Decision No. 03/2012/QD-KTNN of April, 04, 2012, promulgating the audit process of work construction investment project

DECISION

PROMULGATING THE AUDIT PROCESS OF WORK CONSTRUCTION INVESTMENT PROJECT

STATE AUDITOR GENERAL

Pursuant to the Law on State Budget;

Pursuant to the Law on State Audit;

Pursuant to the Construction Law;

Pursuant to the Law on Promulgation of legal normative documents 2008;

Pursuant to Decision No. 02/2008/QD-KTNN dated February 15, 2008 of the State Auditor General promulgating the regulations on drafting and assessing and promulgating legal normative documents of the state audit;

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Pursuant to Decision No. 04/2007/QD-KTNN dated August 02, 2007 of the State Auditor General promulgating the auditing process of the state audit;

Considering the proposal of the Chief Auditor of the State Audit specialized IV, the Director of Legal Affairs Department, Director of Audit Policy and Quality Monitoring Department.

DECIDES:

Article 1. Promulgating together with this Decision the Audit Process of work construction investment project

Article 2.This Decision will take effect after 45daysfrom its signing date and supersede theDecision No.05/2007/QD-KTNNdated August 02, 2007of the State Auditor General promulgating the audit process of the investmentprojects.

Article 3. Heads of units directly under the State audit, organizations and individuals concerned are liable to execute this Decision.

STATE AUDITOR GENERAL




Dinh Tien Dung

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PROCESS

AUDIT OF WORK CONSTRUCTION INVESTMENT PROJECT
(Promulgated together with Decision No. 03 /2012/QD-KTNN dated April 04, 2012 of the State Auditor General)

Chapter I

GENERAL REGULATIONS

Article 1. Subjects of application

The auditing process of work construction investment project (hereafter referred to as investment project) is applicable to the audit of investment projects implemented by the state auditor. When implementing the auditing of investment projects, the audit team, members of audit team and individuals and units concerned must comply with the regulations in the Auditing Process of the State audit and provisions in this Process.

Article 2. Scope of adjustment

1. The auditing process of investment projects stipulates the order, content and procedures of the steps of audit of investment projects, including the following steps:

a) Preparing the audit;

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c) Making and sending auditing report;

d) Verifying the implementation of conclusion and proposal of audit;

2. Depending on the characteristicsand nature ofeach audit, theycan applyone, twoor all threetypes of auditing suchas: Audit offinancial statement, compliance audit; operational audit.

Chapter II

PREPARING AUDIT

Section 1. SURVEYING, COLLECTING INFORMATION ON INVESTMENT PROJECT AND THE UNIT TO BE AUDITED

Article 3. Collecting information

1. The information on the investment project that needs collection including:

a) The necessity of the investmentproject, investmentpurpose,scaleof the works;construction site; starttime, completion of investment projectas plannedand in actuality;

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c) Total investment(total number, formulation agency, assessment and approval of project, number of times of adjustment if any), investmentcapital approved (central budget, local budget, loan capital, and other sources...); Estimate of works construction (total number, formulation agency, assessment and approval); bid package price, bid winning price approved, number of times of adjustment of bid package price;

 d) Form of project management (the investor will directly manage the project and hire the project management consultation organization.

dd) Form of contract: The package contract, the fixed unit price contract, the adjustedunit pricecontract, the time-based contract, percentage contract;form of contractor selection: Public bidding,limited bidding, appointment of contractors, self-performance, competitive offer...

e) Final report: The final report of project completed, report on investment capital implemented on the yearly basis (for ongoing project)

g) Implementation investment capital: The total number, costs construction and installation, costs of equipment, costs of compensationfor assistance and resettlement, the costs of project management, the costs of consultancy and other costs; the funded investmentcapital, the situation of advance and paymentfrom the start time to the completionanddelivery orto the time ofsurvey(total number, construction and installation, equipment and othercosts...);

h) Work of compensation, assistance and resettlement: Performance unit, management form; fund source, value by decision approved, payment made, content of compensation and assistance of households, relocation, resettlement, implementation organization…

i) Situation of formulation and dossier keeping of project in the course of implementation, formulation and keeping of as-built dossier;

k) The legal document system relating to the preparation, organization, operation, management and implementation of the project.

l) Situation of ealier inspection, verification and audit

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a) Internal control environment:

The organizational structureofthe operational machine, control machine organization, function, duties, management capacityof the projectmanagement Board and other professional departmentssuch as engineering, planning, finance and accounting...; the characteristicsof theproject management board; form of project management; difficulties and advantages due toobjective andsubjectiverelating tothe project, policyand regulationon internal managementofthe unit onmonitoring the constructional technique, acceptance, payment and settlement; financeand accounting...; the monitoring work of people; consulting unit; the unitsimplementing work of compensation, assistance and resettlement.

b) Control activitiesandcontrol procedures.

The implementation of management regulations in phases: supervision of performance technique, acceptance, payment and settlement, finance, accounting…

c) Work of accounting: The applied accounting regulation; organization of accounting machine, organization of accounting (system of documents, accounts, accounting books and accounting report)

d) Audit, internal inspection and verification: the information collected from the result of auditing, inspection and internal verification; result of implementation and handling under conclusion and proposal of auditing, internal inspection and verification.

3. For the frequent accounting investment project, only conducting the survey to collect information for the first time, for the subsequent audits, upon having additional information, the supplement will be made

Article 4. Information sources and method of information collection

1. Information from project management unit

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The dossier of investment procedures (written assessment of project approval, design, works constructioncost estimates; plan and decision on tender handover; record of acceptance, totalacceptance of works; investment capital settlementreport on the project completion, report on settlement verification of investment capitalofthe project completion, decision on approval of investment capital settlementreport of the project completion of the competent authorities; issues of compensation, assistance and resettlement…); accounting reports and statistics in accordance withthe State'sdecision; decision on the machine organization of the project management, the guiding documents of the competent agencies concerning the organization of project implementation; loan agreement and regulations, guidance of the donors relating to the management and use of loan capital (if any); documentsexchanged betweenthe parties taking part in management and implementation of the project; reports of inspection, verification and audit of the previous years (if any)

b) Information from collective and individuals participating in the project

c) Information from report of the unit on the situation of project implementation.

2. Information from the outside of the project management unit (in necessary case and if the project management unit cannot provide enough information to make the plan of audit)

a) The governing agency: information on capital source, implementation investment capital, management mechanism of the governing agency

b) The capital allocation agency, situation of payment and disbursement at the State Treasury

c) The agency has conducted the earlier inspection, verification and auditing earlier: the reports and records of conclusion;

d) Mass media: the articles about the project and other documentation;

đ) Other units (if any)

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a) Sending written request to the project management unit for supply of information and materials under the survey outline.

b) Collecting and evaluating materials from the project management unit and outside of the project management unit.

c) Updating and evaluating materials of the previous times of audit

d) Directly interviewing and exchanging

đ) Observing and experimenting

Section 2. EVALUATING INFORMATION COLLECTED AND INTERNAL CONTROL SYSTEM OF THE UNIT TO BE AUDITED, DETERMINING FOCUS AND AUDITING RISK

Article 5. Evaluating information collected and internal control system

1. Characteristics of the projectmanagement Board: Time of establishment, experience of project management; board of responsibility and plurality.

2. Form of project management: The investor directly manages the project or hires the project management consultation organization.

