80592 3 0 JUN 20l3 t:J:t$A~~~(Epg~t1EintrKFJlltff Audit Office of Inner Mongolia Autonomous Region of the People's Republic of China Audit Report ~ tfJ 1~* (2013 J 002% AUDIT REPORT ( 2013 J No.002 Project Name: Bayannaoer Water Reclamation and Environment Protection Project Financed by the World Bank ~ ** %: Loan No.: 8047-CN 8047-CN Project Entity: Hetao Water Affairs Group Co., Ltd. of Bayannaoer City ~it-1¥-lt: 2012 Accounting Year: 2012 Contents -, 'iflitYiP:t-~ ...... .................................................... ........ 1 I .Auditor's Opinion ........... . ................................................ 3 =-' Jilt 9}1&-*:&JI!t9}** ffl"jf. ................................................5 II .Financial Statements and Notes to the Financial Statements ............ 5 ( - ) *"*.3f2-1*f-*: ............... ........ ........................................ 5 i.Balance Sheet .................................... . .. . ..................... ....... 5 (=- ) JjJi El *-lr.-*: ..... ........................ ..................................... 8 ii.Summary of Sources and Uses of Funds by Project Component .......... 8 - ) ,(.l!:, St.. +.J.. ~ -1-.l. /. - 1hi;. ~1;;1 ~ ( .::::. _9;!. JfiA WJ' A:. 'lJL IT 1FJ ~I.J~ . • . • • • • • • • • • • . • • . • • • . • • • • • • • • • • • • • • • • • • • • • • • • •••••• 12 iii.Statement of Implementation of Loan Agreement ...................... 12 ( ll!1 ) 1t )fJ Ji!l(? **........................................................... 13 iv. Special Account Statement ................................................................. 13 ( 1i ) J!t ~** 13ft7i ........ ...... .... ........................... ............. ..14 v. Notes to the Financial Statements ......................................................... 17 .=.' $it$:_~~ liiJ J/Jll)._Ji-1,)( ............................................ ...... 20 TIL Audit Findings and Recommendations .................................... 22 ~1fJ 'ij1it 1 i!t-Yf-1Rff~#~ ~ffi)~~ -rfr;j(~:!_t~~j~l1_~ f3 2012 ~ 12 A3 1 8~~~+-*&«~~a~$~~~§*~*·~-~ ~~ff~~*~~m•~**$*~§~M~-*&M~-*~~ (~5 yr ~~ 19 yr ). ~~x~M~**~~~~+•*·~§*~*&~-~~~rr ~~*~~~~•*'~~~m•~•*~~·~~~gN•ff~• 1:£:, ~~-1f~t5-: 1. ~~~00~~**~· ~#~~~*~§~-~~~~~­ ~~§M~-*) #~~~m0ft~~; 2.~#. ~ff~~~~~~~~~~. ~~~§M~-*~# ~~f•~~-~w~~~•*••· ~m~•*~~~ff$~I~~£·L~~~-*~*$#. ~-~ill~~~OOOO*lf1#*~~00~'tf1#*~~~~~1TJ$#I *·~~*~~~~ill-~$*~~4*,#~~~h$#I~~~ ~§M~**~~~*~~*··~~~~~~. ~~•**M~•*~•~••~~~~*~•.~m~~J~ ~~'tfi#fi~.~m~m~~~••••#ft~.~~~~~M~~ r•~~-*~~~M~~*~*~-~~~w~.~*rr~~w~ ~.~J~#~~~•#ft~.~m~4J~M~•*~*~~~~ ~~' 1EI § ~#~f~~~~*~~*~'liJt-*:t~. lfJiti~lf~t!iftJt m~m~*••~~~~~~ili~#~#~~~~,~aw~M~• *~ ~~-1*jU *· ~m~~, ~m~~~•*~•~~~~-~~~,~~**# am~~,•-mm~~~-•~m~•*~w*~~oo~4~ $~.~#~~~*~~~-~~~4*-~'~ft~~1~~-fi ~~~ff)~$rfr;rj(~:lJt~~1~ll~ E1 2012 1f.