PROJECT MANAGEMENT UNIT MARD M&E CAPACITY BUILDING FOR AGRICULTURAL RESTRUCTURING PLAN IMPLEMENTATION PROJECT (MECARP PROJECT) Grant Agreement No. TF0A5252 AUDITED FINANCIAL STATEMENTS For the period from 0110112020 to 30/0412021 I August 2021 PROJECT MANAGEMENT UNIT MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project Grant No. TF0A5252 TABLE OF CONTENTS CONTENT PA PART I FINANCIAL STATEMENTS I Statement of the Project Management Unit 2 Independent Auditors' Report 3-4 Balance Sheet 5-6 Statement of Receipts and Expenditures 7 Statement of Receipts and Disbursements 8 Statement of Designated Account 9 Statement of Loan Withdrawal 10 Notes to the Financial Statements 11-15 PART II AUDITORS' REPORT ON THE COMPLIANCE 16 -18 PART Ill INDEPENDENT ASSURANCE REPORT ON EFFECTIVENESS OF 19-21 INTERNAL CONTROL APPENDIX MANAGEMENT LETTER 1-5 PART I FINANCIAL STATEMENTS 1 PROJECT MANAGEMENT UNIT MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project (MECARP) Grant No. TF0A5252 STATEMENT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit - MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) (hereinafter referred to as the "PMU") submits its report together with the audited financial statements of MECARP project (hereinafter referred to as "the Project") for the period from 01/01/2020 to 30/04/2021. Project Management Unit Members of the Project Management Unit who held office during the period and to the date of this report include: Mr. Nguyen Van Viet Director Mr. Nguyen Van Ngoc Accountant in charge Ms. Nguyen Thi Thu Hien Accountant Assistant Ms. Nguyen Thi Thuy Nga Project Coordinator Responsibilities of the Project Management Unit The PMU is responsible for preparing Financial Statements which give a true and fair view of balance of assets, liabilities and funds as at 30 April 2021 as well as the funds received and disbursements made for the period from 01/01/2020 to 30/04/2021 in accordance with the accounting policies as stated in Note 2 and Note 3 of the Notes to the Financial Statements and provisions of the Grant No. TF0A5252. In preparing those financial statements, the PMU is required to: * Select suitable accounting policies and then apply them consistently; * Make judgments and estimates that are reasonable and prudent; * State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; * Design and maintain an effective internal control system for the purpose of proper preparation and presentation of the financial statements to minimize risks and frauds. The PMU is responsible for ensuring that proper accounting records are kept which disclose, with reasonable accuracy at any time, the financial position of the Project and to ensure that the financial statements comply with the accounting systems as described in Notes to the Financial Statements as well as laws and other provisions applicable to the Project. They are also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The PMU confirms that they have complied with the above requirements in preparing the Financial Statements. For and on behalf of the Project Management Unit, Nguyen Van Viet Director Hanoi, 01 August 2021 2 JHJAUDT ING AND CONSUL NG CO LTD No: 1/2021/UHY- BCKT INDEPENDENT AUDITORS' REPORT To: The Project Management Unit MARD M&E Capacity Building for Agricultural Restructuring Plan implementation Plan Project (MECARP project) Opinion We have audited the accompanying financial statements of MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) (hereinafter referred to as "the Project"), prepared on 01 August 2021 as set out on pages 5 to 15 herein, including the Balance sheet as at 30 April 2021, the Statement of Receipts and Expenditures, the Statement of Receipts and Disbursement, Statement of Designated Account, Statement of Loan Withdrawal for the for the period from 01/01/2020 to 30/04/2021 and the Notes thereto (hereinafter collectively referred to as "the financial statements"). In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Project as at 30 April 2021, and of its receipts, disbursements, expenditures and fund withdrawals of the Project for the period from 01 January to 30 April 2021, in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the Financial Statements.. Emphasis of matter - Basis of Accounting We draw attention to Note 2 and Note 3 of the Notes to the financial statements, which describes the accounting