Joint Circular No. 88/2005/TTLT/BTC-BYT guiding the financial management mechanism and certain expenditure standards for the Project "Preventing and Controlling HIV/AIDS in Vietnam" funded by the World Bank's grant aid.

JOINT CIRCULAR

Guidelines for financial management mechanisms and certain expenditure standards for the Project

"Preventing and Controlling HIV/AIDS in Vietnam" funded by the World Bank's grant

 

Pursuant to the Grant Agreement No. 152-VN dated May 26, 2005 between the Government of the Socialist Republic of Vietnam and the International Development Association regarding the grant for the Project "Preventing and Controlling HIV/AIDS in Vietnam";

Pursuant to Decree No. 17/2001/NĐ-CP dated May 4, 2001 of the Government on the issuance of the Financial Management and Utilization Regulations for Official Development Assistance (ODA);

Pursuant to Circular No. 06/2001/TT-BKH dated September 10, 2001 of the Ministry of Planning and Investment guiding the implementation of the Financial Management and Utilization Regulations for ODA issued together with Decree No. 17/2001/NĐ-CP dated May 4, 2001 of the Government;

Pursuant to Circular No. 78/2004/TT-BTC dated August 10, 2004 of the Ministry of Finance on guiding the management and disbursement of ODA funds;

Pursuant to Decision No. 112/2001/QĐ-BTC dated November 9, 2001 of the Minister of Finance on issuing certain expenditure standards applicable to projects using ODA loan funds;

The Ministry of Finance and the Ministry of Health jointly issue guidelines for the financial management mechanism and expenditure levels of the Project "Preventing and Controlling HIV/AIDS in Vietnam" for the period 2005-2011 as follows:

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

The Ministry of Health shall be responsible for managing the Project "Preventing and Controlling HIV/AIDS in Vietnam," ensuring that the funds are used for their intended purposes and in accordance with the approved project content; consistent with commitments to the donor and related documents.

1. Abbreviations and definitions

In this Circular (including Appendices), the following Vietnamese and English terms are abbreviated as follows:

a) Ministry of Health: The main administrative body of the Project "Preventing and Controlling HIV/AIDS in Vietnam"

b) CPMU: Central Project Management Board "Preventing and Controlling HIV/AIDS in Vietnam"

c) PPMU: Provincial Project Management Board

d) HCSN: Administrative and Public Services

đ) Project Serving Bank: Commercial bank selected to serve the project

e) State Budget: National budget

f) Local Budget: Provincial budget within the project provinces

g) Central Budget: Central government budget

h) ODA (Official Development Assistance): Official Development Assistance

i) Central: Central level

j) Foreign Finance: Foreign finance

k) People's Committee: People's Committee

l) USD: United States Dollar

m) VAT: Value Added Tax

n) VND: Vietnamese Dong

o) WB: World Bank (World Bank)

2. Sources of Project Funds The total cost and structure of the Project "Preventing and Controlling HIV/AIDS in Vietnam" (hereinafter referred to as the Project) are stipulated in Decision No. 260/QĐ-BYT dated February 4, 2005 of the Minister of Health approving the Project "Preventing and Controlling HIV/AIDS in Vietnam," and the Grant Agreement No. 152-VN dated May 26, 2005 between the Government of the Socialist Republic of Vietnam and the International Development Association, specifically:

2.1. Non-reimbursable grant from the WB: 35,000,000 USD.

2.2. Counterpart funding of the Government of the Socialist Republic of Vietnam: 3,500,000 USD, including:

a) Contribution through existing physical assets, technical equipment, and staff of beneficiary units valued at 500,000 USD;

b) Contribution through funds allocated from the central and local budgets for procurement of goods, activities of the Project Management Board, and contingency reserves valued at 3,000,000 USD. The entire non-reimbursable grant from the World Bank and the counterpart funding of the Project are administrative and public service funds; the grant is allocated by the Central Budget to the Ministry of Health and the provinces participating in the Project to implement the approved Project.

3. Principles of Management

3.1. The Ministry of Health and the People's Committees of the provinces participating in the Project are responsible for allocating sufficient counterpart funding for the Project from the Ministry's and provincial budgets to implement the Project contents as specified in Decision No. 260/QĐ-BYT dated February 4, 2005 of the Minister of Health.

