Xinjiang Uygur Autonomous Region Audit Office of the People s Republic of China Audit Report 2017 29 XINJIANG AUDIT REPORT 2017 NO.29 ( ) Project Name: Urumqi Urban Transport Project II Financed by the World Bank 8568-CN Loan No.: 8568-CN Project Entity: Urumqi Urban Comprehensive Transport Project Research Center 2015 1 1 2016 12 31 Accounting Period: January 1,2015-December 31,2016 Contents .1 .................................................................................... 3 ............................................................... .6 . Financial Statements and Notes to the Financial Statements ............... 6 .............................................................................. 6 i. Balance Sheet ..................................................................................... 6 .............................................................................. 8 ii. Summary of Sources and Uses of Funds by Project Component ..... 8 ............................................................ 10 iii. Statement of Implementation of Loan Agreement ........................ 10 ........................................................................ 11 iv. Designated Account Statement ...................................................... 11 ........................................................................ 12 v. Notes to the Financial Statements ................................................... 14 .................................................................. 17 III. Audit Findings and Recommendations ............................................... 21 2016 12 31 16 1 nion To Urumqi Urban Comprehensive Transport Project Research Center: We have audited the special purpose financial statements (from page 6 to page 16) of Urumqi Urban Transport Project II Financed by the World Bank, which comprise the Balance Sheet as of December 31,2016, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement for the year then ended, and Notes to the Financial Statement. 1.1 Project Entity and Autonomous Region Finance Department's Responsibility for the Financial Statements The preparation of the Balance Sheet, the Summary of Sources and Uses of Funds by Project Component and the Statement of Implementation of Loan Agreement is the responsibility of your entity, while the preparation of the Special Account Statement is the responsibility of Autonomous Regional Finance Department, which includes: i. Preparing and fair presenting the accompanying financial statements in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement; ii. Designing, implementing and maintaining necessary internal control to ensure that the financial statements are free from material misstatement, whether due to fraud or error. 1.2 y Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Government Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected 3 Region P. R. China Postcode: 830002 Tel : 86-991-2815503 Fax: 86-991-2815503 The English translation is for the convenience of report users; please take the Chinese audit report as the only official version. 5 .Financial Statements and Notes to the Financial Statements i. Balance Sheet BALANCE SHEET 2016 12 31 (As of December 31, 2016) Project Name: Urumqi Urban Transport Project II Financed by the World Bank Prepared by: Urumqi urban comprehensive transport project research center Currency Unit: RMB Yuan Line Beginning Line Beginning Application of Fund No. Balance Ending Balance Sources of Fund No. Balance Ending Balance Total Project Expenditures 1 - 616,780,401.09 Total Project Appropriation Funds 24 Project Capital and Capital To use assets 2 - 140,604,500.00 Surplus 25 - 1,000,000,000.00 Construction in Progress 3 - 476,175,901.09 Total Project Loan 26 - 203,771,730.98 Investment Loan Receivable 5 Total Project Loan 28 - 203,771,730.98 Including: World Bank Investment Loan Receivable 6 The world bank loan 29 - 3,771,730.98 Appropriation of Investment Loan 7 Including: IDA 30 Including:Appropriation of World Bank Investment Loan 8 IBRD 31 Technical Equipment 9 - - Cooperation 32 Including Equipment Losses in Suspense 10 - - Co-Financing 33 Total Cash and Bank 11 - 557,411,573.07 Domestic Loan 34 - 200,000,000.00 Cash in Bank 12 - 557,411,573.07 Other Loan 35 6 Including: Special Account 13 Appropriation of Investment Loan 36 Including: Cash on Hand 