Xinjiang Uygur Autonomous Region Audit Office of the People's

Republic of China

Audit Report

tnr'if! ?rtll c 2o13 J 45 %

XINTIANGAUDITREPORT (2013) N0.45

Project Name: Xinjiang Yining Urban Transport Improvement Project

Financed by the World Bank

~ ~~ %: 8166-CN Loan No.: 8166-CN

Project Entity: WB-financed Project Management Office under

Construction Bureau ofYining City

%-it.1f.lt: 2011 .1f. 3 f] 11 s --2012 .1f. 12 f] 31 s Accounting Year: 2011103/11--2012/12/31

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13 }/{ .Contents

" it ~iji ~ ~ o o o o o o 0 0 0 o 0 0 0 o o 0 0 o o o o o o o o o o 0 0 0 0 o o 0 o o o o o 0 o o o o 0 o o o o o o 0 o o 0 o o o o o o 0 0 0 o M 1

I. Auditor's Opinion ................................................. ... ................................ 3

.::. , Ji!:t 4ril-*:.&Ji!:t 4}-il-*: Mt11 ................................................................ 6

II. Financial Statements and Notes tothe Financial Statements ............... 6

( - ) *-t-Jf-~-*: ....................................... .... ................................... 6

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

( .=.. ) ~ ~ :Itt.,tt. * .............................................................................. 8

ii. Summary of Sources and Uses of Funds by Project Compnent .... 8

( :=. ) ~ ~ tdJ- ;t i*.1t 'tt {JL-*: ............................................................ 10

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

( ~ ) JJ!t 4}-il-*: ~ti1 ........................................................................ .11 .

iv . Notes to the Financial Statemmts ................................ - ...... ~ .. u .... 15 . ... : -~ .. .. l'. .: ;;·.·:

:=.' "it $t ~ ~ liiJ .R!.&.Jti)l.. .............................. : ........................... -........ 17

III. Audit Findings and Recommendations ............................... ... ~ ........... l8 · · · · ' . ~ .. . . ..

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~3~: 86-991-2815503

ff~ : 86-99 1-2821590

2

I. Auditor's Opinion

Auditor's Opinion

To Execution Office of WB-financed Project of Construction Bureau of Yining City, Xinjiang

We have audited the special purpose financial statements (from page 6 to page 18) of Xinjiang Yiriing Urban Transport Improvement Project financed by the World Bank, which comprise the Balance Sheet as of Dec. 31, 2012, the Summary of Sources and Uses of Funds by Project Component, the Statement of Implementation of Loan Agreement for the year then ended, and Notes to the Financial Statement.

Project Entity and Autonomous Region Provincial Finance Department's Responsibility for the Financial Statements

The preparation of the Balance Sheet, the Summary of Sources and Uses of Funds by Project Component and the Statement of Implementation of Loan Agreement is the responsibility of your entity, while the preparation of the Special Account Statement is the responsibility of Autonomous Region Finance Department, which includes:

i. Preparing and fair presenting the accompanying financial statements in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement;

ii. Designing, implementing and maintaining necessary internal control to ensure that the financial statements are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the 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 error. In making those risk assessments, the auditor considers internal control rele\Wlt 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 wdit evidence we have obtained is appropriate and sufficient to provide a basis for our audit opinion.

Auditor's Opinion

In our opinion, the financial statements identified in the first paragraph present fairly, in all material respects, financial posit:im of Xinjiang Yining Urban Transport Improvement Project financed by the World Bank as of Dec 31, 2012, its financial receipts and disbursements, the project implementation and the receipts and disbursements of the special account for the year then ended in accordance with Chinese accounting standards and system, and the requirements of the project loan agreement.

Other Matter

No withdrawal application during the period of the Project.

The audit report consists of the Auditor's Opinion.and two more .p.arts . hereinafter: Financial Statements and Notes to the Financial Statement$' Audit Findings and Recommendations.

Audit Office of Xinjiang Uygur Autonomous Region of the People's Republic of China June 26,2013

· · · ·· · tr! 'r ·=. '·a.' (. .. t .. ) t.

