Capital structure: construction and installation, equipment, other costs.

1.2. Costs not included in the asset value of the project:

- Losses due to natural disasters, enemy actions, and other unforeseeable causes not covered by insurance.

- Value of volume canceled according to the decision of the competent authority.

1.3. Value of assets handed over for production and use:

- Fixed assets (Tangible Fixed Assets - TFA) and current assets (Current Assets - CA) created by the project after deducting non-included costs and converted to the price level at the time of handover for production and use.

The method of conversion to the price level at the time of handover is carried out according to the guidelines of the Ministry of Construction.

- TFA is classified and valued according to the principle: costs directly related to which TFA are allocated to that TFA, common costs related to multiple TFAs are allocated according to the ratio of directly related costs to the total value of TFAs.

- In cases where assets are handed over to multiple units for use, the full value of TFA and CA of the project handed over to each unit must be determined.

2. The finalization report on completed works or project components put into production and use only reflects basic and main contents to serve as the basis for determining the value of assets put into production and use.

3. For projects using foreign capital, a separate finalization report on investment capital must also be prepared according to the requirements of international organizations specified in signed agreements (if applicable).

4. For design planning projects, when completed, the investor must prepare a finalization report on investment capital and submit it to relevant agencies like completed investment projects. The finalization report on design planning reflects the received and utilized capital according to the approved budget and a description of the completed design planning project results.

5. For projects that have completed the investment preparation phase, the investor must prepare a finalization report on investment preparation similar to the design planning project.

III. Documentation for Accounting and Finalization Reports on Investment Capital

1. The documentation for annual accounting reports on investment capital implementation is applied according to the accounting report form prescribed in Section 4 of Circular No. 72/TTLB dated December 6, 1991 of the Joint Ministries of Finance and Construction guiding the implementation of accounting regulations for investment project owners.

2. Documents for reporting final settlement of capital investment for completed works

2.1. Appendix of relevant legal documents (Form No. 01/QTĐT)

2.2. Comprehensive report on final settlement of capital investment for completed construction works (Form 02/QTĐT); reflecting the situation and results of investment in construction works as well as existing issues and recommendations for resolution by the investor.

2.3. Report on implementation of capital investment over the years (Form 03/QTĐT); reflecting the use of capital from preparation to completion and commissioning of the work, converted according to the price level at the time of handover.

2.4. Report on implementation of capital investment by project components for completed works (Form 04/QTĐT); reflecting the actual investment capital implemented by each component, structure of investment capital.

2.5. Quantity and value of new fixed assets increased (Form 05/QTĐT); reflecting the quantity and value of each new fixed asset increased, classified by source of investment and user category.

2.6. Quantity and value of transferred current assets (Form 06/QTĐT); reflecting the quantity and value of each type of raw materials, materials, fuel, spare parts, labor tools not meeting fixed asset standards and other costs belonging to transferred current assets for the using unit.

2.7. Status of receivables and payables (Form 07/QTĐT); reflecting outstanding receivables and payables up to the time of final settlement of capital investment.

2.8. Comparison table confirming data and comments of the funding and lending agencies (Form 08/QTĐT).

3. Documents for reporting final settlement of capital investment by project components for completed works put into production and use.

3.1. Report on final settlement of capital investment by project components for completed works put into production and use when the entire work has not yet been completed (Form 09/QTĐT); reflecting the implementation of investment for completed project components.

3.2. Comparison table confirming data and comments of the funding and lending agencies (Form 08/QTĐT).

The documents for reporting final settlement of capital investment for completed works or project components must be fully signed by the Chief Accountant, Head of the Project Management Board (for projects with established Project Management Boards); Project Manager (for projects implemented under the Project Manager model), and the signature of the Head of the Investor Unit.

4. Agencies receiving accounting reports and final settlement of capital investment

4.1. Annual accounting reports on capital investment implementation:

- For centrally-managed investment projects:

+ Direct funding and lending agencies.

+ Higher-level agencies of the investor (Ministry, agency equivalent to a Ministry, agency under the Government, Management Council of State-owned Enterprises established by Decision No. 91/TTg dated March 7, 1994 of the Prime Minister).

- For locally-managed projects:

+ Direct funding and lending agencies.

+ Higher-level agencies of the investor (Sector Management Departments).

+ People's Committee of the locality.

- Projects with foreign investment capital: annual accounting reports must also be submitted to financing organizations as stipulated in agreements (if any).

4.2. Final settlement reports on investment projects (works or project components) completed:

- For centrally-managed investment projects:

+ Direct funding and lending agencies.

+ Investment decision-making agencies.

- For locally-managed projects:

+ Direct funding and lending agencies.

+ People's Committee of the locality.

