DECISION

ISSUING THE PROCEDURE FOR AUDITING CONSTRUCTION PROJECTS

STATE AUDITOR GENERAL

Pursuant to the Law on State audit;

Pursuant to the Law on State budget;

Pursuant to the Law on Construction;

Pursuant to the Law on Promulgation of legal documents 2008;

Pursuant to the Decision No. 02/2008/QD-KTNN dated February 15^th 2008 of the State Auditor General, issuing the Regulation on compilation, appraisal, and issuance of legal documents of State Audit Agency;

Pursuant to the Decision No. 02/2009/QD-KTNN dated April 07^th 2009 of the State Auditor General, amending the Regulation on compilation, appraisal, and issuance of legal documents of State Audit Agency;

Pursuant to the Decision No. 04/2007/QD-KTNN dated April 02^nd 2007 of the State Auditor General, issuing the State Audit Procedure;

At the request of the Chief Auditor of Sector IV, the Director of the Legal Department, the Director of the Department of Policies and Audit Quality Control,

DECIDES:

Article 1. Issuing the procedure for auditing construction projects together with this Decision.

Article 2. This Decision comes into force after 45 days from the day on which it is signed and supersedes the Decision No. 03/2012/QD-KTNN dated April 04^th 2012 of state-owned corporations, issuing the Procedure of construction projects.

Article 3. Heads of units affiliated to State Audit Agency, organizations and individuals involved are responsible for the implementation of this Decision./.

PROCEDURE

FOR AUDITING CONSTRUCTION PROJECTS
(Promulgated together with Pursuant to the Decision No. 04 /2013/QD-KTNN dated April 05^th 2013 of the State Auditor General)

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. The Procedure for auditing construction projects (hereinafter referred to as projects) specifies the order, contents, and formalities of a construction project audit, including:

a) Prepare for the audit;

b) Begin the audit;

c) Make and send the audit report;

d) Inspect the fulfillment of auditors’ requests.

2. Depending on the nature of each audit, one, two, or three types of audit may be applied such as: financial audit, compliance audit, and operational audit

Article 2. Subjects of application

The Procedure for auditing construction projects is applicable to the units affiliated to State Audit Agency that audit construction projects. When auditing a construction project, the auditors and involved units shall comply with the audit procedures of State Audit Agency and this Procedure. Auditors shall specify the contents to suit the nature of projects on a case-by-case basis.

Chapter II

PREPARATION

Section 1. SURVEYING, COLLECTING INFORMATION ABOUT THE CONSTRUCTION PROJECT AND THE AUDITED UNIT

Article 3. Information collection

1. Necessary information about a construction project:

a) The name of the construction project, its necessity, purposes, scale; location; intended and actual commencement date, completion date;

b) The investor, representative of the investor (if any); governing body of the investor; decision on investment, consultancy units, building and supplying contractors;

c) Total investment (total number and details, organizations that make, appraise, and pass the projects, the number of adjustments and their reasons – if any); the approved capital sources (central budget, local budget, loans, other sources, etc.); building estimate (total number, organizations that make, appraise, and pass the estimate); bid package prices, approved successful bides (total number, building, supplies, other costs);

d) Form of contract;

dd) Modality of contractor selection;

e) Settlement reports: the settlement report on the settlement of the finished project; final report on capital settlement according to finished work items and works; report on capital by year, report on finished works by the surveying time (for projects under construction);

g) Capital: total number, building cost, equipment cost, compensation and resettlement cost, management cost, consultancy cost, other costs; provided capital, advanced payments from the commencement to the transfer, annual settlement, or surveying time (total number, building cost, equipment cost, other costs, etc.);

h) Compensation and resettlement: Units in charge, management modality; funding; approved amount, paid amount; contents of compensation and resettlement, etc.;

i) The making and retention of project documents during the execution, the making and retention of as-built dossiers;

k) The system of legal documents related to the management and execution of the project;

l) Information about the language used in the project if it is participated by foreign parties;

m) The changes during the execution of the project that significantly affect the project (scale, design, approved estimates, changing order, etc.); changes in policies of the state relating the project management; advantages and disadvantages during the execution of the project;

n) Other information (if any).

2. Necessary information about the internal management system, including:

a) Internal management environment: the organizational structure of the operational apparatus, controlling apparatus, the functions, tasks, and managerial capability of the management board and specialized departments such as technical department, planning department, finance and accounting department, etc. ; Characteristics of the management board; the management modality; the objective and subjective difficulties and advantages relating to the project; internal policies and regulation on technical supervision, assessment, payment and settlement; finance, accounting; consultancy units and the units in charge of compensation and resettlement;

b) The controlling activities and controlling formalities: the implementation of managerial regulations on technical supervision, assessment, payment and settlement; finance, accounting, etc.;

c) Accounting: the applicable accounting regime; accounting mechanism, accounting organization (systems of documents, accounts, accounting books, and accounting reports);

d) Internal inspection and audit: the information collected from the internal inspection and audit; the implementation and settlement according to requests of internal inspectors and auditors;

3. For construction projects subject to periodic audits, survey shall be conducted only for the first time. Any additional information shall be provided in subsequent audits.

Article 4. Information sources and information collection methods

1. Information from the project management board

a) Information collected by studying documents: investment formalities relating to the project from preparation, execution, completion, transfer, and operation; the documents relating to the organizational structure; loan agreements and guidance of sponsors; inspection and audit reports (if any), etc.

b) Information collected from participant in the projects.

c) Information from reports on the project execution.

2. Information external sources (where it is necessary and the management board fails to provide adequate information for audit planning), including:

a) The governing body: information about the capital sources, actual capital , and management mechanism of the governing body;

b) The capital provider and capital release at State Treasuries;

c) The authorities that conduct inspections and audits previously: written conclusions and reports;

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

dd) Other units (if any).

3. Information collection methods

a) Send a written request for information and documents according to the survey outline to the management board.

b) Collect and assess documents sent by the management board and other units.

c) Update and assess documents of previous audits.

d) Hold direct interviews and discussions.

dd) Observe and survey.

Section 2. ASSESSMENT OF INFORMATION COLLECTED AND INTERNAL MANAGEMENT SYSTEMS OF AUDITED UNITS, DETERMINATION OF AUDIT OBJECTIVES AND RISKS

Article 5. Assessment of information collected and the internal management system

1. Characteristics of the management board: establishment date, experience of project management; full-time or part-time.

2. Project management modality: the project is directly management by the investor or by a hired advisory organization.

3. Assignments and tasks of departments within the unit: the transparency, rationality, and mutual control mechanism.

4. Qualifications of managers.

5. Managerial policies of the unit.

6. Assessment of consultancy units.

7. Assessment of capability of units in charge of compensation and resettlement.

8. Difficulties and advantages; objective and subjective reasons relating to the project; the changes in personnel of the management board.