convention and. the summary of the significant accounting policies. The financial statements are prepared in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements and the requirements of the World Bank. Our opinion is not modified in respect of this matter. Basis of Opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Project Management Unit in accordance with the international Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements The Project Management Unit is responsible for the preparation and presentation, in a true and fair view, of the financial statements in accordance with the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements and for such internal control as the Management determines is necessary to enable the preparation and presentation of the financial statements that are free from material misstatement, whether due to frauds of errors. Head Office: Sth Floor, B2 Tower, Roman Plaza, To Huum Street, Dai Mo Ward, Nam Tu Liem District, Hanoi, Vietnam. Phone: 84 24 5678 3999 www.uhy.vn Pe ni mebr ofUHYIntemational INDEPENDENT AUDITORS' REPORT (CONT'D) Auditor's Responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit 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 Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. o Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Nguyen Th1 Phuong Thao Nguyen Thi Thu Ha Deputy General Director Auditor Auditor's Practising Certificate Auditor's Practising Certificate No.0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY Auditing & Consulting Company Limited Hanoi, 01 August 2021 4 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TF0A5252 to 30/04/2021 BALANCE SHEET As at 30 April 2021 3010412021 01/01/2020 VND VND ASSETS I. Current assets 1,230,882,799 2,287,335,916 Cash 6 1,230,882,799 79,859,916 Cash on hand 61,422,100 Cash in bank, state treasury 1,230,882,799 18,437,816 Accounts receivable - 2,207,476,000 Advances to supplier 7 - 2,207,476,000 II. Non - current assets 39,655,548,724 19,161,527,335 Tangible fixed assets 646,537,500 478,225,000 Cost 1,029,500,000 688,000,000 Accumulated amortization (382,962,500) (209,775,000) Intangible fixed assets 712,500,000 Cost 950,000,000 Accumulated amortization (237,500,000) Project implementing expenditures 8 38,296,511,224 18,683,302,335 Project implementing expenditures 38,296,511,224 18,683,302,335 TOTAL ASSETS 40,886,431,623 21,448,863,251 The accompanying notes are an integral part of the Financial Statements 5 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/0112020 Grant No. TF0A5252 to 30/04/2021 BALANCE SHEET (continued) As at 30 April 2021 30/04/2021 01/0112020 VND VND RESOURCES 1. Liabilities - 98,961,352 Payables to suppliers 9 74,871,352 Other payables 10 24,090,000 II. Funds 40,886,431,523 21,349,901,899 Project funds 40,757,029,048 21,138,108,019 Counterpart fund 11 806,831,841 574,379,176 WB fund 12 39,950,128,507 20,563,697,343 Other funds 68,700 31,500 Other fund 129,402,475 211,793,880 Exchange rate differences 129,402,475 211,793,880 TOTAL RESOURCES 40,886,431,523 21,448,863,251 Nguyen Van Viet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi, 01 August 2021 The accompanying notes are an integral part of the Financial Statements 6 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 0110112020 to 30/04/2021 Grant No. TF0A5252 STATEMENT OF RECEIPTS AND EXPENDITURES For the period from 01/01/2020 to 30/04/2021 Unit VND For the period from 0110112020 to 30/0412021 Accumulated to 3010412021 NO. DESCRIPTION WB fund Counterpart Khc Total WB fund Counterpart Khac Total I, RECEIPTS 19,386,431,164 232,452,665 37,200 19,618,883,829 39,950,128,507 806,831,841 68,700 40,757,029,048 1 WB fund 19,386,431,164 - - 19,386,431,164 39,950,128,507 - - 39,950,128,507 2 Counterpart fund - 232,452,665 - 232,452,665 - 806,831,841 - 806,831,841 3 Others - - 37,200 - - - 68,700 68,700 I[. EXPENDITURES 19,380,756,224 232,452,665 - 19,613,208,889 37,489,558,383 806,952,841 - 38,296,511,224 1 Training and workshop 3,043,790,950 - - 3,043,790,950 11,226,535,758 - - 11,226,535,758 2 Goods 539,086,500 - - 539,086,500 994,499,500 - - 994,499,500 3 Operating cost 520,894,567 232,452,665 - 753,347,232 1,303,737,987 806,952,841 - 2,110,690,828 4 Consulting cost 15,276,984,207 - - 15,276,984,207 23,964,785,138 - - 23,964,785,138 EXCESS(DEFICIT) OF RECEIPTS OVER 5,674,940 - 37,200 5,712,140 