- 12 }J 31 B ~~~i*{)L aa~~a~~~~~~~~. ~Elftfi~*m•P~~~{)L. am•*1*M~~~~~~~n•~~~fi~• ~ %*~~ •~am~•~. am~~,~®·~~*~~~~~~~*'~~ tt~ ~mi'ttltrg1tii. **~~~~z~,#~~~•~•%~~~oo~~~= M~• *&~~--~~~-~km~RM&~~. :l~:hl. : ~ 00 ~~* ~ j~ ~~~Ya-~rfr***1tJ 116 % lb~*~~ : 010020 t ~ : 0471-6634918 1t ,__: 0471-6634651 I .Auditor's Opinion Auditor's Opinion To the Leading Group Office of World Bank Financed Bayannaoer Water Reclamation and Environment Protection Project We have audited the special purpose financial statements (from page 5 to page 19) of the World Bank Financed Inner Mongolia Bayannaoer Water Reclamation and Environment Protection Project, whlch comprise the Balance Sheet as ofDecember31, 2012, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement and the Special Account Statement for the period then ended, and Notes to the Financial Statements. Project Entity and the Finance Department of Inner Mongolia Autonomous Region's Responsibility for the Financial Statements The preparation of the Balance Sheet, the Summary of Sources and Uses of Funds by Project Component, 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 the Finance Department of Inner Mongolia Autonomous Region, 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 fmancial statements are free from material misstatement due to fraud or error. Auditor's Responsibility Our responsibility is to express an opinion on these fmancial statements based on our audit. We conducted our audit in accordance with the Government Auditing Standards of the People's Republic of Chlna and International 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 depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements due to fraud or error. In making those risk assessments, the auditor 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. Opinion In our opinion, the financial statements identified in the first paragraph present fairly, in all material respects, the financial position of Bayannaoer Water Reclamation and Environment Protection Project financed by the World Bank as ofDecember 31,2012, its fmancial receipts and disbursements, the project implementation and the receipts and disbursements of special account for the period 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 No.1 and the attached documents submitted to the World Bank during the period. In our opinion, those documents comply 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. Audit Office of Inner Mongolia Autonomous Region, China June 15, 2013 Address: No.116, East Ring ofUniversity Avenue Huhhot, Inner Mongolia, China Post Code: 010020 Telephone: 0471-6634918 Fax: 0471-6634651 The English translation is for the convenience of report users. Please take the Chinese audit report as the only official version. _ , IT. Financial Statements and Notes to the Financial Statements (-)jtf~Jfl-~* i. Balance Sheet ~~lJl-~* BALANCE SHEET 20 12 ~ 12 }J 3 I 8 (As of December 3 I, 20 12) ~~~~ : ~~~fi~~~~*~$#~~ ~ ~~~~~ •••tt: Project Name: Bayannaoer Water Reclamation and Environment Protection Project Financed by the World Bank Prepare d b ~••~•~•# •• m~~~ ~ . G roup C0., Ltd. 0 f Bayannaoer c·tty >y: Hctao Water A ffiatrs •~~ft: A ~~ft Currency Unit: RMB Yuan fi fi ~ ~ Jfl .M-WJ«*: 1Jl-*«*: ~ ));: M-WJ«t M* «* * Application of Fund * Line Beginning Balance Ending Balance * fi. Sources of Fund * Lin e Beginning Balance Ending Balance No. No. - , lj! 13 tUJ~ ~it - , 1Ji13j:ili~it Total Project Total Project I 40,420,432.54 134,494,884.25 Appropriation 28 - 27,300,000.00 Expenditures Funds - , lj!13~ -* .!ii1Jil3~ _ I 3t f11!1! }fj * f' *IJ}~ Fixed Assets 2 - - Project Capital and 29 - - Transferred Capital Surplus 2. fHHi1l 1Ji 13 .t ili Construction ~.P:ffi • tt Expenditures to be 3 - - Including: Grants 30 - - Disposed 3. ~~ili~ft 1Ji !Hit;j: -8-it Investments 4 - - -· Total Project Loan 31 40,000,000.00 119,651 ,729. 