Article 6. Determination of audit foci

1. The audit objectives shall be determined based on the scale, nature, and characteristics of the project in order to assess the investment formalities, progress, quality, investment, and prices of the project.

2. The project audit objectives shall be determined according to each audited object and selected among the audited objects such as:

a) The compliance with planning approved by competent authorities, the necessity of the project;

b) The compliance with the investment formalities;

c) The compensation and resettlement;

d) The building and equipment costs;

dd) The consultancy cost, project management costs, and other costs;

e) The profitability, efficiency, and accomplishment of the project;

g) Other issues (if any).

Article 7. Assessment of audit risks

1. Potential risks

a) The works where fraud and mistakes are likely (especially hidden works)

b) The price lists are made during a transitional period in over which policies of the State on construction management relating to the projects are changed; special prices; the application of limits not announced by the Ministry of Construction.

c) The issues about compensation and resettlement; impact of the environment, the degeneration of the construction, etc.

d) The scale of the project is large and its items are complicated.

dd) The project uses specialized technologies and equipment; the proportion of equipment to total investment is large.

e) Prices and quality of supplies, materials, and equipment imported.

g) The compliance with planning of the project.

2. Controlled risks

a) The operational mechanism of the management board is still inappropriate; the capability of the management board is limited.

d) The changes in policies.

c) Arising workload due to changes in the design or adjustment during the execution, non-contractual prices and workloads.

d) Changes in prices and contracts; inflation relating to multiple currencies; inflation due to slow progress.

dd) Irrationalities of previous audits and inspections, systematic errors that have not been resolved (if any).

e) Manifest issues during the project management, including accounting and financial management.

g) Mistakes in strategies and planning; the compliance and rationality of professional and geographical planning; the deficiencies in management that were identified such as improper investment, slow progress, extravagant investment, and failure to achieve set targets.

h) Confusing management.

i) Other issues (if any).

3. Assessment of risk

Based on the analysis of the internal management system and information about the project as prescribed in Article 5 of this Procedure, the risks of each issue shall be assessed according to the types of risks (potential risks, controlled risks) and levels of risks (high, medium, low).

Section 3. PLANING PROJECT AUDITS

Article 8. Audit targets

Specific targets are determined based on general targets of State Audit Agency, survey results and requirements of each audit.

Article 9. Audit contents

Auditors shall decide the audit contents on a case-by-case basis. A construction project audit usually includes the following contents:

1. Auditing the compliance with law, the project management regime, the accounting and financial regime;

2. Auditing the quality control and progress of the project;

3. Auditing the settlement report on the settlement of the finished project settlement or capital settlement according to finished work items and works; report on capital by year, report on finished works by the auditing time (for projects under construction);

4. Auditing the profitability, efficiency and accomplishment of the project.

Article 10. Subjects, range, limits, and location of audit

1. Subjects of audit: the project and project management works.

2. Range of audit

a) Audited period.

b) Audited units: the investor, investor’s governing body, investor’s representative (the management board), and relevant managerial units.

c) The works of each audited contents.

3. Audit limits: the contents exempt from audit and reasons.

4. Location of audit: at the audited unit or the head office of State Audit Agency (if possible).

Article 11. Determination of criteria for assessing the profitability, efficiency and accomplishment of the project

Depending on each project, auditors may assess the profitability or efficiency or accomplishment of the project or all of them, and determine the assessment criteria. The profitability, efficiency and accomplishment of a project are usually assessed based on the following criteria:

1. Amount of wasted money because the construction is not conformable with planning; the scale, class, and purposes of the construction are not correctly identified;

2. Unreasonable increases in costs due to improper level of total investment and inappropriate selection of building materials and technologies;

3. Increases in costs due to mistakes during surveys (topographical, geological, hydrography surveys), project planning, and project execution;

4. Increase in costs due to prolonged period of planning and examining the project;

5. Unreasonable increases in costs due to inappropriate plan for land clearance and resettlement;

6. Unreasonable increases in costs due to the scale, standards, solutions, materials, design (architecture, structure, infrastructure, etc.) that are not suitable for the fundamental design of the approved project;

7. Unreasonable increases in cost due to mistakes during making, appraising, and passing estimates;

8. Unreasonable increases in costs due to incorrect prices of bid packages and incorrect selection of contractors;

9. Unreasonable increases in costs due to mistakes in negotiation and contract conclusion;

10. Unreasonable increases in costs due to mistakes in the management of contractual construction progress and quality;

11. Increases in costs due to mistakes in final assessment and payment for finished works;

12. Assess the influence of the project on poverty reduction, employment generation, environmental improvement, easier access to medical, educational, and credit services, access to political, economic centers, shift in economic and employment structure based on the statistics on socio-economic growth after the project is finished.

13. The wasted amount of money because the finished construction fails to serve intended purposes;

14. Comparison of living conditions of people in new residences and those in the old ones;

15. The feasibility of environmental impact assessment and requirements of National defense and security; impacts on the environment and life of the community in the area within which the project is located;

16. The degree of achievement of each specific target of the project by comparing the actual achievements with the approved targets.

Article 12. Audit methods

Apart from the methods in the Audit Procedure of State Audit Agency, project audits should focus on field inspection and consultation with experts.

Article 13. Other contents of an audit plan

The regulations on the audit period; audit personnel; funding, and material conditions necessary for the audit shall comply with the Audit Procedure of State Audit Agency.

Chapter III

AUDITING THE COMPLIANCE WITH LAW, THE PROJECT MANAGEMENT REGIME, THE ACCOUNTING AND FINANCIAL REGIME

Section 1. AUDITTING THE MAKING, APPRAISAL, AND APPROVAL OF PROJECTS

Article 14. Basis for auditing the making, appraisal, and approval of projects

1. Legal basis:

a) The Law on Construction, the Law on Investment, and relevant legislative documents.

b) The regulations on managing and using ODA (for constructions funded by foreign parties); the regulations of sponsors (for projects funded by sponsors)

2. Project dossier

a) Decisions on relevant planning; the agreement signed with creditors.

b) Reports on investment in the project or economic-technical reports and decisions made by competent authorities to on the permission for making investment in the construction.

c) The Decision to assign tasks to the investor and to establish the project management board, the contract for project management consultancy (if any).

d) Annual plans for investment preparation delegated by competent authorities; approved funding estimate.

dd) Contracts to investigate, survey, and advise on making reports on investment or economic-technical reports.

e) Business licenses of units in charge of performing the contracts to investigate, survey, and advise on making reports on investment in the project or economic-technical reports.

g) The written assessment and approval of the project or economic – technical reports; the record on final assessment and document handover.

h) Other documents.

Article 15. Contents of auditing the making, appraisal, and approval of projects

1. The suitability of the project with approved planning. For adjusted projects, it is necessary to inspect the basis and conformity of such adjustments with the Law on Construction, the Law on Investment, and relevant regulations.

2. Authority of the organization that decides the investment: find out whether the decision to invest is made intra vires.