2,460,570,124 (121,000) 68,700 2,460,517,824 EXPENDITURES Ill. OPENING BALANCE 2,454,895,184 (121,000) 31,500 2,454,805,684 - - - IV. CLOSING BALANCE 2,460,570,124 (121,000) 68,700 2,460,517,824 2,460,570,124 (121,000) 68,700 2,460,517,824 Nguyen Van Viet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi, 01 August 2021 The accompanying notes are an integral pad of the Financial Statements 7 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/0112020 to 30/0412021 Grant No. TF0A5252 STATEMENT OF RECEIPTS AND DISBURSEMENTS For the period from 01/01/2020 to 30/04/2021 Unit VND DESCRIPTION For th period from 0110112020 to 3010412021 Accumulated to 3010412021 WB fund Counterpart Other Total WB fund Counterpart Other Total 1. RECEIPTS 19,386,431,164 232,452,665 37,200 19,618,921,029 39,950,128,507 806,831,841 68,700 40,757,029,048 1 WB fund 19,386,431,164 - - 19,386,431,164 39,950,128,507 - - 39,950,128,507 2 Counterpart fund - 232,452,665 - 232,452,665 - 806,831,841 - 806,831,841 3 Others - - 37,200 37,200 - - 68,700 68,700 II. DISBURSEMENT 18,128,964,076 232,452,665 - 18,361,416,741 38,848,595,883 806,952,841 - 39,655,548,724 1 Training and workshop 3,090,060,950 - - 3,090,060,950 11,226,535,758 - - 11,226,535,758 2 Goods 1,419,899,000 - - 1,419,899,000 2,353,537,000 - - 2,353,537,000 3 Operating cost 549,495,919 232,452,665 - 781,948,584 1,303,737,987 806,952,841 - 2,110,690,828 4 Consulting cost 13,069,508,207 - - 13,069,508,207 23,964,785,138 - - 23,964,785,138 III. EXCESS(DEFICIT) OF RECEIPTS OVER 1,257,467,088 - 37,200 1,257,504,288 1,101,532,624 (121,000) 68,700 1,101,480,324 DISBURSEMENT (I - 11) IV. Exchange rate differences (82,391,405) - (82,391,405) 129,402,475 - 129,402,475 V. OPENING BALANCE 2,454,895,184 (121,000) - 296,119,251 - - - V. CLOSING BALANCE (Il + IV + V) 3,629,970,867 (121,000) 31,500 1,471,232,134 1,230,935,099 (121,000) - 1,230,882,799 Represented by Cash at bank 1,230,882,799 1,230,882,799 Nguyen Van Viet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi 01 August 2021 The accompanying notes are an integral part of the Financial Statements PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TF0A5252 to 30/04/2021 STATEMENT OF DESIGNATED ACCOUNT For the period from 01/01/2020 to 30/04/2021 For the period For the peiod from 01/01/2020 to 30/04/2021 Account Number 1400206033453 Depository bank Vietnam Bank for Agriculture and Rural Development - Lang Ha Branch Address No. 24 Lang Ha, Dong Da district, Hanoi Loan Agreement No. TFOA5252 Currency unit USD Amount PART A: ACCOUNT ACTIVITY Opening balance 304.07 Add: 836,179.25 Total amount replenished by the WB 836,179.25 Deduct: 783,414.41 Total amount withdrawn 783,414.41 Closing balance (3010412021) 53,068.91 PART B: ACCOUNT RECONCILIATION I Amount advanced by the WB 200,000.00 2 Deduct: Total amount recovered by the WB 146,931.09 3 Present outstanding amount advanced to Designated Account as at 30/0412021 53,068.91 4 Closing balance of Designated Account (30/04/2021) 53,068.91 5 Add: Amounts claimed and not yet credited 0.00 6 Add: Amounts withdrawn and not yet claimed - 7 Total advance to Designated Account accounted for as at 30/04/2021 53,068.91 The Project Management Unit refunded the amount of USD 53,068.91 to the WB's account on 11 May 2021. Nguyen Van Viet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi, 01 August 2021 The accompanying notes are an integral part of the Financial Statements 9 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 0110112020 to 30/04/2021 Grant No. TF0A5252 STATEMENT OF LOAN WITHDRAWAL For the period from 01/01/2020 to 30/04/2021 Disbursement requested Disbursement approved No. Currency Advance Training and Purchase Operating Consulting Total Date Currency Amount Amount Difference Note (a) workshop cost cost (b) disbursed (c) approved for (c+d-a-b) advance clearance (d) Designated Account DA-12 USD - 57,779.84 - 3,220.09 7,023.15 68,023.08 07/01/2020 USD 68,023.08 DA-13 USD - 53,043.27 - 8,463.83 68,057.05 129,564.15 16/01/2020 USD 129,564.15 - DA-14 USD - 4,764.13 - 3,507.79 141,731.31 150,003.23 16/06/2020 USD 150,003.23 - DA-15 USD - 7,310.50 - 2,513.89 47,088.96 56,913.35 12/08/2020 USD 56,913.35 DA-16 USD - 14,077.63 - 6,298.18 32,522.98 52,898.79 02/10/2020 USD 52,898.79 DA-17 USD - 3,738.61 - - 67,249.38 70,987.99 08/10/2020 USD 50,987.99 20,000.00 DA-18 USD - 1,727.99 - 1,345.81 87,263.63 