13 Transferred-out 4. -tntif! I. lji 13 ~ ftiit it Construction in 5 40,420,432.54 134,494,884.25 Total Project 32 40,000,000.00 I 19,651 ,729.1 3 Progress Investment Loan .::.. 1J!t1.f' ~ttNft1it~ ( I ) 00 ~~1{}~ Investment Loan 6 - - Foreign Loan 33 - 30,651 ,729. 13 Receivable ;n. tf :l't ~ 1. f' 1fL1!1 t!t -lt- cp :00 15-F :1f ht'f:J: ~#}~ Including: World Bank 7 - - Lncluding: 34 - - Investment Loan IDA Receivable -· - ~ ·tm .at!t*it.:.t 00 ~~1t1t \ppropriation of 8 - - 7f~itHr 35 - 30,651 ,729.13 Investment Loan IBRD ~l±l :~ fti!trr}HJ: -it-*-8-ft: Including :Appropriatio 1t~ n of World Bank 9 - - Technical 36 - - Investment Loan Cooperation fT fr ~ ~ (; ffl jtlj.fl] ~ jtlj* ~ :t ~ WHJJ~ m*lt Application of Fund * Line No. Beginning Balance Ending Balance * *Fund Sources of iJ Lin e Beginning Balance Ending Balance No. M~l!~ 1!!1 . ~.# Equipment 10 - - Co- 37 - - Financing ;it 4' :~~ ~~&.#.fP't !}t (2) Ill ~11Hi Including: Equipment II - - Domestic Loan 38 40,000,000.00 89,000,000.00 Losses in Suspense Ji, ~t iii Jf:t~it 2 . jtf{~.1tr~ Total Cash and Bank 12 958,039.44 28.02 1.341 .04 Other Loan 39 - - 1!!1. J:. tJU.l A. ft Jf 1i 1,t I. ilffff~ Cash in Bank 13 958,039.44 28,02 1,341.04 Appropriation of 40 - - Investment Loan :)t.cf:' :~.A t!tfi~ jt 1J!!3;tlll ~ /' • Construction Total Prepaid and 16 20, 199,941.90 33, 121.279.93 Expenditures to be 43 - - Receivable Offset Jt:cf:' :~~t!tii}f~~J .~. Including: World Bank 17 - - -G. Total Ji 1t~~it Payable 44 21 ,578,413.88 48,685,776.09 Loan Interest Receivable .btc&t!trrjfiJ.:ift Jt: cf:' :m ftt!trr~ ~t ~,flj.~. World Bank Loan 18 - - Including: World 45 - - Commitment Fee Bank Loan Interest Receivable Payable )s:L ft t!t{t~~ Iii:& t!t rr ~·ut •* ~~~ .s- Jf) t World Bank World Bank Loan 19 - - Loan 46 - - Servi~;e- Fee CommiliTlent Receivable Fee Payable 1ti. ft t!t rrjt #.t Jf :tfi.lfl~ -G . 1fffl'iiE~ 20 - - World Bank Loan 47 - - Marketable Securities Service Fee Payable ;\. t!J;tJfr:~it ;\. ;;jt3(~~it Total Fixed Assets 21 - - Other Payables 48 - - .fL • ..lflit )-.Jf:t t!J)tilf!'~ffl' Fixed Assets, Cost 22 - - Appropriation of 49 - - Fund ~ : 1. ~HITIB Less: Accumulated 23 - - -r. rn~~.A 50 - - Retained Earnings Depreciation ff ff M:fJJ «*: ~*-«*: ~ WH11tt .Wl*«t ~ -i- 6 ffl ~ -:t ~ Application of Fund Line No. Beginning Balance Ending Balance * * Sources of Fund Lin e Beginning Balance Ending Balance No. III~~f'ltlt Fixed Assets, Net 24 - - - - m~~f'1ill! Fixed Assets Pending 25 - - - - Disposal # ;t l! f!l ;t ~f' 4~ Fixed Assets Losses in * 26 - - - - Suspense ~ ~ 6 )fJ .g..it itt~ JIOffi .g.. it 27 61.578,413 .88 195,637,505.22 51 61 ,578,413.88 195,637,505.22 1 otal Application of Fund Total Sources of Fund ( .:: )lJil3lltlt*: ii. Summary of Sources and Uses of Funds by Project Component ~ lit It*( - ) lJi SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT 1 *M~:f 2012 ~ 12 JJ 31 s (For the period ended