3. Authority of the organization that appraises the report on investment in the project or economic-technical report.

4. Capability of consultancy units: inspect the conformity of the Business licenses of the consultancy units with the project being worked with; inspect the Licenses of participants in the project.

5. The compliance to investment procedures: the report on investment in the project or economic-technical report shall be made, appraised, and approved in accordance with the regulations on procedure, time, and contents.

6. The adequacy and conformity of the fundamental design documents with the policies and targets of the investment, the survey results, and approved planning.

7. The basis of the total investment calculation; and the legitimacy of the method of total investment calculation.

Section 2. PROJECT EXECUTION AUDITING

Article 16. Basis for project execution auditing

1. Survey, design, estimate documents; design dossier and design examination reports; decision to approve the design and estimate.

2. Compensation and resettlement documents.

3. Contractor selection documents:

a) The bidding plan, invitation to bid, bidding documents, decision to approve the bidding result enclosed with the report on rankings of contractors made by the investor (if a bidding is held).

b) Written requests, appraisals, and approval, written suggestions and decisions to appoint contractors (for limited biddings and competitive offering)

4. The License for construction (where the License for construction is compulsory), License for resource extraction (if the project requires resource extraction).

5. The contract negotiation record, economic contracts and appendices thereto, records on finalization of contracts for building, installation, equipment procurement, and other costs.

6. Annual investment plans.

7. Construction quality control documents: as-built drawing, construction diary, final assessment documents, etc.; payment documents.

8. Regulations on price management, progress, quality, payment and settlement.

9. Other bases (if any).

Article 17. Contents of project execution auditing

1. The legitimacy of participants in the project execution (survey, design, consultancy, construction, etc. with legal status, licenses)

2. The compliance of the design with the standards approved by competent authorities; the authority of appraising agencies (design, estimate, and payment); authority of agencies that approve the survey, design, estimate outline, or that issue licenses, etc.

3. The compliance with procedure such as the order of construction design according to defined steps; design and estimate documents that must be assessed before approval; conditions of commencing the construction; other regulations (if any).

4. Inspect the contents of documents on investment procedures. Comparison of the scale, level, and targets with other predominant documents and procedure of the project that have been issued, such as:

a) The scale, technologies, output, class, building standards of subsequent design steps must be conformable with previous steps that have been approved;

b) The construction estimate must not exceed the total investment;

c) The contracts must comply with the Law on Construction, the Law on Investment, and relevant legislative documents.

d) Inspect contract finalization procedures.

5. Inspect the adequacy and legitimacy of the invitation for bid, in accordance with law (the Law on Construction, the Law on Investment, and relevant legislative documents).

6. Inspect the value of construction estimate: the volume of building and installation must be consistent with the design; the limits, prices, and surcharges must comply with regulations. Inspect the procedure and authority and adjusting estimates.

7. Annual investment plans must comply with the regulations on conditions for planning and authority to set targets.

8. The procedure for construction price management and payment, the compilation and approval of price lists must comply with regulations.

9. Inspect the conformity of changes in the design, arising works with the regulations, bidding documents, and contracts.

10. Inspect the compliance with regulations on compensation and resettlement:

a) The composition of the Compensation and Resettlement Council;

b) The rates of compensation and support decided by provincial People’s Committees;

c) The making, verification, and approval for compensation and resettlement plans;

d) Inspect the competent authority’s certification of status map, technical documents of land, etc. made by consultancy units;

dd) Inspect the adequacy of compensation and resettlement documents;

e) Inspect the arrangement of resettlement houses.

Section 3. AUDITING FINAL ASSESSMENT, PAYMENT, AND COMMENCEMENT OF OPERATION

Article 18. Bases for auditing final assessment, payment, and commencement of operation

1. The Law on Construction and relevant legislative documents.

2. The records on the final assessment of works, parts, stages, items or the whole project; the quality control documents (testing input materials; inspecting quality of the whole project, etc.).

3. The as-built drawing, the report on result of the project (if any), construction warranty documents, and warranty provided by building units, etc.

4. Reports on settlement of the finished project, report on capital settlement according to finished works; reports on value of finished works.

Article 19. Contents of auditing final assessment, payment, and commencement of operation

1. Final assessment documents: inspect records on final assessment of works, parts, stages, items and the whole project.

2. Inspect the as-built documents as prescribed; inspect construction warranty documents and the warranty provided by building units.

3. Inspect the reports on finished project payment, report on capital settlement according to finished works; reports on value of finished works.

4. The use of assets and construction after the transfer.

Section 4. AUDITING THE COMPLIANCE WITH ACCOUNTING AND FINANCIAL REGIME OF THE STATE

Article 20. Auditing the financial management

1. Audit the management and use of investment sources of the project: capital from the State budget, loans, and other capitals.

2. Audit the compliance with regulations on regular expenditures of the project management board.

3. Inspect the conformity with procedures for capital release and payment; inspect the compliance with payment procedures based on the contracts and regulations.

4. Inspect the compliance with regulations on other costs of the project.

5. Inspect the management, purchase, use, and liquidation of assets.

6. Inspect the compliance with the regime for reporting annual capital settlement according to state fiscal year.

Article 21. Auditing accounting works

1. The comparison of debts and payments of the investor and their representatives with those of contractors, suppliers, and creditors.

2. The accounting mechanism of the project management board: the organization and management of accounting of capital sources and costs of the audited project. The distribution of general costs (management cost, consultancy cost, payment fees, etc.).

3. The compliance of the investor with the accounting regime in terms of accounting documents, accounting books, accounts, settlement reports, and financial statements.

Chapter IV

AUDITING QUALITY CONTROL AND PROGRESS OF PROJECTS

Article 22. Auditing the quality control

1. Bases for auditing

a) The Law on Construction and relevant legislative documents; relevant procedures and standards.

b) Invitations for bid and bidding documents.

c) Documents on construction quality: documents on survey, design, construction quality, etc.

d) Contract documents.

dd) As-built documents.

2. Audit contents

Based on the result of auditing the compliance with legislative documents on project management, based on the legislative documents on construction quality control, based on the result of field inspection and assessment to assess the quality of each stages of the project execution and of the whole project. In particular:

a) Assessment of the quality of project planning: the conformity with planning, investment demand, investment scale, selection of designs and technological lines, etc.;

b) Assessment of the survey quality: inspect the conformity with survey purposes, survey methods, applicable survey standards, survey supervision of contractors and the investor together with the contents of the survey report, etc.;

c) Assessment of the design quality: the conformity with design purposes, survey result, design standards, the transparency, rationality, accuracy, and adequacy of the design in order to serve the estimate making and building;

d) Assessment of the building quality: inspect the supervision of building quality of contractors; inspect the supervision of building quality and final assessment of the construction of the investor; inspect the designer supervision of construction designers; inspect the compliance with the certificate of bearing safety and certificate of quality of the construction; inspect the conformity of warranty and maintenance as prescribed;

d) Field inspection and assessments of specialized organizations: the field inspection must be planed and approved by the chief commissioner, including the contents, methods, instruments, personnel, etc., and the field inspection result must be accompanied by a field inspection record. The works that require deep knowledge may be carried out by hired experts or technical instruments after obtaining the approval from the State Auditor General.