90,337.43 30/10/2020 USD 63,337.43 27,000.00 DA-20 USD - 2,634.49 20,386.07 454.36 47,854.68 71,329.60 15/12/2020 USD 51,329.60 20,000.00 - DA-20 USD - 88,410.86 - 8,660.09 30,467.69 127,538.64 20/01/2021 USD 127,538.64 - DA-21 USD - 4,038.27 20,656.66 55.48 60,832.58 85,582.99 01/02/2021 USD 85,582.99 DA-22 USD - 7,313.89 20,679.15 942.47 50,995.58 79,931.09 USD - 79,931.09 Total - 187,059.64 61,721.88 32,241.90 634,063.84 983,110.34 836,179.25 146,931.09 NgyDcn Van iet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi, 01 August2021 10 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TF0A5252 to 30104/2021 NOTES TO THE FINANCIAL STATEMENTS 1. PROJECT BACKGROUND MECARP Project Management Unit was established under Decision No. 3930/QD-BNN-TCCB dated 2 October 2017 of the Minister of Agriculture and Rural Development on establishment of the Project Management Unit of "MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project" funded by the Policy and Resources Development Fund (PHRD) of the Japanese Government through the World Bank in Vietnam. The total fund of the Project is USD 1.9 million, of which: - Non-refundable ODA fund: USD 1.8 million. - Counterpart fund of Vietnam: VND 2,241,500,000, equivalent to USD 100,000 (exchange rate of USD I equal VND 22,415), in which: * Counterpart fund from the state budget: VND 950,396,000, equivalent to USD 42.40 thousand; * Contribution in kind: VND 1,291,104,000, equivalent to USD 57.60 thousand. Overall objective of the project: to enhance M&E capacity of the Ministry of Agriculture and Rural Development (MARD) and selected Departments of Agriculture and Rural Development (DARDs). Specific objectives/outcomes of the project: - Specific objectives/outcomes 1: a set of new sector performance and Agriculture and Rural Plan (ARP) indicators developed. - Specific objectives/outcomes 2: the M&E procedures of the ARP outcomes improved and strengthened. - Specific objectives/outcomes 3: M&E capacity for ARP implementation of staff of MARD and selected DARDs is improved. The project has 3 components: - Component A: Support to the development of ARP M&E indicators (Grant: USD 995,500 USD, counterpart fund: USD 10,000) - Component B: Improve the M&E procedures and strengthen human capacity for ARP implementation (Grant: USD 430,000) - Component C: Management, Monitoring and Evaluation (Grant: USD 374,500 including contingency; Counterpart fund: USD 90,000) The project is commenced from 26 January 2018 and expected to be completed on 30 June 2020. On 27th May 2020, the President issued Decision No. 767/QD-CTN on extending the operation of the Grant agreement of the MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project). Accordingly, the President agreed to extend the project until 31 December 2020. 11 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TF0A5252 to 30/04/2021 NOTES TO THE FINANCIAL STATEMENTS (CONT'D) 2. BASIS OF PREPARATION AND ACCOUNTING PERIOD Basis of preparation The financial statements have been prepared in Vietnam Dong ("VND") under the historical cost convention. The financial statements are prepared in accordance with WB's financial reporting requirements and in accordance with Vietnamese Accounting Standards and non- business accounting system under Decision No. 107/2017/QD-BTC dated 10/10/2017. Accounting period The Project's accounting period is from 01 January to 31 December. These financial statements were prepared for the period from 01 January 2020 to 30 April 2021 (including 4 months of project payment extension). 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the Project Management Unit in the preparation of these financial statements, are as follows: Receivables Receivables are recognised based on the amounts acutally arisen and those advanced to suppliers in accordance with the terms of the contract. Payables Payables are recognised based on the amounts actually incurred. Foreign currency Funds received from the World Bank in foreign currency is translated into VND using the exchange rates announced by the Ministry of Finance at the date of receiving the funds or at the date of direct payment made to contractors/suppliers. Transactions arising in foreign currencies are translated into Vietnam Dong (VND) at exchange rates ruling on the transaction date. Balance of monetary items and liabilities denominated in foreign currencies are retranslated at the rates of exchange prevailing on the balance sheet date. Recognition of funds and expenditures Funds and expenditures are recognized when incurred. Details are as follows: * WB fund is recognized when being credited to the first Designated Account and payment made directly to the suppliers during the year. * Counterpart fund is recognized when being disbursed by the State treasury. * Project costs are recognised on the accrual basis including actual expenses incurred and payables owed to the supplier. 