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4. Qualificationand capacityofmanagement officials (able to meet requirement of work)

5. The policies and regulations on management of the unit.

6. Evaluating consulting units: Capacity, experience and prestige

7. Evaluating the units performing work of compensation, assistance and resettlement: Capacity of performance

8. The difficulties, advantages, objective and subjective causes concerning the project

Article 6. Determining the focus of audit.

1. Based on the scale, nature and characteristics of each project in order to determine the focus of audit to ensure the target of project assessment on: Investment procedures; progress, quality and price.

2. The focus of audit of the investment project is determined by each auditing content and selected in auditing contents such as:

a) The observance of the order of investment procedures

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c) Construction and installation and equipment;

d) Cost of consultation, cost of project management and other costs;

đ) The economy, effect and effectiveness

e) Other issues (if any).

Article 7. Determining the risks of audit

1. Theissues with highpotential risksfor theinvestment project

a) The volume of construction and installation of departments; work items prone to fraud and shortcomings (volume, underground and obscured items…)

b) The price unit arisingat the time of"transition" of the effectofchanges on theregime, the State'spoliciesin the field ofconstruction investment managementrelating to the project and the particular unit prices

c) The issues of compensation, assistance and resettlement, environmental effect and degradationof the worksand projects...;

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2. Theissueswithhigh-risk controlfor the investment project

a) Modeland operation mechanism oftheprojectmanagement boards are still inadequate; the qualification and capacity of theproject management board are limiting..

b) The content relating to the change of policy;

c) The content arising: the volume of work arising due to change of design, adjustment and supplement in the process of implementation, price and volume arising outside of the contract.

d) The issue of price and contract adjustment; issue of price slippage relating to many types of currency, issue of price slippage due to progress slowing

dd) Theshortcomings are indicated fromthe previous audits, inspections and verifications, thesystematicshortcomingshave not been corrected(if any);

e) Thebig issuesin the process ofproject management, including the finance and accounting management.

g) The shortcomings in the strategy and planning; the compliance and reasonability of sectorial and regional planning; the shortcomings in management leading toweaknesses that are identifiedasunsuitableinvestment, progress slowing, exceedinginvestment costs, unable to meetthe objectivesset out;

h) Coinciding or overlappingin operation;

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Article 8. Risk assessment

On the basis of analysis of internal control system and information on investment project in the above stage, risk assessment of each issue under the type ofrisk (potential risk, control risk) andrisk level(high,medium, low).

Section 3. AUDIT PLANNINGOFAN AUDITOF THE INVESTMENT PROJECT

Article 9. Requirements of the audit plan making.

Based on the information collected and analyzed on the subjects and units audited and the current resources in order to conduct anauditplan under the form prescribed of the State audit. Theauditplan of an audit includes essential contents as stipulated from Article 10 to Article 15 of this Process

Article 10. Audit target

On the basis of the general auditing target of the whole sector and the requirements of each audit in order to determine the specific target.

Article 11. Audit content.

1. Auditing the compliance with the law, regulation on managementof investment project and regulation onfinance and accounting;

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3. Auditingreports on the settlementof investment capital of works completedorwork itemscompleted, report on investment capital implemented on the yearly basis(forongoingprojects);

4. Auditing the economy, effectiveness and effect of the investment project;

5. Depending on each project and result of analysis of initial information and the audit target, the audit content must be determined specifically on the basis of result of assessment of focuses and risks of audit

Article 12. Scope and limit of audit

1. Audit scope

a) Audited period

b) Audited unit

c) Determining the limit of work to be performed by each auditing content (value, percentage of the value audited, bidding package, works, work items audited, and investment capital sources..), the observance of law, regulations on investment project management, regulations on finance and accounting; the issues and areas needing assessment relating to the audit of economy and effectiveness of investment project.

2. Audit limit: Specifying the contents not audited and the reasons for non-performance.

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1. Assessing the economy

a) Assessing the economical and wasteful factors in the use of input resources of the project;

b) Focusing on assessment of the level of thrift, level ofthe wastefulness of the use ofproject funds.

2. Assessing the effectiveness

Using 02 assessment principles: The minimum costand the optimum resultforeach contentandfor the entire project, assessment of the social and economic effectsoftheproject;

3. Assessing the effect: Assessing theachievement oftheobjectives set out and the effect ofdocuments of the project management.

Article 14. Audit method

In addition to themethodsspecified inthe auditprocessofthe State audit, in theaudit of investment project, the method of field testing and using of experts should be focused on the implementation.

Article 15. Other content of audit plan

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Chapter III

AUDIT IMPLEMENTATION

Section 1. AUDITING THE COMPLIANCE WITH THE LAW, REGULATION ON MANAGEMENT OF INVESTMENT PROJECT AND REGULATIONS ON FINANCE AND ACCOUNTING;

Article 16. Auditing work of formulation, assessment and approval of investment project

The audit content of work of formulation, assessment and approval of the investment project is prescribed in Article 17, Article 18 and Article 19 of this Process.

Article 17. Foundation for auditing the work of formulation, assessment and approval of investment project.

1. Legal foundation

a) Construction Law, Bidding Law and documents of implementation guidance;

b) Regulations on management and use of official development assistance resources (for basic constructional works using foreign assistance capital);

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2. Dossier of investment project

a) Decision on sectorial and regional planning; the agreements signed for loan capital resources.

b) Report on work construction investment, work construction investment project or technical, economic report of works construction and decisions of the competent authorities permitting the performance of work construction investment;

c) Decision on tasks assignment for the investor and establishment of project management board, contract of project management consultation hiring (if any)

d) Yearly plan on investment preparation assigned by the competent authorities; the cost estimate approved;

dd) Contract of inspection, survey and consultation for making the Report on work construction investment, the work construction investment project or the technical and economic Report of work construction;

e) Business license and certificate of practice of the unit performing the Contract of inspection, survey and consultation for making Report on work construction investment, the work construction investment project or the technical and economic Report of work construction;

g) The written verification and assessment and approval of investment project or the technical, economic Report, record of acceptance and documents handover;

h) Other documents (if any)

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1. The conformity of the project formulation with the approved plan.

2. The competence of investment-deciding agency: Inspecting whether the decision on investment is under competence.

3. The competence of the appraisal agency of the Report on work construction investment, the work construction investment Project or the technical and economic Report of work construction;

4. Capacity of consulting unit: Inspecting the conformity of consultation unit’s business license with the content of investment project under implementation; inspecting the certificate of practice of individuals participating in the project.

5. The compliance of order and procedures for the investment: Report on work construction investment, Project of work construction investment or the technical and economic Report of works construction must be set up, appraised and approved in accordance with the order, time and content.

6. Inspecting the adequacy and conformity of the basic design dossier with the policies and objectives of the investment.

7. The foundation for formulation of total invested capital; The properness of calculation method of the total invested capital;

Article 19. Auditing the work of investment project implementation

The audit content of the work of investment project implementation as prescribed in Article 20, 21, 22 and 23 of this Process.

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1. Dossier of survey, design, estimate; report on verification and appraisal of the dossier of design and estimate; decision on approval of design and work construction estimate.

2. Dossier of compensation, assistance and resettlement

3. Bidding dossier:

a) Bidding plan, bidding invitation, bidding document, bid, decision on approval of bidding result attached to the report on contractor rating of the investor ( in case of procurement)

b) Dossier of requirement, decision on appointment of contractors, proposal dossier, contractor appointment dossier (in case of appointment of contractors and competitive offering)

4. License of construction ( in case the investment project requiring license of construction), license of natural resources extraction ( in case the investment project having need of natural resources extraction)

5. Economic contract, dossier of liquidation of economic contract of construction tender handover, equipment purchase and other costs.