Article 23. Auditing the progress management

1. Bases for auditing

a) The Law on Construction, the Law on Investment, and relevant legislative documents.

b) Decisions of competent authorities to permit the construction of the project.

c) Invitations for bid and bidding documents.

d) Construction quality documents.

dd) Documents on contracts, arising documents, and documents on contract extensions.

e) As-built documents.

2. Audit contents

a) Determine the lateness of each works from project planning to construction, and transfer of each item and the whole construction; inspect the contract extension (if any) of bid packages and the project according to concluded contracts.

b) The lateness of the project compared to the initial plan.

c) Determine objective and subjective reasons for the lateness and contract extension; the entitlement to decide the contract extension.

d) Assess the solutions of the investor for such lateness.

dd) Suggest penalties for violations

Chapter V

AUDITING CAPITAL SETTLEMENT

Section 1. AUDITING CAPITAL SOURCES

Article 24. Basis for auditing capital sources

1. The Law on State Budget, the Law on Construction and relevant legislative documents.

2. The management and use of ODA, agreements signed with creditors.

3. Decision to approve the project investment.

4. The accounting and financial management regime of the State.

Article 25. Contents of capital sources audit

1. Inspect the release and payment of capital; inspect the adequacy of invested capital: invoices, accounting books; compare the amount of capital that was provided, loaned, or paid to the investor with the numbers provided by corresponding capital providers, creditors, and payers; inspect the exchange rates of capital in foreign currencies according to the exchange rates at that time.

2. Inspect the legitimacy of capital sources; inspect the settlement of capital sources by State budget fiscal year

3. Inspect the conformity of the use of capital sources with the decisions to invest of competent authorities.

Section 2. AUDITING COSTS

Article 26. Bases for auditing costs

1. The Law on Construction, the Law on Investment, and relevant legislative documents.

2. The accounting and financial management regime of the State.

3. Documents provided by the unit about the survey, design drawing, estimate, contracts, final assessment record, as-built drawing, settlement A – B, etc.; cadastral documents, compensation and resettlement documents, and relevant documents.

Article 27. Bases for auditing costs

1. Auditing building cost

Auditors shall study documents, design drawings, as-built drawings, and relevant documents, carefully examine the works were duplication is likely.

a) Field inspection: carry out overall inspection of the construction volume, quality, technique, and aesthetic; inspect some works and items by measuring and counting; inspect the specifications, standards of materials; use instrument to examine the consistency of the actual construction with the as-built drawing, final assessment record, and building diary; inspect the location, topography, and geology of the construction to determine the conditions for applying transport coefficients and distance on paper and in reality. The inspection of works under construction, it is necessary to inspect hidden works (if possible) before proceeding other works.

b) Inspect the calculation of workloads and imposition of building prices when making payments: the design basis, as-built drawing, technical assessment records, building diary, fiend inspection result in comparison to payment figures; inspect building prices when making payment for finished works on a case-by-case basis depending on the modality of the building contract; the legitimacy of changes in the design and materials during the construction that cause final prices to changes in comparison with the successful bids; the imposition of construction surcharges in each stage such as general expense, taxable income and VAT; for the costs that arise and inflation, audits are carried out according to terms in contracts and relevant documents.

2. Auditing equipment cost

a) Inspect relevant documents: compare the categories, technical standards, and origins of technical equipment and parts attached thereto and other equipment with contracts and requirements of the invitation for bid; inspect equipment prices: consider documents on bid procurement, sale contracts, original invoices or their certified true copies of the equipment purchased at home or imported; the application of exchange rates (for equipment purchased in foreign currencies); the costs of transport, storage, maintenance, and processing such as transport and unloading costs according to prescribed charges, costs of storage, maintenance and processing of equipment according to approved estimates, contracts, assessments, etc. (for equipment purchased by the investor himself); foreign contractor withholding tax on projects participated by foreign contractors.

b) Inspect some equipment on the sport to determine the presence of assets, categories, technical standards, origins of technological equipment and parts attached thereto and other equipment.

3. Auditing other costs

a) Auditing groups of costs according to limits: auditing based on the prescribed limits, ratios, and terms of contracts.

b) Auditing direct groups of costs according to approved estimates: inspect the calculation, examination, and appraisal of estimates; the settlement of costs.

c) Audit the costs of compensation and resettlement: the legitimacy and adequacy of compensation and resettlement documents, the formulation and approval of compensation and resettlement plan; determine the area and origin of compensated land based on compensation and resettlement documents, cadastral documents together with field inspection; estimates­ of works on compensated land; the rates of compensation for land, crops, and works on land according to the State’s policies in each period; the value of resettlement works and constructions serving the compensation (if any).

d) Auditing the project management expense: base on relevant invoices and documents to inspect the legitimacy of project management expenses; compare the expenditures with estimates approved by competent authorities; compare actual costs with prescribed limits; the purchase, management, and use of assets.

If a project management board simultaneously manages multiple projects without monitoring details of each project: compare the distribution of project management cost of each project with the ratios and limits prescribed by the State.

Section 3. AUDITING COSTS INCLUDED IN PROJECT VALUE

Article 28. Bases for auditing costs included in project value

1. The Law on Construction and relevant legislative documents.

2. Payment documents and approvals of competent authorities.

3. Results of audits of investment in each work every year.

4. Written determination of damage and decision on cancellation of competent authorities.

Article 29. Contents of audits of costs included in project value

1. Costs included in project value are determined by deducting the costs not being included in project value from the post-audit costs.

2. The determination of costs not being included in project value are based on damage assessments (asset inventory and damage assessment carried out by the Internal Inventory Council); compare them with the volume of finished works; inspect the legitimacy of the decision on cancellation; inspect the bases for calculating the cancelled works (works, prices, etc.).

Section 4. AUDITING VALUES OF TRANSFERRED ASSETS

Article 30. Bases for auditing values of transferred assets

1. The Law on Construction and relevant legislative documents.

2. Payment documents and approvals of competent authorities.

3. Results of audits of investment in each work every year.

4. Records on the transfer of assets for being use.

5. The price floor and polices of the State at the transferring time.

6. Documents providing guidance on converting building costs into the price floor at the transferring time.

Article 31. Bases for auditing values of transferred assets

1. Inspect the list of assets transferred to managers, including fixed assets and current assets.

2. Inspect the conversion of costs into the price floor at the transferring time under the guidance of the Ministry of Construction: inspect the summarization of costs in each year; the determination of conversion factors; the calculation and summarization of converted costs.

3. Inspect the accuracy of the classification of fixed assets and current assets transferred. Detect incorrect classification of fixed assets and current assets.