"'!. - '"' .. ... .... -"-' l ..&.aa. 11o I I 1 •

• a ~ •

Address: No. 186 Jianshe Road, Urumqi, Xinjiang Uygur Autonomous Region, P.R. China Postcode: 830002 Tel : 86-991-2815503 Fax: 86-991-2821590

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

5

-' .wt 4}-•*&.!ilt 4}•* ffl-71 II. Financial Statements and Notes to the Financial Statements (-)~~1f2-~*

i. Balance Sheet ~*.lfl-{jf* BALANCE SHEET 20121f. 12 JJ 31 B

(As of December 31 , 20 12) ~~~#: ~$~fi~~~-~~~*~-~~ Project Name: WB-financed Xinjiang Yining Urban Transport Improvement Project

~··ft: ~~*•tM~fi~-~~~~~~~ .$.ft: AR$~ Prepared by: WB-financed ProJect Management Office under Construction Bureau ofYining City Currency Unit: RMB Yuan

ff fj Mfl

•• 6111 ~ Jll!trlll: 1111*11: •••• ~ II: llll*lt

Lmo s.c-.. Lon BcJinnlna

Aj>pbcaiiOD elf....! No ~ En4••• Balance Souroco or Fund • llllancc Endma Balanoc

- ,llfiXlllfl'it I 7,082,171 .62 -, liiiHIII:fl'<t 28 41,644,180.00

TC!Ial Pn>Jc<t Expcndi1W'C:I Talll Pl'ojoct Appropriation FundJ

I. !R!ItU•I" 2 - :, IJIIIlll*.lillHIII!*~IIl 29 -- -Fbc&d Alseb Trlndmed Pooj0<1 C.pllal and C.pllal SufJ!hot

l. lt •• liii!IXIII 3 - - ;JC;'fl, .... 30 - -Cooswctioll E."f>C''doturcs to be

~ lncl\ldona 01'1011

3. ftt!llill 4 - :, llfflfiii:1Ht 31 1,575,951.17 -lnvcttmcnu T...,rCI'I'ed-out Total Pl'ojoetl.otn

c. lEJlJ:II 5 7 ,082, 171.62 I. liiB!illflll: 32 1,575,951.17

Conottu<bon in Proarw Tocal PrO)octl.otn

=.. atoa:v•u••• 6 - - (I) 11~1111: 33 1,575,951.17

lnvutma\l Loan R.tcc.lvablc Fonl1n Loen

;JC;'I' , ae:~,.. .. ii.LIItff1ittk

- - - -lncludlna: World Btnk 1 ;JC;'f', II•JUtl&* 34

Investment Loan Rctc•vablc lnchld•na IDA

:::;, lltfoi/Ji.III!JUIII._ 8 - - IIIIJJU'Utllt• tJ 35 1,575,951.17

Appropriulon or lnvcstmcht

Loon IBIU>

;It 'I', lli't11tl110: lndudona. 9 - lt*~~IJR 36 -- -Appropnllllon o( WO<Id Btnk Tcdoaieal CCIClp<BIIoo

lnvcstmtnt t.c.n

1!11 , lftf Equopm.,. 10 - lltfl'ltll Co-Fonanciog 37 - -~'I' . tttt••fllll!l<

- - - -lndudona II (2) II~IIUI:: 38

Equipment l.otscs m Suspmse Domesu< L.oon

li-·~···it 12 36,143,060 14 2. ~jt(l.ll; 39 - -

TC!Ial Cash and Back Other Lotn

6

I •trl'¥J; 13 36,143,%0.14 P.!l • .ta!IA~tl!!•* 40 - -Cash'" Bank Appropril.oon of lnvtsement Lou

~·· \OJI!If..P?JII: 14 - .Jt'l>. ll>-llttf!llll: ~ I - -

lnclud1nc Special Aocoun< lnclud•na· World Bank Loan

2. "'* Call> on Hand 15 - - li:. ~\ltCI!••* 8oacl fund 42 - -fro , llf'!AIIlU*it 16 79,935.87 fr.,ftl'PiillXtll Conswct- 43 - -r ... 1 PrtpOICI and Rem.-.bt. E•pendowrell(l be Offse<