6. Plan of annual investment

7. Dossier of work quality control: As-built drawings, work diary, acceptance document.., document of payment and settlement

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9. Other foundation (if any)

Article 21. Content of auditing the work of investment project implementation

1. The legality of organizations and individuals participating in project implementation (survey, design, consultation, performance…with full legal entity and business license and appropriate certificate of practice as prescribed.)

2. The observance ofregulations on:thecompliance of designwith the framwork regulationsandstandardsof the project approved by the competent authorities; the competence of the appraisal agency(design, cost estimate and settlement); competenceof the agency making decisionon approvingthe outline of survey,design-estimate orlicense issuance…

3. Theobservance of order,procedures for investment such as: Order of works design by the steps prescribed; dossier of design and cost estimates mustbe verified andassessed beforeapproval;conditions for works startingprocessand other regulations(if any).

4. Inspecting content of documents stipulating the investment procedures. Comparing the scale, degree and targets with the other documents and procedures of the investment project previously issued with higher legality such as:

a) The late designstepsmust be consistent withthe previousdesign stepsapprovedin terms of scale, technology, capacity, work grade, standards and constructional regulations;

b) The cost estimate of work construction must be consistent with the total invested capital and must not exceed the total invested capital;

c) The contract in constructional operation must be consistent with the Construction Law, the relevant guiding documents such as: work to be performed; work quality; starting time and completion; condition for acceptance and payment; contract price, contract bonus or penalty..;

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5. Inspecting dossier and procedures for bidordirect contractingonthe completeness, properness, validity ... in accordance withregulations oflaw (Construction Law, Bidding Lawandtheguiding documents).

6. Inspecting value of work estimate: constructional volume in conformity with design; unit price, surcharge applied in accordance with regulation as prescribed.

7. The annual investment plan must be in accordance with the policies on the condition of plan recording and competence of plan assignment

8. Order and procedure for work management, work of payment and settlement; the formulation and approval of unit price must be in accordance with regulation prescribed.

9. Inspecting the conformity of the change on design, auditing of volume generated (the change order) with regulations, bid and regulations of contract.

10. Inspecting the observance of regulations on the work of compensation, assistance and resettlement.

a) Members of the compensation, assistance and resettlement Council as prescribed.

b) The promulgation of compensation and assistance unit price of provincial/municipal People’s Committees

c) The approval of the plan for compensation, assistance and resettlement.

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dd) Inspecting the completeness of dossier of compensation, assistance and resettlement as prescribed: Declaration of household’s compensated property; Record of inventory of compensated property of the Council of compensation, assistance and resettlement (including copy of draft drawing of the compensated property; Record of compensation price determination, Record of the appraisal of compensation, assistance and resettlement Council; slip of compensation payment.

e) Inspecting the arrangement of settlement housing.

Article 22. Inspecting the work of acceptance, settlement and putting works into operation.

1. Audit foundation

a) Construction Law and relevant legal normative documents;

b) Records of acceptance of work, divisions, phases, items, the whole of investment project;

c) As-built drawings, report on project implementation result (if any)…;

d) Reportonsettlement of the completed investment capital

2. Audit content

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b) Inspecting document of work completion as prescribed;

c) Inspecting the formulation of Reporton the settlementof investment capital of works completedas prescribed;

d) The actual situation of work and property using after the hand-over.

Article 23. Auditing the compliance with the state accounting and finance regulation

1. Work of financial management

a) Auditing the management and use of the project investment capital resources: state budget capital, loan capital and other capital;

b) Auditing the compliance of regulations on regular expenditure to serve the management board;

c) Auditing the observance of procedures for disbursement and payment: Based on regulation and stipulation of the contract of examination of order and payment procedures;

d) Auditing the observance of regulation in other costs of the project;

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2. Accounting work

a) The comparision of public debt and payment for the contractors and allocating and lending agency;

b) Organizing the accounting machine of the project management board: The organization and management of capital accounting, investment cost for each project. The cost allocation with the general nature (cost of management board, consultation cost, payment charge…)

c) The observance of investor accounting regulation on accounting documents, accounting books, accounting accounts, settlement report and financial report.

Section 2. AUDITING WORK OF QUALITY CONTROL AND PROGRESS OF INVESTMENT PROJECT

Article 24. Auditing Work of Quality Control

1. Audit foundation

a) Construction Law, Bidding Law and guiding documents;

b) Government’s Decree on constructional work quality management

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d) Bidding documents and bid;

đ) Document of work quality: document of quality of survey, design and performance…;

e) Contracting dossier;

g) As-built dossier

2. Audit content

Based on the resultof auditing implementation steps of the observance of legal documents on investment project management and based on legal documents on constructional work quality control to assess the quality of each phase in implementation of investment project and the whole of project specifically as follows:

a) Inspecting and assessing the work of project formulation quality: The observance of planning, investment demand, investment scale, plan for selection of constructional design and technological line….

b) Inspecting and assessing the work of survey: Inspecting the observance of of the task of survey, method of survey, applied standard of survey, supervising survey of contractor and investor with contents in the report of survey…

c) Inspecting and assessing the quality of work of design: The observance of the tasks of design, basic design, result of survey and design standard, the clarity and completeness of design drawing to ensure the work of cost estimate and performance.

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e) Using assessment result of specialized agencies

Article 25. Auditing the work of progress control

1. Auditing foundation

a) Construction Law, Bidding Law and guiding documents;

b) Government’s Decree on constructional work quality management

c) Decision of competent authorities for the permission of the performance of work construction investment;

d) Bidding documents and bid;

đ) Document of work quality;

e) Contracting dossier;

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2. Audit content

a) Determining the time of progress slowing by each work from the project formulation to the construction, installation, completion and handover of items and the whole of works under the content of the signed contract;

b) The time of progress slowing of the project according to the initial planning;

c) Determining the objective and subjective causes

d) Assessing the treatment of investor’s progress slowing;

dd) Proposing the handling of violation.

Section 3. AUDITING THE REPORT OF SETTLEMENT OF THE INVESTMENT CAPITAL IMPLEMENTED

Article 26. Auditing the investment capital resources

1. Audit foundation

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b) Regulations on management and use of ODA capital resources, agreements signed with capital loan organization;

c) Decision on approval of project investment;

d) Regime of the state’s accounting and finance management regulation.

2. Audit content

a) Inspecting the completeness of the invested capital resources: Documents, accounting books, implementation of comparison of capital allocated, loaned and paid by the investor’s report with the confirmed number of the relevant agency allocating and loaning capital and making payment; in case of receiving capital in foreign currency, the inspection of exchange rate prescribed at the arising time of must be made.

b) Inspecting the legality and validity of the investment capital resources that have been used;

c) Inspecting the conformity in the use of the type of investment capital resources compared with the structure determined in the decision on investment of the competent authorities.

Article 27. Auditing the investment cost.

The audit content of the cost of work construction investment is prescribed in Article 28 and 29 of this Process.