4. Inspect the legitimacy of assets transferred to users and their purposes: the costs used for calculating price conversion and handing over to users are the audited costs that have unreasonable costs eliminated, are supplemented, or receive costs from other projects; a finished project may be transferred to multiple users.

Where the project management board fails to keep managing assets (belonging to the projects, not completely depreciated or liquidated) that are used for their operation, such assets are not included in the transferred value.

Section 5. AUDITING DEBTS, REMAINING MATERIALS AND EQUIPMENT

Article 32. AUDITING DEBTS, REMAINING MATERIALS AND EQUIPMENT

1. Decisions on asset transfer.

2. Accounting books of supplies, assets, debs, and relevant documents.

3. Asset inventory records and debt comparisons.

4. Policies of the State on handling assets after the project is finished.

5. Documents on liquidation and sale of assets.

Article 33. Audits of debts, remaining materials and equipment

1. Auditing debts payable: inspect the amount payable to each clients based on the value of the construction, equipment, and fundamental structures for which payments are accepted; inspect accounting books and invoices to determine the actual amount of payment to each contractor; determine the debt payable by deducting the paid amount from the amount to be paid; compare debts with contractors or send letters of certification (where necessary).

2. Determine the quantity of each remaining asset and capital by balancing the imported, exported, and remaining quantities, then compare them with the data in accounting books, financial statements, and inventory documents. Compare a large quantity of some remaining assets to compare with the reality.

3. Inspect remaining cash by comparing with the balance in accounting books.

4. Compare bank deposits with sub-books and request certifications from banks, compare and certify the account balance at capital providers.

5. Consider the settlement of excess assets (supplies and equipment), untreated wastes, amount of recovered investment not being remitted to the budget, residual deposits and cash, etc.

Chapter VI

AUDITING THE PROFITABILITY, EFFICIENCY, AND ACCOMPLISHMENT OF A PROJECT

Article 34. Auditing the profitability, efficiency, and accomplishment of a project

The profitability, efficiency, and accomplishment of a project shall be assessed based on the contents and criteria in Article 11 of this Procedure; based on the audits of project planning, design, estimates, contractor selection, quality control, cost management, etc.

Article 35. Profitability

Assess the frugality of each item and of the whole project.

Article 36. Influence

Compare the result with the investment or compare the use of capital with a set target; assess the social effect of the project.

Article 37. Accomplishment

Asset the accomplishment of targets of the project.

Chapter VII

AUDIT REPORTS AND INSPECTION OF COMPLIANCE WITH AUDITORS’ REQUESTS

Article 38. Making and issuing project audit reports

1. The procedure for making and sending project audit reports is specified in the Audit procedure of State Audit Agency; the regulations on making, examining, approving, and issuing audit reports of State Audit Agency.

2. Project audit reports are made in accordance with the template provided by State Audit Agency.

Article 39. Primary contents of a project audit report

1. The first part includes:

a) Audit contents: according to the decision on audit;

b) Scope and limits of audit: specify the contents audited and not audited and explanation;

c) Bases for audit.

2. The main part includes:

a) Summary of the project: the decision to invest, the investor, purposes, scope of investment; total investment; commencement date and completion date;

b) Audit results according to audit contents: capital sources; costs; other contents of the final report on capital of the finish project (if any). Specify the results and reasons for differences;

The legitimacy and accuracy of the settlement report of the Project;

c) The result of the audit of compliance with law and policies and relevant legislative documents on project management and . Assess the strengths, weaknesses, limitations, and responsibilities of relevant persons in each analysis;

d) The result of the audit of the assessment of profitability, efficiency, and accomplishment of the project.

3. suggestions

Offer suggestions concerning the mistakes and weaknesses discovered to relevant organizations.

Article 40. Inspect the compliance with auditors’ requests

According to the Law on State audit and the Procedure for inspecting the compliance with auditors’ requests./.

PPENDIXES

Appendix I: Some common mistakes and frauds

Appendix II: List of questions 01 – Designing phase

Appendix III: List of questions 02 – Bidding phase

Appendix IV: List of questions 03 – Construction, supervision, and assessment phase

APPENDIX I

SOME COMMON MISTAKES AND FRAUDS
(to the Decision No. 04/2013/QD-KTNN dated April 05^th 2013 of State Auditor General)

I. AUDITING THE COMPLIANCE WITH LAWS AND POLICIES ON CONSTRUCTION MANAGEMENT

1. Project planning, appraisal, and approval

- The project planning, appraisal, and approval are conformable with the regulations on the order, authority, and punctuality;

- The project of investment is cursory and insufficient as prescribed;

- The documents about market survey, material sources, motives, environment, plans for land clearance and resettlement, capital sources, etc. are not adequate;

- The consultancy works for which charges are not regulated but such charges are not estimated or estimated at a high rate;

- The project is not congruent with the geographical or sectoral planning;

- The total investment calculated is not accurate and well founded.

2. Project execution

- The survey document is inadequate and the design is not well founded;

- The technical design and construction design documents are inadequate and incorrect in terms of scale, technologies, capacity, construction class, capital, land area in comparison with the decision to invest;

- The estimates apply incorrect limits and prices. The determination of charges for works is not well-founded;

- Land clearance: the compensation plan is improperly made, approved, and examined; compensation documents are in adequate, etc.;

- Biddings: invitations to bid are not sufficient, clear, and detailed; bidding documents and plans are approved ultra vires; the number of contractors participating is not sufficient; the regulations on time are not complied with; biddings are launched without sufficient composition; bids are unfairly and groundlessly examined, etc.

- The construction contract is not tight and sufficient;

- The workload that arises is not shown in the amended design or estimate;

- The building is not consistent with the approved design;

- The final assessment and payment are not consistent with the contract;

- The regulations on the supervision of construction, and copyright are not complied with;

- The assessment documents are insufficient: the assessment records of each part, documents about material, concrete, and structure testing are missing, etc.

- The building diary does not record every development and incidents during the construction, etc.

3. Assessment, payment, and opening of the project

- The overall assessment documents are insufficient;

- As-built documents are insufficient or incorrect;

- Settlement report is not made or not correctly made.

II. AUDITING THE PROFITABILITY, EFFICIENCY, AND ACCOMPLISHMENT OF PROJECTS

1. Project planning, appraisal, and approval

- The information and data that serve as bases for project planning are not reasonable: the economic and market indexes, environmental indexes (sewage, noise, pollution, etc.); technical indexes (resistance to storm, wind, rain, earthquake, etc.); improper technical standards (durability, lifecycle, material quality, etc.);

- All investment plans are not examined to make an optimal selection;

- The location is unreasonably or subjectively chosen without due regard to relevant factors (geology, traffic, material sources, market, human resources, etc.);

- The technologies are not selected according to price/performance criteria; the consistency is not ensured, standards, features, economic and technical specifications of equipment are not clear;

- The calculation does not take due account of actual condition of existing infrastructure such as electricity, water supply and drainage, etc.;

- The selection of construction methods does not take due account of technological advances and obsolescence.

