80548




Audit Office of Guangxi ZhuangAutonomous Region ofthe
                 People's Republic of China


                      it
                 Audit Report
                  -ti w5'~4l   (2013 J 13 %
         GXAUDITREPORT (2012] NO. 13



 Project Name:   Second Liuzhou Environment Management Project
                  Financed by the World Bank


 ~.#.%:           8005-CN
 Loan No.:        8005-CN




 Project Entity: Liuzhou Municipal Wastewater Treatment Company
                  Limited


                  20111f_. 8   A   23 E ~ 2012 ~ 12   A 31   E
 Accounting Period: August 23, 2011 - December 31,2012
                                                 f3             ~
                                               Contents
        'i¥ it yip ;@: .J\!. ......................................................................................... 1
I. Auditor's Opinion ............................... .......................... ........................... 3

=-'
·       J1!ci'   45--fi*&Y!t 45--fK*         ~t:Yi .................................................................6

II. Financial Statements and Notes to the Financial Statements......... .......6
       (-)          *~-f-~;J!t ............................................................................... 6

      i. Balance Sheet ........................................ ..................... ........................ 6

       ( .::.. ) :r.9l:   §*-It*-...............................................................................8
      ii. Summary of Sources and Uses of Funds by Project Component ..... 8
          - )~
       ( ;:::_    *~ .U. ~ .,.J. .;.- <a= 'lU ~
               if fff... IW' K- 17\J1f 'fff oVLJ~ .............................. •.............................. 10


      iii. Statement of Implementation of Loan Agreement.. ....................... 10

       ( IZ9 )      -t J¥J JijC?    ** . . . . . . . . . . . . . .. . . . . . . . . . . . . .. . . . . . .. .       11

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

       ( 1i )       .9!t 45-fl* ~t:Yi ......................................................................... 13
      v. Notes to the Financial Statements ................................................... 16

.::. , '$' it~~~ IPJ ~bt9.tJ5C .................................................................. 19
III. Audit Findings and Recommendations ............................. ..................22
    .   ~ 1fJ 'if! it J 1!t Jf..~ fi~ ~}   w~p ,i If~ ~ 15--1~ J!.::. ~ Jjfi §   2012 :{p 12
A318~~~~-·&·~-B~-~~~§*~-.~-~~~ff~
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           *:it
    ~ 1fJ Jf J *~ ~ 4J*-~iit ~· fi tl'] GXLZOO l ~ GXLZ003 %~
•*~~&mm•~·•m~~.~~-~~ #1}~-~~~ •~ .~~
fF~ *it~·~#di.

       *-$~~~~ z$ ,#~~~·*~~~~~~~~~ : M~~*&
M~••m~~•*~~~~•&•~-




~ ~= ~oo~w~-~~g•~$~•*•98%
lilj3 ~ita~: 530028
 t 1!: 86-0771-5800259
w     1J,: 86-0771-5800259




                                   2
I. Auditor's Opinion
                            Auditor's Opinion

To Liuzhou Municipal Wastewater Treatment Company Limited

We have audited the special purpose financial statements (from page 6 to page
18) of Second Liuzhou Environment Management Project Financed by the
World Bank, which comprise the Balance Sheet as of December 31, 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.

Responsibility of Project Entity and the Finance Department of Guangxi
Zhuang Autonomous 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 Loan
Agreement is the responsibility of your company, while the preparation of the
Special Account Statement is the responsibility of the Finance Department of
Guangxi Zhuang 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 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 fmancial 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
materia] misstatement of the fmancial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control


                                       3
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 fmancial 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 Second Liuzhou
Environment Management Project Financed by the World Bank as of
December 31, 2012, its financial 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 from GXLZOO 1 to GXLZ003
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.




Address: No. , Minzu Avenue, Nanning City, Guangxi Zhuang Autonomous
         Region, P.R. China


                                        4
Postcode: 530028
Tel.: 86-0771-5800259
Fax: 86-0771 -5800259




The English translation is for the convenience of report users; Please take the
Chinese audit report as the only official version.




