* Deloitte 11 CENDTANBELVIOD PROJECT OFC U Financing Agreement No. 5845-VN 5 AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER W FoUh eredd3 eebr21 U W W W U U W U CETAWRJETOFC U MEOGDLAITGAEDCIAERSLEC * N UTIAL IEIOD RJC 11iacn AreetNo 85V * UIE IACA TTMNS CENTRAL PROJECT OFFICE Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project Financing Agreement No. 5845-VN TABLE OF CONTENTS CONTENTS PAGE(S) PART I FINANCIAL STATEMENTS Statement of the Central Project Management Unit 2 Independent Auditors'Report 3 -4 Balance Sheet 5 Statement of Income and Expenditures 6 Statement of Resources and Uses of Funds 7 Statement of Designated Account 8 Statement of Loan Withdrawals 9 Notes to the Financial Statements 10-15 PART II INDEPENDENT AUDITORS' ASSURANCE REPORT ON 16 - 17 INTERNAL CONTROL PART III INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE Statement of the Central Project Management Unit on Compliance 18 Independent Auditors' Assurance Report on Compliance 19-20 PARTIV MANAGEMENT LETTER 21-25 U1 II II II II IU II U PART I * FINANCIAL STATEMENTS 11 Ul U W CENTRAL PROJECT OFFICE Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project W Financing Agreement No. 5845-VN STATEMENT OF THE CENTRAL PROJECT MANAGEMENT UNIT The Central Project Management Unit of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "CPMU" or "Central Project Management Unit") presents this report together with the financial statements of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "Project") for the year ended 31 December 2018. Central Project Management Unit The members of the Central Project Management Unit_who held office during the year and to the date of this report are as follows: Mr. Pham Dinh Van Head of the Central Project Office (appointed on 01 March 2019) Mr. Nguyen Hong Phuong Acting Head of the Central Project Office (resigned on 01 March 2019) Mr. Nguyen Dinh Hau Director of the Project Mr. Dang The Luong Chief Accountant - Head of Accounting and Finance Department Central Project Management Unit's Statement of Responsibility The CPMU is responsible for preparing the financial statements of the Project which comprise the Balance Sheet as at 31 December 2018, the Statement of Income and Expenditures, the Statement of Resources and Uses of Funds, the Statement of Designated Account, the Statement of Loan Withdrawals for the year then ended and Notes to the financial statements, including a summary of significant accounting policies, which give a true and fair view of the financial position of the Project and designated account balances as at 31 December 2018 as well as its income, expenditures, receipts and disbursements of the Project, designated account movements and fund withdrawals for the year then ended, 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 covenants contained in Financing Agreement No. 5845-VN. In preparing these financial statements, the CPMU 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; * Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Project will continue in operation; and Design and maintain an effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements, as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimize errors and frauds; and take responsibility for its assertion as to the effectiveness of such internal control. The CPMU 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 that the financial statements comply with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements. The CPMU is responsible for ensuring that the funds have been used as intended for the Project and for complying with Financing Agreement No. 5845-VN as well as laws and regulations applicable to the Project. The CPMU is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. The CPMU confirms that they have complied with the above requirements in preparing these financial statements. For and on behalf of the CPMU, 'Pham Dinh Van Head of the Central Project Office Hanoi, 27June 2019 2 Deloitte Vietnam Co., Ltd. D e lo itte 1 5th Floor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, No.: 00q0/VN1A-HN-BC Dong Da District, Hanoi, Vietnam Tel: +84 24 6288 3568 Fax: +84 24 6288 5678 INDEPENDENT AUDITORS' REPORT www.deloitte.com/vn To: The Central Project Office (CPO) The Central Project Management Unit of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (CPMU) Qualified opinion We have audited the financial statements of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "Project"), which comprise the Balance Sheet as at 31 December 2018, Statement of Income and Expenditures, Statement of