2. Design and estimate

- The design is created without sufficient information about demands or not based on demands;

- The survey is incorrect that leads to an improper design;

- The design and arrangement of technological line is unreasonable;

- The design is not sufficient and fails to take due account of necessary workload that leads to a large amount of additional workload which slows down the progress and exceed the cost estimate;

- The technical equipment and construction design are not compatible;

- The design exceeds demands and solutions are costly: corridors and passages are unnecessarily wide; furniture is lavish, initial and regular, and maintenance costs of technical equipment are expensive, etc.;

- The design period is so short that the design is only completed during the building which affect the progress and make costs uncontrollable;

- The cost estimates are incorrect due to insufficient information, careless calculation, or deliberate false reduction of price to ease the approval (additional funding will be requested during the building); or deliberate false raise of prices to purchase luxurious equipment;

- Estimates are groundlessly during the examination and approval, and additional funding must be made later;

- The estimate of costs of arising workloads is made late, even after an item is finished, so that it is not affect the cost management.

3. Contractor selection

- No public biddings, only selective bidding or limited bidding.

- The invitation for bid is incorrect that affect the progress and quality of the project;

- The bid package description is not sufficient and clear that leads to alternative interpretation which is likely to cause disputes during contract performance;

- The investor has reached a covert agreement with a contractor to provide such contractor with information about the additional works in the future. The contractor shall make a drastically high bid for such works, reduce prices for other works to win the contract and enjoy substantial benefits from additional works which lead to increases in costs of the project;

- A contractor buys all invitations for bid; contractors reach a mutual agreement to let one of them win the contract and share the benefits among them (usually in selective bidding), etc.;

- Appraisals are inaccurate, bid package prices approved are too high;

- Bids are unfairly examined without following the criteria approved by competent authorities;

- Criteria for assessing bidding documents are unreasonable in a way that enable inexperienced and incapable contractors to participate and win contracts, or to lay down criteria unfavorable for qualified contractors.

4. Contractors and contract performance

- Terms and conditions of the contract are not tight;

- Prices on in the contract are not consistent with successful bids;

- The contract is not adjusted to match the design. Therefore the developments of costs are not monitors and excess of cost is not promptly detected. In those cases, arising costs are usually higher than the original ones in the contract (a reason usually given by management boards is the construction is not commenced at the same time).

5. Construction management

- The progress is impeded for subjective or objective reasons;

- Indecent supervision leads to late discovery of items having technical defects or using inferior materials, equipment of which specifications are not consistent with agreements, etc. which damage the project;

- Defects are discovered while assessing items but builders are not compelled to make immediate rectification;

- The reason for late request for rectification of defects may be users’ failure to notify the project management board of such defects when taking delivery of the project, which may enable the contractor to cite expired warranty as a reason, and therefore the remediation would be costly.

6. Condition and capability of participants in the construction

- Participants in the construction are not financially and technically capable;

- Functions and specialities of participants are not suitable; their reliability and experience are insufficient, etc.

III. AUDITING FINALIZATION REPORTS ON FINISHED WORKS OR WORK ITEMS

1. Capital sources

- All capital sources are not recorded, incorrect exchange rates are used that cause variances in capital balances in the reports compared to the data of capital providers;

- Capital sources are incorrectly classified;

- Capital sources are not used in accordance with financial principles and the decision to invest;

- Capital sources are not used for proper purposes.

2. Investment costs

2.1. For value of finished works

- Workload:

+ Falsify the workload;

+ Calculate the workload incorrectly compared to the design and as-built drawing;

+ Duplicate workloads (usually happen at joints);

+ Record costs of another project;

+ The formalities are not sufficient;

+ Record the removed works due to mistakes of contractors;

+ Failure to deduct recovered products and supplies;

+ Record the removed works due to mistakes of contractors which have been shown in the invitation for bid and the design;

- Prices:

+ Incorrect application of regional prices, successful bids, or project prices;

+ Incorrect application of transport coefficients and price adjustment coefficients;

+ Incorrect categories of supplies;

+ Incorrect calculation of the volume materials eligible for price difference due to incorrect application of limits;

+ Incorrect time of price difference calculation, etc.;

+ Incorrect application of inflation indexes or incorrect time.

- Surcharges:

+ Incorrect calculation of limits;

+ Surcharges are calculated based on prices of installed equipment;

- Incorrect calculation of payments.

2.2. Costs of finished equipment:

- Technical features, quality, and origins of equipment are not satisfactory;

- The quantity of equipment and spare parts are not as adequate as stated in the contract;

- Incorrect application of exchange rates to imported equipment;

- Payment formalities are skipped; documents are invalid, or storage cost, cargo inspection cost, transport cost, warranty cost, and maintenance cost are incorrectly paid.

- Equipment transport, storage, and maintenance costs are incorrectly distributed to fixed assets;

- Non-contractual payments are made;

2.3. Other costs

- Incorrect calculation or falsification of workload;

- Other costs according to limits: incorrect application of percentages, incorrect determination of bases for calculation, incorrect or confused application of other building, equipment, fundamental construction costs;

- Costs are not limited such as: no estimates are made or estimates are not approved by competent authorities;

- Land clearance costs are not practical; incorrect land area compensated; incorrect prices; compensations are not sufficiently paid to people; make payment for public land; incorrect determination of house or land categories, etc.;

- Invoices are invalid, payments are exceeding concluded contracts;

- Recording duplicate costs;

- Failure to record the recovery of product value during experimental production or recovery of scrap value after investment;

- Incorrect imposition of tax rates; making tax-inclusive payments but receiving tax-exclusive invoices;

- Recording false construction insurance;

- Receiving construction insurance without reducing construction costs;

- Incorrect calculation and distribution of loan interests;

- Failure to remit the amounts collected from leasing out premises, equipment, or assets to the State budget;

3. Project quality and progress

- Quality:

+ Incorrect survey and design that affect the quality and use;

+ The construction does not comply with technical procedure and requirements of the project; materials used are not consistent with standards of the project that affect the project quality;

+ Substandard construction management; failure to promptly discover and handle mistakes that affect the quality.

- Progress:

Reasons for slow progress:

+ The contractors are incapable: machinery and equipment are inconsistent with the contract; financial and managerial capability is substandard;

+ The contractors deliberate delay the progress to earn benefits when payments are made;

+ Managerial capability of consultancies and the investor;

+ The unsuitable survey and design lead to adjustment of a lot of contents, etc.;

+ Considerable price fluctuation;

+ Force majeure.