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1. The Construction Law, Bidding Law and documents of implementation guidance;

2. The regulations of the state’s accounting and finance management

3. Dossier and documents provided by the unit: Dossier of design drawing, cost estimate, contract, record of acceptance, as-built drawings, A-B settlement…, cadastral dossier, compensation, assistance and resettlement dossier and other relevant documents

Article 29. Content of auditing the investment cost

1. Auditing the cost of construction and installation.

Upon conducting the audit, the auditor must carefully study dossier, design drawings, as-built drawings and relevant documents and sample the construction and installation volumes with high value, the portion of work with much likely overlapping in order to go into detailed examination.

a) Actually inspecting at the site: Inspecting the overall works on volume, quality, technique and work fine art…, sampling some work, items, inspecting size through methods of measurement and counting..., inspecting specification and quality of materials; using equipment for inspecting the conformity of the actuality with the as-built drawing, record of technical acceptance and performance diary, inspecting and examining location, topography and the terrain for determining the condition in order to apply the transportingcoefficients, transporting distance in the settlement compared with the performance actuality. For the inspection of works under performance, the hidden portion of work must be inspected before implementing the next work.

b) Inspecting the calculation ofvolume andthe formulation ofunit price of construction and installationin paymentand settlement: Based on the design,as-builtdrawing, record of technicalacceptance, the performance diary,thefieldtestresults and re-calculation of the volume comparedwith the data inpayment and settlement; inspecting the construction and installationunit pricein paymentand settlement of value ofconstructionand installation volume completedfor eachspecific case, depending on the form of buildingcontract: The package contract, the adjustedunit pricecontract, thefixed unit price contract, the time-based contract and the percentage(%) contract; the legality of cases having change on the settlement price compared with the winning bid price; the application ofthesurchargeconstruction under regulation prescribed for each period such as general cost, profit as defined and VAT; for the investment cost generated, perform audit under conditions specified in the contract and other relevant documents.

c) Using specialtechnical meansor requesting assessment consultation:Inspecial cases, ifthere is doubt aboutthe quality ofconstruction accepted and paid but it is difficult toidentify immediately evenwith the naked eye, thework that requiresexpertiseand can rented special technical means or hired experts upon havingconsentof the leader ofthe State audit.

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a) Inspecting on dossier, documents and relevant documents: Lists, types, technical standards, orgin of technological equipment and spare parts accompanied and other equipment with contract and requirements of the bidding document, inspecting equipment value: Reviewing the bidding dossier for equipment purchase, sale contract and original documents of equipment domestically purchased or imported; the application of exchange rate(for equipment purchased in foreign currency) compared with regulations; cost of transport, preservation, maintenance and equipment processing under estimate approved and accepted…(for equipment purchased by the investor); cost of transport, loading and unloading under the prescribed rate of price, cost of preservation and maintenance and equipment processing under estimate approved, contract, acceptance…(for equipment purchased by the investor); tax cost of contractor for project with foreign contractor.

b) Sampling some equipment for actual inspection at the site in order to determine the existence of property on lists, types, technical standards, orgin of technological equipment and spare parts accompanied and other equipment (it is necessary to make list for inventory).

3. Auditing other costs

a) Auditingcost group by norms: Based on the application ofnorms, the prescription rate; committed conditionsof the contract to implement the inspection of the project formulation costsand investmentreport; costsand feesproject assessment, investment report;costsfor construction survey, work design, costs of experimental model, costs of design assessment, work estimates, costs of bidding document formulation, costs forthe analysisand assessmentof bidding results; costs for constructionandequipment installation, costs of verification andapproval of settlementof works...

b) Auditing cost group directly calculated under cost estimates approved

Inspecting the formulation, assessment and approval of the cost estimates; the settlement for the cost of project publicization and advertising (if any); costs of technological and scientific research relating to the project; costs of work starting; costs of bomb and mine clearance; costs of safety protection, environmental protection during the constructional process (if any); costs of work insurance, interest loan during investment process; costs of temporary work dismantlment, ancillary works serving the performance; costs of workers and technical officials and production management officials; costs of expert hiring for operation on trial during running test, costs of materials, energy and manpowerforthe test runwithout loadand with load…

c) Auditing the costs of compensation, assistance and resettlement: The legality and completeness of the dossier for compensation, assistance and resettlement, the construction and approval of the plan for compensation, assistance and resettlement; based on the dossier for compensation, assistance and resettlement, cadastral dossier combined with actual inspection in order to determine the surface, origin of land compensated; cost estimates of works on the land to be compensated and removed; the application of the price on compensation and assistance on land, crops and building on the land based on the state policies for each period; the value of settlement of resettlement and construction works for implementation of compensation (if any).

d) Auditing the cost of the project management board: based on documents, invoices and relevant documents, inspecting the rationality and validity of the whole costs of the project management board; comparing the contents of expenditure with the cost estimates allocated with approval from the competent authorities; the actual cost compared with the rate and norms prescribed; the purchase and management and using of property.

In case the project management board manages a lot of works and projects at the same time without monitoring in detaid each works: Implementing the inspection of the whole costs of the board; the allocation of project management cost for each works and project compared with the rate and norm prescribed by the state.

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1. Audit foundation

a) Construction Law, Regulation on management of investment and construction and documents of implementation guidance;

b) Dossier of resettlement and decisions on approval of the competent authorities;

c) Result of auditing the cost of project investment for each works performed annually;

d) Record of damage value determination, decision on annulment of the competent authorities.

2. Content of auditing the investment cost included in the work value

a) Determining the investment cost included in the work value by the method: taking the investment cost after audit subtracted by the investment cost not included in the work value.

b) The way of determining the investment cost not included in the work value on the basis of the grounds of damage assessment (inventory of property and damage value of basic inventory Council…); compared with the value of the work volume accepted; inspecting the properness of the annulment decision; inspecting the grounds in order to calculate the value of volume annulled (volume, unit price…)

Article 31. Auditing the value of property handed over for production and use

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a) Construction Law, and documents of implementation guidance;

b) Dossier of resettlement and decisions on approval of competent authorities;

c) Result of auditing the cost of project investment for each works performed annually;

d) Record of property handover to units for use;

dd) The plan of cost price and the state regulations and policies at the time of handover;

e) The documents guiding the method of cost conversion of construction investment project implemented on the plan of cost price at the time of handover;

2. Content of auditing the handed-over property value.

a) Inspecting the list of handed-over property including the fixed and liquid property for the management subjects

b) Inspecting the calculation and conversion of investment cost on the plan of cost price at the time of handover under the guidance of the Ministry of Construction: Inspecting the aggregation of cost done annually; the determination of conversion coefficient; inspecting the calculation and aggregation of conversion costs;

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d) Inspecting the properness of property value handed over to the subjects for use and purpose of use: The investment costs for calculating the price conversion and handing over to units for use is the investment costs after audited to eliminate the irrational costs and supplement the missing portions or receiving the cost handover of other project investment; a works completed can be handed over to many subjects for use.

In case the project management board are not dissolved and keeps on managing the property under use for the board’s activities, those property will not be included in the handover value.

Article 32. Auditing the state of debt, material and equipment in stock

1. Audit foundation

a) Decisions on transfer of property;

b) Accounting book to monitor materials, property, state of debts and relevant documents and materials;

c) The records of property inventory, comparison of debt with customers;

d) The state regulations on management and property treatment upon project termination;

e) The dossier of liquidation and sale of property.