12 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No, TF0A5252 to 30/04/2021 NOTES TO THE FINANCIAL STATEMENTS (CONT'D) 4. DESIGNATED ACCOUNT The Project opens its Designated Account at Vietnam Bank for Agriculture and Rural development - Lang Ha branch. Payments out of Designated Accounts are made in accordance with the relevant covenants of Grant Agreement No. TF0A5252 signed on 5 December 2017, effective on 26 Jannuary 2018 and related regulations of the World Bank (WB). 5. STATEMENT OF RECEIPTS AND DISBURSEMENTS Statement of receipts and disbursements is prepared based on actual cash flows; specifically: Cash inflow is the actual cash flow received from the World bank (WB). Cash outflow is the actual cash outflow from the Project management unit for the project's cost items of this year and the amount paid to the supplier during the current year and those brought forward. Closing balance is based on the opening balance of cash flow plus cash inflows and minus cash outflow for the year. This balance is reconciled with the balance sheet items as at the end of the fiscal year as disclosed in Note 13. Accumulated figures are presented on the accrual basis from the commencement date of the A Project to the end of the reporting period. 6. CASH As at 3010412021 As at 01/0112020 VND VND Cash at bank 1,230,882,799 18,437,816 Advance account 1,230,882,799 18,437,816 Cash - 61,422,100 Total 1,230,882,799 79,859,916 7. ADVANCE TO SUPPLIERS As at 30/04/2021 As at 01/01/2020 VND VND Mekong Development Research Institute - 1,164,930,000 Development Research and Consultancy Center - 818,141,800 MCG Management Consulting Company Limited - 224,404,200 Total - 2,207,476,000 13 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TFOA5252 to 30/04/2021 NOTES TO THE FINANCIAL STATEMENTS (CONT'D) 8. PROJECT IMPLEMENTING EXPENDITURE For the period Accumulated to from 01/01/2020 30/04/2021 to 30/04120201 VND VND Training and workshop 3,043,790,950 11,226,535,758 Goods 539,086,500 994,499,500 Operating cost 753,347,232 2,110,690,828 Consulting cost 15,276,984,207 23,964,785,138 Total 19,613,208,889 38,296,511,224 9. PAYABLES TO SUPPLIERS As at 30/04/2021 As at 01/01/2020 VND VND Other payables - 74,871,352 Total - 74,871,352 10. OTHER PAYABLES As at 30/04/2021 As at 01/01/2020 VND VND Deposit - 24,090,000 Total - 24,090,000 11. COUNTERPART FUND For the period Accumulated to from 01/01/2020 3010412021 to 30/04/20201 VND VND Government fund 232,452,665 806,831,841 Total 232,452,665 806,831,841 12. WB FUND For the period from 01/01/2020 Accumulated to 30104/2021 to 30/04/2021 USD VND USD VND equivalent equivalent Designted account 836,179.25 19,386,431,164 1,732,472.87 39,950,128,507 Direct payment - - - 836,179.25 19,386,431,164 1,732,472.87 39,950,128,507 14 PROJECT MANAGEMENT UNIT FINANCIAL STATEMENTS MARD M&E Capacity Building For Agricultural Restructuring Plan Implementation Project For the period from 01/01/2020 Grant No. TF0A5252 to 30/04/2021 NOTES TO THE FINANCIAL STATEMENTS (CONT'D) 13. OTHERS FUND For the period Accumulated to from 01/01/2020 30/04/2021 to 30104/20201 VND VND Interest of State treasury account 37,200 68,700 37,200 68,700 14. RECONCILIATION BETWEEN PROJECT IMPLEMENTATION COST OF THE STATEMENT OF RECEIPTS AND DISBURSEMENTS AND BALANCE OF EXPENDITURES OF THE BALANCE SHEET AS AT 30/0412021 3010412021 VND Expenditures presented in the Balance sheet 38,296,511,224 Of which: Training and workshop 11,226,535,758 Goods 994,499,500 Operating cost 2,110,690,828 Consulting cost 23,964,785,138 Reconciliation of expenditures presented with statement of receipts and expenditures = (1) - (2)+(3)+(4) 38,296,511,224 Disbursement accumulated to 30/04/2021 (1) 39,655,548,724 Receivables related to expenditures as at 30/04/2021 (2) Payables related to expenditures as at 30/04/2021 (3) Net book value of fixed assets