December 3 1, 2012 ) ~~~~ : ~~~fi~~~8~~~~~~~~~~~§ Project Name: Bayannaoer Water Reclamation and Environment Protection Project Financed by the World Bank ~*~tt: ~8~~~~*~~~m~~0~ ~~~~= A~~ft atrs G roup C 0 ., Ltd 0 fB ayannaoer C"1ty Prepared by: I Ietao W.ater A ffi. 0 Curren~ Unit: RMB Yuan ..fi:M i{rr Current Period Cumulative ~ W:J i ~:M~Ji 4>: M:&1::~ 4>: JIJl ~/i!W: ~it~JllG~ ~if~l&:l:t Current Current Current J.W E1 ~. rr:MSI Cumulative Cumulative Period Period Period \ Life of PAD Actual ' Coapleted Budget Actual Completed ~~;f(:~frit 128,851, 729. 13 101\, !151, 72!1. 13 113. 00\ I, 094, fi.lfl, 100. 00 146, 9iil, 729. 13 13.43\ Total Sources of Funds - ' )]j ~J·~ihm~~JX International 30, 6SI. 729. 13 30, 6ii I, 72!1. 13 lOll. (10\ S32. 328. 100. 00 30,t;.'il, 729.13 5. 76\ Financing l. ~ ~F~D'Hf :&itHr ~(). 651,729. 1:1 :m. 6iil, 72!1. 13 100. 00'11 ii32, :\28, t 00. 00 :10, t;.; I. 729. 13 5. 76\ IBRD _: ,'1£-{t~~ !Ill. 200, 000. ()() 76, 300, 000. 00 77, 7()lt. 562, 220. 000. 00 116. ~00. 000. 00 20.69\ Counterpart Financing 1. J:t!rJJi&.Jr.H£1f Counterpart Financing - - - - - - from Localgovernmcnt 2. M~11MX Financial Loan 70, ()00, 000. ()() 19, 000. 000. 00 70.00\ S62, 220, 000. 00 89.000,000.00 15.83\ 3. JJ EHl,t.~ Project 211.200.000.00 21, 300, ()(XI. 00 96. 1!1'\ 28, 200, ()()(), 00 27 •.'1()(), ()()(). 00 96.81\ Appropriation Founds fi ~.em {:;- rr Total Applic~tion of 94.074, 1iil. 71 91,074. l:i 1. 71 Ill().()()% I, 094, ll1li, 600. 00 13~. 1!14. 881. ~;; 12.2~ Funds (by Project Component) l. CHili (~ ~t-J J§ Bit IIJ1::)j( r - - - 132, ~18. OOCl. 00 0.00 0.00% Wulatehouqi Reclaimation Water Treatment Plant 2. Cl-HJ rfJ:4:*r <3 !t+ > Reclaimation W ater Treatment Plant (Drainage - - - 99,151. 100. 00 0. 00 0.00\ No. 3) 3. CI- WY rJJ 1::J!< r <1 til -r ) Reclaimation W ater Treatment - - - 109. 120, 100. 00 0.00 0.00\ Plant (Drainage Xo. 7) .~.>.:W] *~ CmTent Period Cumulative ..t>:WJit-tJ~ 4>:WJ&1:lil ..$: WJ Ji:hiHt W. ~I ien.!ZWl ~ ~tJt}J)G lt Current CurTent Current ~ o.({t ~ rtJ fi!Jl Cumulative Cumulative Period Period Period 'l Life of PAD Actual 'Conpletcd Budget Actual Completed 4. CL-GQ HJt~~lrf~* r Ganqimo:todu - - - 15!\, 2~3. 900. 00 0. ()() 0.00% RE.'claimalion W ater Treatment Plant 5.C2-WH (~ ti% Jfi .hff y.j* 5tt JIP.r W latehouqi 17, 12!1, 266. 20 17, I:N, 266. 20 100.00\ 7b, :181, 100. 00 I!1, 330. 8211. 37 25.31\ Wastewater Treatment Plant 6.C2-GQ lllt~tfly.j*5ttll r Ganqimaodu Wastewater 34, o:10, 244. 611 ~1. 030, 2H. 66 100. ()()% 129. 092, 000. ()() 3ii. Hllfl, 026. 16 27.80% Treatment Plant 7. C2 · WQ f'J ~*¥iitr.6ft75* !ll: JW.r W ulateqianqi 32, 118, &16. 76 32. 11 ~. &16. 76 100.~ 110, 1105, :lOO. ()() 36, 860, 387 117 26. 18\ Wastewater Treatment Plant 8. C3-AW (~~itiftJA TlRil!! ?Hil!!i!W: C3- NP f~~~#l dliill;iN~fllli'l~mtMJ! ~ Construction of Artificial W etland of Wu: iangsu Lake - - - 12!1, 510. 000.00 0. 00 0.00% Construction of Demonstration Station for Wuliangsu Lake Non- point Pollution Control 9. C3-WL ~~~~#'~M.m*itt - U!ti Construction of Grid - - - I02, 309, 800. 00 0. 00 0.00% 1 ~anals of W uliangsu Lake ai-rfliff (DRC) Design Review - - - - - - :m Ditf!RfrfriJ Project M anagemrnt - - - - - - Contract atit!?. Other 10, 1!16, 291. 