Xinjiang Uygur Autonomous Region Audit Office of the People's Republic of China Audit Rep ort I$?44 (2016) 40 1 XINJIANG AUDIT REPORT (2016] NO.40 Project Name: Urumqi District Heating Project by the World Bank ' : 8046-CN Loan No.: 8046-CN Project Entity: Urumqi Heating Reform and Building Energy Efficiency International Technical Cooperation Project Office 4iA: 2015 Accounting Year: 2015 Contents .. ...................... . 1 I. Auditor's Opinion.............3......... .............3 ............... .....................6 II .Fin ancial 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 A ,zfkff1A............................ 10 iii. Statement of Implementation of Loan Agreement...... .....10 .*..................................... 11 iv.Desi gnated Account Statement................ ........11 (H) M................................ 13 v. Notes to the Financial Statements... ... ...................... 16 w............................ ... 19 III. Audit Findings and Recommendations.................... 20 w *Lt 4 k Ä: 4flWit7T#9fÅ4I#Fkfi&±st &kåf 2015 $ 12 )A 31 E C, -LÄR Hj Hp 41 M, ] fi&, †k ( 6 I%& 18 %) #£9 H M* &R 91% ru£ EX MOAMn#**n, *, # ) »I ff*lét: (1) **ktFkÅ, † * 9 C-k m tpp@ , #i+ 4 Ylllt4i+M;Iý ,kk>tm -* M2 RI , &*@IiM I, 7 4X¶nk1 W# A\tKt 4í3 4 AP ift †ix ffi -g-ARJk tl k t 4,7T dt ý1-5 R, m*1 i+ 4 Y11,f1ìý0 1† Pli, it4M el Å, t †J4f 7 i+ T44-i 1& At R r,9f,. '(4 1J†é%. 'tff3#ÅRfr fr4kt±†lS N, £W{±I Mt1 F $lf#Mtn fä $ tfWilitif4t91.EI tAlA Ät ―숟 I Auditor's Opinion Auditor's Opinion Urumqi Heating Reform and Building Energy Efficiency International Technical Cooperation Project Office We have audited the special purpose financial statements (from page 6 to page 18) of Urumqi District Heating project financed by the World Bank, which comprise the Balance Sheet as of December 31, 2015, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement and the Designated Account Statement for the period then ended, and Notes to the Financial Statements. Project Entity and Autonomous Region Provincial 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 Designated Account Statement is the responsibility of Autonomous Region 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. Auditor's Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Goven-tment Auditing Standards of the People's Republic of China and International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perfonn 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 depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor 3 considers internal control relevant to the entities' preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is appropriate and sufficient to provide a basis for our audit opinion. Auditor's Opinion In our opinion, the financial statements identified in the first paragraph present fairly, in all material respects, financial position of Urumqi District Heating Project financed by the World Bank as of December 31, 2015, its financial receipts and disbursements, the project implementation and the receipts and disbursements of Designated account for the year then ended in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement. Other Matter We also examined the withdrawal application from 012, 013, 014, 015, 016, 017, 018 and the attached documents submitted to the World Bank during the period. In our opinion, the withdrawal application and the attached documents complies with the project loan agreement and can serve as basis for loan withdrawal. The audit report consists of the Auditor's Opinion and two more parts hereinafter: Financial Statements and Notes to the Financial Statements, Audit Findings and Recommendations. Xinjiang Uygur Autonomous Region Audit Office of the People's Republic