                                       5
           -~


            ll. Financial Statements and Notes to the Financial Statements
               (-)~*JJZ-~*:
           i. Balance Sheet

                                                               ~4t.3fl-•*
                                                              BALANCE SHEET
                                                                   2012:¥-12!13113
                                                                {As ofDecember31, 2012)
 ~~~•= ~~-fi~arw~ m~~-·~•=•~!
 Project Name: Second Liuzhou Environment Management Project Financed by the World Bank
 ···~= ~ffl*~~~-·~-~~~
 p repared by: Liuzhou Municipal Wastewater Treatment Company Limited                                                                  .$.tt: A~~~
                                                                                                                                   Currency Unit : RMB Yuan
                                        rrc;:                                                                            ~
                                                                                                                                 :fT~
                                                                                                                                             M'!JJ~
           ~      :&:    6 Itt
          Apphcation of Fund
                                        Line
                                                     M-IDfi
                                                Beginning Balance
                                                                       M*~
                                                                    Ending Balance
                                                                                                       I! it        *
                                                                                                       Sources of Fund
                                                                                                                                 Line
                                                                                                                                 No.
                                                                                                                                        Beginning Balance
                                                                                                                                                               M*lir
                                                                                                                                                            Ending Aalance
                                        No.
                                                                                             ,   :r~H:!Uint
- ,Jj)i §~tll int
                                          I                                                      Total Project Appropriation      28                          291.586,009.02
    Total Project Expenditures                                        486, 883 ,44 1.79
                                                                                                 Funds
                                                                                           _,J1!ifa~-*~.lj]tf§l~;$:1}~
     L     3t11Ul'l£i"'                                                                                                                                 -                    -
          Fixed Assets Transferred
                                         2                      -     234,087,851.61
                                                                                                 Project Capital and Capital      29
                                                                                                 Surolus
    2.     ~~il!J.!li! ll ~!ll
                                                                                                 1t.P:i*M~
          Construction Expendintres
          to be Disposed
                                         3                      -                      -         lncludmg: Grants
                                                                                                                                 10                                          -

    3. $t::ll~Ji                                                                           llli liHir!l:idt
      Investments Transferred-out
                                         4                      -                      -~, Total   Project Loan
                                                                                                                                  31                    -      763,191.685.32


    4 . ~lli'Ii
                                                                                                 1.    J1l eHlt~fff~
          Construction in Progress
                                         5                      -     252,795,590. 18
                                                                                                      Total Project Investment
                                                                                                      Loan
                                                                                                                                  32                    -     763, 191 ,685.32


=.,J!YJ&Vtll{Yj!tfffr!J\                                                                                fil?f-ffl'!il:
    Investment Loan Receivable
                                         6                      -                      -         {I)
                                                                                                       Foreign Loan
                                                                                                                                  33                            63,191.685.32

    }trp:!i\N!z:1:F ._f.r.1itffli'!:~
                                                                                                       Jt<P:r:E~7f$l:M
    Including: World &nk                 7                                             -               Includmg: IDA
                                                                                                                                  34                    -
    Investment Loan Recewable
.;;:., ~f;jHf.tl:fffll'~
                                                                                                              00 ~!l~7f $l:tfHT 35
    Appropriation of Investment          8                      -                                             IBRD
                                                                                                                                                                63,191.685.32
    Loan
    it<P: ttNl!l:~~                                                                                           ~*1;-fl:ffl1i'!:
    Including :Appropriation of          9                      -                      -                      Technical           36                                         -
    Wor ld B~mk Investment Loe.n                                                                              Cooperation
ll'J , ft~                                                                                                    ~it~)it
    Equipment
                                         JO                     -                      -
                                                                                                              Co· Financing
                                                                                                                                  37                    -                    -
    ;!'t'I'AHJ:l!B~~*                                                                            (2) };jf~fffl!:
    Including: Equtpment Losses          II                                                                                       38                           700,000,000.00
                                                                                                       Domestic Loan
    in Suspense
n - ~mfi:lif:fMt                                                                                 2. Xftf.i~
    Total Cash and Bank
                                         12
