Takes effect on July 20, 2016, the Circular No. 79/2016/TT- BTC dated June 06, 2016 of the Ministry of Finance guiding the implementation of the financial audits of programs or projects financed by the Government’s on-lending of foreign borrowed funds on Auditing of eligibility to qualify for on-lent funds; sub-borrowers’ financial competence; loan application schemes and debt repayment capability of sub- borrowers; assets pledged as collateral for on-lent loans by sub-borrowers; and remarks on non-financial elements and risk assessment and risk minimization measures.
Within that, auditing financial competence of sub-borrowers shall be conducted by means of assessing audited financial statements of 03 most recent consecutive years preceding the year when auditing of financial competence of sub- borrowers takes place. Where sub-borrowers have not completed full 3 years of operation, a written guarantee of the owner’s representative, owner or parent company for repayment of debts on behalf of borrowers who are faced with difficulty in doing so must be submitted. In the absence of the said guarantee, sub-borrowers must seek guarantee for discharge of debt obligations from another commercial bank or other security as appropriate verified by the on-lending body with respect to its feasibility and compliance with laws.
Auditing of conformity with regulations and requirements for eligibility to receive on-lent funds shall take into consideration financial conditions and fulfillment of requirements in relation to investment procedures as stated by laws. Sub-borrowers must demonstrate their financial competence, ensure that the shareholder’s equity adheres to statutory ratios, set up effective business plans in which their ability to repay debts is shown, and implement regulations on loan guarantees.