Resources and Uses of Funds, Statement of Designated Account, Statement of Loan Withdrawals for the year then ended, and Notes to the financial statements, including a summary of significant accounting policies. In our opinion, except for the effects of the matter described in the "Basis for Qualified Opinion" section, the accompanying financial statements give a true and fair view of the financial position of the Project and designated account balances as at 31 December 2018, as well as of the incomes and expenditures, the receipts and disbursements of the Project, designated account movements and fund withdrawals for the year then ended, 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. Basis for Qualified Opinion As presented in Note 5 of the Notes to the financial statements, some Provincial Project Management Units ("PPMU") have not reconciled the balances of cash in State treasury at the year end. We were unable to obtain sufficient appropriate audit evidence regarding Cash in bank and Cash in State treasury at the 10 Irrigation Investment and Construction Management Board under the Ministry of Agriculture and Rural Development, PPMU Kien Giang, PPMU Ca Mau and PPMU Dong Thap with the total balances as at 31 December 2018 of VND 7,089,087,571. Therefore, we were unable to determine whether any adjustments to these amounts were necessary. 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 the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. Basis of Accounting We draw attention to Note 2 and Note 3 of the Notes to the financial statements, which describe 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. Responsibilities of the CPMU and those charged with governance for the Financial Statements The CPMU is responsible for the preparation of the financial statements 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 for such internal control as the CPMU 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, the CPMU 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 the CPMU either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. 3 W * Deloitte INDEPENDENT AUDITORS' REPORT (Continued) Auditors' 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 auditors' 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 International Standards on Auditing (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. * Conclude on the appropriateness of the CPMU'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 in the 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 appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by the CPMU. We communicate with those charged with governance and the CPMU 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. Khuc Thi Lan Anh Ngu AnhTuan Deputy General Director Audilor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0036-2018-001-1 No. 1472-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27 June 2019 Hanoi, S.R. Vietnam 4 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN BALANCE SHEET As at 31 December 2018 Notes 31/12/2018 31/12/2017 ASSETS VND VND I. Current assets 178,709,427,826 13,782,299,439 Cash 5 77,670,246,417 8,095,375,035 Cash on hand 374,199,897 27,548,268 Cash in bank, State treasury 77,296,046,520 8,067,826,767 Accounts receivable 100,965,389,409 5,686,924,404 Prepayments to suppliers 6 100,187,389,409 5,498,244,404 Internal receivables 7 778,000,000 187,000,000 Other receivables - 1,680,000 Other current assets 73,792,000 - Advances to employees 73,792,000 TOTAL ASSETS 178,709,427,826 13,782,299,439 RESOURCES I. Liabilities 60,134,463,589 15,965,730,229 Current liabilities 60,134,463,589 15,965,730,229 Trade payables 8 60,053,063,589 15,965,730,229 Taxes and amounts payable to the State budget 9,400,000 Other payables 72,000,000 TOTAL RESOURCES 60,134,463,589 15,965,730,229 NET ASSETS 118,574,964,237 (2,183,430,790) SURPLUS/ (DEFICIT) OF INCOME OVER EXPENDITURES 118,574,964,237 (2,183,430,790) Pham Dinh Van Dang The Luong Hoang Hong Diep Head of the Central Chief Accountant - Head Preparer Project Office of Accounting and Finance Department Hanoi, 273June 2019 The accompanying notes are an integral part of these financial statements 5 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN STATEMENT OF INCOME AND EXPENDITURES For the year ended 31 December 2018 2018 Accummulated to Notes 31/12/2018 VND VND * INCOME IDA fund 9 317,105,592,763 331,408,657,848 Counterpart fund 10 104,305,898,214 183,434,427,337 TOTAL INCOME 421,411,490,977 514,843,085,185 EXPENDITURES Component 1: Enhancing Monitoring, Analytics, 94,064,924,572 97,890,718,133 