For Group A projects decided by the Prime Minister and ODA projects, final settlement reports on investment capital must also be sent to the relevant Ministry and the Ministry of Finance (General Department of Investment and Planning).

B. AUDITING AND APPROVING FINAL SETTLEMENT

I. Auditing final settlement of projects (works or project components) completed

1. Documents for auditing final settlement

- Final settlement reports on investment capital for completed projects along with documents specified in Point 2, Chapter III, Part II, Section A of this Circular and other related documents as required by the lead auditing agency.

- Comparison, confirmation, and comments on the use of investment capital for completed projects (works or project components) by funding and lending agencies.

- Acceptance certificate of completed works (or project components) handed over for production and use (copy).

- Handover record of assets between the investor and another using unit (if any).

2. Content of auditing final settlement of projects (works or project components) completed.

2.1. Auditing the legality of construction investment projects:

- Checking and comparing the list and content of legal documents in the project dossier to ensure compliance with current regulations of the State.

- Auditing the legality of economic contracts signed by the investor with contractors (consultants, construction, supply...).

- Auditing sources of capital, capital structure, and annual investment capital usage of the project according to the investment decision and annual plan.

- Analyze and compare the actual investment capital structure (construction, equipment, other expenses) with the investment capital structure recorded in the investment decision and approved total budget estimate.

2.2. Auditing annual investment capital usage.

2.3. Auditing construction cost of completed works.

- Scale of completed projects (works, project components) proposed for final settlement compared to the investment decision.

- Value of construction volume of projects (works, project components) proposed for final settlement compared to approved budget estimates and determining reasons for increases or decreases.

- Application of national norms and unit prices for each type of cost during different periods.

- Reviewing acceptance certificates and quality assessments of works to determine construction costs proposed for final settlement.

2.4. Auditing procurement costs for equipment.

- List, types, technical standards, prices,... of equipment compared to approved estimates.

- Auditing related costs associated with equipment: transportation, storage, maintenance, processing,... costs of equipment.

2.5. Auditing other costs by comparing actual usage of each type of cost with approved estimates.

2.6. Auditing implementation of investment costs not included in the value of works:

- Value of losses due to natural disasters, enemy actions, and other force majeure factors not covered by insurance.

- Value of volume canceled according to the decision of the competent authority.

2.7. Auditing determination of the value of assets handed over for production and use:

Auditing determination of the actual value and converted value of assets handed over including fixed assets and current assets for the investor or another unit to manage and use.

2.8. Auditing status of receivables and payables, surplus materials and equipment:

- Outstanding receivables and payables.

- Value of remaining materials and equipment.

- Value of assets held by the project management board.

After auditing final settlement of capital investment, the auditing agency must submit a written report to the competent authority for approval of final settlement and draft notification of approval of final settlement of capital investment.

3. Authority for auditing final settlement of capital investment for completed projects (works or project components).

Before approving the final account settlement for a completed project (construction works or parts thereof), the report on the final account settlement must be reviewed according to the following分级:

- For projects in Group A and ODA projects with a capital amount less than 1.5 million USD, the Ministry of Finance (General Department of Investment Planning) shall take the lead in organizing the review.

- For the remaining projects:

+ Central-managed projects shall be organized for review by the agency authorized by the Minister (head of an equivalent ministry-level agency, agency under the Government, chairman of State-owned corporations established pursuant to Decision No. 91/TTg) taking the lead.

+ Locally-managed projects shall be organized for review by the agency directly responsible for disbursing and lending funds at the provincial level, centrally-administered cities.

In cases where necessary, the Ministry of Finance and agencies authorized to approve the final account settlement may establish an advisory team to assist in the review before approving the final account settlement.

+ The advisory team reviewing the final account settlement for projects in Group A shall be established by the Minister of Finance, including representatives from the Ministries of Planning and Investment, Construction, industry management, relevant ministries, provincial People's Committees (for projects managed by localities), and the General Department of Investment Planning.

+ The advisory team reviewing the final account settlement for remaining projects shall be established by the ministries (equivalent ministry-level agencies, agencies under the Government, State-owned corporation chairmen established pursuant to Decision 91/TTg), provincial People's Committees, including representatives of corresponding management agencies.

The General Department of Investment Planning, Investment Planning Departments shall be responsible for assisting ministries, sectors, provincial People's Committees in reviewing and approving the final account settlement of projects under their management.

4. Provisions on auditing for completed projects

- Projects in Group A (excluding those in Group A defined in Point 1, Section I of the accompanying classification of investment projects under Decree No. 42/CP dated July 16, 1996 of the Government), and ODA projects using up to 1.5 million USD (excluding technical assistance projects) must be audited.

- For other projects, auditing shall be carried out according to the requirements of the agency authorized to approve the final account settlement. If errors are discovered by legal authorities in projects that have been approved without auditing, the auditing costs shall be borne by the agency that approved the final account settlement.

