THE MINISTRY OF FINANCE
Circular No. 79/2016/TT-BTC dated June 06, 2016 of the Ministry of Finance guiding the implementation of the financial audits of programs or projects financed by the Government’s on-lending of foreign borrowed funds
Pursuant to the Law on Public Debt Management No. 29/2009/QH12 dated 17/6/2009;
Pursuant to the Law on Public Sector Investment No. 49/2014/QH13 dated 18/6/2014;
Pursuant to the Government’s Decree No. 78/2010/ND-CP dated 14/7/2010 on on-lending of the Government's foreign loans;
Pursuant to the Government’s Decree No. 79/2010/ND-CP dated 14/7/2010 on public debt management operations;
Pursuant to the Government’s Decree No. 16/2016/ND-CP dated 16/3/2016 on management and utilization of ODA capital and concessional loans granted by foreign sponsors;
Pursuant to the Government's Decree No. 215/2013/ND-CP dated December 23, 2013 defining the functions, tasks, powers and organizational structure of the Ministry of Finance;
Upon the request of the Director of Department of Debt Management and External Finance,
The Minister of Finance hereby introduces the Circular guiding the implementation of financial audits of programs or projects financed by the Government’s on-lending of foreign borrowed funds.
Article 1. Scope of adjustment
1. This Circular shall set out regulations on financial audits that may be applicable to the following situations:
a) Making decisions on investment in programs or projects financed in whole or in part by the Government's foreign borrowed funds;
b) On-lending the Government’s overseas borrowed funds to enterprises.
2. Programs or projects are financed by on-lent funds invested in the form whereby on-lending bodies which assume the whole credit risk shall conduct auditing and lending operations under finance and credit institutions' regulations, comply with laws and regulations, and are not governed by this Circular.
3. Audits that serve the purpose of on-lending of the Government’s foreign borrowed funds to the provincial People’s Committees shall adhere to laws on capital on-lending to local governments.
Article 2. Subject of application
Investment decision-making bodies, Ministry of Finance, on-lending bodies, sub-borrowers, institutional or individual entities related to financial audits of programs or projects financed by overseas borrowed funds on-lent by the Government that fall within the scope and coverage of this Circular.
Article 3. Definition
Terms used herein shall be subject to the interpretation which is the same as that provided in the Law on Public Debt Management No. 29/2009/QH12 dated June 17, 2009, the Government’s Decree No. 78/2010/ND-CP dated July 14, 2010 on on-lending of the Government’s foreign borrowed funds (hereinafter referred to as the Decree No. 78/2010/ND-CP) and the Government’s Decree No. 16/2016/ND-CP dated March 16, 2016 on management and utilization of ODA capital and concessional loans received from foreign sponsors (hereinafter referred to as the Decree No. 16/2016/ND-CP). Other terms shall be construed as follows:
1. Benefit – Cost ratio (B/C) refers to the ratio of present value of benefit flow and that of cost flow which is determined within a life cycle of a project.
2. Net Present Value (NPV) refers to net value of all future cash flows of a project discounted to their present value.
3. Internal rate of return (IRR) refers to the discount rate at which the NPV of a project equals 0 (zero).
4. Formulas for calculation of financial indicators referred to in paragraphs 1, 2 and 3 of this Article shall be specified in Appendix 1 and 2 to this Circular.
Article 4. Auditing principles
1. Ensure objectivity, transparency and due care.
2. Investment decision-making bodies shall be responsible for results of audits or decisions on investment projects in accordance with laws.
3. Sub-borrowers shall take legal responsibility for accuracy, validity, rationality and legality of figures, information, parameters and data provided to auditing bodies as inputs for calculating project financial plans or debt repayment schedules and financial competence of sub-borrowers.
4. With regard to investment programs or projects financed by taking the form in which on-lending bodies partially assume risks, financial audits must conform to regulations laid down herein and on-lending bodies' regulations.
5. Financial audits that serve the purpose of making investment decisions must observe regulations set forth in the Decree No. 16/2016/ND-CP, this Circular and relevant legislation.
6. Financial audits for the purpose of on-lending the Government’s foreign borrowed funds must conform to regulations set out in Article 19 of the Decree No.78/2010/ND-CP, this Circular and relevant legislation.
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