• • • • ■ • ■ ■ • ■ ■ •「兀不頂不烹可不羸萬不不不兀烹 .-”一”11汰需濡姿瀟疋斤汗夏不萬贏祈鄴一‘- ■―‘一騙森需舟斤品贏〕不舟而’一― •―,or’森無么嘆黑盔扁轟盔壽頸騙，- ■陸－---------－日－-- • ■ •州9一吒一純 ■ . . • ■ • ■ . • ■ • • • •―不兩而聶一2019 • MAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT Credit No. 4900 - VN TABLE OF CONTENTS PAGE PART 1: FINANCIAL STATEMENTS REPORT OF THE PROJECT MANAGEMENT UNIT 2 INDEPENDENT AUDITORS' REPORT 3 -4 FINANCIAL STATEMENTS Balance sheet 5 Summary of Sources and Uses of funds 6 Expenditures by Funding sources 7-8 Statement of Designated account Reconciliation 9 Statement of Loan withdrawals 10 Notes to the Financial Statements 11-15 PART 11: INDEPENDENT AUDITORS'REPORT ON INTERNAL CONTROL 16 PART III: INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE 17 PART IV: MANAGEMENT LETTER 18-26 . - . • . - - - . . .SECTIONI ■FINANCIAL STATEMENTS . • • . • • ■ 沐“ - . • . . - . . 目 - • • - • . HAI PHONG URBAN TRANSPORT DEVELOPMENT REPORT OF PROJECT MANAGEMENT UNIT PROJECT - Credit No. 4900-VN for thefiscal year ended Deceinber 31, 2018 REPORT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit ("the PMU") of Hai Phone, Transport Construction Projects Management Department, assigned by the People's Committee of Hai Phong as Employer Entity for implementing Hai Phong Urban Transport Development Project ("the Project"'), hereby presents this report together with the Audited Financial Statements of the Project for the fiscal year ended December 31, 2018. The PMU The members of the PMU who are in charge of executing the Project during the fiscal year ended December 3 1, 20 18 and to the date of this report include: - Mr. Do Tuan Anh General Director (Appointed on May 01, 2019) - Mr. Doan Xuan Dan Director (Resigned on May 01, 2019) - Mr. Do Huong Le Thuong Chief Accountant (Appointed on May 16, 2019) - Ms. Dao Nguyen Nhung Chief Accountant (Resigned on May 01, 2019) The PMU's responsibili The PMU hereby certifies that the Financial Stateinents of rlai Pliong Urban Transport Development Project, including: the Balance sheet, Summary of Sources and Uses of funds, Expenditures by Funding sources, Statement of Desianated account Reconciliation, Statement of Loan withdrawals and Notes to the Financial Statements from page 05 to page 15 as attached hereto for the fiscal year ended December 31, 2018 have been properly drawn up so as to give a true and fair view of the assets, liabilities and resources of the Project as at December 31, 2018 as well as of its incomes and expenditures for the fiscal year ended December 31, 2018, in accordance with the Accounting policies stated in Note No. 3 of the Notes to the Financial Statements and the provisions of the Financing Agreement No. 4900-VN signed on May 31, 2011, Amendments to Financing Agreement dated September 17, 2014 and June 09, 2015 between the Government of the Socialist Republic of Vietnam and International Development Association. In preparing those Financial Statements, the PMU is required to: - Select suitable accounting policies and then apply them consistently; - Make j Udgments 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 or not; and - Design and maintain 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; take responsibility for its assertions as to the effectiveness of such internal control. The PMU is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the special position of the Project. It is 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, HAI PHONG TRANSPORT CONSTRUCTION PROJECTS MANAGEMENT DEPARTMENT Do Tuan Anh General Director Hai Phong, Mc y 25, 2019 S"'"""'"" VIET NAM AUDITING AND EVALUATION COMPANY LIMITED INDEPENDENT MEMBER OF LEA GLOBAL Specialized in Auditing, Evaluation, Consultancy on Finance, Accounting and Tax No.. T -19/BC-TC/VAE Hanoi, June 20, 2019 INDEPENDENT AUDITORS' REPORT To: Project Management Unit of Hai Phong Transport Construction Projects Management Department Opinion We have audited the Financial Statements of Hai Phong Urban Transport Development Project (hereinafter referred to as "the Project"), prepared on May 25, 2019, which comprise: Balance sheet as at December 3 1, 2018, Summary of Sources and Uses of funds, Expenditures by funding sources, Statement of Designated account Reconciliation, Statement of Loan withdrawals for the fiscal year then ended and Notes to the Financial Statements, 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 as at December 3 1, 2018 as well as of the funds received and expenditures of the Project for the fiscal year then ended in accordance with the accounting convention and the accounting policies set