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a) Auditing the debts payable: Inspecting the amount payable to each customer: Based on the result of the inspection of investment implementation value on construction, installation, other basic construction approved for payment above mentioned, aggregating and classifying according to each contractor in order to determine and inspect the accounting books and documents to dertermine the amount of money paid to each contractor; determining the debt to be paid by the amount of money accepted for payment subtracted by the paid amount; performing the comparison and verification of debts with the contractors or sending confirmation letter ( if necessary)

b) Inspecting the property and stagnant capital by the method: balance of stock receiving, stock delivery and inventory in order to determine the amount of inventory of each material, property and then comparing with the data by accounting book, financial statement and inventory document to see whether they are consistent or not, in which sampling some materials and property in stock with a large number for actual comparison.

c) Checking thecashbalancethrough theactual inventory in comparison withthe balance in theaccounting books;

d) For bank deposits through the comparison with subsidiary book and directly getting the confirmation of the bank, comparing the account balance confirmation at the fund-allocating agency;

dd) Considering the way of treatment of the investor for the redundant property (materials and equipment) untreated waste material, amount of capital collected not yet paid to the budget, residual of deposit and cash…

Section 4. AUDITING THE ECONOMY, EFFECT AND EFFECTIVENESS OF THE WORK CONSTRUCTION INVESTMENT PROJECT

Article 33. Requirements in the audit of the economy, effect and effectiveness of the work construction investment project

According to the particularity of each project to determine the criteria of the economy, effect and effectiveness. On the basis of criteria specified, based on the audit result on the contents of project formulation, design, cost estimate, contractor selection, quality control and investment cost management….in order to assess the economy, effect and effectiveness of the investment project.

Article 34. The economy

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Article 35. The effectiveness

Assessing the output result compared with the cost invested; the way the implementation of project affecting the social and economic in each content and the entire project

Article 36. The effect

Assessing the degree of achievement of project objectives, the effect of the project managementdocumentsineach work portion andtheentire project.

Section 5. SOME CONTENTS TO NOTE IN THE PROCESS OF AUDIT IMPLEMENTATION OF THE INVESTMENT PROJECT

Article 37. The shortcomings and fraud frequently met upon the audit implementation of the investment project.

Auditor should refer to the Annex I (attached herein)

Article 38. List of questions

Auditor should refer to the list of questions in Annex II, III and IV (attached herein)

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FORMULATING AND ISSUING THE AUDIT REPORT

Article 39. Requirements for the formulation and issuance the audit report of the investment project

1. The order and procedures for the implementation of the step of formulating and sending the audit report of the investment project implemented under the audit Process of the state audit; Regulations on formulation, assessment, approval and issuance of audit report of the state audit;

2. The audit report of investment project is formulated under the form prescribed in the System of forms and records of the state audit.

Article 40. The basic content of the audit report of the investment project

1. The introduction consists of the following basic contents:

a) Audit content: Recording in accordance with the audit decision;

b) Audit scope and limit: Clearly specifying the contents without audit and the reason of the non-implementation;

c) Audit foundation

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a) Generalizing the project situation: Decision on investment, investor; purpose, investment scale total invested capital, starting date and completion date.

b) The result of estimate audit of the project under the auditing contents: The capital resources implemented; investment costs implemented; other contents of the investment capital settlementreport of the project completion (if any). The result and cause of difference in each content must be clearly specified.

About the properness and honesty of the settlement Report (data) of the Project;

c) The audit result of the observance of the law, policies, regulations in the investment project management and other relevant documents. In each content, the outstanding issues need analyzing and assessing: advantages, well-done aspects; shortcomings, remaining issues, limitation, responsibilities of collective and individuals concerned;

d) The audit result of assessment of the economy, effect and effectiveness of the project.

3. Proposal

Based on the shortcomings and basic remaining issues detected, proposing the units and agencies concerned.

Chapter V

INSPECTING THE IMPLEMENTATION OF AUDIT CONCLUSION AND PROPOSAL

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Implemented in accordance with regulation in clause 2, Article 57 of the Law on State Audit and the Process for inspection of the implementation of audit conclusion and proposal of the State audit.

ANNEX ATTACHED

Annex I: Some shortcomings and fraud frequently met.

Annex II: List of questions 01 – Phase of construction works design

Annex III: List of questions 02 – Phase of bidding and tender handover

Annex IV: List of questions 03 – Phase of performance, supervision of performance and work acceptance.

ANNEX 1

SOME SHORTCOMINGS AND FRAUD FREQUENTLY MET
(Promulgated together with the Decision No. 03/2012/QD-KTNN dated April 04, 2012 of the State Auditor General)

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1. Work of formulation, assessment and approval of investment project

- The work of formulation, assessment and approval of project is inconsistent with the order, competence and time;

- The content of investment project is sketchy and incomplete as prescribed.

- Theresearching and surveying documents, materials resources, dynamics, ecology, environment, plans for site clearance, resettlement, investment capital...are incomplete;

- The consultation work for which there are not regulations on the cost norms but not formulated and approved the cost estimates or formulated and approved with the high unit price

- The projectis inconsistent with the sectorial and regional planning;

- Determining the total invested capital incorrectly and insufficient foundation.

2. Work of investment project implementation.

- The surveying dossier is incomplete and there is insufficient grounds for design;

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- Work of estimate: The wrong application of norms, unit price, price determination for work having no regulations on the price with the shortage of grounds..

- Site clearance: The formulation, approval and implementation of the plan for compensation are inconsistent with regulations; incomplete compensation dossier, etc

- Bidding work: The bidding document is not complete, clear and detailed; the approval of dossier and bidding plan are not under the right competence, there are inadequate numbers of minimal participating bidders, failing to comply with regulations on the time; bid opened without enough present participants, unfair bid evaluation, insufficient foundation, etc.

- Constructioncontractis not strict, complete and proper asspecified

- The volume arising without any design, cost estimate approved for supplement and amendment;

- Improperly performing as in the approved design.

- Acceptance and payment are not in conformity with contract;

- Failing to complywith regulations on the supervision of the performance and copyrightofdesign consultants;

- The acceptance dossieris incomplete: missing partialacceptance records, documents on test results of materials, concrete, structure, etc..

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3. Work of acceptance, payment and settlement and putting the works into operation and use

- The overallacceptance dossieris incomplete;

- The as-built dossier is not complete and actually correct;

- The report on the settlementof investment capital of works completed isnot formulated or formulated inconsistently with regulations

II. AUDITING THE ECONOMY, EFFECTIVENESS AND EFFECT OF THE WORK CONSTRUCTION INVESTMENT PROJECT

1. Formulation, assessment and approval of investment project

- The information and parameters used as a basis for formulation of investment project are not rational: The indexes on economy and market; the parameters on environment (waste water, noise, pollution, etc); the technical indexes ( the level subject to storm, wind, rain, earthquake, etc); the inconsistent technical standards ( durability, longevity, quality of materials,...)

- Failing to consider all investment plan likely to be in order to have an optimal choice

- Selection of theinvestment locationis irrational and subjectivenot mentioning therelevant factors(geology, transportation, raw materials resources, markets, human resources, ...);

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- Calculation made without considering theactual conditionsonexisting infrastructuresuch as electricity, water, water drainage, ...;

- Selecting the constructional solutionwithouttaking into account thetechnologicalbackwardnessand technological and scientific advances.

2. Design and cost estimate

- Design performed upon insufficient information on investement demand, not basing on the needs.

- Inaccuratesurveyled tothe inconsistent design;

- Irrational design and arrangement of technological line ;

- Inadequatedesign, not foreseeing theextentof necessary workloadleading tolarge volume generated to be contracted additionallyand causing slow progressand exceedingcost estimates;

- Design of technical equipment and constructional design wihtout synchronous coordination;

- The design exceeds theneedsof the using party, the solution is too expensive: the hallway and interconnected way is too broadunnecessarily; tooexpensive furniture, the technical operation equipment istoo expensivenot only forinitialcostbutthe frequent cost ofrepair andmaintenance arising fromthe process of operationlater...;

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- The cost estimateis inaccuratedueto incompleteinformation, lack ofcarefulnessincalculation or deliberately making low estimateforthe projecteasily approved andupon performance, request for additional funding approval will be made for completion;conversely,making highestimateto get the fundforpurchaseof expensiveequipment;

- The estimateis cutunreasonablyinthe process of assessment and approval,thenadditional approval must be made later again;

- The cost estimate of the volume arisingismadelate, even upon the completion of the performance of the items, so the cost management becomes ineffective.