of China June23 , 2016 4 Address: NO.186 Jianshe Road, Urumqi City,Xinjiang,Uygur Autonomous Region, P.R. China Postcode: 830002 Tel.: 86-0991-2815503 Fax: 86-0991-2815503 5 II.Financial Statements and Notes to the Financial Statements ( ) WFfl i. Balance Sheet BALANCE SHEET 2015 * 12 A 31 H (As of December 31, 2015) Project Name: Urumqi District Heating Project by the World Bank A tT tt *tk:A IF AeAX LA N ~ftYKf V f II~ )b- Prepared by: Urumqi Heating Reform and Building Energy Efficiency International Technical Cooperaton Project Office Currency Unit: RMB Yuan 1& d! I r Line ft * MM Beginning Application of Fund No Ending Balance Sources of Fund Line No. Beginning Balance Ending Balance Balance r I-tit TalProict .Ilifli+ TotalProjectExpenditures 1 1,660,339,33266 1,915,889601 13 28 473,100,000.00 709,621,50000 Appropriation Fonds 2 29 Fi.ed Assets Transfenred Project Capital and Capital Surplu 2 f4t*Rf tBa301:MMA 3 30 Coustnuction Expenditues to be Disposed Including: Grants 3 tHlBk InvestenItsTansfitsd-out 4 A F R*tit Toal Project Loa 31 1,216,152,463.42 1,308,931,733.18 L Alliva Total Project 4 an12 Construction Progress 5 1,660,339,332 66 1,915,S9,601 13 32 1,216,152,46342 1,308,931,733.13 Invesanent Loan , Edif4 RRfliR(1) 15191fli 6 33 391,152,463.42 563,931,733 18 Invstimet Loan Receivable Foreign Loan ass&Ialk l-flC Including: x4 5fIaiff t1 7 34 - World Bank Investmnt Loan Receivablo Including IDA 35 391,152,463.42 563,931,7333.18 Appropriation of Investment Loan IBRD Inluding Appropriation of World Bank 9 36 Technical Cooperation Investmemo Loan V| Bit Equipment 10 63,989,964.07 83,345,771.52 QM I Co- Financing 37 ~A#WN'Io*M 02) 19P4 . 11 35 825,000,000.00 745,000,000.00 Including& Equipment Losses in Suspense Domestic Loan 0 *. *iBIa it Total Cash and Bank 12 230,566,459.85 166,141,759.46 2- Allif5k OMher L.n 39 n.uIn# 1a1 J-rnRAiRWn 13 230,566,459,85 166,141759.46 40 Cash in Bank 6ppoapriean oflInvesnmni Ion 14 27,240013.73 7,479.2367 41 Including Special Account including World Bank Lan 2 mIt& CashonHand is It*1! % it Bond Fund 42 8 (To be continued) 6 16 113,340,262.47 127.002,149.22 Construction Expendirs to bo 43 Total Potpaid and R.eivabl. Offsct Inlddng: World Bank Loao lnterrt 17 44 374,305,293.59 269,434,63742 Tol Pavable Receivable World Bank Loan Commitment Fer 18 - Inoluding: World Bank Loan Inermsc 45 ReceiablePayable World Bank Lan Sorvim- Foe 19 - World Bank Loan Conmitment 46 Receivable For Payacl 20 World Bank Loan Servico For 47 Maktablo Seuriti.s Payabl , EAtit e5gR*lit 2 48 39,81553 44,$11.36 Total Fixed Assets Other Payable 22 49 Fi..d Asers, Cost Approprtiaon of Fond 23 50 4,638,446.51 5,546,89937 Les Accumulated precian Retainod Eanings 24 Fixed Asseis, Not ii&ýt NAt ftit 27 2,068,236,01905 2,292,579,28133 51 2,068,236,019.05 2,292,579,20133 Total Application of Fond Total Somcesa of Fond 7 ii.Summ ary of Sources and Uses of Funds by Project Component SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT I A A 2015 - 12 R 31 H (For the period ended December 31, 2015) Project Name: Urumqi District Heating Project by the World Bank Prepared by: Urumqi Heating Reform and Building Energy Efficiency International Technical Cooperation Project Office Currency Unit: RMB Yuan Current Period Cumulative Current Current Period Current A H f i if Aam Civ Period cu i Period % Life of PAD Cumulative Actual Cmlte% u t Actual Completed Completed Total Sources of Funds 231,727,00000 329,300,769.76 142.11% 2,299,760,000.00 2,018,553,233 18 87.77% I a231,727,000.00 172,779,26976 74.56% 670,000,00000 563,931,733.18 84.17% itetio nlfianSLng, g 1. t t!MSMf 23),727,000.00 172,779,269.76 7456% 670,000,000.00 563,931,733.18 84.17% WB Counterpart Financing 