unrecognized in expenses (4) (1,359,037,500) Nguyen Van Viet Nguyen Van Ngoc Nguyen Thi Thu Hien Director Accountant in charge Preparer Hanoi, 01 August 2021 15 PART II AUDITORS' REPORT ON THE COMPLIANCE 16 UH AUJII N 'NUTN C LTD INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE To: The Project Management Unit MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) We have audited the accompanying financial statements of MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) (hereinafter referred to as the "Project") for the period from 01/01/2020 to 30/04/2021 in accordance with International Standards on Auditing and issued Independent Auditors' Report dated 01 August 2021 with unqualified opinion, In connection with the audit of the Financial statements, we also performed procedures on the Project's compliance with the Grant Agreement No. TF0A5252, laws and regulations that could have a direct and material financial implications on the Project's Financial statements for the period from 01/01/2020 to 30/04/2021 (hereinafter referred to as "Requirements") The Project Management Unit is responsible for complying with the Grant Agreement No. TF0A5252, laws and regulations applicable to the Project. Our responsibility is to express an opinion on the Project's compliance with the Requirements based on our procedures. We limited our tests of compliance to the Requirements, rather than test of compliance with all laws and regulations applicable to the Project. We performed our work in accordance with International Standard on Assurance Engagements (ISAE 3000). That standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with the Requirements. We apply International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. We have-complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behavior. An assurance engagement to report on the compliance with the Requirements at the Project involves performing procedures to obtain audit evidence about whether the Project activities are free of material noncompliance with the Requirements, including obtaining an understanding of the internal control relevant to the Project's compliance with the Requirements. The procedures selected depend on the auditors' judgment, including the assessment of risks that the Project does not comply with the Requirements and whether such noncompliance could have a direct and material financial Implications on the Project's Financial statements. Our procedures included testing the compliance with the requirements that we consider necessary to provide reasonable assurance that the Requirements are complied by the Project. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Head Office: Sth Floor, B2 Tower, Roman Plaza, To Huu Street, Dal Mo Ward, Nam Tu Liem District, Hanoi, Vietnam. 17 Phone 84 24 5678 3999 www.uliy.vn Ar d el o tberof UHY snternational INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE (CONT D) Auditors' Opinion In our opinion, the Project has complied, in all material respects, with the Grant No. TF0A5252, Laws and regulations that are likely to have financially direct and material effects on the financial statements of the Project for the period from 01/01/2020 to 30/04/2021. Other Matters Our audit works include assessing the PMU's compliance in the past at a specific point in time. Therefore, our examination does not give an assurance for the future periods because of the risk that the Project's requirements may change or the degree of compliance with the requirements may deteriorate. fI Nguyen Thi Phuong Thao Nguyen Thi Thu Ha Deputy General Deputy Director Auditor Auditor's Practising Certificate Auditor's Practising Certificate No. 0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY Auditing & Consulting Company Limited Hanoi, 01 August 2021 i8 PART III AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION OF THE FINANCIAL STATEMENTS 19 AUDIT NG AND CONSULT NG CO LTD AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION OF THE FINANCIAL STATEMENTS To: The Project Management Unit MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) We have audited the effectiveness of the design and implementation of the internal control system that may have a financially direct and material effect on the financial statements of the MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP project) ("the Project") for