and Information Systems Component 2: Managing Floods in the Upper 7,807,181,693 27,035,746,693 Delta Component 3: Adapting to Salinity Transitions in the Delta Estuary 164,749,189,915 190,780,611,915 Component 4: Protecting Coastal Areas in the 16,558,622,282 24,858,550,097 Delta Peninsula Component 5: Project Management and Implmenttio Suport23,723,313,261 62,063,338,099 Implementation Support TOTAL EXPENDITURES 11 306,903,231,723 402,628,964,937 SURPLUS OF INCOME OVER EXPENDITURES 114,508,259,254 112,214,120,248 Foreign exchange differences 6,250,135,773 6,360,843,989 DEFICIT OF INCOME OVER EXPENDITURES (2,183,430,790) AT THE BEGINNING OF THE YEAR SURPLUS OF INCOME OVER EXPENDITURES AT TE EN OFTHE EAR118,574,964,237 118,574,964,237 AT THE END OF THE YEAR_________________ Pham Dinh Van Dang The Luong p Hoang Hong Diep Head of the Central Chief Accountant - Head Preparer Project Office of Accounting and Finance Department Hanoi, 27 June 2019 The accompanying notes are an integral part of these financial statements 6 ® ® И�р 00 � � и т � n и r� и и и у rn � n � о^ о ® Н у'i Z р ��rm м � w � rn й � � й � � о о о ш= N > �' й��` о�''� и й ni ni а ri рр ш ni °- о � у �� и N � N 1� t0 0� М � V м V 01 о О О7 L = I О l0 V N цJ Ш О � W n OJ Ш N f� о О W L � Ср д' [� l.� О �р N О О г'1 � 0� ® �- fO � � I м О f`1 ~ О f� h О М ~ 10 N 1� I� о!� � �� I 1 00 V д' � l0 л 7 О Ct н п1 й lO " t� л Г� I� OJ И V f� i0 1� ® И Ф U � .i м о� а� N О N ш ^ оо г� .� � � I с0 и д� н'� L *� й � V LL М � � n ' n М rv гn и rn С' ef � � а Z N t м г'1 {П OJ 7 л W N W GO Q л � М r+i у w л rn и м � а . 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GENERAL INFORMATION Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "Project") operates under Financing Agreement No. 5845-VN dated 11 July 2016 signed between the Socialist Republic of Vietnam and the International Development Association (IDA). The objective of the Project is to strengthen tools to make plans for adapting with climate change, enhance the climate change resilience for land and water management and usage in selected provinces in the Mekong Delta area. The Project consists of the following parts: Part 1: Enhancing Monitoring, Analytics and Information Systems; Part 2: Managing Floods in the Upper Delta; Part 3: Adapting to Salinity Transitions in the Delta Estuary; Part 4: Protecting Coastal Areas in the Delta Peninsula; Part 5: Project Management and Implementation Support. The Project is implemented in 9 provinces of the Mekong Delta area and is separated into 3 ecological zones: (a) upstream areas including An Giang, Dong Thap and Kien Giang; (b) Peninsulas in Ca Mau and Bac Lieu; (c) coastal areas of Ben Tre, Tra Vinh, Soc Trang and Vinh Long. Total Project's fund is: USD 384,979,000. In which: IDA fund: USD 310,000,000 Central Counterpart fund: USD 72,547,000 Provincial Counterpart fund: USD 2,432,000 The Project started on 11 July 2016 (date of the Financing Agreement) and is expected to be completed by 31 December 2022. 2. ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention except for the Statement of Designated Account and Statement of Loan Withdrawals which are expressed in original currencies. These financial statements are prepared in accordance with the accounting policies set out in Note 3 and requirements of the World Bank. The financial statements were prepared on the basis of aggregation of figures of Project implementing units, including CPMU, Irrigation Construction and Management Board No.10 under the Ministry of Agriculture and Rural Development ("ICMB 10"), Sub project Management Unit 6 Mekong Delta Comprehensive Infrastructure Development Scheme for Climate Change Adaptation and Socio-Economic Development under the Ministry of Planning and Investment (PMU 6 - Ministry of Planning and Investment), Management of Construction Investment Projects - Ministry of Natural Resources and Environment and Provincial Project Management Units ("PPMUs"). Financial year The Project's financial year begins on 01 January and ends on 31 December. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the CPMU in the preparation of these financial statements, are as follows: Foreign currency translation Transactions arising in foreign currencies are translated into Vietnam Dong (VND) at exchange rates ruling at the transaction date. Closing balances of monetary items denominated in foreign currencies are not retranslated as the guidance of the Accounting system applicable to Owner units in the public service units issued in conjunction with Circular No. 195/2012/TT-BTC dated 15 November 2012 by the Ministry of Finance. 