3.2. The Central Project Management Board (hereinafter referred to as CPMU) established by the Ministry of Health is responsible for managing expenditures and implementing procedures for withdrawing and settling funds for Project activities carried out by the CPMU; disbursing grant funds to the provinces participating in the Project according to current regulations on ODA disbursement and specific provisions in this Joint Circular.

3.3. The Provincial Project Management Boards (hereinafter referred to as PPMU) established by the People's Committees of the provinces/cities are responsible for organizing the implementation of activities in their respective areas, processing payment procedures for counterpart funds at the State Treasury in their province, and requesting the CPMU to disburse grant funds from the World Bank.

3.4. The counterpart funding of the Project is allocated in the budgets of the Ministry of Health and the provinces participating in the Project and notified to the State Treasuries (ST). The State Treasury (for CPMU) and the State Treasuries of the provinces participating in the Project will control payments for administrative and public service funds for expenditures involving counterpart funding (domestic procurement items and increased costs). The ST's confirmation of valid expenditures must clearly specify the grant and counterpart funding according to the stipulated funding ratio in the Grant Agreement. This confirmation note is a necessary document in the file for withdrawing World Bank funds and settling counterpart funds.

3.5. The Vietnam Commercial Joint Stock Bank serves as the Project Bank, implementing withdrawal procedures for the Project according to Circular No. 78/2004/TT-BTC dated August 10, 2004 of the Ministry of Finance guiding the management of withdrawals for ODA funds and specific provisions in this Joint Circular.

4. Principles of Expenditure

4.1. The expenditure content of the Project is defined in Decision No. 260/QĐ-BYT dated February 4, 2005 of the Minister of Health approving the Project "Preventing and Controlling HIV/AIDS in Vietnam," comprising three components:

a) Component 1: Supporting 20 provinces and cities in implementing eight national action programs to prevent and control HIV/AIDS;

b) Component 2: Supporting policies and implementing the national program to prevent and control HIV/AIDS nationwide;

c) Component 3: Supporting project management at the central level (including office equipment purchases and vehicles for supervising the project).

4.2. Allocation of Expenditure Responsibilities

4.2.1. For CPMU

a) Implement procurement procedures for medical equipment, office equipment, medicines, transportation means, and other specialized equipment in accordance with the World Bank's regulations to provide to the provinces benefiting from the Project. If goods are imported or purchased at the factory price (excluding taxes and other costs) within the country, 100% of the funds will be disbursed from the World Bank's grant. Other domestic procurement cases will be disbursed 90% from the World Bank's grant and the remaining 10% from the counterpart funding.

b) Expenditure on minor repairs of treatment facilities at the Rehabilitation, Education, and Social Services Centers and district/county health centers (or other healthcare facilities selected by the Ministry of Health) in three provinces, including Hanoi, Khanh Hoa, and Hai Phong. This item will be fully disbursed from the World Bank's grant.

c) Expenditure on information, education, communication activities, program monitoring, and evaluation activities. This item will be fully disbursed from the World Bank's grant.

d) Expenditure on individual and unit consultancy services both domestically and internationally. This item will be fully disbursed from the World Bank's grant.

đ) Expenditure on conferences, meetings, site visits, training, and capacity-building programs for officials. This item will be fully disbursed from the World Bank's grant.

e) Expenditure on organizing competitions, developing initiatives, and rewarding initiatives to encourage innovation. This item will be fully disbursed from the World Bank's grant.

g) Additional activity expenses: including travel and incidental expenses for project staff, office expenses, communication and postal service fees, transportation costs, bidding-related expenses, and other reasonable operational expenses but excluding salaries and allowances for civil servants. This item will be disbursed 75% from the World Bank's grant and 25% from the central government's counterpart funding.

h) Management of the Project's contingency fund.

i) Other expenditures within the CPMU's mandate.

