Emergency Natural Disaster Reconstruction Project - Quang Ngai Province Financing Agreement No. 6074-VN CONTENTS Page PART I INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS Report of the Project Management Unit 3 Independent Auditors' Report on the Financial statements 4-5 Audited Financial statements Statement of Funds and Disbursements 6 Statement of Funds balance 7 Statement of Designated Account 8 Statement of Withdrawals and Reconciliation of Funds 9 Notes to the Financial statements 10-14 PART II INDEPENDENT AUDITORS' REPORT ON 15-16 THE INTERNAL CONTROL SYSTEM PART III INDEPENDENT AUDITORS' REPORT ON 17-18 THE COMPLIANCE PART IV MANAGEMENT LETTER 19-22 2 Emergency Natural Disaster Reconstruction Project - Quang Ngai Province Financing Agreement No. 6074-VN REPORT OF THE PROJECT MANAGEMENT UNIT The Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province presents this report and the Financial Statements of the Emergency Natural Disaster Reconstruction Project - Quang Ngai Province ("the Project") for the period from 01 January 2021 to 30 April 2022. The Project The Project is funded by the International Development Association (IDA) under the Financing Agreement No. 6074-VN ("the Agreement") dated 29 September 2017 between the Government of the Socialist Republic of Vietnam and the World Bank. The Project Management Unit Members of the Project Management Unit ("the PMU") in the period and to the reporting date are: Mr. Do Tam Hien Director Mr. Nguyen Thuong Chief Accountant Auditors The auditors of AASC Limited have taken the audit of financial statements of the Project. Responsibilities of the Project Management Unit The Project Management Unit is responsible for preparing the project financial statements, including Statement of Funds and Disbursements, Statement of Funds balance, Statement of Designated Account and Statement of Withdrawals and Reconciliation of Funds, which comply with the accounting policies described in the attached Notes to the Financial Statements. The Project Management Unit assures that the accounting policies are appropriately selected and consistently applied. The Project Management Unit assures that the accounting records were fully maintained to prepare the financial statements in accordance with the applied accounting policies and to disclose, with reasonable accuracy at any time, the financial position of the Project. The Project Management Unit is also responsible for maintaining an effective internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and comply with relevant laws, regulations and other provisions of the funding agreement that could have a direct and material financial effect on the Projct financial statements. On behalf of the Project Management Unit Do Tam Hien Director Quang Ngai, 15 June 2022 3 I aasc No.: 150622.010/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS To: Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province Opinion We have audited the accompanying financial statements of the Emergency Natural Disaster Reconstruction Project - Quang Ngai Province ("the Project") which comprise Statement of Funds balance as at 30 April 2022, Statement of Funds and Disbursements. Statement of Designated Account, Statement of Withdrawals and Reconciliation of Funds, and Notes to the Financial Statements for the period from 01 January 2021 to 30 April 2022, including a summary of significant accounting policies. In our opinion: The accompanying financial statements give a true and fair view, of the financial position of the Project, including the balance of the Designated Account as at 30 April 2022, funds received and disbursements paid, movements of the Designated Account for the period then ended in accordance with the basis of the principal accounting policies described in the Notes to the Financial Statements and the provisions of the Financing Agreement No 6074-VN dated 29 September 2017; In addition, with respect to Statements of Expenditure, adequate supporting documents have been fully maintained to support to the replenishment requests submitted to the World Bank The expenditures are eligible and in right purposes of the Financing Agreement No. 6074-VN dated 29 September 2017. 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 Project Management Unit for the Financial Statements The Project Management Unit is responsible for the preparation of the financial statements in accordance with the principal accounting policies described in Notes to the Financial Statements, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error In preparing the financial statements, management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to cease operations, or has no realistic alternative but to do so. T (84) 24 3824 1990 I F:(84) 24 3825 3973 I 1 Le Phung Hieu. Hanoi, Vietnam AASC AUDITING FIRM 4 I Auditor's Responsibilities for the Audit of the Financial Statements 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. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Project to cease to continue as a going concern. 