                                                                      315,731,088.53                  Other Loan
                                                                                                                                  39                    -
     1. l!Hr-7!~                                                                           ll'J,..t¥Jitt.A~fiff~
       Cash in Bank
                                         13                     -     315,731,088.53
                                                                                                 Appropriation of Investment      40                                         -
                                                                                                 Loan
         X 'T':~ffll!I:.P:ff-!1::                                                                :It9>: ttl A1!Hr1it~
      lncludin&· Spec1al Account
                                         14                     -      12,851,718.10             Including: World Bank Loan
                                                                                                                                  41                                         -
    2. llt~                                                                                li' 1t~J.Idl~ fi ~                                                                -
                                         iS                                                                                      42
          Cesh on Hand                                                                           Bond Ft.md
            ~~      <To be continued)



                                                                                   6
                                                                   7\.~)!j>]Jii§!:Jt!ti
7\. HI# .&Eil&.~i.t                 16   -    363,844,295.56            Construction Expenditures               -                   -
    Tolal Prepaid and Receivable                                                                       43 1
                                                                        to be Offset
    Jt'l'.l!Ya&11!mff;~J1!,
                                                               - -t, Total
                                                                     JiH<t~~~i-
                                                                                                                -
    Includtng World Bank Loan
    lnterot Receivable
         lrii&1!!:ff~ll:~'Aft!
                                    17   -                                 Payable
                                                                                                       44
                                                                                                            I        111,670.604.71


                                                                        ;Jttp :~{;tl!!Jtjll:~.l!J~
         World Bank Loan
         Comm itment Fee
                                    18   -                     -        Including: World Bank Loan 45           -                   -
                                                                        Interest Payable
         Receivable
                                                                             j;i{;f1!!:tr~1J;~tt !It
        ~i&~~J:~~.!i .llH~
                                                                             World Bank Loan
        World Bank Loan Service-    \9   -                     -             Commitment Fee
                                                                                                       46       -                   -
        Fee Receivable
                                                                             Pavable
                                                                             );i{;f1!!:ff~at:lli~.!i
-t;,:f41ftiiE~                                                 .             ffl!t                              .                  .
                                    20                                                                 47
    Marketable Securities                                                    World Bank Loan
                                                                             Service Fee Payable
"'· I!I~S!ff"i!-~t                  21   -                     . ,,, * 3<::a1t#                        48       -
    Total f ixed Assets                                                 Other Payables
    lllflellii"'it-fft
    Fixed Assets. Cost
                                    22   .                     . ;tt,   J::t&ttJ>.~~
                                                                        Appropriation of Fund
                                                                                                       49       .                   -
       l!l..a#~IR
      Less· Accumulated
      D~eciation
                                    23   -                          ii.&tt&J>.
                                                               -+ . Retained Earnings
                                                                                                       so       -          10,526.83

    lm~~F~il
    Fixed Assets, Net
                                    24   -                     -
    lii~Jti"'?f~
    Fixed Assets Pending Disposal
                                    25   -                     -
    *~li!QI)Slli i"'Ul!R
    Fixed Assets Losses in
    Su~nse
                                    26   -                     -
           ll~.5Jtifi'lt                                                    J!i~*li!Hnt
    Total Application of Fund
                                    27   -   I ,166,4:58,825.88
                                                                        Total Sources ofFw1d
                                                                                                       51       -   1,1 66,458,825.88




                                                           7
             (.::.):IJ!~l£~*:
           ii. Summary of Sources and Uses of Funds by Project Component
                                                       JJi 13 *.It*(-)
                           SUMMARY OF SOURCES AND USES OF FUNDS
                                BY PROJECT COMPONENT I
                                                               ;l>:.jl}j~.¥, 2012    q:.   12 Jj 31 8
                                                   (For the period ended December 31, 2012)
~§~~ : ~~~rr~ ~;w~~ ~~~~~~~M~§
Project Name: Second Liuzhou Environment Management Project Financed by the World Bank
• •• ft: ·ffl-~~~-~--~~~                                                                                                               -~·ft: Al~~
                                                                                                                                       Currency U.
Prepared by: Liuzhou Municipal Wastewater Treannent Company Limited                                                                              rut: RMB Yuan
                                                                       :.f;:ii~J                                                          ~it
                                                                  Cum:nt Period                                                         Cumulative

                                             *~iliil ~            -*N!.Ot~li           *~VI;!Cnt~
                                                                                                                :qj EI .!HH!;~
                                                                                                                                         .F.it~illi          Jl~%.&1Ht
                                            Current Period       Current Period      Current Period %                                     Cumulative        Cumulative %
                                                                                                                  Life of PAD
                                               Budget               Actual              Completed                                           Actual           Completed
    lif~*~*it                               470,000,000.00      I ,054, 777,694.34            224.42%          I ,873,260,000.00        1,054,777,694.34         56.31%
    Total Sources oiFunds
    -, li ii;~~llil:;t~!!;