4.2.2. For the PPMUs

a) Expenditure on the eight provincial-level action programs: including (1) Information, education, and communication programs aimed at changing behaviors to prevent HIV/AIDS transmission; coordinating with drug prevention and prostitution control programs to prevent HIV/AIDS transmission; (2) Harm reduction interventions in HIV/AIDS prevention; (3) Care and support for people living with HIV/AIDS; (4) HIV/AIDS surveillance, program monitoring, and evaluation; (5) Access to HIV/AIDS treatment; (6) Prevention of mother-to-child HIV transmission; (7) Management and treatment of sexually transmitted infections; (8) Enhancing capacity and international cooperation in HIV/AIDS prevention. This item will be fully disbursed from the World Bank's grant.

b) Procurement of office equipment managed and used by the PPMUs through bidding. If goods are imported or purchased at the factory price (excluding taxes and other costs) within the country, 100% of the funds will be disbursed from the World Bank's grant. Other domestic procurement cases will be disbursed 90% from the World Bank's grant and the remaining 10% from the counterpart funding.

c) Expenditure on hiring individual and unit consultants. This expenditure will be fully disbursed from the World Bank's grant.

d) Additional activity expenses: including travel and allowances for project staff, office expenses, communication and postal service fees, bidding-related expenses, but not including salaries and allowances for civil servants. This expenditure will be disbursed 75% from the World Bank's grant and 25% from the local government's counterpart funding.

đ) Other expenditures within the PPMUs' mandates.

4.2.3. Goods and services imported and paid for from the World Bank's grant are exempt from taxes according to current state regulations (import tax, special consumption tax, VAT). Domestic purchases of goods and services must pay taxes as prescribed and are not eligible for tax refunds. The CPMU and PPMUs must prepare a budget for counterpart funding to pay taxes as required.

II. SPECIFIC PROVISIONS

1. Opening an account

1.1. The CPMU shall open the following accounts

1.1.1. Special account: The CPMU shall open one special account in USD under the name of the Project at the Bank for receiving non-reimbursable grants from the World Bank.

1.1.2. Deposit account: The CPMU shall open two deposit accounts at the Bank for receiving revenues such as bid document sales proceeds, bid bond proceeds, performance bond proceeds, and other miscellaneous receipts.

1.1.3. Budget account: The CPMU shall open one budget account at the State Treasury to receive counterpart funding provided by the central government for project activities.

1.2. The PPMUs shall open the following accounts

1.2.1. Provincial grant account: The PPMUs shall open two accounts (VND) to receive non-reimbursable grants from the World Bank at the branch of the Bank serving the project: - One account to manage the grant for the eight action programs, hereinafter referred to as the Provincial Grant Account for Component I. - One account to manage the grant for activities outside the eight action programs mentioned above, hereinafter referred to as the Provincial Grant Account for Components outside Component I.

1.2.2. Deposit account: At the Commercial Bank, the PPMUs shall open one deposit account (VND) to deposit revenues from the project such as bid document sales proceeds, bid bond proceeds, performance bond proceeds, contributions from beneficiaries (if any)...

1.2.3. Budget account: At the State Treasury Branch of the province, the Project Management Unit (PMU) shall open one budget account for state budget capital to implement the payment of counterpart funds for the Health Care Sector Project (HCSN). The Central Project Management Unit (CPMU) may use the interest generated from the special account to pay bank service fees, with the remaining interest being separately tracked and used according to the decision of the Ministry of Finance - Ministry of Health at the end of the project. Each PMU may use the interest generated from the aid fund account to pay bank service fees (if any), with the remaining interest being separately tracked and annually used for project activities according to the decision of the Ministry of Health at the end of the fiscal year. Interest generated from the special account and the aid fund accounts is one of the sources of project funding and will be settled in accordance with the provisions of this Circular.

2. Planning and notification of capital plan

2.1. At the beginning of July each year, the CPMU guides the PMUs to prepare the project's capital plan, including aid funds and counterpart funds as prescribed.

2.2. Based on the approved Project and actual progress, the PMU prepares the action plan and budget plan and submits them to the CPMU in July. The budget plan must detail by work categories and sources of funding as stipulated. In the first year of the Project, the CPMU will directly review the budget plan submitted by the PMU and consolidate it together with the CPMU's budget plan to submit to the Ministry of Health for World Bank (WB) approval. From the second year onwards, the provincial budget plans will be reviewed and commented on by the Technical Review Team (TRT - established by the Ministry of Health with suitable experts) within a maximum of ten working days. Within a maximum of ten working days, the PMU will revise the budget plan and submit it to the CPMU for consolidation and submission to the Ministry of Health for WB approval.