.Jt 'I' • St 4ll 1lt 11 lltiU<I .a

Including: World Bank Loan - - -t;. Sftll:iHt 10,000.00

ln<erc&l IUcciYJ.bie 17 /1.. TC(al">'blc 44

I!UUtff_.IIJt ,_.., , l!!l'lllttHUkflla

Wotid Bank Loan Comm1lm<ftl - lncludin&: World B111k Loan 45 -- -FocR ... Ivablt 18 lntcoell Pa)"lblc

S!ill11tff11fJ;IIf*c!i.IIIJt 19 - - B!fitlltmtUIIJt 46 - -Wcw1d Bank Lou S.V.cc·ftt Wcw1d Bank looA Commr!mCIII Fee

~·-Pt)"lblc

-t.Wiltll* 20 - - IRI'IIItmtll:ll!*c!iiiiJt 47 - -lneludon&. World Bank Loan

Mat1<CI&blc Sewntt<S StM<e F• "rable

/I..Bl!•l"*it 21 - - /1., llt~J;-t~t 41 - -Toulf'buld .... I<U Totti orOtlltr "yablcs

lllltlii"Milt 22 - - n. • .taa>-ll!* 49 - -FoxedAs,..I,C... Appropriato.., or FUnd

• • •itflll 23 - - -t-.8Jlilll:>- 60 75,036.46

lAt. Atalmulated

o.p,...iation Reta1ned Elminas

llf*c!iiUi'it Toul AP1>Iicat1on ...... It 43,305,167.63 43,305,167.63

or Fund 27 TouJSooncaorFund 51

7

ii. Summary of Sources and Uses of Funds by Project Component

lJfi ~ 11111 * (-) SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT I

-*M~l: 2012 &f. 12 JJ 31 E (For the p-eriod ended December 31, 2012)

~~~~= ~rr~~~-~$~w~~~m

Project Name· WB-financed Xinjiang Ytning Urban Transpon Improvement Project

~~·-= ., .•. ~~ff·~·~~fi~~~ Prepared by: WB-Iinanced Project Management Office under Construction Bureau of Vining City

*Wl

Current Period

*~it~· *~~~~~~- *Wl3!~1:t .IJID.Iaitt~•

Current Period Cum:nt period Cum:nt

Period% Life of PAD Budget Actual

coml)leted

••*•-&it 62,6U,I71.62 43,220,131.17 692W• 1,323,203,100.00 Total Sourcea of Funda

- lll:ff1iUk 1,575,951.11

World Bank Loan 1,515,95111 100'~ 635,000,000.00

=.. E1U!j: Counterpart 61,039,220.45

F'anancinR 41,644,180.00 68.2W. 688,203,100.00

I. J$1Kf!!I2C District Countapan

2 • .J.iiEC County 61,039,220.45 41,644,180.00 68.23% 688,203,100.00

Countel'))art

7liklii.lli1Ht Total 62,615,171.62

Application of Funds 7,082,17162 11 31% 1,323,.203,100 00

I ±a Civil Works 55,288,000.00 907,739,700.00

2. ti 4-,f(lt.f $01 Equipment and 246,161,500.00 Materials

3. ¥Lfli~natif11J&~ Institutional Capacity Building 5,151,220.45 5,S06,220.4S 95.7% 141,055,700.00

and Project Training

4 ~.a,fOJ!IIlA~1iUt 1,575,95 1.17 Interest, fee and CroDI·cnd (ce

1,515,951.11 100% 28,246,200.00

7. 1C.ltJUl Exchange llJns

and losses - - -~~ Difference 36,137,959.SS

I. S'llf.:l'l~-lt Change m 19,935.11

Receivable - - -

2. Si!fal'l~-lt Chanae in 10,000.00

Payable - - -

3. :lllfli·~~.jt Changein 36,143,060.14

Cash and Bank - - -

4. J;'e; Other - -75,036.46 - -

~ili-ft: A.~lfij[; Currency Unit RMB Yuan

JHt

CumulatiVe

.ait3!/l .ait3!1l.

It

C\lmulabve Cumulative Actual %

completed

43,220,131.17 3.27%

1,515,951.11 025%

41,644,180.00 6.05%

41,644,180.00 605%

7,012.171.62 O.S.C%

5,506,220.45 3.9%

1,575,9$1.11 5.6%

-36,137,959.55

79,935.87 -

10,000.00 -

36,143,060.14 -

-75,036.46 -