10 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience For the year ended and Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statement Foreign exchange differences are not cash flows. However, the effect of changes in foreign exchange rates is reported separately in the Statement of Income and Expenditures and Statement of Resources and Uses of Funds in order to reconcile with balances of assets and liabilities in the Balance Sheet. Recognition of funds and expenditures Funds are recognized on cash basis. Expenditures are recognized on accrual basis. 4. DESIGNATED ACCOUNTS Designated Accounts are bank accounts in United States Dollar (USD) opened at Joint Stock Commercial Bank for Investment and Development of Vietnam - Tay Ho Branch for the implementation of the Project's activities. Payments out of the Designated Account are for expenditures in accordance with the relevant covenants of Financing Agreement No. 5845-VN and relevant regulations established by the World Bank. According to the Disbursement Letter on 11 July 2016 from World Bank, there are 11 designated accounts to be opened for the implementation of the Project's activities, including designated accounts opened to the CPMU, ICMB10, PMU 6 - Ministry of Planning and Investment, Management of Construction Investment Projects - Ministry of Natural Resources and Environment, PPMU An Giang, PPMU Dong Thap, PPMU Ben Tre, PPMU Soc Trang, PPMU Bac Lieu, PPMU Ca Mau and PPMU Kien Giang. As of 31 December 2018, there are four designated accounts opened and traded, including CPMU, PMU 6 - Ministry of Planning and Investment, ICMB 10 and Management of Construction Investment Projects - Ministry of Natural Resources and Environment. 5. CASH 31/12/2018 31/12/2017 VND VND Cash on hand 374,199,897 27,548,268 PPMU Dong Thap 5,885,548 27,548,268 PPMU Kien Giang 288,314,349 - PPMU Ca Mau 80,000,000 Cash in bank, State treasury 77,296,046,520 8,067,826,767 CPMU 8,360,001,697 6,161,384,421 PMU 6 - Ministry of Planning and Investment 18,611,940,048 410,401,015 Management of Construction Investment Projects - 1,412,905,374 280,127,652 Ministry of Natural Resources and Environment ICMB 10 43,568,827,814 1,000,000,000 In which: cash in State treasury at ICMB10 (*) 3,550,647,000 1,000,000,000 PPMU Dong Thap 379,533,706 215,913,679 In which: cash in State treasury at PPMU Dong 378,755,282 214,952,274 Thap (*) PPMU Ca Mau 1,314,598,910 - PPMU Bac Lieu 1,326,420,000 PPMU Kien Giang 1,895,714,421 In which: cash in State treasury at PPMU Dong 1,845,086,379 Thap (*) PPMU An Giang 152,104,550 PPMU Tra Vinh 274,000,000 77,670,246,417 8,095,375,035 !() ICMB10, PPMU Dong Thap, PPMV,U Ca Mau and PPMU Kien Giang have not reccnciled the balances of Cash in State treasury with the total amount as at 31 December 2018 of VND 7,089,087,571. The Central Project Management Unit has prudently assessed and believed that there were no material misstatements to the balance of cash in State treasury of the Project. 11 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statement 6. PREPAYMENTS TO SUPPLIERS 31/12/2018 31/12/2017 VND VND CPMU 6,978,038,605 Haskoningdhv Vietnam Co., Ltd. 5,172,071,306 HaskoningDHV Holland Co., Ltd. 1,204,544,179 Others 601,423,120 Management of Construction Investment 20,355,759,804 5,029,034,404 Projects - Ministry of Natural Resources and Environment Center for land fund development in Binh Thuy 7,392,334,864 district Construction Investment and Rural Development JSC. 6,843,000,000 - Center for land fund development in Kien Giang 760,028,080 31,903,600 province Thanh Dong No. 1 Investment and Construction JSC. 731,000,000 731,000,000 789 Corporation - 1,544,406,000 Tuan Linh Technology Development and Construction - 827,728,000 JSC. Management of Construction Investment Projects - - 822,217,953 Ministry of Natural Resources and Environment Others 4,629,396,860 1,071,778,851 ICMP 10 64,020,368,000 Trung Nam Construction and Engineering Corporation 13,963,686,000 Hoa Hiep Co., Ltd. 10,647,429,000 - Tran Tran One Member Co., Ltd. 9,402,943,000 - 276 Mechanical and Construction JSC. 8,843,474,000 - 40 Investment and Construction JSC. 6,183,013,000 - Others 14,979,823,000 - PPMU An Giang 1,404,893,000 469,210,000 PPMU Soc Trang 7,114,330,000 - PPMU Bac Lieu 210,000,000 PPMU Ca Mau 104,000,000 100,187,389,409 5,498,244,404 7. INTERNAL RECEIVABLES Internal receivables mainly include the cost of project management allocated to the Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project belonging to the counterpart fund which has been advanced to the account of the Central Project Office in 2018, but not yet used up. Such amount will be recovered through the allocation of project management costs in 2019. 