2.3. In August each year, the PMU submits the counterpart capital plan to the Provincial Steering Committee for approval to be included in the provincial general budget. The CPMU submits the consolidated budget plan of the entire Project (including the aid fund plan of the Project and the counterpart funds for activities implemented by the CPMU) to the Ministry of Health for inclusion in the Ministry of Health's budget estimate to be approved by the Government and National Assembly as prescribed.

2.4. After being

2.5. In November each year, the CPMU/PMU submits the detailed activity plan of the CPMU/PMU for approval by the Ministry of Health/Provincial Steering Committee.

2.6. In December each year, based on the detailed activity plan of the PMU and the notice of capital allocation from the Ministry of Health, the Director of the CPMU will sign a responsibility contract for implementing the project with the Directors of the PMUs. The contract will specify in detail the amount of aid funds to be transferred to the PMU in the planning year, the schedule of fund disbursement, details of activities to be implemented by the PMU, and conditions for additional funding during the year. The model contract of responsibility is developed by the CPMU, approved by the Ministry of Finance - Ministry of Health, and approved by the WB, and will be detailed in the Project Implementation Guidebook.

3. Authority to adjust the detailed activity plan of aid funds Within the approved budget estimate, if there is a need to adjust between the contents of activities in the detailed activity plan, the authority to decide on such adjustments is as follows:

3.1. For adjustments of activities up to or equal to 10% of the annual total budget, the PMU Director has the authority to decide.

3.2. Adjustments of activities from 10% to 20% of the annual total budget are approved by the Head of the CPMU.

3.3. Adjustments of activities exceeding 20% of the annual total budget are considered by the CPMU and submitted to the WB and the Ministry of Health for approval. Any adjustment to the capital plan that changes the approved counterpart capital estimate must be approved by the managing agency and the financial agency and reported to the Ministry of Finance (Department of Foreign Finance) as a basis for tracking disbursements for the Project.

4. Control process for expenditure and counterpart fund payment

4.1. One-time provided documents: The CPMU and PMUs send the following documents (sent once) to the State Treasury where transactions take place:

a) Non-reimbursable development assistance agreement No. 152-VN dated May 26, 2005, between the Government of the Socialist Republic of Vietnam and the International Development Association.

b) Project document "HIV/AIDS Prevention in Vietnam" funded by non-reimbursable assistance from the World Bank.

c) Decision No. 260/QD-BYT dated February 4, 2005, of the Minister of Health.

d) Project Implementation Guide (OM - Operation Manual).

đ) Annual budget estimate of aid funds/counterpart funds and signed responsibility contracts between the CPMU and PMUs.

e) Budget estimates of expense categories accompanied by decisions approving them from competent authorities.

4.2. Basis, documents, and control process for expenditure at the State Treasury

4.2.1. Circular No. 79/2003/TT-BTC dated August 13, 2003, of the Ministry of Finance guiding the management, issuance, and settlement of state budget expenditures through the State Treasury and subsequent amendments, supplements, and replacements thereof.

4.2.2. Within five working days from the date of receiving valid payment documents, the State Treasury where transactions take place will check the documents, confirm the eligible advance payment/settlement amount according to the prescribed ratio of aid funds, and settle the counterpart funds. The State Treasury's confirmation of the valid amount is sent to the CPMU for consolidation and submission to the Ministry of Finance (Department of Foreign Finance) and serves as the basis for withdrawing funds from the WB.

5. Management and use of aid funds

5.1. One-time provided documents: The CPMU sends the documents listed in Section 4.1 above and the following documents to the Ministry of Finance (Department of Foreign Finance):

a) Tender documents, decisions approving tender results/designation of contractors approved by competent authorities; WB's approval document for tender results (in cases requiring prior WB opinion).

b) Economic contracts with contractors.

5.2. Principles of management, control of expenditure, and disbursement from the WB:

5.2.1. The Department of Foreign Finance is the controlling body for expenditures fully funded by WB aid.

5.2.2. Payments from non-reimbursable WB aid must follow the funding ratio specified for each project activity in Agreement No. 152-VN dated May 26, 2005, and other legal documents of the project.