~~~: 1!t$-ilHf1*Ikffr~119~rl13t~JJi 13

SUMMARY OF SOURCES AND USES OF FUNDS BY PROJECT COMPONENT II

-*M-it~ 2012 ~ 12 A 31 a (For the period ended December 31,2012)

>ject Name: WB-financed Xinjiang Yinjng Urban Transport Improvement Project

•• ft: 11~·-~·1!tff~·Jjil3~ff~~-- r · --- ~ - --- -- ---- - - f

1j !J :t :ll (Project Expendrmre}

f.3Ht•i"' AssetsTransferred

JJ§F*f~ J.it.t:ll OO.it.i"' it9J.i"'

il~-

~~·l" l" it.Jt.:I.~ Project Component

Cumulative Fixed Current Deferred Work in

Amount Asset Asset lntangibleAsset Asset Progress

Ill. ij; lf.~ il*: *.fll Jt iJ!: Urban road improvement and cons!ructron

.1 .±Jt Crvrl works - - - -

.2 ~{\-*'# tl Equrpment and Materials - - - -~#f~i!lii.'lliJ!:.ii..flliJ!:-i- Public transport infrastructure and llllCnt

.I JiJ ~. .±Jt Depot, station and civil works

.2 i,l!:~ Equipment

~il'f .il~ltJ3.~i: Traffic control and road safety

I .±.Jt Crvil works

2 ij!: ~ Equipment

L~ AI! }J JUt -lo !i VII lnsututional capacity buildrng and project ng 5,506~0.45 - - - - 5,506,220.45

~.~ * }ij .&~til- Interest, fee and front-end fee 515,951.11 - - - - I 515 951.17

Total 1 7,082,171.62 - - - - 7,082,171.62 -

9

~ilii;.ft: A~ifiX.

'

~~~1Jt~.t:ll tt:lli!Uf

Expendituresto be Investments

disposed transferred-out

- -- -

- -.

- -- -

(-=-) ~~tb-Jt~ff·lt?JL* iii. Statement of Implementation of Loan ~r~m;.t }t & ff if ~ -*:

STATEMENT OF IMPLEMENTATION OF LOAN AGREEMENT *M.j;~ 20121¥- 12 .fJ 31 a

(For the period ended December 31,2012)

~~~~: ~~~rr~~--~T~~~~~§ Project Name: WB-financed Xinjiang Yining Urban Transport Improvement Project ~~~.!l!-1:\L: 1fT IP}t19:foi 1!trr~~~ ~ &fij]-%i:

financed Proiect Manae.ement Office under Construction Bureau of ~

~~j;f~~li *M!t!l\:lt ~jllj Loan Amount Current-period Withdrawals

Category ~jG ~jG ifTi:-A~fP

USD USD RMB

A. Ifil9i~ Works for the Project 59,270,000.00

B.1i':4m, ~lfilnR*' ~~~~fl!i*~ittiJII, ~~~~~~i;j~, ifl:l: iE~T~ Goods, Consultants Services, Non-consulting Services,

36,280,000.00 Training, Study Tours and Workshops, and Incremental Operating Costs

CJ'!i!\Q:M~J.~ Interest during implementation 4,200,000.00

D.5t~JI~ Front-end Fee 250,000.00 250,000.00 1,571,375.00

E.Jla*~3ttl:\ Service Fee

F. -if ffl9!~.F #.: ~ Balance of imp rest Account

.g.it Total 100,000,000.00 250,000.00 1,571,375.00

10

~ fl1 ll!-1i: ~j[J A ~ $ it -

•#tt~fl

Cumulative withdrawals

~jG USD i1Til-A~ffi

USD RMB

i

250,000.00 1,571,375.00 i

!