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 communicate with the Project Management Unit 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. AASC Limited Do Manh Cuong Nguyen Pham Hung Deputy General Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2018-002-1 2893-2020-002-1 Hanoi, 15 June 2022 5 ！〕〕、〕〕！〕、〕〕〕〕〕〕〕’。 屆 Emergency Natural Disaster Reconstruction Project - Financial Statements Quang Ngai Province Period from 01 January 2021 Financinq Aareement No. 6074-VN to_30 April 2022 STATEMENT OF FUNDS BALANCE As at 30 April 2022 Note 30/04/2022 31/12/2020 VND 7TSD VND USID Surplus Surplus as at beginning 1,134,148,712 49,068.80 - Surplus in the period 3,469,611,746 154,277.51 1,134,148,712 49,068. Surplus as at closing 4,603,760,458 203,346.31 1,134,148,712 49,068.80 Represente Current assets 4,603,760,458 203,346.31 1,134,148,712 49,068.80 Cash at bank, treasury 04 4,603,760,458 203,346,31 1,134,148,712 49,068.80 Surplus 4,603,760,458 203,346.31 1,134,148,712 49,068.80 7 Emergency Natural Disaster Reconstruction Project - Financial Statements Quang Ngai Province Period from 01 January 2021 Financing_Agreement No 6074-VN to 30 April 2022 STATEMENT OF DESIGNATED ACCOUNT For the period: From 01/01/2021 to 30/04/2022 Account No.: 0271370568888 Bank: Joint Stock Commercial Bank for Foreign Trade of Vietnam -Quang Ngai Branch Address: 345 Hung Vuong Street, Tran Phu Ward, Quang Ngai City, Quang Ngai Province I Agreement No.: 6074-VN PART A: ACTIVITIES Note USD Opening balance 36,430.91 Add: Amounts deposited by the World Bank 8,098,377.00 Deduct: Amounts withdrawn (7,931,461.60) Closing balance 203,346.31 PART B: RECONCILIATION 1. Amount advanced by the World Bank 1,000,000.01 2. Add: Amount supplemented by the World Bank 8,098,377.00 3. Deduct: Amount recovered by the World Bank (8,895,030.70) 4. Present outstanding amount advanced to 203,346.31 5. Closing balance 203,346.31 6. Total advances accounted for 203,346.31 I I I 8 I и с� ( 1 .�.� N � о , ы Q i о ,_, i �'`� z ! Е = ., � L � пsQ с� о v с�аосоои о +� О N а 1`� г О CtJ 1`� � и о � � о вi вi с� cti �ri о ! о со й с� о� �t м i t° о � ос�гсоvг-ti о j �Г •� °oti No``'orN-й`rm й � �N � оrnииоо�rо т = о N cv оо jL `. ..� � � I о � о� о о � о � � � о о о о о � � о о й сп cv r- � О СО г О) !`� О t!7 (`� О м i Q _ � j О tf) и О� б� � р '� tf) 00 г1' N О ' w- � N (V N ОО й _О о � Г Г Г Г Г(V � � , � � iV iV CV CV CV CV � о о о о о о Q счсvсчс�гс� � М (�- б> ' о О О О О г О f � Г � f� бэ �' ! 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Background Emergency Natural Disaster Reconstruction Project - Quang Ngai Province is funded by the International Development Association (IDA) under the Financing Agreement No. 6074-VN dated 29 September 2017 between the Government of the Socialist Republic of Vietnam and the World Bank. Total original IDA loan is USD 16,000,000 and the total amount of counterpart fund is USD 3,350,000. The main objective of the Financing Agreement No. 6074-VN is restoration and reconstruction of damaged infrastructure in the project provinces affected by natural disasters and strengthening capacity to respond effectively to future disaster problems. The Project consists of the following components: Component 1: Resilient Reconstruction of Damaged Public Use and Preventive Infrastructure at the Provincial Level. Resilient reconstruction in Quang Ngai Province: Support for reconstruction and restoration of damaged roads, bridges, irrigation systems and disaster prevention/control works, including 08 sub-projects, of which 04 sub-projects are in the field of Agriculture and Rural Development and 04 sub-projects in the field of Transport. Component 2: Disaster Recovery Capacity Enhancement. Providing technical and analytical support to strengthen the institutional capacity of the Government at the central and provincial levels to respond to disasters, without limitation (a) Evaluation of the effectiveness of the efforts reduce existing flood risk-, (b) Building capacity to Disaster Risk Management agencies on the damage and loss assessment methodology; (c) Developing emergency recovery and reconstruction procedures. Component 3: Project management. Providing technical support for overall Project implementation and management at the provincial level, including monitoring and evaluation, environmental and social safety supervision, independent financial audits and construction supervision and management. The Project officially came into operation since 20 December 2017 and closed on 31 December 2021. The Project is managed by Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province and its office is located at No. 234 Vo Thi Sau Street, Quang Ngai City, Quang Ngai Province. 