the period from 01/01/2020 to 30/04/2021. The internal control was set up for purpose of managing risks to the achievement of the Project's objectives, including the reasonable prevention and detection of errors, irregularities and fraud. The internal control is the responsibility of the Project Management Unit. Auditors' Responsibility Our responsibility is to express an opinion, based on our audit, on the effectiveness of the internal control that could have a financially direct and material effect on the financial statements of the Project for the period from 01/01/2020 to 30/04/2021. We conducted our audit in accordance with the principles of International Standard on Assurance Engagements 3000 - Assurance Engagements other than Audits of Reviews of Historical Financial Information ("IASE 3000) insofar this standard could be usefully applied in this audit and in its specific compliance context. This standard requires that we comply with ethical requirements and that we plan and perform the audit to obtain reasonable assurance about whether the internal control for the Project is adequately designed for the purpose of the Project and was operating effectively during the period covered by the audit. Our audit included obtainng a sufficient understanding of the Project and the internal control for the Project; assessing the risk that a material weakness exists that could have a financially direct and material effect on the financial statements of the Project; testing and evaluating, on the sample basis, the design and operating effectiveness of internal control based on the assessed risk; and performing such other procedures as we considered necessary in the circumstances. We considered the following criteria in evaluating the effectiveness of the internal control: - The requirement for design and implementation of the internal control in the Project's Operations Manual ("POM"); - The appropriateness of the internal control for the Project's activities and objectives; - The implementation of the internal control by the TDSI to achieve its objective of prevention and detection of errors, irregularities and fraud that could have a financially direct and material effect on the financial statements of the Project; - The significance to the financial statements where one control or several controls did not operate as designed, if any; and - That a weakness or a deficiency existed where a control or several controls did not reasonably prevent or detect risks that could have an adverse impact on the objectives of those internal controls which are to provide reasonable assurance that the financial statements are prepared, in all material respects, in accordance with the adopted accounting policies and POM, that the funds are utilized for the purpose defined in the Grant Agreement between the Government of the Socialist Republic of Vietnam and the World Bank and that the Project complies with the Grant Agreement, POM and other laws and regulations applicable for the Project. We believe that our audit provides a reasonable basis for our opinion. lead Office: 5th Floor, 82 Tower, Roman Plaza, To HuI Street, Dai Mo Ward, Nam Tu Lem Distrlct, I-lanoi, Vietnam. 20 Phone: 84 24 5678 3999 www.uliy.vn Ane.ni nmermbefof UHY Intermational AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) Auditor's Opinion The Project's internal control system that may have a financially direct and material effect on the financial statements of the project for the period from 01101/2020 to 30/04/2021, in all material respects, is sufficiently designed for the Project's purposes and operated in an effective manner, based on the above-mentioned evaluation criteria. Other Matters This audit involved a historical evaluation of internal control at a specific point of time. Thus, this audit does not provide assurance for future periods due to the risk that internal control may become inappropriate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. NguyenrThi Phuong Thao Nguyen Thi Thu Ha Deputy General Director Auditor Auditor's Practicing Certificate Auditor's Practicing Certificate No. 0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY Auditing and Consulting Company Limited Hanoi, 01 August 2021 21 THE PROJECT MANAGEMENT UNIT MARD M&E Capacity Building for Agricultural Restructuring Plan Implementation Project (MECARP Project) Grant No. TF0A5252 