5.2.3. CPMU is the unit directly responsible for implementing procedures to withdraw funds from the World Bank (WB). CPMU may consider applying methods of withdrawing funds from the Special Account, supplementing the Special Account, reimbursing costs, making direct payments, and issuing commitment letters as stipulated in Circular No. 78/2004/TT-BTC dated August 10, 2004, issued by the Ministry of Finance on guiding the management of fund withdrawal for Official Development Assistance (ODA) sources. CPMU is responsible for guiding and supervising financial management at PPMUs. For activities carried out by PPMUs, CPMU transfers advance aid funds to PPMUs based on responsibility contracts. Subsequent fund transfers are made based on progress reports and expenditure situations of PPMUs.

5.2.4. PPMU is responsible for implementing activities in the plan approved by CPMU and the Provincial Steering Committee; bears responsibility for requests to transfer additional funds and expenditures at PPMU; is responsible for retaining accounting records in accordance with the Accounting Law and the World Bank's regulations (specific guidance provided in the Project Implementation Handbook); provides all documents requested by CPMU and competent authorities. PPMU is responsible for monitoring and inspecting the implementation of activities by participating units within its jurisdiction to ensure that project activities are implemented according to their intended purpose and effectively.

5.2.5. Annually, along with announcing the allocation plan, the Ministry of Health must report to the Ministry of Finance (Department of State Budget) the amount of funds from the previous year that were utilized and the remaining balance on the special account compared to the plan (if any) for the entire HIV/AIDS Prevention Project in Vietnam.

5.2.6. During the project's operational period, the end-of-year balances of CPMU and PPMUs that are not used will be transferred to the following year for continued use (except for the residual counterpart funds on the budget account at the Treasury). PPMUs are responsible for reporting to CPMU in the annual financial report so that CPMU can adjust it into the next year's capital plan.

6. Withdrawal Process of Aid Funds

6.1 Initial Withdrawal to the Special Account To withdraw the initial funds to the CPMU's special account, in addition to the documents sent once as specified in Section 5.1, CPMU sends the following documents to the Ministry of Finance (Department of State Budget) and the servicing bank:

a) A letter requesting the initial withdrawal of funds.

b) A withdrawal form according to the World Bank's model. The Ministry of Finance (Department of State Budget) issues an approval document sent to CPMU and the servicing bank. Based on the approval opinion of the Ministry of Finance, CPMU and the servicing bank jointly sign the withdrawal form and send it to the World Bank. After reviewing and approving, the World Bank transfers the money from the aid account to the CPMU's special account.

6.2 Transfer of Funds to PPMUs

6.2.1 For expenditures for provinces to implement the 8 Action Programs (Component 1): CPMU bases on the signed responsibility contracts with PPMUs to initially transfer 50% of the total funding; the second transfer is 25% of the total funding based on the first progress report of PPMU and approved by CPMU; the third transfer is the remaining 25% based on the second progress report of PPMU. Annually, the transfer of funds to PPMUs is carried out in three phases: The first phase is implemented in January, the second phase in June or July, and the third phase in September. The end-of-year balance on the PPMU's account will be transferred to the following year for continued spending but must be deducted from the first transfer of the following year. In cases where the end-of-year balance on the PPMU's account exceeds 25% of the total budget planned for the following year's activities, CPMU will not make the first advance payment to PPMU.

6.2.2 For regular expenditures for advisory services (payment of salaries for PPMU staff) and increased operating costs of PPMU (not included in Component 1 above), CPMU will base on the detailed monthly annual plan of PPMU that has been approved and transfer funds to PPMU on a monthly basis. For the first transfer, based on the approved annual plan and the request for fund transfer from PPMU, CPMU will transfer funds to PPMU for the estimated expenses for activities in one month. Subsequent transfers will be based on the previous month's expense vouchers and the projected expenses for the next month.