250,000.00 1,571,375.00 • ---

1.~1§~~

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25 ~Jt~, '~'* 72. 39km, ;ft'f: ~}tlt~ 10 ~' -*lt.JJ 30. 38km; i1f }{:it~ 15 ~, -*lt.JJ 42. 01km. ( 2) J~#.?C.ii-T~ l§ }ti~J;kJ~-§#i: J~

3( {lj'c.fr ~ 2 J!' ~\.3(-f~JILM: 2 J.t' 03( iY A~~ J.t if I~']} ~~i~' J~~j;p ~fr6 2 J.t, 03( 11 .*-f45 5 hiL&~ I 250 ~~\.3($~f113$. ( 3) 3C.Ji~ l!~ :rt•~~I·-1-~0-@M: .?C.Ji~~~~. g~.?(Ji~%~~%~. -#.1t3C.Jfh.~~j~)~I-. ( 4) *1A~.iJD~I-T~ 13 i.t:-§t6: i.fliR:t't~.iJD~I Fi-JttlJII, ~~~1-f~, #!#cit71t:r:Jf~~ ~~~. ~ 13 t~i~ -f 2012 ~ 7 A 13 s iE~~;J, 2012 ~ s JJ 22 a~~~, 1Yiit 2011 .it- 3 JJ 31 s 1tr #cl~L ~ 13 it~~J,~,fi* A~ FP 13. 2316ft, ft if: i!ttr~~ 116~ft, tJf~A~ $ 6. 35 16ft, 11TW:l~7JWE*-*~A~ FP 6. 8816ft.

2. Jl!t ~tit*=~~~ te: 00 *Jl!t~--~-~~OO.JJi!t~~ff~--~1fT~W3C.Ji~13Jl!t

~•*&~~gJnt~ff~ro•~**·

3. i.t:%it~Jt

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3. 3 *~ 13 ~itt~~ t;i_ "{X.}!~~ ~J" 1t ~ iE!i*JJ Ji!tl, 71()f] 1~~ ~

l..iE.!i**iE.!i*, t;i_A ~ $ .JJ iE.!i**1iL $. 3. 4 ~lffiifOOA~ilff 2012 ~ 12 JJ 31 E1 j[~, ~p USD1=A~FP

6. 2855 )G.

4. ~*-f4- § i)t U}j

4. 1 ~ § .:t tB ~ ~ 2 o 12 ~ 12 JJ 31 8 , J:Pi § .:t ili ~it A ~ ff5 7, o 8 2, 1 71. 6 2 Jt ,

Ja i!t 1T ll M ~ }fJ .:t ill a

~If: .:t1t~ j~ t8A±-f4-~~-ilu~A~ ff5 1, 209,172. oo Jt; .:t1t~~rtflfki~it-PJFJEI;ti~it!PfA~ ff5 2, 600, ooo. oo Jt; .:t 1t § jf:l!Rlf:!.t1*~ if' ~~'If iff A~ ff5 800, ooo. oo Jt; .:t1ti!t1t:gii § {Jf:if:A? 1}JJ~~ A~ fP 94, 320. oo Jt; .:t1t~jK, if$', ~1}11, ~~t~1~$fffJA~ ff5 709,634.83 Jt; .:t 1t :gii ro -rotr M .ft * ~ A ~ r=p 11, 4 31. 2 4 Jt; .:t 1t 1C ~ , »*? ~ ~ ~Jilt 9}-~ JfJ A ~ ff5 1, 19 4. 3 8 Jt; .:t 1t t~ft#, ~P 1j;iJ ~ 91-01} A~ F15 20, 468. oo Jt; .:t 1t i:!t tr 1#: ffix 1G 1.iE IJt it A ~ FP 1 , 5 11 , 3 1 5. o o 7t ; .:t 1t 2 o 12 ~ 8 JJ 2 2 8 -2 o 12 1f. 11 JJ 15 8 ~ #~ .f1J,~, A ~ fP 4, 57 6. 1 7

4. 2 }trp*~ ~ ~ 2 o 12 1f. 12 JJ 31 E , ~ fP ~ ~~ ~ j; A ~ Fj5 3 6, 14 3, o 6 o. 14

Jt, 7a ~ fi 1f #~ ~ 1=r ~. ~ t:p iR fi 1t ~ .f~ .€, 7 s, o 3 6. 4 6 .7t , 1fT rr A ~ ~}(f!llt~4*AW~*~ 36, 068, 023. 68 .7t.