2. Principal Accounting Policies a. Basis of accounting Annual accounting period commences from the 1 It January and ends at the 31 s' December. The financial statements are prepared in accordance with the requirements of the World Bank, presented in Vietnam Dong (VND) and converted to United State Dollar (USD), except for the Statement of Designated Account and Statement of Withdrawals and Reconciliation of Funds, which are prepared in United State Dollar (USD). In which, the receipts and disbursements from counterpart funds and other sources arising in VND; balances of assets and liabilities in VND are converted to USID at the exchange rate of the Ministry of Finance at the reporting month. Specifically, the exchange rate applied for April of 2022 is VND 23,155 per USID. 10 Emergency Natural Disaster Reconstruction Project - Financial Statements Quang Ngai Province Period from 01 January 2021 Financing Agreement No. 6074-VN to 30 April 2022 The principal accounting policies are summarized as below: b. Foreign currencies Funds received from the World Bank in foreign currency is translated into VND using actual exchange rates announced by the Joint Stock Commercial Bank for Foreign Trade of Vietnam at the date of receiving the funds or at the date of direct payment made to contractors/suppliers. Transactions in foreign currencies are translated into VND using actual exchange rates at other transaction dates announced by the Joint Stock Commercial Bank for Foreign Trade of Vietnam All exchange differences from these transactions are recorded as "Exchange rate differences" account and presented as "Exchange rate differences" on the Statement of Funds and Disbursements. c. Funds and Disbursements Funds - Funds received from the World Bank are recognized when remittance made into the Designated Account or direct payment made to contractors/suppliers; - Counterpart funds are recognized when payments are made directly from the State Treasury to contractors/suppliers of the project or funds are withdrawn to the PMU for settlement of project's activities including any payments under current period plan until the next 31 January of the following period; Disbursements: - Disbursements are recognized when payments are made by the Project to contractors/ suppliers. d. Designated account Designated Account is the deposit account in USD opened at the Joint Stock Commercial Bank for Foreign Trade of Vietnam - Quang Ngai Branch for the Project's activities. Payments made via Designated Account are for eligible expenditures of the Project in accordance with the provisions of the Financing Agreement No. 6074-VN dated 29 September 2017. 3. Funds received from the World Bank From 01/01/2021 to 30/04/2022 Accumulated to 30/04/2022 USD Converted to VND USD Converted to VND Designated account Advance 8,098,377.00 184,947,758,800 11,998,377.00 275,130,958,800 8,098,377.00 184,947,758,800 11,998,377.00 275,130,958,800 4. 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О�� � S2 �. ш и . с ш--� и �� сл � ш т� � � о>� ел � о° с� ш аэ. и' ��, Ё ш�� � ш � У й п� й с�В Q � �Q� й о�� о о а й ° ш� о � ��-°° � i Q �в n ~'� п� v I � в" � � ° аэ �' � � � �� Е с � -о ссв �._ и о аз и° о� и О о о с � � � (.� �� � t� сЛ 0 С.� С..� U z д jy. ш с� � .� ш� � � Emergency Natural Disaster Reconstruction Project - Quang Ngai Province Financial Statements Fi No. 6074-VN Period--from-01--January 2021 to 30 April 21022 6. Subsequent events There have been no significant events occurring after the reporting date, which would require adjustments or disclosures to be made in the financial statements. 7. Corresponding figures The corresponding figures are the financial statements for the fiscal year ended 31 December 2020 which were audited by AASC Limited. In which, accumulated disbursements by components funded by the World Bank have been represented as follows: Note 5 - Disbursements: Disbursements by components (LISD) Item Presented Represented Variances USD USD USD Component 1: Resilient 3.777.224,30 3.848.376,95 71.152,65 Reconstruction of Damaged Public Use and Preventive Infrastructure at the Provincial Level Component 3: Project Management 86.344,79 15.192,14 (71.152,65) Support 3.863.569,09 3.863.569,09 Disbursements by components (VND) Item Presented Represented Variances VND VND VND Component 1: Resilient 87.347.141.000 88.991.912.000 1.644.771.000 Reconstruction of Damaged Public Use and Preventive Infrastructure at the Provincial Level Component 3: Project Management 1.995.671.000 350.900.000 (1.644.771.000) 89.342.812.000 89.342.812.000 - 8. Approval of the Financial Statements The financial statements were approved by the Project Management Unit for issuance on 15 June 2022. il; L - - ----- Do Tam HF66- Nguyen Thuong Director Chief Accountant Quang Ngai, 15 June 2022 14 aasc No.: 150622.010/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL SYSTEM To: Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province We have audited, in accordance with International Standards on Auditing, the financial statements of the Emergency Natural Disaster Reconstruction Project - Quang Ngai Province ("the Project") for the period from 01 January 2021 to 30 April 2022 and issued the auditors' report thereon dated 15 June 2022 expressing an opinion on those financial statements. In connection with our audit of the financial statements. we also examined the effectiveness of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as the internal control over financial reporting for the period from 01 January 2021 to 30 April 2022. Responsibilities of the Project Management Unit The Project Management Unit is responsible for maintaining an effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as the internal control over financial reporting Auditor's Responsibility Our responsibility is to express an opinion on the effectiveness of internal control based on our examination. Our examination was conducted in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised). 