3. Selection of contractor

- No wide tender made but only limited tender or appointment of contractors

- The bidding document formulated with the shortcomings leads to the unqualified contractor selected for the project and affects the progress and quality of the works;

- Describing the bidding package incompletely and clearlyleading todifferentunderstanding and therefore to the occurrence of dispute upon performance ofthe contract;

- The investor and contractor have colluded with each other so the contractor is provided with information on one portion of a certain workload in the bidding package that will be additionally allocated. The contractor upon knowing this information will make a bid with a sudden high price for these works and decrease the unit price for the remaining works in order to win the bid. When payment made, the contractor will enjoy a huge profit for the additional allocation that leads to the increase in the work cost.

- Bidder collusion: One contractor will purchase all bidding documents; the contractors will compromise one another to let a certain contractor win the bid and then share benefits among the contractors (usually in limited tender)…;

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- Unfair bid evaluation, inconsistent withthecriteriaalreadyapprovedby the competent authorities;

- The criteria for evaluation ofbidding documentsare irrational,therebyenablingthe contractors with little capacity and experience to participate in the bidding and win the bid or offercriteria of unfavorable evaluationforqualifiedcontractors.

4. Contract and contract implementation

- The terms of contract are not formulated closely;

- The price on contract is not based on the winning price;

- Contractsare not adjustedon schedule uponchange on design, so there is no overview on the development of costs; the exceeding costsnot detectedin time.Insuch cases, usually the price of thecost generated andsupplementedis higher than that of the original contract(the constructionmanagement boards often makes an excuse that the performance is not in the same time).

5. Management of construction performance

- The progress is prolonged due to the subjective and objective causes;

- Due to bad supervision so the shortcomings of the technical items are not detected in a timely manner, using materials with low quality; the technical equipment is inconsistent with the parameters as agreed....leading to the damage of the constructional works.

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- Thedelaytorequest a remedy ofdefectscan be that the unit,upon receiving the work handover, has not notified the construction management board completely and in a timely manner of these defects leading to the fact that the contractor can make an excuse of the expiration of the warranty period and that the remedy will be costly.

6. Condition and capacity of organizations and individuals in the contructional activities

- The organizations and individuals participating in the contructional activities do not have professional, technical and financial capacity;

- The organizations and individuals are not in proper function and sector and without sufficient reliability and experience....

III. AUDITING REPORTS ON THE SETTLEMENTOF INVESTMENT CAPITAL OF WORKS COMPLETED OR WORK ITEMS COMPLETED.

1. Investment capital resources

- Inadequateaccounting ofthe capital resources, misapplication of the ratesat the wrong timeleading to the divergence of the capitalbalanceon the reportof the unitcompared to that of the capital-allocating and capital-loaning agencies.

- The capital resources are classified divergently;

- The capital resources are used inconsistent with the financial principles and investment decision;

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2. Investment costs

2.1. For the value ofconstructionand installation volume completed

- About the volume:

+ Fraudulent settlement of the volume; inconsistent with the actual performance;

+ Wrong calculation of the volume compared with the design and as-built drawing;

+ Doubly counting the same volumeofconstructionworks (usually occurringat thepoints of intersection);

+ Settlement of costs of other works

+ Lack of procedures for the settlement as prescribed;

+ Settlement of volume that must beremoveddue to the fault ofthe contractor;

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+ Settlement of volume arising due to the contractor’s fault in indequate calculation shown in the bid, bidding document and design dossier;

+ etc…

- About the unit price:

+ Applyingarea price incorrectly, bid wining priceor work unit price;

+ Applyingtransport coefficients and price adjustment coefficients incorrectly

+ The material brought into the works are inconsistent with the types as prescribed;

+ Miscalculating the material volume with the price difference calculated due to wrong application of norms;

+ Applying the wrong time as prescribed for the calculation ofprice difference…..,

+ Misapplyingthe slippage index: wrong index resource and the wrong point of time.

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+ Miscalculating the norms as prescribed;

+ Calculating the surcharge of construction and installation over the value of equipment brought for installation;

- Miscalculating arithmetically the settlement value

2.2. For the equipment costs completed:

- The equipmentdoes not ensurethe technical features, qualityand originas required;

- The number of equipment and spare parts is not adequate as prescribed in the contract;

- Misapplying the rate of exchange for imported equipment;

- Lack of payment procedures, invalid documents or payment made with the wrong regulations on: warehousingcosts, inspection of goodsat the port, freight, costs of warranty, maintenance of equipment…;

- Wrongly allocating the cost of transportation, preservation, maintenance of equipmentto eachfixed property;

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2.3. For other costs

- Miscalculating the survey volume and fraudulently calculating the volume;

- Other costs calculatedaccording to the norms: The unit has misapplied the percentage as specified, determining thebasis for incorrect calculation, misleadinguseor confusionbetween different typesof costs of construction and installation, equipment and other basic construction;

- The costs donot have regulations on the norms such as: there is no settlement or the settlement is not approved by the competent authorities;

- The costs for site clearance are inconsistent with the actual volume, compensation made for the wrong land surface, wrong unit price, the compensation is not made fully to the people compensated, payment even made to the public land surface, wrongly dertermining the house degree, land type,...;

- The documents and costs are invalid, the settlement exceeds the contract value signed;

- Settlement made coincides with the costs;

- Failing torecord the recovery of product value recoveredduring thepilot production orrecovery of the waste material valueafter the investment;

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- Making the settlement of the insurance of the works but failing to purchasing it in fact;

- Receiving the insurance compensation of the works but failing to reduce the work costs;

- Failing to calculate and allocate the investment loan interest as prescribed;

- Failing to make payment to the state budget the items of the lease of office, equipment and property;

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3. Quality and and progress of works

- Quality:

+ There are shortcomings in survey and design affecting the quality of use;

+ The performance does not ensurethe technical processand the requirements ofthe project; using materialsinconsistent with the standards of the project...affectingthe quality of works;

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- Progress:

Cause of progress slowing:

+ Because the contractor’s capacity does not ensure: to mobilize equipment and machine inconsistently with the bidding documents; the limited financial capacity and bad management capacity…

+ Intentionally prolonging the progess by thecontractorto get the benefitin payment;

+ Due to the management capacity of the consultant and investor;

+ Due to unsuitable work of survey and design that leads to the change and supplement of many contents...;

+ Due to large price fluctuations;

+ Due to unforeseen conditions

4. Investment costs included in the work value

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- Miscalculating the volume for cancellation;

- Other shortcomings that are specified in the audit of investment capital implemented;

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5. Value of property handed over for the production using

- Theinvestment projects have been implemented formany years, the priceconversion is very difficult and complex and susceptible to wrong calculation;

- Many types of property are sodifficult to classifyasfixed propertyorliquid property so causing confusion;

- Omitting theinvestment valuehanded over ofother projects in theinvestment processor omitting the subjects forhandling over theinvestment property.