out in Note No.2 and Note No.3 of the Notes to the financial statements. - The Financial Statements give a true and fair view of the balance of Designated account as at December 3 1, 2018 as well as the receipts and expenditures of the Project via Designated account for the year then ended in accordance with relevant covenants of Financing Agreement for the Financing Agreement No. 4900-VN, Amendment to Financing Agreement dated September 17, 2014 and Amendments to Financing Agreement dated June 09, 2015, Project Financial Manageient Manual and prevailing relevant regulations established by the World Bank. - The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Project Management Unit for the fiscal year ended December 31, 2018 and those SOEs were adequately supported. Basis for 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 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 opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note No.2 and Note No.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 No.2 and Note No.3 of the Notes to the financial statements and the requirements of the World Bank. As a result, the financial statements may not be suitable for another purpose. Our opinion is not modified in respect of this matter. 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 accounting convention and the accounting policies set out in Note No.2 and Note No.3 of the Notes to the financial statements, and for such internal control as the Project Management Unit determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Head Office: 11 Floor Song Da Building Branch: No. 173 Nguyen Huy Tuong No 165 Cau Gosy Streer Cau Gi. DIS, H Noi 3ard 6. Binh Thann Dst Ho Chi Mmnh City Tel 024 626704 ' 4924932 Fax 024 62 6 424 DT. 28 6294 1117 6252 1818 Fax 028. 6294 1116 Website: www.vae.com.vn W U INDEPENDENT AUDITORS' REPORT (continued) In preparing the financial statements, the Project Management Unit 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 Project Management Unit either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. 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 fi-om 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 scepticism 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 Project Management Unit'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 Project Management Unit. 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. Pham Hung Son Dang Thi Thu Hang Deputy General Director Auditor Certificate ofAudit Practice Registration Certificate ofAudit Practice Registration No. 0813-2018-034-1 No. 3744-2016-034-1 For and on behalf of VIETNAM AUDITING AND EVALUATION CO., LTD 4 HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 BALANCE SHEET As at December 31, 2018 U Unit: VND Notes December 31, 2018 December 31, 2017 A - ASSETS Current assets 195,228,358,660 671,415,751,176 Cash on hand 5.1 14,300,000 14,300,000 Cash in bank, State treasury 5.2 57,262,358,323 30,932,189,421 Other receivables Advances to suppliers 6 137,951,700,337 640,469,261,755 Total assets 195,228,358,660 671,415,751,176 B - LIABILITIES Current liabilities 119,519,873,615 143,052,695,422 Payables to suppliers 7 119,498,254,851 143,025,267,247 Other payables 8 21,618,764 27,428,175 Total liabilities 119,519,873,615 143,052,695,422 NET ASSETS (A - B) 75,708,485,045 528,363,055,754 NET EQUITY Excess of Income over expenditures 75,708,485,045 528,363,055,754 TOTAL NET EQUITY 75,708,485,045 528,363,055,754 Hai Phong, May 25, 2019 HAI PHONG TRANSPORT CONSTRUCTION PROJECTS MANAGEMENT DEPARTMENT Prepared by Chief Accountant General Director Tran Thi Le Thu Do Huong Le Thuong Do Tuan Anh HAl PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 SUMMARY OF SOURCES AND USES OF FUNDS The year 2018 Unit: VND Accumulated to The year 2018 Accumulated to December 31, 2017 December 31, 2018 Income Credit fund from IDA 2,176,237,399,196 415,967,343,044 2,592,204,742,240 Counterpart fund (i) 1,821,917,361,051 (154,461,834,749) 1,667,455,526,302 Exchange rate differences 25,406,530,747 7,337,893,642 32,744,424,389 Total 4,023,561,290,994 268,843,401,937 4,292,404,692,931 Expenditures Civil works 2,001,632,661,008 248,413,220,273 2,250,045,881,281 Goods 65,605,512,970 1,403,025,000 67,008,537,970 Training 1,925,092,189 - 1,925,092,189 Operating costs 21,849,208,002 487,501,216 22,336,709,218 Land acquisition 1,074,423,874,100 442,287,380,832 1,516,711,254,932 Consultancy service and other expenses 329,761,886,971 28,906,845,325 358,668,732,296 Total 3,495,198,235,240 721,497,972,646 4,216,696,207,886 Excess