Audited Project Financial Statements

Project Number: 47009-002 Loan Number: 3215 Period covered: 6 July 2015 to 31 December 2016

People’s Republic of China: Guangxi Baise Vocational Education Development Project

Prepared by the Baise Municipal Government and Baise University

F or the Asian Development Bank Date received by ADB: 28 June 2017

The audited project financial statements are documents owned by the borrower. The views expressed

herein do not necessarily represent those of ADB’s Board of Directors, Management, or staff. These documents are made publicly available in accordance with ADB’s Public Communications Policy 2011 and as agreed between ADB, Baise Municipal Government and Baise University.

+ + K *4"A f 6Ji ik?,# tr F t+ tt Audit Office of Guangxi Zhuang Autonomous Region of the

People's Republic of China b Ht E1 Audit ort

ti H ,l'+R (2017 ) 42 + GX AUDIT REPORT ( 2OT7 ] NO.42

ry.fl 4 tB: f,.i^\ff k+F-tlfr +kr wH 8 4fl it+tH. kRryfl Project Name: Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank

ft. i't, t: 3215-PRC Loan No. : 3215-PRC

qfl +ilti+1n: H ETiT4ljIA E rFfi'ikryfl r1F4frS4.4X t1-^8. Project Entity: Leading Group Office for Project Utilized Foreign Capital of Baise City

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Accounting Period: July 6,2015-December 3 l, 2016 E Contents tl= rlr & ril 'q -'ItyrF,glr...... 1 I. Auditor's Opinion ...... 3 :. vt++v.hkrt++w.+p1t,i ...... 6 II. Financial Statements and Notes to the Financial Statements...... 6 (-),fr++|fi* ...... 6

i, Balance Sheet ...... 6 (-)4E+E*. , ...... 8

ii. Summary of Sources and Uses of Funds by Project Component.....8 ( = ) 9i',+tth,t+t"11'H)X,+"...... 10 iii. Statement of Implementation of Financing Agreement...... 10

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iv. Special Account Statement...... 11

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Auditor's Opinion

To Leading Group Office for Project Utilized Foreign Capital of Baise City

We have audited the special purpose financial statements (from page 6 to page 18) of Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank, which comprise the Balance Sheet as of December 37,2016, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Financing Agreement and the Special Account Statement for the period then ended, and Notes to the Financial Statements.

The Responsibility of Project Entity and the Finance Department of Guangxi ZhuangAutonomous Region 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 Financing Agreement is the responsibility of your entity, while the preparation of the Special Account Statement is the responsibility of the Finance Departrnent of Guangxi Zhtang 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 the necessary internal control to ensure that the financial statements are free from material misstatement, whether due to fraud or eror.

Auditor' s Responsibilify

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the Government 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 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, whether due to fraud or eror. 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 intemal control. An audit also includes evaluatingthe 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, financial position of Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank as of December 37, 2016, its financial receipts and disbursements, the project implementation and the receipts and disbursements of the 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.B0001 to No.B0003 and the attached documents submitted to the Asian Development 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.

Aud uang Autonomous Regi lic of China June Address: No. 98, Minzu Avenue, Nanning, Guangxi, P.R. China Postcode: 530022 Tel.: 86-771-5800259 Fax: 86-771-5800259