6. Auditing the state of debt and materials and equipment in stock

- There is insufficient grounds for the debt to determine the accuracy;

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- The materials and equipment in stock are not inventoried and re-evaluated and tightly controlled

ANNEX II

LIST OF QUESTIONS 01 – PHASE OF CONSTRUCTIONAL WORK DESIGN
(Promulgated together with the Decision No. 03/2012/QD-KTNN dated April 04, 2012 of the State Auditor General)

1. Design foundation

1.1. Beforedesign, is there any information searched on the land lot used for work construction or not? Or is the geologicalsurveyof the work foundation conducted or not?

1.2. Is there any reference to the result drawn from the above information and applied to the work of design after that or not?

2. Organizing work of design

2.1. Is the work of design based on the grounds of general regulations and the contractor’s requirements? Are those regulations complied with or not?

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2.3. Are there any measures to ensure that the design is fullly considered for the factor of operation and maintenance cost later?

3. Technical design

3.1. In design, is there consideration on the plan of alternatives:

- Type of works ( for example: bridge or tunnel);

- Way of construction (for example: poured-in-place concrete, assembly ofprecastconcrete components

- Foundation performance (for example: strip foundation or raft foundation).

3.2. Do the measures of specific performance pay attention to the factors, especially:

- Geological survey of the foundation;

- Regulations of the state agencies;

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3.3. Upon selection of plan, is there any special attention to the norms:

- Correlation between cost and efficiency;

- Conditions for the later expansion or change on the use;

- Cost of operation and maintenance as well as other associated costs

- Environmental protection, fire and explosion prevention;

- Differenttime of performance

3.4. Is there any concern about the method of performance, the chosen constructional material (in terms of engineering and experience is there any assurance for the plan to be performed or not?)

3.5. Is the design of the load bearing frame timely in order to test the economy of this design (testing the economy of the design of the load bearing frame)?

3.6. Are the changes on design and their impacts approved by the competent authorities in a timely manner?

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4. Progress plan

4.1. Is there a progress plan for that project? Is it formulated in a timely manner?

4.2. Is that progress planning consistent with the scale and requirements of the project; is it suitable for the timely indication of the shortcomings in order to have necessary responses?

4.3. Are the important activities for the work of construction performance fully monitored and is the specific time limit set for each separate portion of work?

4.4. Is the time set for each specific activity or set the deadline to complete those works determined actually and exchanged consistently with the agencies concerned?

4.5. Are the subjects concerned aware of the activities that if their progress gets slow, will the time limit for the completion of the whole works will be affected?

4.6. Are the estimated time limits complied with?

4.7. If the answer is “No“, is it the cause in the phase of progress planning formulation or is there anyone responsible for those delays?

4.8. What does the contracting party draw?

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ANNEX III

LIST OF QUESTIONS 02 – BIDDING PHASE AND CONTRACTING PHASE
(Promulgated together with Decision No. 03/2012/QD-KTNN dated April 04, 2012 of the State Auditor General)

1. Describing work, performance and list of work.

1.1. Is the description of the performance and the list of work built on the basis of approved design complete?

 1.2. If the question is “ No“, find out that this has caused what negative effects?

1.3. Is the content of work description ( bidding package description) formulated neutrally with all contractors? Or is there any specific information in favor of a certain contractor?

1.4. Are potential contractors mobilized to take part in? Are there competitive advantages for those contractors?

1.5. Is the content of the portions of bidding package description consistent with one another?

1.6. Does the description of performance tasks provide an overview on the estimated objectives of the constructional work; is there a limit of technical data?

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- The purpose of the constructional measure;

- The topography andgeologyof the land lot where the works will be built.

- The current traffic capacity leads to constructional site;

- The constructional mode and the most important portions of work of the project;

- The buildingsand worksare currently available.

1.8. Is thegeneral descriptionof constructiontasks based on the result of the geological research and survey of works, is that survey complete to evaluate the geology, water ratio and environmental effects likely to occur?

1.9. In case one constructional project needs implementing by 02 or many separate steps with one another, is this indicated in the description of performance?

1.10. Does the constructional description include the caution on the state agencies’ regulations, especially the technical requirements of the investor?

1.11. Does the list of work aggregate all work items indicated in the design?

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1.13. In the layout of work items, is the attention paid to the group of work of the same category put into the same item?

1.14. Is thereany implementation of aclear delimitationofthe listwiththe itemsof the work list in order to preventthe coincidence anddoublecalculation capacity to take place?

1.15. Are the work to be done described coherently and in detailed? ( to the extent that all contractors can understand the same)

1.16. Is the volume indicated in the list of work items calculated correctly and in the framework that the contracting party permit?

1.17. Where does the cause of differences lie and what are the measures to deal with those differences?

1.18. Are the volume calculation units used forthework items reasonableforthe aggregationand examination of volumein thesettlementperiodor not?

2. Conditions of contract

2.1. Do the conditions of contractsetcomply with therules:onlyincluded in the contract the valid provisionsforall the single work?

2.2. Does the content of conditions of contract have any unclear and contrary issues?

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2.4. In the conditions of the contract, are there requirements on the use of manpower and site equipment?

2.5. Is the contract closely and completely stipulated by the way to handle the case of work interruption at interval?

2.6. Does the contract set out the penalty conditions for the case of non-compliance of the time limit of completion as agreed?

2.7. Is the level of penalty limited and set out a ceiling level?

2.8. In the conditions of contract, is there any clear description of all necessary facilities for the work of performance? (eg. power and water, concerning the location: way and capacity of drainage of waste water and waste rubbish)

2.9. In the contract, is there any specific adjustment to keep clean for the site, clearing rubbishandwastebuilding materialsas well asthe allocation of the bearing of the cost?

2.10. In the conditions of contract, is there any call for the contractors to give out their proposals and alternative measures in order to improve the economic efficiency?

2.11. The annexes attached to the contract prescribe that:

- Contracting the work items by each period bidding package

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- Acceptance;

- Site diary;

- Warranty;

- Incidents hindering and interrupting the constructional work;

- Way of handling in the case of dispute on payment;

- Regulations on the case of settlement with the assistance of computer.

3. Invitation for bid

3.1. Is there any regulation and guidance on bidding documents?

3.2. Are these regulations rational and complied with?

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3.4. Upon invitation for bid, are there enough prerequisites as prescribed?

3.5. If the invitation for bid is implemented in advance, must the explanation of the reason be considered reasonable or not?

3.6. In the selection of contractor ( bid evaluation), is the attention specially paid to the aspects:

- Prestige – thefirst thing is the reliabilityand compliance with the time limit;

- Contractor'spositionin the market;

- Technical qualification, capacity and quality;

- Geographical distance.

3.7. In case of appointment of contractors or limited tender, does the investor continuously change the appointment of contractors?

3.8. Is there a phenomenon of bidder collusion among contractors or not?

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3.10. Is the number of bid offering copies required proportional to the scale of work?

3.11. In case of open bidding, does the investor widely inform the bidding on the mass media as prescribed by the current regulations?

3.12. Is the reasonto ignorethe takingofacompetitive bid offering copies justified?

3.13. Do all contractors taking part in the bidding fully receive the bidding documents with the same content and at the same time?

3.14. Is the information on the bidding package provided to all contractors equally?

3.15. Is there any monitoring list of the contractors?

3.16. Are all contractors entitled to refer to drawing, visiting the site to know the site topography, types and scale of work to be done or not?

3.17. Are the conditions set in the bidding document relating to the submission of bid offering document complied?

3.18. Is the time for the bidding evaluation satisfactory?

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3.20. Is the time limit for the submission of bidding document and contract handover consistent with the overall planning?