                                             60,000,000.00         63,191,685.32              105.32%          J ,024,500,000.00          63,191 ,685.32          6.17%
           International Financing
           mii;1UHf htif!rr                  60,aoo.ooo.oo 1       63,191,685.32              105.32%          1.024.500,000.00           63,191 ,685.32          6.17%
           IBRD
    = - !!~ $~                              410,000,000.00                                    241.85%           848,760,000.00           991 ,586,009.02
                                                                  991 ,586,009.02                                                                               116 83%
        Counterpart .Ftnancing
           I. 11~~UH1'1JUk                  170,000.000.00        700,000,000.00              41 1.76%          170,130,000.00           700,000,000.00         411.45%
             Commercial Bank Loans
           2.   Mi]{tte:
                Financial Appropriation     240,000,000.00        291,586,009.02              12149%            678,630,000.00           291,586,009.02          42.97%
                Fund$
    l:ti ~~ffl'**       <ts<lll!fl Pi] ~)
    Total Application of Funds (by          470,000.000.00        486,883,441.79              103.59%          1,873,260,000.00          486,883,441.79          25.99%
    Project Component)

    I. .=:U:i'5J.!<:~ll=illl                 55,000.000.00         57,136, 147 18             103.88%            75,154,110.00            57,1 36,147 18         76.03%
      Sanjiang Sewerage & \\'WTP
    2.   lt~l7J.!<:~llL... ~                                                                                                                                     58.49%
                                             75,000,000.00         77,662,674.96              103.55%           132,783,950 00            77,662,674.96
         Ron~t'an Sewerage &     WWTP
    3. tiJ.!<:f57.1<:3d:llifi                70,000,000.00         70,745,874.49              101.07%           125,878,550 00            70,745,87<:49          56.200.4
         Rongshul Sewerage & WWTP
    4.   ~~j$f5J.!<:~lli~
                                             65,000,000.00         67,521,135.84              103.88%           II 0,820,860.00           67,521,135 84          60.93%
         Liucheng Sewerage & WWTP
    5.   tl>ll§l7J.!<:~lli.fi
                                            23,000,000.00          24,067,354.57              104.64%           113,440,200.00            24,067,354.57          21.22%
         Shatang Sewerage & WWTP
    6. 1f~J4 f8:1SJ.!<:~J'II~               100,000,000.00        I 05,059,234 83             105.06%           333,754,880.00           105,059,234.83          31.48%
      Guantang Sewerage & W\VTP
    7. ~~fflffl'j$~f57l<l!lt• .J;tJti~
       Liw .hou Suburb.n Drainage            55,000,000.00         56,431,517.58              102.60%           933,980,850.00            56,431,5 I 7.58         6.04%
      Component
    8. ~Ptli1Pi'5i1Eil~1>t~Iti
       Liuzhou Dewatered Sludge             2 7,000,000.00         28,259,502.34              10466%             4 7,446,600 00           28,259,502 .34         59.56%
      Co-combustion Component
    ~ff                                                                                                                                  567,894,252.55
                                                                 567,894,252.55                      ...
i Ditrcn.-nce
i I. ll!NU~~-It                                          .       363,844,295.56                      ...                         ...     363,844,295.56
         Change in Receivables
    2. 1El1t~:l'1t
         Change in Payables
                                                         ...     -IJI ,670,604.71                    .I
                                                                                                           I                            -11!,670,604.71                ...

                                                                                                           :
    3 ~iP l'i~N
                                                         ...     315,731,088.53                                                          315,731.088.53                 ...
l        Change in Cash and Bank
    4    ;It~
         Other                                           .            -10,52683                      ...                                     -10,526.83                ...

                                                                                     8
                                                            ~ fliil lt  (.:=.)
                                                   SUMMARY OF SOURCES AND USES OF FUNDS
                                                                                                               *
                                                        BY PROJECT COMPONENT II
                                                                                   *-~ il ~ 2012 5f 12 }] 31 13
                                                                            (ror the period ended December 31, 20 12)
~~~~: ~ $~rr~~1 N~ffl~~ ~~ ~~ ~~~~
Project Name: Second Liuzhou Environment Management Project Financed by the World Bank
!;t~dRJ¥!-'fft: ~ ffl iff%JJ<. 1{HJHflllH't ff ~ a'J                                                                                                                                ~ if5 lf!.1~:
                                                                                                                                                                                             A lit$ it
Preoared
  -- --- - - bv: Liu11lou     Municioal
                   · -- --- --- --- --- - --- Wastewater Treatment Comoanv Limited                                                                                                  Cunencv Unit: RMB Y- ..
                                                                                                                                        ~ 13 1:1.li
                                                                                                                                   Project Expenditure
                                 Jllie~ ~                                                                          e3Cf<tl!t.i"'                                                           ~~flli!Jl !Hil.li
                                                                                                                                                                                                                    ~tiHi!!!
                         Project Component                     .lit:tlll                                      Assets Transfem:d                                            tfl!Iilil         Constmction
                                                                                                                                                                                                                   In vestments
                                                           Cumulative Amount        llil~l8fi"'        V!L:;;IJ\!:!i"'          liifHrti"'            ll\J!l!ii"'       Work in Progress    Expendilures to
                                                                                                                                                                                                                  Tmnsferre<klut
                                                                                   fixed Asset        Current Asset          lnt.anaible Asset    Deferred Asset                             be Disposed
  1.   .=:m51l<Jd:llfi m                                         57,136,1 47.18    53,036,894.92                                                                    .       4,099,252.26                      .
       Sanjinng Sewemgc & WWTP
 2. l.\1::sl:19Jl<Jd:l!P.Il!il                                                                                           .                                          .                                         .                .
       Rong'nn Sewerage & WWTP
                                                                 77,662,674.96     67,777,362.58
                                                                                                                                             -                              9,885,312.38