The English translation is for the convenience of report users; Please take the Chinese audit report as the only offrcial version. :. M+#.tX.M+#*Fftlt II. Financial Statements and Notes to the Financial Statements (-) fr.#+'&* i. Balance Sheet fra+'&t BALANCE SHEET zorcFnAya (As of December 31, 2016) 4.fl &tfr: friil;t- k&ftft#.f EE-€Hit bk€ kEry.a Project Name: Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank ffi#Hln: H6frfti)HErfit#4ar.1F4fr+A'9il1tlAB- Hfi41t: /.R,fi,L Lead Offrce for Pro Utilized Fo I of Baise C Unit: R_N4B Yuan lit^ 11t^ Affi yfr+tw. W1+W. N4ilW. tEx& fr + Line fr#*,8 Line Application ofFund Beginning Balance Ending Balance Sources of Fund Beginning Balance Endrng Balance No No TFF+e r! 4E +h+f.ai+ . /4E XU E ll -. I I 03,803,755 59 Total Project 28 I 07,082,830 0 l Total Project Expenditures Appropriation Funds r t1n&,EhF -. IEEE+-5rntrfr+LtR 2 1 2,250,807 9 I Project Capital and Capital 29 Fixed Assets Transferred Sumlus 2'l+&+H4.Ai.t HS;tEIlEff Construction Expenditures 3 30 lncluding: Grants to be Disposed 3 HHfSfr =. IFE.ffiffiait 4 3t 86,538,692 I 5 Jnvestmenls Transferred-out Total Project Loan 4 tt+rtE r rn Elsfri#ffi 5 91.s52,947 68 Total Project 32 86.538,692 I s Construcrion in Progress Investment Loan -. ,e&EP+,in&F,f6fl,.r (1) Erl-l#ffi 6 JJ 86,538,692 l Investment Loan Receivable Foreign Loan flf :,&tliEP4fifrl1tt#i. Including: Asian Development HH: tr#11trtstR1] 7 34 86,s38,692 I Bank Investment Loan lncluding. ADB Receivable =. ffi4i85/E+qH'(#H (2) EA1S#r( Appropriation of lnvestment 8 35 Domestic Loan Loan H*:#'(.1U1ifrfi Including :Appropriation of 9 2 H1t{#fi 36 Asian Development Bank Other Loan Investment Loan Lt*ffi.^+*fr.8#. E. +&i.t w, 10 Appropriation 3',7 Equipment of Investrnent Loan H*:1*4lEt*t/tft* 4H:#AI[1ifr# Including: Equipment Losses il Including: Asian JO in Suspense Development Bank Loan ,tffiE#ai+ r. t2 38,122,344 39 n. #.!!ffi+fr+ 39 Total Cash and Bank Bond Fund

t. +R1IEF}' /\'. f+i+lFElH l3 38,122,344 39 Construction Expenditures 40 Cash in Bank to be Offset Hf :tHffiF#* lu.l-ttai+ l4 34,694,992.68 t. 41 6.445,558 7i Including: Special Account Total Payable 4#:&,HIE1ifitFl,E, 2 lncluding: Asian l5 42 Cash'\# on Hard Development Bank Loan Interest Payable fr* Co be continued) ru.{.Jv1f fifiExHfi, Asian Development i. fi.H&&&tait l6 58,155,108 87 Bank Loan +J Total Prepaid and Receivable Commitment Fee Payable E.ffilz'{ififiH#A f,H:&&u{ifiilfi1,8, Hfr Including: Asian Development 17 Asian Development 44 Bank Loan Interest Receivable Bank Loan Sewice Fee Pavahle &&ulifrtfrii$ft Asian Development Bank l8 /\. *tfr+it 45 Loan Commitment Fee Other Payables Receivable &&u.1ifififr#frffift Asian Development Bank Lgith.^fr.+ 19 tL. 46 Loan Service- Fee Appropriatron of Fund Receivable EFt{t n. Hhin.+ 20 +. 47 14,t27 92 Marketable Securities Retained Eamings

/\. trtEP.+it 21 Total Fixed Assets

trtHErFlA 22 Fixed Assets, Cost fil:Hit]TlE Less: Accumulated 23 Depreciation trEfrP}FE Fixed Assets, Net

EIEftFiBiE 25 Fixed Assets Pending Disposal

1+ftjstEtHPtEt 26 Fixed Assets Losses in Suspense fr#*il,Eei+ E#5ffiei+ 27 200,08r,208 85 51 200,08r,208 85 Total Application of Fund Total Sources ofFund (-) 4E+E* ii. Summary of Sources and Uses of Funds by Project Component 4 E + H_ * (-) SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT I AH&a zorc 1p A sr a (For the period ended December 3 1 , ZOrc )