4. Bid opening, bidding document verification and bid evaluation

4.1. Are the bidding documents submitted in a timely manner opened by a neutral division?

4.2. Are the safety measures implemented (signing each page or affixing the joint pages stamp on all pages of the bidding documents) in order to avoid the fraud?

4.3. Are allowable special proposals considered and referred during the bid evaluation?

4.4. Is the record of bid opening made and does that record bear all signatures of the participants in the bid opening?

4.5. How are the bidding documents submitted late treated?

4.6. Are all documents submitted verified during the verification of the documents?

4.7. Are dossiers submitted complete?

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4.9. Are the optional items, sub-bid offering, additional portion and amendment proposal in terms of economic and technical aspects verified and evaluated?

4.10 . Is the price of the bidding package definitely accurate?

4.11. Is the price list of bidding consistent with the bidding document? Is there unusual price?

4.12. Is the rectification and modification of the bidding document in accordance with regulations?

4.13. Is there anyphenomenon ofpricecollusion?

4.14. Is the tender annulled? If annulled, is there reasons and record for demonstration?

4.15. Before deciding to hand over the contract, is the assessment and approval of the bidding result conducted?

4.16. Is the calculation of structure or design drawing provided by the contractor verified on the economy and technical aspect?

4.17. Is there any sufficient and plausible reason for the cases of contractor’s removal or tender annulment?

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5. Contract negotiation

5.1. Is the contract negotiation conducted?

5.2. In contract negotiation on price, the contractual conditions, technical issues...guarantee the principles of equal treatment with all contractors able to win the bid?

5.3. Are the notes and track of the contract negotiations complete? And are other adjustments with the regulations in the bidding document rational?

6. Tender handover and contract signing

6.1. Is there any regulation on the time limit for payment in the contract?

6.2. Is the contract signed in accordance with requirements approved?

6.3. Is there any explanation in writing on the reason why having selected the contractor who does not offer the lowest price?

6.4. Is there sufficient documents to prove the decision on the contractor selected reasonable?

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6.6. Is the contract handed over by competent individuals and agencies?

6.7. Is there any regulation to guarantee the compliance of the principle “only performing a certain work after having agreement in writing^“?

6.8. Are the bidding package subdivided in order to dodge the regulation on approval competence and contract signing competence?

6.9. If in the contract there is no adjustment of obligatory time limit on the performance progress, is there any agreement with the contractor through the task-allocating document?

6.10. Is the contract handed over to the contractor with the most reasonable bid offering on the economy, technique and quality?

6.11. Is the contract compiled in accordance with the form prescribed?

7. Contract adjustment

7.1. What is the reason leading to the necessity of contract adjustment and additional contract?

7.2. Can we foreseetheprobability of contract adjustment and additional contract ?

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7.4. Is there earlyagreement onprices fortheworkadjusted and supplemented?oruntilthese works are done, then the agreement on the price comes?

7.5. Is the reasonability on the price of the parts adjustment and supplement of the contract verified?

7.6. Are the parts adjusted and supplemented consecutively numbered andcorrectly sortedinto the corresponding construction items?

7.7. Does the contracts adjusted and supplemented lead to changes on the plan of time and payment?

7.8. Is there proper attention to the issued needing amendment and supplement?

7.9. Does the adjustment ofthe contractcomply with theconditionsofthe contract; Is it consistent withthelegal provisionson the adjustment ofcontract and price adjustment. 

ANNEX IV

LIST OF QUESTIONS 03 – PHASE OF PERFORMANCE, SUPERVISION OF PERFORMANCE AND WORK ACCEPTANCE
(Promulgated together with Decision No. 03/2012/QD-KTNN dated April 04, 2012 of the State Auditor General)

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1.1. Upon starting the works, are there complete procedures:

- License of construction,

- Drawing of performance design and work items

- Other state’s binding provisions and conditions

1.2. Does the contractor mobilize sufficient machinery, equipment and capacity as committed in the bidding document?

1.3. Are these works carried out with the correct volume and scale and do they guarantee the quality as prescribed?

1.4. The materials that are brought into the works guarantee the technical standard of the project?

1.5. What are the causes for the progress slowing?

1.6. Are the as-built drawings formulated in accordance with the actual performance?

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Are there performance adjustments and the reason why?

Are the reasonsleading to adjustments fully recorded and explained? Is there any approval of the competentauthorities before makingthose adjustments?

Are the changes on the costs of the adjustments fully notified?

In case of urgent adjustments at the requirement of the performance supervision division without timely approval, are those adjustments fully explained and submitted to the competent agencies for additional approval?

The settlement oftheadditionalvolume, change of design with complete procedures and fullyimplementedas prescribed?

3. Performance supervision

3.1. Are there sufficient employees for the work of performance supervision of works?

3.2. Does the performance supervision division of the contract-allocating party inspect the types and quality of the materials continuously?

3.3. Are the shortcomings detected, monitored and recorded during the process of performance? Is the contractor required to remedy these shortcomings?

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3.5. Is the use of manpower, material and machinery controlled and fully recorded to serve the work of the valid settlement later?

3.6. Does the as-built drawing fully reflect the adjustments for the settlement?

3.7. Are the hidden portions of work fully accepted before carrying out other portions?

4. Supervising the time limit of the performance

4.1. Does the investor complete the following portion of work in a timely manner?

- Providing neccessary materials for the work of performance;

- Settingthe main objectivesand defining the major parts;

- Arranging the construction ground and traffic roads;

- Coordinating the companies by setting out the time limit.

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4.3. Is there a close supervision of the compliance with the time limits set out in the contract? Are these time limits closely complied with?

4.4. Are the incidents interrupting the performance and the directives of the supervision division fully monitored and recorded?

4.5. Does the progress slowing occur? Who is responsible for that?

4.6. Does the contract require additional payment due to progress slowing by the investor’s fault and is it adequate if any?

4.7. Is there any measure to guarantee the progress of the overall works in case the singleitemsare notcompletedwiththe progress? Does this make the cost increase? Is this extra cost blamed for the party causing the delay to bear it?

4.8. Uponthe incompletion of progress under the contractor’s responsibbility, is the contractor extended an appropriate time limit to complete the contract and required to carry out the relevant agreements?

4.9. Is the time limit for the amendment and supplement reasonable and are the neccessary adjustments carried out immediately in the progress planning?

4.10. Is there timely sufficient information for the divisions concerned on the time limits occurred or likely to occur and is the re-negotiation of the binding new time limits made?

5. Acceptance

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5.2. Do the acceptance documents have necessary and sufficient contents and signatures of the responsible person?

5.3. Is the time limitset forthe remedyof the shortcomings detectedduring the acceptancesatisfactory?

5.4. Is there any necessary inspection certificate and acceptance confirmations of the competent state authorities, eg:

- Certificate of material experiment;

- Record of reinforcing acceptance;

- etc

5.5. Upon acceptance, is there a participation of the experts?

5.6. Is the settlement value of the work items accurately synthesized and consistent with the records of acceptance?

5.7. If the shortcomings cannot be remedied or are remedied with the cost to an inadequate extent, is there an agreement on payment reduction and the rate of reduction is adequate?

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5.9. Is there any work item with defects but still accepted by the investor? Do these defects generate from the contracting party’s shortcomings (eg. From the incomplete bidding description or from the non-professional direction of the contracting party)

5.10. Is the rate of shortcoming determined explicitely and rightly at responsible subject?

5.11. What is the reason if failing to conduct the acceptance and can this cause damage for the investor?

5.12. Is the list of warranty items together with the warranty period for all work items formulated and are the contractors notified?

5.13. Are the works inspected before the end of the warranty period?