4. Investment costs included in project value

- Damage concerning material and equipment costs incurred by Party B is confused with the cost of application for cancellation made by the investor

- Incorrect calculation of cancelled works;

- Other mistakes shown in the audit of investment;

5. Value of transferred assets

- The project is executed for many years, the price conversion so complicated that incorrect calculation is likely;

- Many types of assets are hard to be classified as fixed assets or current assets;

- Of other projects during the investment, or subjects of asset transfer are omitted.

6. Auditing debts, remaining supplies and equipment

- The calculation of debt is not well-founded;

- Debtors are dissolved or have their apparatus changed; debts are in doubt or irrecoverable;

- Remaining supplies and equipment are not logged, assessed, and strictly management.

APPENDIX II

LIST OF QUESTIONS 01 – DESIGNING
(to the Decision No. 04/2013/QD-KTNN dated April 05^th 2013 of State Auditor General)

1. Design basis

1.1. Was information about the location and its geology collected before designing?

1.2. Was such information applied to the design later?

2. Design organization

2.1. Was the design based on general provisions and requirements of the investor? Were such Regulation complied with?

2.2. Was a project management board established? Were regulations on its entitlements clear and reasonable?

2.3. Were measures taken to ensure that the design had taken due account of operation and maintenance costs?

3. Technical design

3.1 Did the design take account of alternative plans? In particular:

- Type of the project (e.g. bridge, tunnel);

- Construction method (e.g. casting concrete on the site or assembling precast concrete components);

- Foundation construction (stunk foundation or bed-plate foundation).

3.2. Did the construction method take account of special factors? Such as:

- Geological survey;

- Regulations of state authorities;

- Regulations and requirements of the investor

3.3. Did the selection of plans take account of:

- Price/performance ratio;

- Conditions for expansion or changing uses;

- The operational cost, maintenance cost, and other costs;

- Environment protection, fire and explosion prevention;

- Various construction periods.

3.4. Is there any uncertainty about construction methods, selected building materials (are such plans feasible in terms of technology and experience?).

3.5. Did design of the bearing frame enable the assessment of its profitability (assessment of profitability of the bearing frame)?

3.6. Were changes in the design and their pacts promptly approved by competent authorities?

3.7. Were design drawings corresponding to the design progress sufficiently and punctually made? Were they approved by competent authorities?

4. Progress plan

4.1. Was a progress plan for the project made? Was the construction punctual?

4.2. Was such progress congruent with the scale and requirements of the project? Did it promptly show variances to make necessary responses?

4.3. Were all activities relating to the construction monitored? Did each separate work have a separate deadline?

4.4. Was the deadline for each work determined practically and agreed by involved organizations?

4.5. Did involved subjects know about the activities that would cause the entire project to delay if they are delayed?

4.6. Were intended deadlines complied with?

4.7. If the answers are no, were such delay due to the progress planning or some particular persons?

4.8. What conclusion did the contractee reach?

APPENDIX III

LIST OF QUESTIONS 02 – BIDDING AND CONTRACTING
(to the Decision No. 04/2013/QD-KTNN dated April 05^th 2013 of State Auditor General)

1. Work description, construction, description, list of works

1.1. Were the construction description and list of works based on the approved design basis? Were they sufficient?

1.2. If the answer is “no”, what negative effect did it cause?

1.3. Did the work description (bid package description) treat all contractors equally? Was there any special information that that was beneficial to a particular contractor?

1.4. Were potential contractors mobilized? Were advantages over such contractors present?

1.5. Were the parts of the bid package description consistent?

1.6. Did the task description provide an overview of the construction targets? Was there technical limits?

1.7. Was the task description sufficient and transparent? In particular:

- Purposes of construction methods

- The topography and geology of the construction site;

- The ease of traveling to the construction site;

- The building methods and most important works of the project;

- Existing buildings and works.

1.8. Was the overall construction task description based on the geological survey? Was such survey sufficient to assess the geology, water proportion, and environmental impacts that may occur?

1.9. Was the fact that a projects must be done in separate steps shown in the construction description?

1.10. Did the construction description include the regulation of state authorities, especially technical requirements of the investor?

1.11. Did the list of work include all works in the design?

1.12. Did such list provide alternatives for items that need price comparison?

1.13. Did the list take account of grouping the same type of works?

1.14. Were the parts of the list separated from one another in order to prevent duplication?

1.15. Were necessary works described coherently and in detailed? (to an extent that all contractors can interpreter in the same way)

1.16. Were the workload in the list accurately calculated and conformable with the limitations of the contractee?

1.17. What are the reasons and solutions for such differences?

1.18. The units of measurement of workloads suitable for summarizing and checking workloads during the settlement?

2. Terms and conditions

2.1. Did the contract only include the regulations that affect all separate works?

2.2. Were terms and conditions of the contract confusing or inconsistent?

2.3. Did such confusion and inconsistency discovered and rectified? Did they cause adverse effect on the contractee?

2.4. Did the contract put forwards requirements for personnel and construction equipment?

2.5. Did the contract sufficiently and tightly specify the methods of dealing with interruptions?

2.6. Did the contract specify penalties for not complying with agreed deadlines?

2.7. Were the penalties limited?

2.8. Did the contract specify instruments necessary for construction? (e.g. electricity, water, sewage drainage, waste disposal)

2.9. Did the contract regulate the construction hygiene, discharge of refuses and building materials as well as the distribution of costs.

2.10. Did the contract request contractors to provide alternative solutions to raise the profitability?

2.11. Did the Appendixes to the contract specify:

• Works in each phase?;

• The underwriting?;?

• The final assessment?;

• The construction diary?;

• The warranty?;

• Obstructions and interruption of construction?;

• Resolutions for disputes over payment?;

• The payments aided by information technology?.

3. Invitation to bid

3.1. Were there regulations and instructions on the invitation for bid?

3.2. Were such regulations rational and complied with?

3.3. Were the bidding held by competent authorities?

3.4. Were all conditions satisfied when the bidding was held?

3.5. Were the reasons for holding the bidding first legitimate?

3.6. Did the selection of bidders take due account of:

• The reputation – firstly the reliability and punctuality;

• Position of contractors on the market;

• The technologies, capability, and quality;

• Geographical distances.

3.7. For limited bidding, did the investor constantly change the selection of contractors?

3.8. Did contractors collude with each other?

3.9. Did internal regulations specify the number of bids taken?

3.10. Was the number of bids correspond the work extent?

3.11. For open bidding, did the investor publish the invitation to bid on the mass media as prescribed?

3.12. Were the reasons for rejecting competitive bids legitimate?

3.13. Did all contractors receive the same invitation for bid at the same time?

3.14. Were all contractors equally provided with information about the bid package?

3.15. Was a list of all contractors made?

3.16. Were all contractors enabled to see the drawings and visit the site to know its terrain, type, and scale of works to do?