0!1 10. 1%,291 0'1 100. ()()'4 20. 021, I 00. 00 12,415,611 . ,,;; 211.82% ~# 12, H71, 217 42 12, 456.1!11 RR Difference - - - l. }1\i t&BJ\11::f,t Change in Receivables - 12. !121, ~~8 . 0:1 - :13,121 , 27!1. 9:\ - ~ - 1•Y.N.:X~ft Change in Payables - - 27, 107, 162. 21 - - - 11!, 6115, 771\. 09 3. ~ffi~Q~f,t 27. Ob:l, lO I. 1i0 Change in Cash and Bank - - 211,021. 3·11 01 - 4. Jt·~ Other - - - - ~ ~ ~lt*(.::.) SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT II -*M:it~ 2012 .1f 12 JJ 31 13 (For the period ended December 31, 2012) ~m~•= ~~-ft~•~•*~•~~~•+~•~m Project Name: Bayannaoer Water Reclamation and Environment Protection Project Financed by the World Bank ···~: ~--~$M·~~-OO~M~~ Preoared bv: Hetao Water Affairs Grouo Co.. Ltd. of Bavannaoer C" ~ tjj JV!.1ft: A.~ fjlj(j -- - - - 19i13~lli Project Expenditure ~13f*J.'fl. e.~1t~r J. it:t ~ Assets Transferred it~.If! f.H~il'l~ 13 :t ~~it~ Project Component ~ Construction Cumulative m>tilr Ut.i/JWtr ;tJtH~r ilJt~r Work in Expenditures to Investments Amount Current Intangible Deferred Progress rransferred-out Fixed Asset be Disposed Asset Asset Asset I. !Hi#railtiii.I!ili!IH= .. ~~~;r.~ Reclaimed Water Supply Project in 4,646,929.46 .. . . .. 4,646,929.46 .. .. Wulatehouqi Industrial Zone 2. =-~~f"~ i.~~~.I.fl Reclaimed Water Supply Project in Drain 2,716,715.42 . .. .. . 2.716.715.42 . .. No.3 3. -l:;fjff"¥f1o~~~.If! Reclaimed Water Supply Project in Drain 2,964.489.77 .. . . .. 2,964,489.77 .. .. No.7 4 .~~~~o~w.I~I!Ni.#~~.I f1 Reclaimed Water Supply Project in 5,163,344 22 .. .. . .. 5.163,344.22 - .. Ganqimaodu Industrial Zone 10 1JHl.t l±l Project Expenditure :tgi~pg~ E.~ 1t1f ;r .fHiifi:t.9i ~ .t Project Component lit.t ili Assets Transferred -tnt I *I 1±l Construction 4~ l±l ~}t Cumulative [il;t~;r Vt..#J}trr ~Jf}~F li!~~F Work in Expenditures to Investments Amount Current Intangible Deferred Progress Transferred-out Fixed Asset be Disposed Asset Asset Asset 5. ~ti:~fc'jjl~I~ I! ( '9-~tt) ~JJ/i iiJ Jl4f-~Jt ~l Consulting Service & Training 3,000,000.00 - - - - ( I ) >If. 1§) Jll?}Consulting Service 1,900.000.00 - - - - < 2 > Jtv:l. ~# ~. ::f~ Training, Workshop, Stud) tour 1.100,000.00 - - - - 4. JtAiE 1( Front-end-fee 200,000.00 - - - . 5. ~1fl ~ I' Special Account - 3.105,935.23 19,522,355.89 3.105,935.23 19,522.355.89 .~. it Total 80.000,000.00 - 4,876,577. 70 30,651 ,729.13 4,876.577.70 30,6.51 ,729. 13 12 (jlg){-Jfl~?~* iv. Special Account Statement -tm~?** SPECIAL ACCOUNT STATEMENT #.M~~ 20121F- 12 JJ 31 El (f'or the period ended December 31, 20 12 ) ~§~~: ~~~rr~~~ffi~~w~~~ *?~rr~~: ~*~fi~~~~~rr ~,g.~Jf~EI Project Name: Bayannaoer Water Reclamation Depository Bank: AccountChina Everbright Bank, and Environment Protection Projec Hohhot Branch Financed by the World Bank ~~: 50121488000000949 $f~ %: 8047-CN Account No.: 50 121488000000949 Loan No. 8047-CN ~rji#~: *-it ~~~1i: fj'J:i!J§~I[)!t~Jf Currency: USD Prepared by: The Financial Department of Inner Mongo rta Autonomous R egwn · Atil7/-: *.,~J8*Pill:.t'IA'~ i;l Pan A-Account Activity f()r the Current Pcnod * Amount AHn*''- Beginnmg Balance ;f .i;P: Add *JJlt!!:ftiE! ~)·.