4. 3 m1t&S~1ztx ~~ 2012 1f. 12 JJ 31 E, 19f1t&St&.~~~j;A~ rp 79,935.87

Jt, j;~~$.~-:gii§, ~47a+A~.:t~~~f.

4. 4 :gli § t£~

~~ 2012 ~ 12 JJ 31 E, ~ § ~#X~~j; A~ ff5 41, 644, 18 0. 00

Jt,~~~rrA~~Xf~tt~re•~~. :gli ro it ~~J rs~ * * ~ ~~, lYi A~ ff5 6 8 8, 2 o 3, 1 o o. o o Jt , ~ ~ 2 o 12 1t- 12

}J 31 E jtl19J9~·A ~ rp 41, 644, 180. 001 j(j, ~I~' it~IJ ~ 6. 05%,

12

:!t~:

•A~~w~•%·•~~-#~.~~~-~~*~•~tmA ~ rp 3, 022, 560. 00 jt;

.A:t1Etb-~u fA~ fiJ 3, ooo, ooo. oo .Jt; •A -tltrr~ ~ * oo i3\t5#~ !1f m A~ rf5 334, ooo. oo .Jt; ~.A.--it~ A~ ff5 123, 300. oo; ·A~ ~~IA?~~tA~ rf5 94, 320. oo .Jt; .A liT 1!Jfif '$'fA~ rf5 7 o, ooo. o o .7t; 4:tA~ ~ ~*-t A~ rf5 35, ooo, ooo. oo .Jt; W.J:. 7 ~..g-.it7-JA~ rf5 41,644,180. oo .Jt.

4. 5 ~ ~ 1t;it ~ ~ 2 012 ~ 12 JJ 31 s ' ~ ~ 1t ;it~~ 7-J 2 5 0' 7 0 8. 3 3 * .7t ' t)f -t­

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v. Notes to the Financial Statements

Notes to the Financial Statements

1. Project overview The Loan No. of the WB-financed Xinjiang Yining Urban Transport Project is 8166-CN. The project is to improve transportation mobility of the central urban area in Yining City, and quild a traffic pattern of safety, cleanliness and high efficiency in the selected new urban area for accessibility. The Project includes: (1) 25 roads planned to be built, total length of 72.39km, including 10 rebuilt roads of 30.38km and 15 newly-built roads of 42.01km. (2) Contents of public transport component include: construction of 2 bus depots, 2 bus hubs, bus intelligent dispatching center system, 2 bus CNG stations and 5 bus terminals, and procurement of 250 buses. (3) Contents of transport management and road safety component includes: traffic monitoring system, regional traffic signal control system, and integrated traffic safety corridor work. ( 4) The component of institutional capacity building includes mainly: training, research and discussion of institutional capacity building, research and consultancy of relevant technologies etc. The Project Agreement was signed officially on July 13, 2012 and came into effect on Aug. 22, 2012. It is estimated to be closed by March 31, 2017. The planned total investment of the Project is lUv1B 1.323 billion yuan, including WB loan of RMB 635 million yuan (equivalent to USD 100 million at exchange rate of 1 :6.35) , and local counterpart fund of Yining City Rl\1B 688 million yuan.

2. Consolidation Scope of the Financial Statements Consolidation scope of the financial statements covers the financial statements of WB-fmanced Xinjiang Yining Urban Transport Improvement Project, as well as the Special Account financial statement by Xinjiang 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 Projects (Caijizi [2000] No.13) issued by the Ministry of Finance and the Notification about Distributing "Financial Management Method of WE-financed Xinjiang Yining Urban Transport Improvement Project" (Xincaiwai [2012] No.29) issued by Xinjiang Finance Department.

3.2 In accounting practice, the calendar year is adopted as the fiscal year from January 1 to December 31. This period is a consolidated accounting statement of 2011-2012.

3.3 The accrual basis and the debit/credit double entry bookkeeping method are adopted. R.MB is used as the recording currency of bookkeeping.