 3.    ~2Kt57KJ!I:iJU:tli\
       Rongsh111 Sewerdge & WWTP
                                                                 70,745,874.49      70,621,489.42                        .                   .                      .         124,385.07                                       .
 4. lfP.w1n1KJ!I:l!If1                                           67,521,135 .84     42,652,104.69                                                                         24,869,031. 15
                                                                                                                         .                   .                                                                -
    LIUchcng Sewerage & WWTT'
                                                                                                                                                 ~·




I s. Shutftng Sewemgc & WWTI'
       Y.JilJHt51l<Jd:J!Ili~
                                                                 24,067,354.57                    .                      .                   .                            24 ,067,354.57                      -

 6. 'lfllliJtrx:t'iJKJ!I:lll i fil
   Guantang Scw\lrnge & WWTI'
                                                                105,0.59,234.83                                          .                   -                            105,059.234.83

 1. ~ffl m !lnR.1l<t&m1Mxin
       LiU7Jlou Suhmhan Drninage Component
                                                                 S6,431,517.58                                                               .                             56,431,517.58                      .                .
 8. ~P+Iillinlftltm-ft~t.IUffi
    L•u~ho11 t:><:wuterud Sludge Co-combustion Component
                                                                 28,259,502.34                                           .                   -                            28,259.502.34                                        .
1--
                                   -ftt:l·                      486,883,44 t .79   234,087,851 .61                       .                   .                           252,795,!>90.18                                       .
                                   Total
                                                                                                                                                                                                              -


                                                                                                        9
      < 1!1 > -t JifL~P 41-*
    iv. Special Account Statement
                                                 {- Jfl ·?~*
                               SPECIAL ACCOUNT STATEMENT
                                              *~'l~.¥. 20121¥- 12 }J 31 !3
                                        (For the period ended December 3 1, 2012)


    J:9it=J4l ~:i1t~ilrritr ~r- w~m~~~                                     *P~fi4l~: ~OO *~~fi ~~* ~
                    ~~l]l .::. 1JJ :rjil3                                                  1}-iij i@ .J{,:tfi
    Ptqect 1"'arre: Second Liuzhou Environment                             Depository Bank: Guomao Branch,
                 Management Project Financed by                                            Agricultural Bank of
                 the World Bank                                                            China Limited
    1;} R9.:%: 8005-CN                                                     ~%:          20-023014040002358
    Loan No. : 8005-CN                                                     Account ~o.: 20-023014040002358
    t,;{ll~tt: r-w~±~ El tti IK.9!tiftlf                                   ~ifj~~:      ~.:lt
    Prepared by: The Finance Department ofGuangxi                          Currency:    USD
                    ZhuangAutonomous Region