4d Ltt: f,iAft k+R'nfrikf frH &,W"\Lb\H kRq.A Project Name: Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank ffil\,H4-v: H6frftlHttrrf/friktrlarff4fr+A.2ilfu-^a- trfiHL-v:,\R,firr Leading Group Office for Project Utilized Foreisn Capital of Baise Unit: RMB Yuan 6H 7-tl Cunent Period Cumulalive +ffift,tn*, +ffii+tl]an +HX.Effi Hi+iEI6n Hiti,frrr Cunent u E Hitirlm Cunent Period Cunent Period Cumulative Cumulative Period % Life of PAD Budget Actual Actual % Completed Comoleted fr+*'tF.+it 307,830,000 00 )93,621 ,522 16 62 90Vo 641,948,000 00 193,621,s2216 30 16% Total Sources ofFunds trp,n#E{rgrEfit 132,813,000 00 86,538,692 I 5 65 160k 3 1 0,000,000 00 86,538,692 15 21 92yo Intemational Financine t w.nlfrti+fll1 1 32,8 I 3,000 00 86,538,692 I 5 6s 16% 3 I 0,000,000 00 86,538,692 1 5 21 92Yo ADB man# 175,017,000 00 107,082,830 01 6t 18% 331,948,000 00 r 07,082,830 01 3226% -. Counterpart Financing HAjEHAi+ (ti4H A6) Total ApplJcation ofFunds (by 307,830,000 00 r 03,803,75s 59 3372% 641,948,000 00 1 03,803,755 59 t6 t1% Proiect Component) r re H4.q)Ufl H,E Aru liF.AUh Improving TVET Qualiry and r l,284,000 00 22,61 I ,400 00 CapaciW Development z iH**,fflrtrt3it 255,3 l 6,000 00 101,1 14,904 88 39 60% 510,746,700 00 10t,t 14,904 88 19 80% Chengbi New Campus Construction 3 +EaqRuAE0U*f&+HX^r6 Promoting T\IET Innovation and 2,356,000 00 4,792,600.00 Relevance 4IfrE*ffiHErSiEEE+ Consulting Services for Project 1 ,798,000 00 467,673 08 2601% 3,s96,000 00 46'7,673 08 r3 01% Imolementation Manasement s.tr1itlJ,E,trEulfi ADB Loan Interest and 3,782,000 00 1,229,221 63 32 50% 20,779,300 00 1,229,221 63 5 92% Commitment Charges 6.EA€iAtrfl.E, 7,502,000 00 99r,956 00 1322% l 6,864,000.00 991,9s6.00 5 88% Loan Interest 7.T.E|frnfr 25,792,000 00 62,558.000 00 Non Predictable Fee EJ+ 89,817,766 57 89,817,766 s7 Difference I &qiffA.1r 58,t 55,108 87 5 8, I 55, I 08.87 Change rn Receivables 2 Nfi*k*tL, -6,445,558 77 -6,44s,ss8;77 Change in Payables 3. frfifr#N4t 38,122,344.39 38,122,344 39 Change in Cash and Bank

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$,fl&tfr: vrir\ftk*eftfritiwFefrHit fr P +RtuLfri: *tr1+w+HtuWflatR,a\a bKH KRry.A H?dB',HT{T Project Name: Guangxi Baise Vocational Depository Bank: Nanning Taoyuan Branch, Education Development Project Financed by china construction Bank the Asian Development Bank ,EK ? : a50501604550000000I 6 ftik?: 3215-PRC AccountNo. :45050160455000000016 LoanNo.321s-PRC Hfiffi*: *n ffiffiH4n: f@,Li,*.HjetrItrrT currency:USD Prepared by: The Finance Deparfinent of Guangxi ZruangAutonomous Region

+ffi+=,HKF{tltEfi +. E^ Part A-Account^*tfi, Activity for !he Cunent Period Amount

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6trtr1iE+t"E.A4 12,29'7 ,146 94 Total Amount Deposited tllis Period by Asian Development Bank

+trft,E,qi ,H. hfr (ft HAKF s[r] ) 1,470 49 Total Interest Eamed this^+ Period ifDeposited in Special Account

Hr:tr,H,an Total^tr4e+*t Amount Refunded this Period to Cover lneligible Expenditures ffiD, Deduct:

+Hi4-t,H.*r 7,297,146 94 Total AmountWithdrawn this Period

+ffi *E+6& t.{n&+ frlEE+ fr n H 30 00 Total Service Charges this Period if not Included in Above Amount Withdrawn H*AM 5,001,440 49 Ending Balance (frlifo be continued)

ll B *[,}. €HIKFiEfi +fin Part B-Account Reconciliation Amount I w11E1^E#t,8ffi 5,000,000 00 Amount Advanced by Asian Development Bank ttf,D, Deduct: 2 Itrltfrts-+RliE&,#,*n Total Amount Recovered by Asjan Development Bank 3 +ffi HX€,ffi rM. F E lhH#.1+fi^ 5,000,000 00 Outstanding Amount Advanced to the Special Account at the End ofthis period 4 +ffiKFffiXAAF Ending Balance of Special Account 5,00r,440 49 jEXn,