12 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statement 8. TRADE PAYABLES 31/12/2018 31/12/2017 VND VND CPMU 1,614,706,000 981,696,000 EPC Vietnam Construction and Consultant Co., Ltd. Vietnam 314,853,000 419,804,000 Vietnam Investment and Development Consulting 314,853,000 419,804,000 Co., Ltd. Center for sustainable community development 985,000,000 - Others - 142,088,000 Management of Construction Investment 635,692,531 4,243,399,530 Projects - Ministry of Natural Resources and Environment Management of Construction Investment Projects - Ministry of Natural Resources and Environment 877,186,204 Tuan Linh Technology Development and Construction - 830,188,000 JSC. Gia Binh Tourism Transportation and Trading 3SC. - 731,316,000 Kad Vietnam Construction JSC. - 632,289,600 789 Corporation - 527,751,887 Others 635,692,531 644,667,839 PMU 6 - Ministry of Planning and Investment - 2,016,127,836 Partnership of Vina Mekong Construction Consultant 3SC. and ICU Investment and Construction - 1,946,127,836 Consultant JSC. Others - 70,000,000 ICMB 10 56,070,212,000 1,934,780,000 Tran Tran One Member Co., Ltd. 12,409,895,000 - 5P Thanh Tuan Construction and Minerals Co., Ltd. 8,022,418,000 - NH Trung Nam Construction and Engineering Corporation 7,298,259,000 - 40 Investment and Construction JSC. 5,926,433,000 - Song Hong Sai Gon JSC. 5,902,981,000 - Hoa Hiep Co., Ltd. 5,159,128,000 - 2A 276 Mechanical and Construction JSC. 4,613,937,000 - Hai Duong Rural Development and Dike Stone JSC. Company 3,379,871,000 - Viet Tan Giang JSC. 2,150,037,000 - Truong Son Construction Corporation 50,965,000 943,676,000 Others 1,156,288,000 991,104,000 PPMU Kien Giang 580,714,508 5,629,615,863 Southern Institute of Water Resources Research 299,746,620 2,997,466,196 Hydraulic Engineering Consultants Corporation II 230,339,846 2,303,398,458 Others 50,628,042 328,751,209 PPMU Dong Thap - 1,160,111,000 PPMU An Giang 263,763,550 - PPMU Ca Mau 314,543,000 - PPMU Soc Trang 375,032,000 - PPMU Tra Vinh 198,400,000 - 60,053,063,589 15,965,730,229 13 CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statement 9. IDA FUND Accumulated to 31/12/2018 Accumulated to 31/12/2017 USD VND equivalent USD VND equivalent Designated Account 14,647,625.57 331,408,657,848 641,223.00 14,303,065,085 14,647,625.57 331,408,657,848 641,223.00 14,303,065,085 10. COUNTERPART FUND Accumulated to Accumulated to 31/12/2018 31/12/2017 VND VND CPMU 5,475,571,000 1,174,845,000 Management of Construction Investment Projects - 48,381,781,870 28,627,011,000 Ministry of Natural Resources and Environment PMU 6 - Ministry of Planning and Investment 2,721,582,283 2,022,055,171 ICMB 10 34,337,519,000 25,566,642,000 PPMU Kien Giang 15,533,587,269 2,670,311,952 PPMU An Giang 19,697,664,000 14,567,664,000 PPMU Dong Thap 9,369,066,000 4,500,000,000 PPMU Soc Trang 24,850,516,000 - PPMU Vinh Long 8,929,186,915 PPMU Ca Mau 7,142,953,000 - PPMU Bac Lieu 6,000,000,000 - PPMU Tra Vinh 500,000,000 - PPMU Ben Tre 495,000,000 - 183,434,427,337 79,128,529,123 11. PROJECT IMPLEMENTING EXPENDITURES Project implementing expenditures by implementing unit: From 11/7/2016 Year 2018 to 31/12/2017 VND CPMU 14,545,723,202 2,494,230,000 PMU 6 - Ministry of Planning and Investment 4,429,264,469 8,680,030,025 Management of Construction Investment Projects - 98,821,250,162 30,235,020,321 Ministry of Natural Resources and Environment ICMB 10 137,213,785,000 26,501,422,000 PPMU Kien Giang 5,630,345,192 8,299,927,815 PPMU An Giang 4,305,976,000 14,098,454,000 PPMU Dong Thap 3,493,205,693 5,416,649,053 PPMU Soc Trang 18,111,218,000 - * PPMU Vinh Long 8,929,186,915 - PPMU Ca Mau 6,040,297,090 PPMU Bac Lieu 4,463,580,000 - PPMU Ben Tre 495,000,000 PPMU Tra Vinh 424,400,000 - 306,903,231,723 95,725,733,214 14 U CENTRAL PROJECT OFFICE FINANCIAL STATEMENTS Mekong Delta Integrated Climate Resilience and For the year ended Sustainable Livelihoods Project 31 December 2018 Financing Agreement No. 5845-VN NOTES TO THE FINANCIAL STATEMENTS (Continued) These notes are an integral part of and should be read in conjunction with the accompanying financial statement a 12. COMMITMENTS As at 31 December 2018, the total value of significant contracts for construction, installation and purchase of equipment of the Project which have been signed but not yet paid was about VND 458.7 billion (as at 31 December 2017: VND 95 billion). a 13. RELATED PARTY BALANCE Related party transactions and