of Income over expenditures Opening balance - 528,363,055,754 Ending balance 528,363,055,754 75,708,485,045 75,708,485,045 (i) Decrease in counterpart fund after repayment of the advance paymentfor compensation ofland acquisition on due date of recovery due to non-payment to beneficiaries to the State budget under Regulations in Circular No. 52/2018/TT-BTC dated 24/5/2018 of Ministry of Finance; decrease in fund sourced from the State budget for civil works for resettlement, refunded by World Bank ftom IDA source and decrease in counterpart fund as a result of a decrease in the land acquisition plan. Hai Phong, May 25, 2019 HAI PHONG TRANSPORT CONSTRUCTION PROJECTS MANAGEMENT DEPARTMENT Prepared by Chief Accountant Gieral Director Tran Thi Le Thu Do Huong Le Thuong Do Tuan Anh 6 HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 EXPENDITURES BY FUNDING SOURCES The year 2018 Unit: VND 1. Details of expenses under items Civil works Goods Training Operating costs Land acquisition Consultancy service Total and other expenses Accumulated to December 31, 2017 2,001,632,661,008 65,605,512,970 1,925,092,189 21,849,208,002 1,074,423,874,100 329,761,886,971 3,495,198,235,240 1. Credit fund from IDA 1,828,417,410,092 65,605,512,970 1,925,092,189 157,959,000 - 284,743,762,892 2,180,849,737,143 2. Counterpart find 173,215,250,916 - 21,691,249,002 1,074,423,874,100 45,018,124,079 1,314,348,498,097 The year 2018 248,413,220,273 1,403,025,000 - 487,501,216 442,287,380,832 28,906,845,325 721,497,972,646 1. Credit fund from IDA 247,739,947,852 1,403,025,000 - -- 28,870,172,700 278,013,145,552 2. Counterpart fund 673,272,421 - 487,501,216 442,287,380,832 36,672,625 443,484,827,094 Accumulated to December 31, 2018 2,250,045,881,281 67,008,537,970 1,925,092,189 22,336,709,218 1,516,711,254,932 358,668,732,296 4,216,696,207,886 1. Credit fund from IDA 2,076,157,357,944 67,008,537,970 1,925,092,189 157,959,000 - 313,613,935,592 2,458,862,882,695 2. Counterpart fund 173,888,523,337 - 22,178,750,218 1,516,711,254,932 45,054,796,704 1,757,833,325,191 z . 7 � Л •`' � 7 7 Г.'� � й � � � С:1 �' Z J �.,� �С N ^ О V'� и О 00 'V -� N ,�.-.� . "'� � , � С� о0 N и t� [� N И � с' М N [� 'CF' С^ � � N 00 М N i..� j и � р О� � 7 О� •- о�0 О� L:� М � Q . _ � г,,., .. оо М 7 О �У � о0 оо � z '✓., U 1Гi О � ••i UG М V' 00 I� � �--� и и . � �S � � [� N 'д' N �7 � � �' <_ м cv � с� .� и С.% �., С-+ . r у • U � ,и � '7 О И И � '_Т � О „'т�` U у Z ^� i С � � р ..�в � О� Q� О /J � � � � �. 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О � • О и i О � � � А � U U �"' U U � U U < ° � J = ^ N ^ N ~ N � HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For thefiscalyear endedDecember 31, 2018 STATEMENT OF DESIGNATED ACCOUNT RECONCILIATION The year 2018 For the period: From January 01, 2018 to December 31, 2018 Account No.: 10924717886688 Depository Bank: Vietnam Technological and Commercial Joint Stock Bank - Hai Phong Branch Address: No.5 Ly Tu Trong, Hong Bang district, Hai Phong city, Vietnam Credit No.: CR - 4900 - VN Currency: USD Total Part A - Account transaction Opening balance 1,267,086,42 Add.- - Total amount deposited by the World Bank for the period 18,467,524.69 - Bank interests - Amount refunded for unreasonable expenses Less: - Arnount withdrawn 17,413,411.02 - Bank charge - Amount refunded to the World Bank Closing balance (December 31, 2018) 2,321,200.09 Part B - Account reconciliation Amount advanced to Designated Account as at January 01, 2018 8,000,000.00 Add: Total amount advanced by the World Bank for the period Less: Total arnount recovered by the World Bank Outstanding amount advanced to Designated Account as at December 31, 2018 8,000,000.00 Closing balance of Designated Account as at December 31, 2018 2,321,200.09 Add: Arnount claimed but not yet credited 3,210,980.92 Add: Amounts withdrawn but not yet claimed 2,467,818.99 Total advances to Designated Account as at December 31, 2018 8,000,000.00 Hai Phong, May 25, 2 019 HAI PHONG TRANSPORT CONSTRUCTION PROJECTS MANAGEMENT DEPARTMENT Prepared by Chief Accountant General Director Tran Thi Le Thu Do Huong Le Thuong Do Tuan Anh 9 � � � � � ['✓ ,� '.� i . � Z � � � Z � М � � ����,� � � ' J ыJ ', . �'� � д ^ � � ('� д � � '� N � ^ , Or .: � й � ° о [� �, � .. � ! °° I оо Са � ё� ,-• °���1 Т Е„ ! 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N ��,� ~ � " � � � � � i � U � д ! ' я. Vr �� i ' И 'I �"� Q' V '�Г ! '� И � О .� �, i, i � �'�, м «^. � � и �I, I �I' м .У� ^° ' � р., о и � �- г с� г� ° °° i ! `° i � � � ,� � �� i N -о � � I I о �. 