~· 'R Total Amount Depos1ted this Period by ADB 5,000,000.00 *~~~ill:A!·(~A•m•p¥7/-l Total Interest Enmcd this Period if Dcpos1ted in Special Account *~Ff~.tH. liP'H£~. jjt Total Amount Refunded this Pmod to Cover Ineligible E-: Deduct *~.t fi ~- tl Total Amount WithdnlM th1s Period 1.894.054.77 *M*-@.tliti t H$1. : Deduct 2. l!t-:W-iafftm lit.~. $t Total Amount Recovered by ADB 3. *JVLW!'*- ~-m J!*p 1tl;t~~it• Outstanding Amount Advanced to the Spcc1al Account at the End ofthts 5,000,000.00 Penod 4_ -t ffl Jl( P )OJ.j{ :t; tJ Ending Balance of Specml Account 3.105.935.23 ~jp : Add: - 5. il:.f.#JV!M:K C.IJI~ilJIH!!.IN.rAclfl1Ht11! Amount Clatmed but not yet Credned at the End ofth1s Period '¥~'*~Application No ~-Amount 6. tt£-*MJIII;.i{ e.:.tttf!!.~* If! itilJII<.-!-$1 Amount Withdrawn but not yet Churned at the End of this I,894,054 77 Penod 7. !.l~*l i~ tli! ( tJ;f:-t-lt 5 -!tJ H"

X~~ it • Total Advance to the Spec1al Account Accounted for at the End of th1s 5,000,000.00 Period 1. ~ f3 ~{)L ~ffi5f1F"$"Jl<.lf1_t~~1~1!~ § ~~~% 8047-CN, J§i § }ti~¥f-fA.tl'*- ~~~~-*M*·~~-~~~,~~-~~-MJ1<.~~lf~~J1<.~~ ~,~~**~~~Jl<.~~~~~~Jl<.WJfJ$~~~~~~~~-~~* ~~~~~7~~~~, ~y*~~Jl<.~~·*~' ~~~¥~~-~ ­ M*·~~-MJJ<.~~lf~.~~J§i§~~~n~ffi*1F$~71<.*~*~ ft~R-,~~*~~~Jl<.*S,#R·~~~~I-*00~~,-$~ ~--'~*OO~~*ft*~~,~~ft*£~~lf~~~~-§~.~ w~~tdJ.Jt -r- 2011 1f. 1 JJ 1f. 10 JJ 21 a ~~:t, ~it 2011 29 s ~iT, 2011 1¥- 12 JJ 3 1 B ~ ~ fiL :gii 13 it~}j ~~-~~A~ fP 1,094,000,000 5t, ~ ~ ~tl JfJ-t!tfi~~ 8o,ooo,ooo fk:Jt, tJT~A~ fP 532,ooo,ooo ft <#tJYi § *~' ~fl%j~jt£$ 1:6.6541 ), OO~FJC.**~A~ifJ 562,ooo,oooft. 2. .P!t~fli;&~~JfE:IE *9!t~-;&~-~~IE~~~ffi-~$M*Jl<.~-ffi~~~~Jfti§ 91-~M~**~ 13 1~ ~M~Jf-tJfJY*? **· 3 . .i.~~it~Jlt '*-=9lt § $ « -t!t!f-.iRfi~~~~ § ~it~1f. j]-)t )) 9!t4J-*3&ii~ !Mt.!A· 3.1 cM ~~r- * c 2000 J 13 % ) r:t;J ~;JtiJ $JJ. 3.3 *JJi §~it~~ 1;.1_ "{X.Jt ~ ~ $JJ "ft 7a iEJi*j:jjl~' *JfJ 1{t~jt :«. iE ~ 7t iE!i*, 1;.1. 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Notes to the Financial Statements Notes to the Financial Statements 1. Project Overview Bayannaoer Water Reclamation and Environment Protection Project (Ln.8047) is aimed to the treatment of the water pollution in drains of Inner Mongolia Hetao Irrigation Area as well as that in Wuliangsu Lake, and prevents the water ecological environment of Yellow River from pollution. The project also aimed to establish a complete early warning system of water quality to protect the water ecological environment of Wulangsu Lake, Inner Mongolia Hetao Irrigation Area and Yellow River effectively. Besides, the implementation of this project could also optimize the water resources and exploit the reclaimed water resources of Bayannaoer rationally, as well as promote international and regional economic cooperation through the deep processing of the mineral resources (such as coal and copper) of Mongolia, to achieve the goal of win-win situation such as economic development and environmental protection. The Project Agreement was signed on July 29th, 2011 , carne into force on October 27th, 2011, and it will be completed on December 31st, 2017. The total investment of the project is RMB 1.094 billion yuan, of which USD80 million is World Bank Loan, which is equal to RMB532 million yuan according to the exchange rate of the Fund Application Report (1 :6.6541), and the other RMB562 million yuan is domestic counterpart funds. 