balances only relate to activities which were financed by the counterpart fund. List of related party with balances for the year: Related party Relationship Management of Construction Investment Projects - Project implementing unit Ministry of Natural Resources and Environment Significant related party balances as at 31 December 2018 were as follows: 31/12/2018 31/12/2017 VND VND Prepayments to suppliers Management of Construction Investment Projects - - 822,217,953 Ministry of Natural Resources and Environment Trade Payables Management of Construction Investment Projects - - 877,186,204 Ministry of Natural Resources and Environment 14. COMPARATIVE FIGURES Comparative figures are the figures of the Project's audited financial statements for the year ended 31 December 2017. Pham Dinh Van Dang The Luong CjHoang Hong Diep Head of the Central Chief Accountant - Head Preparer Project Office of Accounting and Hanoi, 27 June 2019 Finance Department U 15 UATI INEEDNUUIOS SUAC EOTO 1U INENLUOTO U 11 II PARII W Deloitte Vietnam Co., Ltd. D e lo itte 5th Floor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel: +84 24 6288 3568 Fax: +84 24 6288 5678 www.deloitte.com/vn INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL To: The Central Project Office (CPO) The Central Project Management Unit of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (CPMU) We have audited, in accordance with International Standards on Auditing, the financial statements of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "Project") for the year ended 31 December 2018 and issued the Independent auditors' report thereon dated 27 June 2019 expressing a qualified opinion on those financial statements. In connection with our audit of the Project's 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 of internal control over financial reporting, and issue the Report of Independent Auditor on internal control. Responsibilities of the Central Project Management Unit As stated in the Statement of the Central Project Management Unit on page 2 and page 3, the Central Project Management Unit is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds; and takes responsibility for its assertions as to the effectiveness of such internal control. Our Independence and Quality Control 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. We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditors' Responsibilities Our responsibility is to express an opinion on 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 internal control over financial reporting based on our examination based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the management has maintained effective internal control over compliance with the 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 of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as of internal control over financial reporting, testing, and evaluating the design and operating effectiveness of the internal control, and performing such other procedures as we considered necessary in the circumstances to obtain sufficient appropriate evidence on which to base our opinion. Because of 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 detected. Also, 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. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL (Continuted) We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion, as well as our findings as presented in the Management Letter on page 21 to page 25. Basis for Qualified Opinion Some Provincial Project Management Units ("PPMU") inclusive of 10 Irrigation Investment and Construction Management Board under the Ministry of Agriculture and Rural Development, PPMU Kien Giang, PPMU Ca Mau and PPMU Dong Thap have not reconciled the balances of cash in State treasury at the year end. Accordingly, the abovementioned PPMUs have not maintained effective controls over the balance of cash in State treasury of the Project. Qualified Opinion In our opinion, excepted for the effect of the matter described in "Basis for Qualified Opinion" section, the Central Project Management Unit has maintained, in all material respects, effective internal control over compliance with requirements that could have a direct and material financial effect on the Project's financial statements as well as internal control over financial reporting for the year ended 31 December 2018. Khuc Thi Lan Anh Nguy Anh Tuan Deputy General Director Audit Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0036-2018-001-1 No. 1472-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27June 2019 Hanoi, S.R. Vietnam 17 . . . 