14 World Bank Loan 37 Total Prepaid and Receivable 15 - 30,705,342.83 Bond Fund 38 Marketable Construction Securities 16 Expenditures to be Offset 39 Total Fixed Assets 17 Total Payable 40 - 1,125,586.01 Fixed Assets, Cost 18 Other Payable 41 Less: Accumulated Depreciation 19 Appropriation of Fund 42 Fixed Assets, Net 20 Retained Earnings 43 Disposal of Fixed Assets 21 44 Fixed Assets Losses in Suspense 22 45 Total Application of Fund 23 - 1,204,897,316.99 Total Sources of Fund 46 - 1,204,897,316.99 7 ii. Summary of Sources and Uses of Funds by Project Component SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT 2016 12 31 (For the period ended December 31, 2016 Project Name: Urumqi Urban Transport Project II Financed by the World Bank Prepared by: Urumqi urban comprehensive transport project research center Currency Unit: RMB Yuan Current Period Cumulative Cumulative Current year Current period Current Period Life of Cumulative % Budget Actual % completed PAD Actual Completed Total Financing 1,760,039,200.00 1,203,771,730.98 93.28% 3,025,230,000.00 1,203,771,730.98 39.79% World Bank Loan 560,039,200.00 3,771,730.98 0.67% 869,000,000.00 3,771,730.98 0.43% Counterpart Fund 1,200,000,000.00 1,200,000,000.00 100% 2,156,230,000.00 1,200,000,000.00 55.65% 1,200,000,000.00 1,200,000,000.00 100% 2,156,230,000.00 1,200,000,000.00 55.65% Total Application of Funds 1,760,039,200.00 616,780,401.09 35.04% 3,025,230,000.00 616,780,401.09 20.39% 1,452,717,000.00 435,005,635.69 29.94% 1,631,989,640.00 435,005,635.69 26.65% The construction of urban integration bus corridor 8,310,000.00 1,925,080.00 23.17% 379,066,200.00 1,925,080.00 0.51% Transportation comprehensive information management platform 283,200,200.00 134,249,294.49 47.40% 901,176,000.00 134,249,294.49 14.90% Public transport infrastructure 3,072,000.00 2,116,057.26 68.88% 43,600,000.00 2,116,057.26 4.85% Institutional capacity 12,740,000.00 8,959,701.86 70.33% 69,398,160.00 8,959,701.86 12.91% 34,524,631.79 34,524,631.79 Difference 586,991,329.89 586,991,329.89 Change in receivable 30,705,342.83 30,705,342.83 Change in Payable (1,125,586.01) (1,125,586.01) Change in Cash and Bank 557,411,573.07 557,411,573.07 Other 0.00 0.00 8 SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT 2016 12 31 (For the period ended December 31, 2016 Project Name: Urumqi Urban Transport Project II Financed by the World Bank Prepared by: Urumqi urban comprehensive transport project research center Currency Unit: RMB Yuan 435,005,635.69 140,604,500.00 294401135.69 The construction of urban integration bus corridor 1,925,080.00 1,925,080.00 Transportation comprehensive information management platform 134,249,294.49 134,249,294.49 Public transport infrastructure Institutional capacity 2,116,057.26 2,116,057.26 8,959,701.86 8,959,701.86 34,524,631.79 34,524,631.79 Total 616,780,401.09 140,604,500.00 476,175,901.09 9 STATEMENT OF IMPLEMENTATION OF LOAN AGREEMENT (For the period ended December 31, 2016) PROJECT NAME CHINA Urumqi Urban Transport Project II Financed by the World Bank Prepared by: Urumqi urban comprehensive transport project research center Currency Unit : CNY Category Loan Amount Current-Period Withdrawals Cumulative Withdrawals USD USD RMB USD RMB 138,790,000.00 CW/GD/nonCS/CS/TRN/WS/IOC f.Pt.A,D Commitment Charge 860,000.00 193,712.12 1,343,780.98 193,712.12 1,343,780.98 Front End Fee 350,000.00 350,000.00 2,427,950.00 350,000.00 2,427,950.00 Total 140,000,000.00 543,712.12 3,771,730.98 543,712.12 3,771,730.98 10 Special-purpose accounts balance sheet (For the period ended December 31, 2016) Prepared by: Finance Department of Xinjiang Name of borrower People's Republic of China Uygur Autonomous Region Project name Urumqi Urban Transport Project II Financed by the WB (Industrial Bank CO.,LTD Urumqi Branch Account World Bank loan/credit No 8568-CN number 512011400100032782 Currency: USD Beginning Balance Total amount deposited by World Bank Total interest earned this period if deposited in Special Total amount refunded to cover ineligible expenditures Deduct Total amount withdrawn Total service charges if not included in above amount withdrawn Ending balance(month/day/year) PART B-ACCOUNT RECONCILIATION B 1.Amount advanced by World Bank Deduct 2.Total amount recovered by World Bank 3.Present outstanding amount advanced to the Special Account at month/day/year 4.Ending balance of Special Account at month/day/year Add 5.Amount claimed and not yet credited at month/day/year 6.Amount withdrawn and not yet claimed 7.Service charges for the period (if not included in item 5. or 6.) 