156,521,500.00 1,629,760,000.00 1,454,621,500.00 89.25% . ~ AppropriationFunds 236,521,500.00 422,892,000.00 709,621,500.00 167.90% (1) AMELE Prefectural level counterpart fund 1,521,500 00 294,116,000.00 474,621,500.00 161,37% (2) 440- Others 235,000,000,00 128,776,000.00 235,000,000.00 182.49% 2. ftzkE Other Loan -80,000,000,00 1,206,86s,000.00 745,000,000.00 61.73% Total Application of Funds (by Project 265,698,000,00 Component) 255.550,26847 96.18% 2,299,760,00000 1,915,889,601.13 83.31% 51,326,000.00 1.6 EXAMI Shaqu Shayibake (SHN) 42,926,70664 83.64% 921,380,000.00 635,830,016.03 69,01% 2 .11t=MAV1n Ururmci Weidian 111 (UHN) 107,632,000 00 85,429,427 39 79,37% 1,183,020,000.00 794,405,264 22 67.15% 3.,t4iE* Front-end Fee 1,623,400,00 4. VLAik*fl Istitutional 9,320,000.00 Strengthening and Training 3,668,31181 39.36%6 9,581,524 80 3,668,311.81 38.29% 101,120,552.27 457,957,33871 6 97,420,000.00 22,405,270 36 23% 185,778,475,20 22,405,270.36 12.06% A Difference 73,750.501 29 102,663,632.05 I. 13,661,886,75 127,002,249.22 2. vt1Rft -10S,870,656 17 268,434,63742 3. imiff"t -64,424,700.39 166,141,75946 4 994 19,535,807 45 83,545,771 52 5 WE -913,148.69 -5591,41073 8 〕啊－ -,-1―님「 V ttp iv. Designated Account Statement -rK z * P # DESIGNATED ACCOUNT STATEMENT 12015 * 12 ] 31 H (For the period ended December 31, 2015) A Project Name: Urumqi District Heating Project by the World Bank 8046-CN Loan No. 8046-CN Prepared by: The Finance Department ofXinjiang UygurAutonornous Region )TP * ff t #: P W ik ff * ONP-C 3 - tf A M Depository Bank: China Bank Xinjiang Branch SUB 108223318310 Account No.: 108223318310 Currency: USD A 93 : *9 Part A-Account Activity for the Current Period Amount 4,451,710.04 Beginning Balance Add: 22,920,000.00 Total Amount Deposited this Period by ADB 337.78 Total Interest Earned this Period ifDeposited in Special Account M T 4 A Lb H A 10- 9 Total Amount Refunded this Period to Cover Ineligible Expenditures Deduct: * M A ill A 0 26,220,26242 Total Amount Withdravm this Period *M+P MrtJ4,tVt nJJK*_%7 -ffl Total Service Charges this Period if not Included in Above Amount Withdraym M*15M 1,151,785.40 Ending Balance (. ITo be continued Parn B-Account Reconciliation Amount 10,000,000-00 Amount Advanced by ADB Deduct: 2. 11 $1IF& Total Amount Recovered by ADB 3. *#PRR Outstanding Amount Advanced to the Special Account at the End of this 10,000,000o Period 4. ## 1PM V 1,151,785.40 Ending Balance of Special Account Add: 5. 99AMM* i4R41A E AM 8,850,527,03 Amount Claimed but not yet Credited at the End of this Period Application No. Amount 6, i 4,532.22 Amount Withdrawn but not yet Claimed at the End of this Period 7 f Rljifili (05fff 5816 9) 1000 Cumulative Service Charges (If not Included in Item 5 or 6) Deduct: 8. AA&A (4AWRPWV ) 6,85465 Interest Earned (If Included in Special Account) 9. P Total Advance to the Special Account Accounted for at the End of this 10,000,00000 Period 12 닙「 ;:-- -: --! …1,9…………11……………币… ；其中指定账户存款折合人民币7,479,233.67元。 ’…配欲丫… 项目计划配套资金总额人民币1,629,760,000.00元，截至2。巧年 …一’ 1 2015年12月31日余额人民币5,546,89937元注要是银行存款 &{｝矛习。息叼交入。 {5．指定账户使用情况 ’本项目指定账户设在中国银行新疆分行营业部，账号为 :108223318310，币种为粎元。本年指定账户净额为10,000,000.00美 元，2015年年初余额4,451,710.04美元，本年度回补22,920,000.00 粎元，利息收入337.78粎元，本年度支付26,220,2 62.42美元，年末 余额l,151,785.40美元。 …… { v Notes to the Financial Statements Notes to the Financial Statements 1.Project profile The Loan Agreement of UDHP (Urumqi District Heating Project)was signed in June 8, 2011, and became effective in the same year, the construction of UDHP will be completed in December 31, 2015, Closure of loan account will in December 31, 2015. The proposed project development objective (PDO) is to connect consumers in selected districts of Urumqi City to district heating services with improved energy efficiency and environmental performance. Total estimated cost of UDEP is RMEB 2.3 billion Yuan, including the Word Bank Loan of US$ 100 million (RMB 670 million Yuan), about 30% of total cost. Counterpart funds are RM[B 1.63 billion Yuan, about 70% of total cost. There are three components in the LJDHP: I Component A. Shuimogou District Urumqi CHP Plant District Heating Network (UHN) 2 Component B: Shayibake District CHP Heating Network (SHN) 3 Component C: Institutional Development and Project Management 2 Consolidation Scope of the Financial Statements Consolidation scope of the financial statements covers the financial statements of the Urumqi Heating Power Parent Company (Heating Power Parent Company), as well as the Designated Account set in the Autonomous Region Finance Department. 3. Accounting Policies 3.1 The Financial Statements of the project were prepared according to the requirements of Accounting Methods for the World Bank Financed Project Xa izi[2000]Nb. 13 ) . 3.2 In accounting practice, the Gregorian calendar year is adopted as the fiscal year from January I to December 3 1. 3.3 The accrual basis and the debit/credit double entry bookkeeping method are adopted. RMB is used as the recording currency of bookkeeping. 3.4 The exchange rate adopted in the financial statements was the exchange rate on December 31, 2015 of the People's Bank of China, which is USD I RMB 6.493 6 yuan. 4.Notes for the main accounts 16 4.1 Total Project expenditures The project expenditure in 2015was RMB 255,550,268.47 yuan, and the cumulative expenditures were RMB 1,915,889,601.13 yuan, which accounted for 83.31% of the total investment plan. 4.2 Equipment By the end of December 31, 2015,th e balance was RMB 83,545,771.52yuan. 4.3 Cash and Bank By the end of December 31, 2015 the balance was RMB 166,141,759.46yuan. And the funds in the Designated Account were converted to RMB 7,479,233.67yuan. 4.4 Prepaid and Receivable By the end of December 31, 2015, the balance was RMB 127,002,149.22yuan, mainly the prepaid, and the internal transfers between the business account of the Heating Power Parent Company. 4.5 Counterpart Funds The balance on December 31, 2015 was RMB 1,454.621,500.00yuan, which was the free counterpart funds and the domestic bank loans. The total planned counterpart fund of this project was RMB 1, 629,760,000.00 yuan. By the end of 2015, RMB 1,454,621,500.00 yuan of the counterpart funds had been allocated, which accounted for 89.25% of the plan, including the local level counterpart fund of RMB709,621,500.00yuan and the domestic bank loan of RMB745,000,000.00 yuan. 4.6 Foriong Loan The balance on December 31, 2015 was RMB 563,931,733.18 yuan. 4.7 Payable The balance on December 31, 2015 was RMB 268,434,637.42 yuan, mainly payable to the equipments, engineering and quality assurance deposit of the construction entities. 4.8 Other Payables Its balance on December 31, 2015 was RMB 44,511.36 yuan, mainly interest earned of Designated Account. 4.9 Retained Earnings The balance on December 31, 2015 was RMB 5,546,899.37 yuan, mainly 17 interest earned of bank deposit. 5. Designated Account The Designated Account of this project is set in Depository Bank: China Bank Xinjiang Branch SUB, with the account number of 108223318310, and USD account. The initial Deposit of the Special Account is USD 10,000,000. The beginning balance of 2015 was USD 4,451,710.04and the reimbursement in the year was USD 22,920,000.00. This year the interest earned was USD337.78and the disbursement was USD 26,220,262.42. This year the total service charges this period if not Included in above amount withdrawn was USD Thus, the ending balance was USD1,151,785.40. 18