MANAGEMENT LETTER For the period from 01/0112020 to 30/04/2021 August, 2021 PROJECT MANAGEMENT UNIT MANAGEMENT LETTER MARD M&E Capacity Building for Agricultural Restructuring Plan For the period from Implementation Project (MECARPI_project)_ 01 /01 /2020 to 30/04/2021 TABLE OF CONTENTS CONTENT PAGE 1. STATUS OF IMPLEMENTING ISSUES RECOGNITION IN THE PREVIOUS MANAGEMENT LETTER 2. ISSUES RELATING TO ACTUAL EXPENDITURES VS. BUDGET 4-5 2 PROJECT MANAGEMENT UNIT MANAGEMENT LETTER MARD M&E Capacity Building for Agricultural Restructuring Plan For the period from Implementation Project (MECARP project) 01/01/2020 to 30/04/2021 Grant No. TF0A5252 1. STATUS OF IMPLEMENTING ISSUES RECOGNITION IN THE PREVIOUS MANAGEMENT LETTER No. Issues recognition in the previous management letter Status of implementing from 0110112020 to 30/0412021 in 2019 I Issues relating to actual expenditures vs. budget Some categories of expenses were lower than the budget plan. In year In the period from 01/01/2020 to 30/04/2021, the disbursement rate of WB 2019, the proportion of WB fund expenditure compared to the budget reached 68% of the budget plan, the counterpart fund reached 100% of the reached 64%, the counterpart fund expenditure reached 84% of the budget. budget. However, from the beginning to the end of the whole project, the disbursement rate of the WB fund reached 96% and the counterpart fund reached 100%. Details in Section 2 - Issues relating to actual expenditures vs. budget 3 PROJECT MANAGEMENT UNIT MANAGEMENT LETTER MARD M&E Capacity Building for Agricultural Restructuring Plan For the period from implementation Project (MECARP project) 01/01/2020 to 30/04/2021 Grant No. TF0A5252 2. ISSUES RELATING TO ACTUAL EXPENDITURES VS. BUDGET Findings Through review of actual expenditures of the project management unit vs. budget, we found that some categories of expenses were lower than the budget plan for the period from 01/01/2020 to 30/0412021. However, from the beginning to the end of the whole project, the disbursement rate of the WB fund reached 96% and the counterpart fund reached 100%, specifically: Unit: VND For the period from 01(0112020 to 30/0412021 WB fund Counterpart fund NO. DESCRIPTION Approved budget plan Approved budget Disbursement Disbursement (B) Rate (B)/(A) Rate (DI/(C) _____ _______________(A) plan (C)(D 1 Training and workshop 8,774,863,083 3,090,060,950 35% - - 2 Goods 1,765,000,000 1,419,899,000 80% - - - 3 Operating cost 780,142,067 549,495,919 70% 232,452,665 232,452,665 100% 4 Consulting cost 15,526,966,279 13,069,508,207 84% - - - Total 26,846,971,429 18,128,964,076 68% 232,452,665 232,452,665 100% Accumulated to 3010412021 WB fund Counterpart fund NO. DESCRIPTION Approved budget plan Disbursement (B) Rate (B)1(A) Approved budget Disbursement Disbrseent(B) ate(B)(A)Rate (D)/C (A) plan (C) (D) 1 Training and workshop 13,021,904.590 11,226,535,758 86% - - 2 Goods 2,668,662,655 2,353,537,000 88% - - 3 Operating cost 1,294,533,495 1,303,737,987 101% 806,952,841 806,952,841 4 Consulting cost 22,684,742,110 23,964,785,138 106% - - 5 Provision 677,157,150 - - - - ____Total 40,347,000,000 38,848,595,883 96% 806,952,841 806,952,841 The WB estimated budget plan was approved in Decision No. 4505/QD-BNN-TC dated 10 November 2020 by the Ministry of Agriculture and Rural Development. Exchange rate: USD = 22,415 VND, according to the Project Document. 4 PROJECT MANAGEMENT UNIT MANAGEMENT LETTER MARD M&E Capacity Building for Agricultural Restructuring Plan For the period from Implementation Project (MECARP project) 01/01/2020 to 30/04/2021 Grant No. TF0A5252 2. ISSUES RELATING TO ACTUAL EXPENDITURES VS. BUDGET (CONT'D) Auditor's recommendations Due to the fact that the disbursement rate of the project in 2018 and 2019 was lower than the annual budget plan, so the Ministry of Agriculture and Rural Development has adjusted the estimated budget plan for the year 2018 and 2019 and forward the budget plan to 2020 and 2021. Overall, the WB's fund is still in line in accordance with the approved project document at USD 1.8 million, equivalent to VND 40,370 billion; Therefore, the disbursement of the project was guaranteed according to the approved initial plan in overall. The total budget disbursed is USD 1,679,558.21 (the budget plan is USD 1,800,000). The Project management unit's response We agree with the auditor's recommendations. 5