6.2.3 Conditions for subsequent fund transfers to PPMUs

a) PPMUs must submit reports to CPMU as specified in the Project Implementation Management Handbook.

b) CPMU bases on the bank statement of the servicing bank, financial reports, and progress reports of PPMUs to assess the disbursement progress of aid funds at the local level. CPMU will proceed with the next transfer when the total amount of disbursed expenditures reaches 50% or more of the transferred funds in the previous phase.

c) If PPMUs disburse less than 50% of the initial allocated funds within six months, the CPMU Director (after obtaining approval from the Ministry of Health and the World Bank) has the right to reallocate funds to other provinces with greater need and more active disbursement progress. This regulation applies from 2007 until the closing date of the project's special account (December 31, 2011).

6.3 Supplementing the CPMU's Special Account CPMU submits the fund withdrawal application documents to the Department of State Budget (Ministry of Finance), including:

a) A letter requesting the supplementary withdrawal of funds from the Special Account.

b) A withdrawal form and expense statements according to the World Bank's model.

c) Confirmation from the Treasury for Increased Costs items, expense receipts, and bank account statements (original copies) for expenses directly incurred by CPMU.

d) Documents serving as the basis for CPMU to transfer funds to PPMUs according to the Responsibility Contract, confirmation from the Treasury for Increased Costs items, expense receipts, and branch bank account statements for expenditures from the PPMU's aid source account. Within five working days from receiving complete documents, the Ministry of Finance (Department of State Budget) reviews and issues an approval document for fund withdrawal sent to CPMU and the servicing bank. CPMU and the servicing bank jointly sign the supplementary withdrawal form and send it to the World Bank. The World Bank reviews and transfers the money from the aid account to the CPMU's special account.

7. Accounting System for the Project

7.1. Accounting Documents System The accounting documents system applied to the Project Management Units (PMUs) at all levels using non-repayable aid funds from the World Bank (WB) includes two types: - The accounting documents system of Vietnam, implemented according to the current accounting documents system of Vietnam. - Accounting documents and materials according to WB management requirements specified in the Operations Manual (OM).

7.2. Accounting Ledger Format To unify the entire project, the Ministry of Health requires the Central Project Management Unit (CPMU) and Provincial Project Management Units (PPMUs) to use a General Journal format for financial project verification work, annual settlement report compilation, and overall project settlement, while facilitating computer usage in project accounting.

7.3. Accounting Account System

7.3.1. Based on the expenditure items and contents of each component in the Aid Agreement, the "HIV/AIDS Prevention in Vietnam" project must use the accounting account system according to the model of the Project Management Unit with分级管理。

7.3.2. Accounting documents and accounting vouchers (including electronic vouchers) generated at any unit (CPMU, PPMU, National Institute of Hygiene and Epidemiology, West Central Institute of Hygiene and Epidemiology, Ho Chi Minh City Pasteur Institute, Nha Trang Pasteur Institute, and other central units) must be retained according to the provisions of the Accounting Law and guiding legal documents implementing the Accounting Law.

7.3.3. The project implements the administrative and public institution accounting system as stipulated in Decision No. 999/TC-QĐ-CĐKT dated November 2, 1996 issued by the Minister of Finance regarding the issuance of the administrative and public institution accounting system.

8. Project Asset Management

8.1. Project assets are managed and utilized in accordance with the state asset management regulations. PMUs and participating units organize the establishment of books to track and calculate depreciation of fixed assets, establish usage regulations that are purposeful and effective. For transportation equipment, the project shall not change the use of assets. Each year, PMUs at all levels organize asset inventory, determine the status of assets, and comply with regular maintenance regulations.

8.2. During the usage period, if project assets are damaged beyond repair or cannot be repaired economically and effectively, PMUs at all levels shall establish a Committee and prepare a record recommending the disposal of assets. Upon approval by the competent authority in writing, PMUs shall reduce the asset value in the accounting books.

9. Reporting, Inspection, Audit, and Settlement of the Project

9.1. Reporting System

9.1.1. For the CPMU - Quarterly, the CPMU is responsible for preparing and consolidating reports as prescribed by Vietnam (to be sent to the Ministry of Health and the Ministry of Finance), financial management reports (FMRs) to be sent to the WB according to the form specified in Appendix 7 of the Non-Reimbursable Development Assistance Agreement No. 152-VN (detailed guidance in the Implementation Project Handbook). Reports must be submitted no later than 45 days after each quarter. - Along with each additional drawdown request, the CPMU prepares a detailed statement of expenditures during the period to be sent to the Ministry of Finance (Department of State Budget) for recording income and expenditure in the national budget. The statement needs to detail according to voucher number, date, and transaction content, classified by budget item, amount in USD and equivalent VND. The statement needs to be divided by central level (Ministry of Health) and each beneficiary locality.