彎 . , 口 . 廳 . 口 驪 總PART 111 . INDEP狂NDENT AUDITORS&ASSURANCE REPORT ON 居CO閱PLIANCE 口 騙 黑 騙 添 細召 口i .! 朧必 . . 騙 . 臘 . . . . . . CENTRAL PROJECT OFFICE Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project Financing Agreement No. 5845-VN STATEMENT OF THE CENTRAL PROJECT MANAGEMENT UNIT ON COMPLIANCE The Central Project Management Unit is responsible for complying with Financing Agreement No. 5845-VN, laws and regulations applicable to the Project. The Central Project Management Unit confirms the following: 0 An effective internal control has been designed and maintained over compliance with Financing Agreement No. 5845-VN, laws and regulations applicable to the Project; 0 The Project has complied with Financing Agreement No. 5845-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018; 0 The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement No. 5845-VN and prevailing relevant regulations established by the World Bank; 0 The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Central Project Management Unit for the year ended 31 December 2018 and those SOEs were adequately supported; . The proceeds of the loan were used only for the purpose(s) of the Project. For and on behalf of the Central Project Management Unit, Pharn Dinh Van Head of the Central Project Office Hanoi, 27 June 2019 18 Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE To: The Central Project Office (CPO) The Central Project Management Unit of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (CPMU) We have audited, in accordance with International Standards on Auditing, the financial statements of Mekong Delta Integrated Climate Resilience and Sustainable Livelihoods Project (the "Project") for the year ended 31 December 2018 and issued the independent auditors' report thereon dated 27 June 2019 expressing a qualified opinion on those financial statements. In connection with the audit of the financial statements, we also performed procedures on the Project's compliance with Financing Agreement No. 5845-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018 (the "requirements"). Responsibilities of Central Project Management Unit Central Project Management Unit is responsible for complying with Financing Agreement No. 5845-VN, laws and regulations applicable to the Project. Our Independence and Quality Control 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. 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. Auditors' Responsibilities Our responsibility is to express an opinion on Project's compliance based on the evidence we have obtained. 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 conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An reasonable assurance engagement in accordance with ISAE 3000 to report on the Project's compliance with the requirements involves performing procedures to obtain evidence about whether the Project's 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 auditor's 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 effect 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 qualified opinion as well as our findings as presented in the Management Letter on page 21 to page 25. 19 W * Deloitte INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE (Continued) Basis for Qualified Opinion Some Provincial Project Management Units ("PPMU") inclusive of 10 Irrigation Investment and Construction Management Board under the Ministry of Agriculture and Rural Development, PPMU Kien Giang, PPMU Ca Mau and PPMU Dong Thap have not reconciled the balances of cash in State treasury at the year end. Accordingly, the abovementioned PPMUs have not complied with the regulations on management of cash in State treasury of the Project. Qualified Opinion In our opinion: * Except for the effects of the matter described in the "Basis for Qualified Opinion" section, the Project has complied, in all material respects, with Financing Agreement No. 5845-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018. * The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement No. 5845-VN and prevailing relevant regulations established by the World Bank. * The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by Central Project Management Unit for the year ended 31 December 2018 and those SOEs were adequately supported. * The proceeds of the loan were used only for the purpose(s) of the Project. Khuc Thi Lan Anh Nguy Anh Tuan Deputy General Director Auditr Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0036-2018-001-1 No. 1472-2018-001-1 DELOITTE VIETNAM COMPANY LIMITED 27 June 2019 Hanoi, S.R. Vietnam 20