3.17. Were regulations on submitting bidding documents in the invitation for bid complied with?

3.18. Did the period of bid examination appropriate?

3.19. Were the bids protected as prescribed?

3.10. Were the deadlines for submitting bidding documents and contract conclusion consistent with the overall plan?

4. Bid examination

4.1. Were the bids submitted before the deadline examined by a neutral unit?

4.2. Were safety measures (putting signatures or seals to all pages) taken to prevent frauds?

4.3. Did special suggestions considered during the bid examination?

4.4. Was a record on bid examination made? Was it signed by all participants?

4.5. How bidding documents submitted late dealt with?

4.6. Were all submitted bids examined?

4.7. Were the submitted bids complete?

4.8. Were all bids examined properly?

4.9. Were optional items, secondary offers, additional parts, and suggestions about economic and technical adjustments examined?

4.10. Were prices of the bid package accurate?

4.11. Were offered prices consistent with the invitation for bid? Were they unusual?

4.12. Were the adjustments of the bidding documents legitimate?

4.13. Was there price collusion?

4.14. Was the bidding cancelled? If it was, was there any reason and written evidence?

4.15. Was the bidding result verified and approved before signing the contract?

4.16. Were the structural calculation or design drawings provided by contractors technically and economically examined?

4.17. Were there legitimate reasons for eliminating contractors or canceling the bidding?

4.18. Were all bids examined properly?

5. Contract negotiation

5.2. Did a contract negotiation take place?

5.3. Were all potential contractors treated fairly in terms of prices, conditions, and technical issues during the negotiation?

5.4. Was the contract negotiation sufficiently recorded? Were amendments of the invitation for bid reasonable?

6. Contract conclusion

6.1. Did the contract specify a deadline for payment?

6.2. Was the contract concluded in accordance with approved requirements?

6.3. Was written explanation for not choosing the contractor that offered the lowest price provided?

6.4. Was there sufficient documents proving that the contractor selection is reasonable?

6.5. Did the contract contain all agreements reached by both parties?

6.6. Was the contract made by competent persons and authorities?

6.7. Were there regulations for ensuring works are done after a written agreement is made?

6.8. Was the bid package divided to dodge the restriction on entitlements to approve and sign contracts?

6.9. If the contract does not indicate a deadline, was an agreement with the contractor reached in the written assignment?

6.10. Was the contract sign with the contractor that made the best offers in terms of profitability, technology, and quality?

6.11. Was the contract compiled in accordance with provided templates?

7. Contract adjustment

7.2. What are reasons for the contract adjustments and the additional contract? Were they legitimate?

7.3. What are reasons for the contract adjustments and the additional contract? Were they legitimate?

7.4. Was price renegotiation necessary when adjusting the contract?

7.5. Were there early agreements on prices for changed or additional works, or agreements on prices reached after such works are done?

7.6. Was the legitimacy of prices in adjusted or additional parts of the contract examined?

7.7. Was the legitimacy of prices in adjusted or additional parts of the contract examined?

7.8. Did the adjusted or additional contract lead to changes in the progress and payments?

7.9. Were due attention paid to the issues that need adjusting or amendment?

7.10. Did the contract adjustments comply with terms and conditions? Were they conformable with the laws on contract adjustment and price adjustment.

APPENDIX IV

LIST OF QUESTIONS 03 – CONSTRUCTION, SUPERVISION, AND ASSESSMENT
(to the Decision No. 04/2013/QD-KTNN dated April 05^th 2013 of State Auditor General)

1. Construction

1.1. Were the following available when the construction is commenced?

• The License to build,

• Design drawings and the list of works

• Other conditions of the State

1.2. Did the contractor mobilize adequate machinery and equipment as agreed in the bidding documents?

1.3. Were the workloads and quality conformable with regulations?

1.4. Were the supplies used for the construction satisfy the technical standards of the project?

1.5. What are the reasons for slow progress?

1.6. Were the as-built drawings made in accordance with the actual construction?

2. Construction adjustments

Were there construction adjustments and why?

5.4. Was the contract negotiation sufficiently recorded? Were amendments of the invitation for bid reasonable? Were such adjustments approved by competent authorities before they are made?

Were the costs of such adjustments sufficiently informed?

Were such adjustments explained when they are requested by the supervisors without being approved? Were additional approval made by competent authorities?

Were the payments for additional works and changes of the design made properly?

3. Construction supervision

3.1. Were sufficient personnel assigned to supervise the construction?

3.2 Did the supervisors of the contractee constantly examine the categories and quality of materials?

3.3. Were mistakes detected during the construction recorded? Were the contractor requested to rectify such mistakes?

3.4. Were such mistakes rectified on schedule as requested? Are they recorded?

3.5. Were personnel, materials, and machinery recorded in order to serve later payments?

3.6. Did the as-built drawing adequately reflect the adjustments to serve payments?

3.7. Were hidden works assessed before others are carried out?

4. Deadline supervision

4.1. Was the investor able to finish the following works?

• Providing documents necessary for the construction;

• Set primary targets and foci;

• Arrange the building site and building roads;

• Coordinate the companies by imposing deadlines.

4.2. Did the contractor mobilize all personnel, materials, machinery and equipment necessary for the construction?

4.3. Was the compliance with contractual deadlines strictly supervised? Were such deadlines complied with?

4.4. Were the incidents that interrupt the responsible for and supervisors’ directives recorded?

4.5. Was there lateness? Who is responsible for it?

4.6 Did the contractor request additional payment because the lateness is on account of the investor? Was it appropriate?

4.7. Where separate works failed to meet deadlines, was the overall progress of the construction affected? Did it cause expenses to increase? Was such increase on account of the party that caused the lateness?

4.8. If the failure to meet the deadline is on account of the contractor, was the deadline extended for the contractor to completely execute the contract? Were they requested to adhere to relevant agreements?

4.9. Was the deadline for adjusting the construction reasonable? Were necessary adjustments immediately made on schedule?

4.10. Were relevant departments promptly informed about deadlines? Was an agreement on new obligatory deadlines reached?

5. Final assessment

5.1. Was a final assessment carried out?

5.2. Did the final assessment record contain necessary information and bear signatures of responsible persons?

5.3. Was the deadline for rectifying the mistakes discovered during the final assessment appropriate?

5.4. Were the assessment certified by state authorities and all required certificates presented? For example:

• Material testing certificate;

• Steel rebar assessment record.

5.5. Was the assessment participated by experts?

5.6. Were the values of construction works accurately calculated and consistent with assessment records?

5.6. If mistakes cannot be rectified or the rectification is unacceptably costly, was an agreement of payment reduction reached? Was the reduction appropriate?

5.8. Where the contractor refuses to rectify mistakes, were all measures taken?

5.9. Was there any defective works that were accepted by the investor? Were such defects on account of the contractee (for instance: the bid description was in adequate or the instruction were incorrect)?

5.10. Was the extent and persons responsible of mistakes clearly identified?

5.11. The reasons for not carry out the final assessment? Did it inflict damage upon the investor?

5.12. Was a list of warranties and warranty periods for all construction works made and sent to all contractors?

5.13. Were all constructions inspected before the warranty period run out?