9.1.2. For the PPMUs

a) On the fifth day of each month, the PPMUs send a quick report to the CPMU on the situation of receiving and using project funds, including recommendations to the competent authorities for handling difficulties encountered during project participation.

b) Quarterly, in addition to special reports serving as the basis for transferring funds from the CPMU to the PPMUs, the PPMUs are responsible for preparing reports as prescribed by Vietnam, financial management reports (FMRs) according to the form specified in Appendix 7 of the Non-Reimbursable Development Assistance Agreement No. 152-VN (detailed guidance in the Implementation Project Handbook). These financial management reports must be submitted to the CPMU no later than 30 days after each quarter.

9.2. Inspection

9.2.1. Functional agencies of the Ministry of Health cooperate with the CPMU to conduct surprise inspections in provinces participating in the project on project content and tasks, implementation progress, difficulties in managing the project, finding causes, and recommending measures to resolve issues to relevant authorities.

9.2.2. Regularly and unexpectedly, the Ministry of Finance and the Ministry of Health will inspect the implementation of the project and the use of funds (non-reimbursable aid and counterpart funds). If violations of fund use contrary to the provisions of the Aid Agreement, the Minister of Health's Approval Decision, and the project's legal documents are discovered, after reaching agreement with the WB, the Ministry of Finance will suspend the signing of drawdown requests for the competent authorities to handle the violations.

9.3. Audit

9.3.1. Annually, the entire financial activities of the project must be audited by an independent auditing agency according to state regulations and the Aid Agreement. If the WB does not designate an auditing agency, the CPMU selects an independent auditing agency according to regulations.

9.3.2. When conducting audits, the CPMU must fully comply with the provisions of Decree No. 105/2004/NĐ-CP dated March 30, 2004 of the Government on Independent Auditing and Circular No. 64/2004/TT-BTC dated June 29, 2004 of the Ministry of Finance guiding the implementation of some provisions of the aforementioned Decree No. 105/2004/NĐ-CP.

9.3.3. The financial statements of the Project confirmed by the auditing agency must be sent to the WB, and simultaneously sent to the Ministry of Health and the Ministry of Finance as the basis for considering additional drawdowns to the special account or direct drawdowns from the aid account for payment, and also as the basis for evaluating the project's implementation progress.

9.4. Settlement At the end of the fiscal year, the CPMU, PPMUs, and beneficiary units of the project (National Institute of Hygiene and Epidemiology, West Central Institute of Hygiene and Epidemiology, Ho Chi Minh City Pasteur Institute, Nha Trang Pasteur Institute, and other central units) must prepare annual financial reports on project activities in the year according to the current division of responsibilities and approval authority for settlement report review and approval. The process of preparing reports, reviewing, and compiling settlements is carried out according to each source of funding as follows:

9.4.1. Non-reimbursable aid funds from the World Bank (WB)

a) The Project Management Units (PMUs) base on the expenditure items, check the vouchers, compile the final accounts according to the state budget classification, and send them to the Central Project Management Unit (CPMU) for consolidation.

b) The CPMU consolidates the vouchers of activities at the CPMU, compiles the final accounts of the entire project (CPMU, PMUs, and beneficiary units), sends them to the Ministry of Health for approval, and then consolidates and sends them to the Ministry of Finance.

9.4.2. Counterpart funds

a) The PMUs base on the actual expenditures according to the proportion allocated by the locality from the counterpart funds for the project's activities, compile the final accounts according to the state budget classification, and send them to the Department of Health for consolidation, and the Department of Finance for review before submitting to the People's Committee of the province for approval.

b) The CPMU bases on the actual expenditures from the counterpart funds allocated by the Ministry of Health for the project's activities, compiles the final accounts according to the state budget classification, and sends them to the Ministry of Health for approval and then consolidates and sends them to the Ministry of Finance. The procedures for preparing, reviewing, and approving the final accounts shall be carried out in accordance with Decision No. 999/TC-QĐ-CĐKT dated November 2, 1996, issued by the Minister of Finance, and Circular No. 10/2004/TT-BTC dated February 19, 2004, issued by the Minister of Finance, guiding the examination, review, and notification of annual final accounts for administrative agencies, public institutions, and budgets at all levels.