- For foreign direct investment projects, auditing of completed projects shall be conducted in accordance with the Law on Foreign Investment in Vietnam and related implementing regulations.

- The content of auditing is to verify the accuracy and legality of accounting figures and reports on the final account settlement of completed investment projects in accordance with current investment and construction management regulations.

- For projects subject to auditing, the investor may select a legitimate auditing agency, agree on the auditing fee within the scope of the review fee for approving the final account settlement of the project, and sign an auditing contract after obtaining the approval of the agency authorized to approve the final account settlement.

- The auditing agency is responsible under the law for the figures and materials in the auditing report and the final account settlement report. If errors are found in projects that have been audited by the agency authorized to approve the final account settlement or legal authorities, the auditing agency must bear material responsibility for losses caused by incorrect auditing results; in serious cases, legal measures will be taken.

II. Approval of the final account settlement for completed projects (construction works or parts thereof)

- The Minister of Finance shall approve the final account settlement for projects in Group A upon delegation by the Prime Minister and ODA projects with a capital amount less than 1.5 million USD.

- For other projects, the authority deciding on investment is also the authority deciding on the approval of the final account settlement.

After the final account settlement report for completed projects (construction works or parts thereof) has been approved, one copy of the decision approving the final account settlement must be sent to:

+ The Ministry of Finance (General Department of Investment Planning) for projects in Groups B and C managed by ministries, sectors, and State-owned corporations established pursuant to Decision No. 91/TTg.

+ The Provincial Investment Planning Department for projects in Groups B and C managed by localities.

- The Provincial Investment Planning Department is responsible for compiling projects managed by localities and sending them to the Ministry of Finance (General Department of Investment Planning). The General Department of Investment Planning is responsible for assisting the Minister of Finance in compiling the state's final account settlement report.

C. TIME FOR PREPARATION, REVIEW, AND APPROVAL OF ACCOUNTING REPORTS AND FINAL ACCOUNT SETTLEMENT

INVESTMENT CAPITAL

I. Annual Accounting Report on Investment Capital Implementation

1. Within one month after the end of the planning year, the investor must complete the accounting report on investment capital implemented during the year and submit it to the funding or lending agency for verification and confirmation. Within five days, the funding agency must verify and confirm the capital provided and transfer it back to the investor.

2. Within fifteen days, the superior agency of the investor must check and approve the accounting report on investment capital implemented.

3. For projects with foreign investment capital, if auditing of the annual accounting report on investment capital is required, an auditing report must be attached. The time for preparation, checking, and approval of the accounting report on investment capital shall be carried out as above.

II. Finalization Report on Investment Capital for Completed Projects (Works or Project Components)

1. For projects in Group A:

- Within six months after the completion of the investment project, the investor must complete the final account settlement report.

- The review period for the final account settlement report shall not exceed three months after receiving all the required documents for the final account settlement report as stipulated in Section III, Part A of this Circular.

- The approval period for the final account settlement shall not exceed one month after receiving the reviewed final account settlement documents.

2. For the remaining projects:

- The preparation period for the final account settlement report shall not exceed three months after the completion of the project.

- The review period shall not exceed two months for projects in Group B and one month for projects in Group C after receiving all the required documents for the final account settlement report.

- The time for approving the final accounts of capital investment shall not exceed fifteen days.

3. Special cases: Extensions of the time for preparation, review, and approval of the final account settlement must be decided by the agency authorized to approve the final account settlement.

D. EXPENSES FOR PREPARATION, REVIEW, AND APPROVAL OF THE FINAL ACCOUNT SETTLEMENT OF INVESTMENT CAPITAL

I. Principles of expense management

1. The cost of preparing the final account report for the completed project (construction works or construction components) established by the investor or hired consultants shall be included in the costs of the Project Management Board according to the approved budget estimate. This cost shall be managed and utilized by the investor.

2. The cost of auditing and approving the final account for the completed project (construction works or construction components), including audit fees, shall be determined for the entire completed construction works or components put into use and shall be included in other costs in the total investment capital of the project. It shall be managed and utilized by the agency responsible for auditing and approving the final accounts.

II. Determining the Budget Estimate for Auditing and Approving Final Accounts of Investment Capital

1. Based on the approved general budget estimate and the characteristics of the construction works (components), the auditing, auditing, and final account approval costs for completed projects shall be calculated as a percentage (%) of the total approved budget estimate of the completed project at the following rates:

Of which, the cost for approving the final account shall not exceed 10% of the total cost deducted according to the above regulations.