3.4 According to the exchange rate on December 31, 2012 of the People's Bank of China, USD 1 = RMB6.2855 yuan.

4. Explanation of Subjects 4.1 Total Project expenditures The project expenditure as of Dec. 31, 2012 was RMB7,082,171.62 yuan, which is an early-stage expenditure ofWB,Ofwhich: Consulting fee of R1\1B 1,209,172.00 yuan paid to Xinjiang Academy of Social Sciences; Design fee of R1\1B 2,600,000.00 yuan paid to Xinjiang Municipal Engineering Design & Research Institute; EIA fee of RMB 800,000.00 yuan paid to Xinjiang Environmental Protection Center; Household survey fee of R.MB 94,320.00 yuan paid for housing demolition and relocation work under WB-financed project; RMB 709,634.83 yuan paid for travel, appraisal, training and business entertainment; RMB 71 ,431.24 yuan paid for early-stage translation fee of the Project; RMB 1,194.38 yuan paid for financial expenses such as remittance fee and account maintenance; RMB 20,468.00 yuan paid for administrative expenses such as computer consumables and printing etc.; RMB 1,571,375.00 yuan paid for front-end fee ofWB loan; RMB 4,576.17 yuan paid for load interest from Aug. 22- Nov. 15, 2012. Total RMB 7,082,171.62 yuan was paid for those 10 items above.

4.2 Cash and Bank Up to Dec. 31, 2012, the balance was RMB 36,143,060.14 yuan, which is the actual balance of bank deposit, including interest of bank deposit 75,036.46 yuan, and counterpart fund of 36,068,023.68 yuan appropriated by the People's Government ofYming City.

4.} Prepaid and Receivable Up to Dec. 31, 2012, the balance of prepaid and receivable was RMB 79,935.87 yuan, which is entried under the item of Other Receivables, including mainly the travel expenses asked for an advance on one's pay.

4.4 Project Appropriation Funds The balance up to December 31, 2012 was RMB 41,644,180.00 yuan, which

was the counterpart fund allocated by the People's Government of Yining City. The planned counterpart fund totals up RMB 688,203,100.00 yuan; up to Dec. 31, 2012, the fulfilled counterpart fund was RMB 41,644,180.001 yuan and 6.05% of total planned amount, including: IDv1B 3,022,560.00 yuan for preparation fee of Social Assessment Report, Resettlement Plan, and Ethnic Minority Development Plan; Rl\1B 3,000,000.00 yuan for geologic survey report preparation; RMB 334,000.00 yuan for WB-fmanced project negotiation in the US; RMB 123,300.00 yuan for translation fee; RMB 94,320.00 yuan for RP household survey fee; RMB 70,000.00 yuan for feasibility assessment and review fee; RMB35,000,000.00 yuan for project counterpart fee. Those 7 items above total up RMB 41,644,180.00 yuan.

4.5 Project Loan Up to December 31, 2012, the balance of project loan was USD 250,708.33, equivalent to RMB 1,575,951.17 yuan. Front-end fee of WB loan was USD 250,000.00, equivalent to RMB 1,571,375.00 7G ; Loan interest from Aug. 22, 2012- Nov. 15, 2012 was confirmed as USD 708.33, equivalent to RMB 4,576.17 yuan. Up to Dec. 31, 2012, accumulated confirmed ffiRD loan was USD 250,708.33, equivalent to RMB 1,575,951.17 yuan, including no withdrawal of civil works, equipment and materials, institutional capacity building and training, no withdrawal, confirmed interest of USD 708.33, and front-end fee USD 250,000.00.

4.6 Payable The balance up to December 31, 2012 was RMB 10, 000.00 yuan, mainly the fund payable to the People's Government of Yining City which paid the fund for opening a special account ofWB-financed project.

4. 7 Retained Earnings The balance up to December 31, 2012 was RMB 75, 036.46 yuan, mainly interest earned of bank deposit.

5. Special Account The Special Account of this project is set in a CCB Sub-branch directly under Xinjiang Branch of CCB, the account number of 65014610100220103215, and USD as currency unit. No business occurs yet to this special account this year, and the special-purpose financial statements include no special-account financial statements.