III. PROVISIONS ON CERTAIN EXPENSE STANDARDS FOR THE PROJECT

1. Principles of applying standards

1.1. The portion of funds allocated for the project's activities from non-reimbursable aid funds of the World Bank (WB) shall apply specific expense standards as stipulated in this Joint Circular. The portion of funds allocated for the project's activities from counterpart funds shall apply current domestic regulations.

1.2. At the time this Joint Circular takes effect, expenses that have been temporarily advanced or borrowed for expenditure since the project became effective may be settled according to the specific expense standards set forth in the two Appendices of this Joint Circular.

2. Wages

2.1. Employees and consultants hired regularly or irregularly in the CPMU/PMUs shall be paid 100% from the non-reimbursable aid funds of the WB (Consultancy Item, Appendix 1 of the Aid Agreement). After reaching agreement with the World Bank, the Inter-Ministerial Committee will guide certain wage and fee rates for some specialized activities at Appendices 01 and 02 attached to this Joint Circular.

2.2. For civil servants and employees assigned to work full-time at the Project Management Boards at various levels: they shall receive wages and allowances from the aid funds according to the expense standards stipulated in this Joint Circular and shall not receive salaries from their respective civil service management bodies.

2.3. Wages and allowances paid to the aforementioned employees and civil servants include social insurance, health insurance, and personal income tax (if applicable). Wages shall be paid monthly and converted into Vietnamese Dong based on the buying rate of commercial banks at the time of payment.

3. Allowances Allowances shall be applied to state civil servants and employees assigned to work concurrently at the Project Management Boards at various levels. Allowances shall be paid from the project's counterpart funds according to Decision No. 112/2001/QĐ-BTC dated November 9, 2001, issued by the Minister of Finance regarding the issuance of certain expense standards applicable to projects using Official Development Assistance (ODA) loan funds.

4. Project Activity Expenses For project activity expenses, the Project Management Boards at various levels and participating units can only spend within the approved plan, with a maximum not exceeding the levels specified in Appendix 1 attached to this Joint Circular.

IV. PROCUREMENT AND TENDERING

All procurement and tendering activities of the "HIV/AIDS Prevention and Control" Project in Vietnam must comply with the terms of the Development Assistance Agreement No. 152-VN signed between the Government of the Socialist Republic of Vietnam and the International Development Association. The CPMU's tendering plan is approved by the Minister of Health; the tendering plans of the PMUs are approved by the Chairman of the Provincial People's Committee or the City People's Committee. The Ministry of Health issues regulations on分级审批投标结果的原则如下：

1. 对于价值低于26,000美元的货物采购合同：卫生部/省人民政府授权CPMU主任和PMU主任执行招标程序并批准投标结果。

2. 对于价值等于或超过26,000美元的货物采购合同：

a) 对于CPMU：CPMU执行招标程序，并将投标结果提交卫生部部长批准。

b) 对于PMU：PMU执行招标程序，并将投标结果提交省人民政府或市人民政府/市卫生局局长批准。

3. 对于招聘为项目工作的个人顾问：CPMU/PMU被授权批准参考条款和选择顾问的结果。对于招聘国际个人顾问，CPMU执行招标程序，并将短名单和中标结果提交卫生部批准。

4. 对于价值低于26,000美元的咨询公司选择合同：卫生部/省人民政府或市人民政府授权CPMU主任和PMU主任批准中标结果。

5. 对于价值等于或超过26,000美元的咨询公司选择合同：卫生部部长/省人民政府或市人民政府或市卫生局局长批准由CPMU/PMU提交的投标结果。

V. IMPLEMENTATION

This Circular shall take effect fifteen days after its publication in the Official Gazette. During implementation, if there are any difficulties, relevant agencies should promptly reflect them to the Ministry of Finance (Department of Foreign Financial Affairs) and the Ministry of Health (Department of Planning and Finance) for research and appropriate supplementation or amendment./.