8.Interest earnings for the period (if included in Special Account) 9.Total advance to Special Account accounted for at month/day/yea 11 BRT 51.84 2 2 2 3,025,230,000.00 140,000,000.00 869,000,000.00 2000 13 1 1 12 31 2016 12 31 USD1= 6. 9370 2016 616,780,401.09 20.39% 267,889,540.77 2,799,009.25 205,487,351.07 12 BRT 140,604,500.00 2016 12 31 557,411,573.07 0 2016 12 31 30,705,342.83 3,482,822.55 27,222,520.28 2016 12 31 1,000,000,000.00 200,000,000.00 2016 12 31 3,771,730.98 543,712.12 3,771,730.98 2016 12 31 1,125,586.01 180,518.33 945,067.68 2016 12 31 0 512011400100032782 2016 12 31 0 13 (V) Notes to the financial statements Notes to the financial statements 1. Project overview The Urumqi Urban Transport Project II Financed by the World Bank includes the construction of urban integration bus corridor, transportation comprehensive information management platform, public transport infrastructure and institutional capacity. It mainly constructs the new BRT route of 51.84 km, and 2 bus transfer hubs, 2 origin and terminal bus stations and 2 bus parking lots, etc. The estimated total investment of project was RMB 3,025,230,000.00 yuan, and among them the total amount of World Bank loan was USD140,000,000.00 which was equivalent to RMB 869,000,000.00 yuan. 2. Compiling range of financial statement The compiling range of the financial statement includes the financial statements of Urumqi Urban Comprehensive Transport Project Research Center (the following briefly called as Urumqi Transportation Research Center) and special account statements of Finance Department of autonomous region. 3. Main accounting policies 3.1 The financial statements of the project was compiled according to the requirements of Accounting Methods of World Bank Loan Projects (CJZ [2000] No. 13). 3.2 The accounting year adopts the Gregorian calendar, which starts from January 1st to December 31st of Gregorian calendar. 3.3 The accounting of this project adheres to the accounting principle of "accrual basis" and it adopts the debit and credit double entry accounting and the 14 recording currency was RMB. 3.4 According to the exchange rate of People's Bank of China on Dec. 31st, 2016, USD1 was equivalent to RMB6. 9370 yuan . 4. The account instruction of statements 4.1 Project expenditure The total expenditure was RMB 616,780,401.09 yuan in 2016.which accounted for 20.69% of the total investment plan. Among them, the building installation project investment was RMB267,889,540.77 yuan; the equipment investment was RMB2,799,009.25 yuan; the amortized investment was RMB 205,487,351.07 yuan which mainly was the compensation for demolition; the delivery and operation asset was the BRT vehicle asset whose amount was RMB 140,604,500.00 yuan. 4.2 Bank and cash On December 31,2016,the balance of bank and cash was RMB 557,411,573.07 yuan . The remaining sum of special account deposit was RMB 0 yuan. 4.3 Prepaid and receivable On December 31,2016,the balance of prepaid and receivable was RMB30,705,342.83 yuan. It was mainly composed of advance project payment of RMB3,482,822.55 yuan and other account receivable of RMB27,222,520.28 yuan. 4.4 Project capital and domestic loan On December 31,2016,the project capital was RMB 1,000,000,000.00 yuan, the domestic loan was RMB 200,000,000.00 yuan. 4.5 The World Bank loan On December 31,2016,the balance of the World Bank loan was RMB 3,771,730.98 yuan. Among them, the remaining sum of World Bank loan was 15 USD543,712.12 which was equivalent to RMB 3,771,730.98 yuan. 4.6 Account payable On December 31,2016,the balance of account payable was RMB 1,125,586.01 yuan. Among them, the payable project sum was RMB 180,518.33 yuan and other payable account was RMB 945,067.68 yuan. 4.7 Retained income On December 31,2016,the balance of retained income was RMB 0 yuan. 5. The usage conditions of special account The special account of the project was set in the Urumqi branch of Industrial Bank Co., Ltd., and the account number was 512011400100032782 and the currency was US dollar. The special account has not been used by Dec. 31st, 2016, and the remaining sum was RMB 0 yuan. 16