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5,000,000 00 Total Advance to the Special AccountAccounted for at the End ofthis Period

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15 v. Notes to the Financial Statements

Notes to the Financial Statements

1. Project overview The Loan No. of Guangxi Baise Vocational Education Development Project Financed by the Asian Development Bank is 3215-PRC. It aims to promote the economic development of Baise city, enterprise transformation, and create a high quality, flexible and fast-responding multilayer vocational education system that satisff local enterprises'needs through the project implementation. The contents of this project include the engineering of Improving TVET Quality and Capacity Development; Chengbi New Campus Construction; Promoting TVET Innovation and Relevance; Consulting Services for Project Implementation Management. The Project Agreement was signed on March 19,2015 and came into effect on July 6,2075. The account of the project will be closed before June 30, 2020. The total investment plan of the project was RMB641,948,000 yuffi, which the total Asian Development Bank loan amount was USD50,000,000, equivalent to RM8310,000,000 yuan.

2. Consolidation Scope of the Financial Statements Consolidation scope of the financial statements covers the financial statements of Project Management Office of Baise City, Baise University and the Special Account set in the Finance Department of Guangxi Zhuang Autonomous Region.

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. 13).

3.2In accounting practice, the Gregorian calendar year is adopted as the fiscal year from January 1 to December 31. The accouting period of this project on this report was from July 6, 2015 to December 31,2016.

3.3 The accrual basis and the debit/credit double entry bookkeeping method

16 are adopted. RMB is used as the recording cuffency of bookkeeping. 3.4 The exchange rate adopted in the financial statements was the exchange rate on December 31, 2016 of the People's Bank of China, which is USDI: RMB6.9370 ytan.

4. Explanation of Subjects 4.1 Total Project expenditures

The project expenditure in 2016 was RMB103,803,755.59 yuffi, and the cumulative expenditures were RMB103,803,755.59 yuan, which accounted for 16.l7Yo of the total investment plan.

4.2 Cash and Bank on December 3r, 2016, the balance was RMB38,122,344.39 yuan with an increase of RMB38,|22,344.39 yuan compared to last year. The funds in the Special Account were converted to RMB3 4,694,992.6g yuan.

4.3 Prepaid and Receivable The balance on December 31, 2016 was RMB58,155,10g.97 yuan, which included mainly the prepaid project payment in engineering, advance payment of labor insurance premium for construction engineering, and migrant workers'wage guarantee, and etc.

4.4 Project Appropriation Funds

The balance on December 3r,2016 was RMB107,082,830.01 yuan. The total planned counterpart funds of this project were ru,m::1,94g,000.00 yuan. By the end of December 31,2016, RMBro7,og2,g30.01 yuan of the counterpart funds had been allocated, which accounted for 32.26Yo of theplan.

4.5 Project Loan

The balance on December 31, 2016 was RMB86,538,692.15 ytan, including the ADB loan of USDL2,47 4,944.81, equivalent to RMB86,5 3g,692.1 5 yuan.

t7 By the end of December 37, 2016, accumulated uSD12,474,944.81 of the ADB loan had been withdrawn, accounting for 24.95% of the total, which the withdrawal for civil works was rJ5D7,272,149.37, accounting for 19.84% of the category plan; the withdrawal for consulting services for project implementation management was USD25,597.57, accounting for 4.4I% of the category plan; the withdrawal for interest and commitment charges was USD177,I97.87, accounting for 5.29% of the category plan; the withdrawal for imprest fund was USD5,000,000.00.

4.6Payable

The balance on December 3r,2016 was RMB6,445,558.77 ytan, which was mainly outstanding payable guarantee money of constructions and works.

4.7 Retained Earnings The balance on December 3r, 2016 was RMBl4,l27.92 yuotr, which was mainly interest earned of bank deposit.

5. Special Account The Special Account of this project is set in Nanning TaoyuanBranch, China Construction Bank, with the account number of 45050160455000000016, and USD as currency Unit. The initial Deposit of the Special Account was USD5,000,000.00. The beginning balance of the period was USD0.00 and the reimbursement in the period was USD12,297,746.94. The interest earned on this period was USD1 ,470.49 and the disbursement was rJ5D7,297,746.94. Thus, the ending balance was USD5,001 ,440.49.

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