                        A lll!~ : }j!:WJ'!<·Jl! J11tf'i&X11fl51.                                   ~   Iii
                   Pan A-Account Activity for the C =t Period                                     Amount
                                                                           -- -
Jtlltl~il
Beginning Balance
                                                                                                                               -
it:llll:
Add :

;$Mtltfil!!l~~ .!;}ill
                                                                                                                9,609,593.68
Total Amount Deposited this Period by World Bank

*Jtll~g~A.!;}~<~A~ffl~f' $~)
                                                                                                                    1.674.78
Total Interest Earned this Period if Deposited in Special Account

:.$:ilfPFfr~ 3t :±;!l:liEktC
Total Amount Refundcd.this Period to Cover Ineligible Elqlenditures

.1>:
Deduct:

;$lf!3t1t.S~                                                                                                     7,566,607.24
Total Amount Withdrawn this Period

:Ul*ii1.15il:itftlli.<Pe'-J~~ft3ttll
Total Service Charges this Period if not Included in Above Amount Withdrawn
                                                                                                                               -
Wl;t'<~@l
                                                                                                                2,044,661.22
Ending Balance

  <Fa ~To be continued )




                                                                      11
r-        - --                                    --
                               Blli!~:-TiltiJ!tf'i.=JlS                             it£   ~


 1. lttff1!"?7-;ff~.~IJi
                            Pan B·Account R<OConcthatton                            Amount                    J
                                                                                                              !
                                                                                              s,ooo.ooo.oo    1
    Amount Advanced b~ World B!f:'.!~-
     !f.~,
     Dcdu.cL
 2 t~tn.tml3l!&.a.IJi
   Totcl AmOWlt Recovered ~ World Bank
                                                                                                         -
 3 Atl'Jll'Jl;t{'VJti~.P1t~.JT~ltCi
                                                                                              5.000,000.00
   Outstanding Amount Advanced to the Special Account at the End of thiS Period
 4. vffl~f'l'Jl*~~
                                                                                              2,044,66122
     Endm& Balance of Special Account
     ttltltl:
     Add ·
 5. G¥:.<fi:1Jlltlliit c!¥iliil~{il iii!;~<Eelniitil
                                                                                                 47,61 6.20
   Amount Claunee but not~ C~tted at the End of this Period
                     ~\i~~                                        iiU
                  Application No.                                Amount


                    GXLZ003                                    47,616.20
                                                                                                          -
 6. t!.?i*R'Iltlliit B~We.r.\1!1< lfi iJfli.tiS!
                                                                                              2,909,397.36
   Amount WithdraMJ but not yet Claimed at the End of this Period

 1 JUHt•*~til <11n**tE 5 fO 6 ~.p >
   Cumulative Service Charges (If not lnd uded in Item 5 or 6)                                           -
     ~~:
     Deduct:

 8. .fJJ.SI!lA.   <ffA.'t'lllll!!f'$~)
                                                                                                  1,674.78
     lnteresl Earned (If Included in Special Accou:n)

 9. -*JP!~iit~J-i!Vlt~~e;~Q
                                                                                              5,000,000.00
     To:al Advance to the Special Account Accounted for at the End of this Period




                                                                           12
    1. ~~ ~ ~
    i1tJ!Lil.ff1if ~) W~1H~~~~iil l.f -=-~ r;t 13 171' !t ~ :hJ 8005-CN. ~
-~~ ~~n#~~-~*g.~a• · •~•· •*•~• •••t~
# ~~ ~ ~Y§"Jktj~j~~7tJ!~l~o -*:t.Pi 13 }t:i~~~~M~Jk;J:J! , ~i%7!:
li.If!~~~jJ Jtt~, #~t! 8-i'--f:lj! 13. ~ ~#J-)t -f 2011 1f- 5 }j 25 E
~1-T. 2011~8}] 23 S1.~. Ji it201 7 ~5}J 31 E ~ #l~. Jj!§H.t ~~J
.~-~*~A.~ flJ 18.73261Lft, Jtr:ft!tJIL4tt.fi~ ~ .~-lYY~ 1.51'L ~ .Jt, ~
~A.~ $ I0.2451L.Jt, 00 ~4!fi~~A~ rp L70131'L.Jt,                       :t1i 13 ~ :£ ~ - ~
OO*ft~~I,BhA.~ FJ5 6.78631L5t.