2. The deduction rate for auditing and approving the final account of completed construction components shall be calculated as follows:

Deduction Rate Deduction Rate Component Project

for component = of the entire project x (project) x 40%

project (project) (project) Total approved budget

estimate project (project)

(project)

Example:

- Construction works with three components: A, B, C

- Approved total budget estimate for the construction works: 800 billion VND

Where:

+ Component A: 200 billion VND

+ Component B: 250 billion VND

+ Component C: 350 billion VND

- The deduction rate for auditing and approving the final account for the entire construction works (project) is: 320 million VND

- The maximum auditing and final account approval cost for each completed construction component is determined as follows:

+ Component A: 320 x 200/800 x 40% = 32 million VND

+ Component B: 320 x 250/800 x 40% = 40 million VND

+ Component C: 320 x 350/800 x 40% = 56 million VND

- The auditing and final account approval cost deducted for the entire completed construction works is:

320 - (32 + 40 + 56) = 192 million VND

3. For projects where equipment capital constitutes from 51% to 75% of the total approved budget value, the auditing and final account approval cost shall be 50% of the corresponding amount or ratio specified in Point 1, Section II, Part D of this Circular.

4. For projects where equipment capital constitutes more than 75% of the total approved budget value, the auditing and final account approval cost shall be 25% of the corresponding amount or ratio specified in Point 1, Section II, Part D of this Circular.

5. The auditing, auditing, and final account approval cost for completed projects (construction works or components) at Points 1, 2, 3, and 4, Section II, Part D includes both the auditing and final account approval costs and the auditing costs (if applicable).

III. Management and Utilization of Auditing and Final Account Approval Costs for Investment Capital

1. Each year, the investor shall prepare the budget estimate for auditing, auditing, and final account approval costs for completed projects (construction works or components) and submit it to the competent authority for approval.

2. Based on the approved budget estimate for auditing, auditing, and final account approval costs for completed projects (construction works or components), the investor shall request the funding allocation and loan issuing agencies to provide funds for payment to the main auditing and final account approval agencies (and auditing agencies if applicable).

3. The auditing, auditing, and final account approval costs for completed projects (construction works or components) shall be used as follows:

- To pay for auditing services according to signed contracts (if applicable).

- To pay remuneration to members of the Audit Verification Team for final account approval.

- To pay expenses for domestic and foreign organizations and individuals conducting auditing reports on completed projects (construction works or components) according to the requirements of the main auditing and final account approval agencies (if applicable).

- To cover travel expenses, office supplies, translation, printing, conference, seminar, etc., serving the auditing and final account approval work.

4. The investor of completed projects (construction works or components) shall be responsible for managing, utilizing, and settling the auditing, auditing, and final account approval costs within the overall final account settlement of the completed construction works according to the prescribed regulations.

E. RESPONSIBILITIES OF THE INVESTOR AND RELATED AUTHORITIES

1. Investor

- Cooperate with the contracting units to resolve outstanding issues regarding received materials and equipment, payment of debts, and other issues arising under the signed contracts.

- Verify and determine the remaining asset value of the Project Management Board for transfer.

- Close accounting books, organize and classify files and documents to serve the final account settlement of investment capital and handover of completed construction works (components).

- Compare and confirm the amounts of capital allocated or lent, debts, assets, transferred, etc., with related agencies.

- Prepare annual investment capital accounting reports and final account reports for completed projects (construction works or components) and submit them to the relevant agencies specified in Point 4, Section III, Part A of this Circular within the prescribed time limit.

- Sign an auditing contract with a legitimate auditing agency.

2. Contracting Units (consultants, contractors, equipment suppliers, etc.)

Cooperate with the investor to resolve outstanding issues according to the contract, provide and take legal responsibility for data and documents related to the investor's final account settlement of investment capital.

3. Funding Allocation and Loan Issuing Agencies (Financial Departments, State Investment System, State Treasury System, Banks)

Verify, confirm, and comment on the annual implementation of investment capital, final account reports for completed projects (construction works or components) within the scope of capital directly managed, allocated, and lent by their units.

4. Final Account Approval Auditing Agency

- Guide, inspect, and urge the investor to prepare final account reports for investment capital according to the contents, requirements, and deadlines stipulated in this Circular.

- Guide and instruct the investor to resolve any issues arising during the preparation of the final settlement report.

- Organize the auditing of final account reports for investment capital according to the contents, requirements, and deadlines stipulated in this Circular.

- Approve the final accounts for investment projects within its decision-making authority.

- Bear legal responsibility for the results of auditing and final account approval for investment capital.

Part 3:

IMPLEMENTATION PROVISIONS

This Circular takes effect from the date of issuance and replaces previous guiding documents on the settlement of investment capital.

During implementation, if there are any difficulties, the relevant ministries, sectors, and localities are requested to promptly reflect them so that the Ministry of Finance can study and make supplements and amendments.