2. Consolidation Scope of the Financial Statements Consolidation scope of the financial statements covers the financial statements prepared by the project office of Hetao Water Affairs Group Co., Ltd. of Bayannaoer City, and the Special Account Statement prepared by Inner Mongolia 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 ( Caijizi[2000]No.l3 ) . 3.2 In accounting practice, the Gregorian calendar year is adopted as the fiscal year from January l to December 31. .., 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, 2012 of the People's Bank of China, which is USD 1= RMB6.2855 yuan. 4. Explanation of Subjects 4.1 Total project expenditures The project expenditure in 2012 was RMB94,07 4,451. 71 yuan, and the cumulative expenditures were RMB 134,494,884.25 yuan, which accounted for 12.29% of the total investment plan. 4 .2 Cash and Bank On December 31, 2012, the balance was RMB28,021,341.04 yuan with increase ofRMB 27, 063 ,301.60 yuan compared with that of the last year. 4.3 Prepaid and Receivable Its balance on December 31, 2012 was RMB33, 121,279.93 yuan, mainly prepaid project payment; consist of main work of the three wastewater treatment plants, Wulatehou Banner reclaimed water project, and the Grid Channel Project of Wuliangsu Lake. 4.4 Project Appropriation Funds The balance on December 31, 2012 was RMB27, 300,000 yuan, which was the counterpart fund allocated by national and provincial governments. The total planned counterpart funds of this project were RMB28, 200, 000 yuan, among which RMB 27,300,000 yuan was up and running until December 31, 2012, equal to 96.81% of the total counterpart funds, including RMB 25,300,000 yuan of the special fund for environmental protection from central government and RMB 2,000,000 yuan (equal to 68.97% of the general plan) of the special funds for pollution discharge from Inner Mongolia Autonomous Region. 4.5 Project Loan The balance on December 31, 2012 was RMB 119,651,729.13 yuan, including RMB30,651,729.13 yuan of IBRD Loan and RMB 89,000,000 yuan of domestic loan. By the end of December 31, 2012, accumulated RMB 11,129,3 73.25 yuan of the World Bank loan had been withdrawn, accounting for 2.09% of the total. All of the withdraw funds is used for civil works, equal to 3.07% of the plan of such type. And the accumulated domestic loan amounted to RMB 89,000,000 yuan; it was 80.91% of the general plan. 4.6 Payable The balance on December 3 1, 2012 was RMB48, 685,776.09 yuan, mainly consists of project loan and the retained quality assurance fund of the three wastewater treatment plants. 5. Special Account The Special Account of this project is set in Huhhot Branch, China Ever bright Bank, with the account number of 50121488000000949, and USD as currency unit. The initial deposit of the Special Account is USD 5,000,000.00. The beginning balance of 2012 was USDO.OO. This year the service charge was USD10 and the disbursement was USD1, 894,054.77. Thus, the ending balance was USD3, 105,935.23. JQ