    2 . .OOt 4}~-*fia~J ~t lE
    -* .OOt 4} ifl-* tf-1 ~ ~J ~ 00 ~ ts- ~ 1H '$" ~ Jk~ l1.:ff ~et~t1:f-0- iiJ i!t J!LitHf~
ar-w~ffl~~- ~~ ll -=-M:t.Pi~ ~ w~•*~~~ g ~•n *m •~•
::fL

       3. :£ ~~itlfk)ft
       3.1 -*JJi ~ Jilt4} ifl-*tiJm.P!!Jfk~ «i!t~il.fi ~ ~~ 13 ~it~~#})i))
 ( .9!! ~*(   2000 ) 13 ~ ) tt-J ~ :t fj;j ~J       0




    3.3 *~!§~it~~ I;}_ "~-1tit ± ~J"1t~iE.Jiikj:Ji-!tl' *JfJ1t~~~1l
J*#:iEJi*,   IV-A~ f!J 7J 1E.!t-*1i1 ifi o

     3.4 ~~ rp !EA.~~fi 2012             Af.    12 }J 31 E 1[$ , ~ USD l=A~ rp
6.2855 .7to




                                               13
          4. fli* f+ ~Ji.}t, P}J
          4.1 ~ f3 .:t tB
          ~.¥. 2012 .1f 12 A 31          s, JJlt §    J. it.:t H:LAJ~~ $   486,883,441.79   Jt,
t5 ~~-~ 11fit~~ ffJ 25.99%.

          4.2 1Jr ilJ ~ ~
          20121¥-12 JJ 31           a :%~~A~ ff5 315,731,088.53 Jt,~ts:h~ff-ff~;
;Jt. t?-t JfJ .!i*?-ff~tfr~A~ rf5 12,851,718.10                 Jt.

                    lkm t&#~
          4.3 1iYi 1t
          2012 1¥- 12     A 3 1 a ~~:hA~ rf5              363,844,295.56 Jt, 3:.~}!~ § 1§0
~fflft*~' ~#I~~~~#~~~o

          4.4 ~ §tk~
          2012 .1f 12     JJ   31   a 5f;iJ!:hA~ $        291,586,009.02 Jt , ~~~ifk.JM-Jiltifk
~{ttfJ .*i~ ~[,*~4:-.
          ~ ~fit~UliG *~~l~,$"iA~ $ 678,630,ooo.oo 5t ( ~*-00 ~1it1K ),
i;.¥. 2012 .1f 12}] 31 E Jtl1ftff.*A~ Ffi 291,586,009.02 5t ( ~'*"00 f.J-it
~   ), t5 it~tj {fJ 42.97%.

          4.5 ~§1t~
      2012 .1¥- 12 JJ 3 1 s 5f;~j,J A~ ifi 763,191,685.32 Jt, :!t- t:f: 00 ~~~'-~
7f~~ff~~~j,J 10,053,565.40 !kJt, tfr~A~ iP 63,191,685.32 Jt; 00
~ riU -*- ~rr1t~ 7oo,ooo,ooo.oo Jt.
      ~ ~ 2012 .1f 12 A 31 s, .l it~lfX.i!t.W.irin~f#:~i:- 10,053,565.40
~Jt.           r5~~~f£-~~ 6.70%.           Jtt:f:     ±;?ti~ ~J.ittft~ 1,109,789.38 ~
Jt, rS--t.~~it~~J #J           o.9o%; ~~ ~' it4:t~Jx 3,499,804.30 ~jfj , rS-~~i+
~tj e'g   31 .90%.


          4.6   $. 1t#X
          2012 1f. 12     JJ   3 1 E :%1Yi7J A~ rf5 111,670,604.71         Jt,   3:. Jl~~-*.:t1t




                                                     14
     4.7 m~ra.A
     2012 if. 12 JJ 31 E1 ~-IY! A~    fP   10,526.83   5t ,   3:-J-Jt{-JfJJ*?-llfi.ft
;l;fU '~' t&Ao

                          tt ~
     5. {- JfJ ~ ,P 1~JfJ ·
    *~§{-JfJ~?~~~OO * ~~fi~~%~ 00 ,~fi, ~ %~
20-023014040002358, fP ~ J.J ~ Jt . {- Jfj .lit? 1" JX.f?~ 5,000,000.00 ~jt.
*~~;fJJ~tJi      o.oo ~ Jt,   *jtlj!m ~l, 9,609,593.68 ~jt , ;f~ .~, ~A. 1,674.78
~Jt. *jtl] ~ {t 7,566,607.24 ~ it, jtl]*~-'i 2,044,661.22 ~jt .