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 maintained an effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as internal control over financial reporting. Our examination included obtaining an understanding, testing, and evaluating the design and operating effectiveness of the internal control, and performing other procedures as we considered necessary in the circumstances to obtain sufficient appropriate evidence to provide a basis for our opinion. Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not to be prevented or detected on a regular basis. In addition. projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. T(184) 24 3824 1990 i F:(84) 24 3825 3973 1 1 Le Phung Hieu, Hanoi, Vietnam 9 AASC AUDITING FIRM 15 I Auditors' opinion in our opinion, the Project has maintained an effective internal control over misstatements that could have a direct and material financial effect on the Project's financial statements for the period from 01 January 2021 to 30 April 2022. AASC Limited Do Manh Cuong Nguyen Pham Hung Deputy General Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2018-002-1 2893-2020-002-1 Hanoi, 15 June 2022 16 I aasc No.: 150622.010/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE To: Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province We have audited, in accordance with the International Standards on Auditing, the financial statements of the Emergency Natural Disaster Reconstruction Project - Quang Ngai Province ( the Project") for the period from 01 January 2021 to 30 April 2022 and issued the auditors report thereon dated on 15 June 2022 expressing an opinion on those financial statements. In connection with the audit of the financial statements, we also performed procedures on the Project's compliance with the Financing Agreement No. 6074-VN dated 29 September 2017. law and regulations that have a direct and material effect on the Project's financial statements for the period from 01 January 2021 to 30 April 2022 ("the Requirements"). Responsibilities of the Project Management Unit The Project Management Unit is responsible for complying with the Requirements applicable to the Project. Auditor's Responsibility 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, and we did not test compliance with all laws and regulations applicable to the Project. We performed our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised). 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. An assurance engagement to report on the compliance with the Requirements at the Project involves performing procedures to obtain evidence about whether the Project's activities are free of material non-compliance 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 non-compliance could have a direct and material financial effect on the Project's financial statements. Our procedures included testing the compliance with the Requirements we consider necessary to provide a reasonable assurance that the Requirements are complied by the Project. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. T.(84) 24 3824 1990 1 F:(84) 24 3825 3973 1 Le Phung Hieu, Hanoi Vietnam AASC AUDITING FIRM 17 I Auditors' opinion In our opinion, the Project has complied, with the Requirements that could have a direct and material financial effect on the Project's financial statements for the period from 01 January 2021 to 30 April 2022. AASC Limited Do Manh Cuong Nguyen Pham Hung Deputy General Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2018-002-1 2893-2020-002-1 Hanoi, 15 June 2022 18 aasc Hanoi, 15 June 2022 To: Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province No 234 Vo Thi Sau Street, Quang Ngai City, Quang Ngai Province We have conducted the audit of the financial statements of the Emergency Natural Disaster Reconstruction Project - Quang Ngai Province (the "Project") for the period from 01 January 2021 to 30 April 2022. During the course of our engagement, we reviewed the accounting procedures and internal controls, and examined the compliances with laws, regulations and funding agreement of Financing Agreement No. 6074-VN. Accordingly, we enclose a memorandum of the points noted by us during our audit together with recommendations thereon. We have discussed the matters with the Board of Directors and the responses were incorporated in our memorandum. We would also like to extend our sincere thanks to the Director, the Chief Accountant and the staffs of the Management Unit of the Traffic Works Construction Investment Project in Quang Ngai Province for the co-operation you all have extended to us during our recent audit visit. We look forward to working with you again soon, and in providing you with the required assistance, if any, in your future endeavors. Yours sincerely, Do Manh Cuong Deputy General Director T:(84) 24 3824 19901 F:(84) 24 3825 3973 I 1 Le Phung Hieu. Hano. Vetnam AASC AUDITING FIRM 19