                                           15
v. Notes to the Financial Statements

                     Notes to the Financial Statements

1. Project overview
The Loan No. of Liuzhou Environment Management Project Phase II
Financed by the World Bank is 8005-CN. The objective of the project is to
establish sustainable wastewater collection and treatment services within the
urban area boundaries of Liuzhou, and in Sanjiang, Rong'an, Rongshui and
Liucheng counties. The construction contents of the project include
wastewater treatment, sludge management and institutional development and
capacity building, consisting of 8 sub-projects. The Project Agreement was
signed on May 25, 2011 and came into effect on August 23, 2011 . The account
of the project will be closed before May 31, 2017. The total investment plan
of the project was RMB1,873,260,000 yuan, among which the total World
Bank loan amount was USD 150,000,000, equivalent to RMB 1,024,500,000
yuan, loans from domestic banks were RMB 170,130,000 yuan, funds raised
by project entities and state investment subsidy were RMB678,630,000 yuan.


2. Consolidation Scope of the Financial Statements
Consolidation scope of the financial statements covers the fmancial statements
of Liuzhou Municipal Wastewater Treatment Company Limited(LMWTC)
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).


3.2 In accounting practice, the Gregorian calendar year is adopted as the fiscal
year from January I to December 31.


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



                                       16
are adopted. RMB is used as the recording currency of bookkeeping.


3.4 The exchange rate adopted in the fmancial statements was the exchange
rate on December 31 , 2012 of the People's Bank of China, which is USD1=
RMB6.2855 yuan.


4. Explanation of Subjects
4.1 Total Project expenditures
By the end of December 31,2012, the project accumulative expenditure was
RMB486,883,441.79 yuan, accounting for 25.99% of the total investment
plan.


4.2 Cash and Bank
On December 31, 2012, the balance was RMB315,731,088.53 yuan, all of
which was deposit in bank. And the funds in the Special Account were
converted to RMB12,851,718.10 yuan.


4.3 Prepaid and Receivable
Its balance on December 31,2012 was RMB363,844,295.56 yuan, mainly the
receivable of LMWTC and the prepayment for the construction and
preparation.


4.4 Project Appropriation Funds
The balance on December 31, 2012 was RMB291,586,009.02 yuan, which
was the free counterpart fund allocated by governments at difference levels.


Total planned counterpart funds of this project were RMB678,630,000 yuan
(excluding domestic loans). By the end of 2012, R.\1B291,586,009.02 yuan
(excluding domestic loans) of the counterpart funds had been allocated, which
accounted for 42.97% of the plan.


4.5 Project Loan
The balance on December 31,2012 was RMB763,191,685.32 yuan, including



                                      17
the IDRD loan of USD1 0,053,565.40, equivalent to RMB63,191,685.32 yuan,
as well as domestic commercial bank loans ofRMB700,000,000 yuan.
By the end of December 3 1, 20 12, accumulated USD10,053,565.40 of the
World Bank loan had been withdrawn, accounting for 6. 70% of the total,
among which the withdrawal for civil works was USD1, 109,789.38,
accounting for 0.9% of the category plan; the withdrawal for goods was
USD3,499,804.30, accounting for 3 1.90% of the category plan.

4.6 Payable
The balance on December 31, 2012 was RMB111,670,604.71 yuan, mainly
the payable of construction cost.

4.7 Retained Earnings
The balance on December 31 , 2012 was R._M.B l 0,526.83 yuan, mainly interest
earned of bank deposit of the Special Account.

5. Special Account
The Special Account of this project is set in Guomao Branch, Agricultural
Bank of China Ltd., with the account number of 20-023014040002358, and
USD as currency Unit. The initial Deposit of the Special Account is
USDS,OOO,OOO.OO. The beginning balance of the period was USDO.OO and the
reimbursement in the period was USD9,609,593.68 This period the interest
earned was USD1,674.78 and the disbursement was USD7,566,607.24. Thus,
the ending balance was USD2,044,66 1.22.




                                     18