3 г.; � О r' и� и : � j �? ! `�I ! � � � иi а11 иI М >, � ° N ; �, � � � .� .д � � и�, Ор д' j 7 � � N •� �Ii �) и1 О� и О С-� и� v t�� � � � � Л . � � �" Е'и Z , � У � N р � � 'i �^ о � ы � .:. i.+ о о�, р � i. _' '^ �_ '' ¢ с. .�� `�`'� z �� � N�I N��� � Н '4 � � V1! (�' и L � � : " �-�- О ; \О j �О i С'.� ( � г � .� � _ � i � W�, N''� ^ L-� l� L � � � � � �� � � z 7 � �' � ^ С х' ��'�,' �. ,,,� о ��,.� L (V �; N , М ";�" � � z �^ ° о, oi о. 1 1 1 � � � 3 Z � �, � I� � '• о � й � � U U! U' U' z м HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900-VN For the fiscal year ended December 31, 2018 NOTES TO THE FINANCIAL STATEMENTS (These notes are an integral part of and should be read in conjunction with the accompanying Financial State7nents) 1. Overview of the Project Hai Phong Urban Transport Development Project (hereinafter referred to as "the Project") operates on Financincr Agreement No. 4900-VN dated May 31, 2011, Amendment to Financing Agreement dated Septernber 17, 2014 and June 09, 2015 between the Government of the Socialist Republic of Vietnam and International Development Association. The amount of Grant Agreement is represented by 112,100,000 Special Drawing Rights (SDRs), or USD 276.61 million at the USD/SDR conversion rate ruling on the agreement date, of which USD 175 million and USD 101.61 million are financed by the IDA and the People's Committee of Hai Phong, respectively, specific is: Project budget cost by components Total IDA's % (USD financing financing million) Component A- Urban Main Road Development 263.58 163.93 62.20 Al - Construction of the Bac Son - Nam Hai East-West 161.86 137.58 85.00 Link (1) A2 - Niem I Bridole and Truong Chinh Road 12.41 10.55 85.00 Improvement (1) A3 - Land Acquisition and Resettlement (2) 61.37 - - Compensation 71.75 - - Resettlement 16.29 - - ess cost recoveryftom land sales) -26.67 - - A4 - Consultant Engineering Services 16.15 15.8 97.84 Internal management costs 11.79 - - Component B - Public Transport Improvement 8.04 6.24 77.61 BI - Technical assistance for a Public Transport 1.76 1.76 100.00 Authority (PTA) B2 - Transformation of Line 2 Bus Services 3.59 2.39 66.80 B3 - Kien An Corridor Improvements 2.69 2.09 77.00 Tain Bac - Kien An Corridor Upgrade 2.09 2.09 100.00 Landplanning, 0.31 - - Internal managment costs 0.29 - - Component C - Capacity Building 4.99 4.83 96.79 C I -Integrated planning connect system (PCS) 0.77 0.77 100.00 C2 - Capacity buiding and Human Resource 0.64 0.64 100.00 Development C3 - Project Implementation Support 3.58 3.42 95.30 Project implementation support 3.42 3.42 100.00 Internal managnient costs 0.16 - - Total 276.61 175.00 63.27 (1) Under Amendment of Grant Agreement dated September 17, 2014 between the Socialist Republic of Vietnain (SRV) and International Development Association (IDA), the IDA financing for Construction work under Sub-component Al and A2 is revised up from 85% to 100%. (2) Under Amendment of Grant Agreement dated June 09, 2015 between the Socialist Republic of Vietnam (SRV) and International Development Association ("IDA"), civil works under sub- component A3 is added as wholly (100%) financed by the IDA, 01jectives of the Project The Project's objectives are to improve urban accessibility and to strengthen capacity for urban transport managernent and planning in Hai Phong. HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900-VN for the year ended December 31, 2018 NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with, the accompanying Financial Statements) Duration of the Project According to the Agreement, the duration of the Project is 6 years, from 2011 to 2016, with the effective date on July 28, 2011 and the closing date by December 31, 2016, to be extended until August 31, 2018 under the approval announcement of the World Bank for the extension of the Agreement dated December 29, 2016 and to be extended until February 29, 2020 under the approval announcement of the World Bank for the extension of the Agreement dated November 01, 2018. 2. Accounting convention and accounting period Accounting convention The financial statements are prepared on the modified cash basis of accounting, and accordingly, income is recognized as received and expenditures as incurred. Accounting period The accounting period of the Project begins from January 01 and ends at December 31. 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: Foreign currency translation Receipts and disbursements denominated in foreign currencies are converted into Vietnam dong (VND) at exchange rates ruling by Vietnam Technological and Commercial Joint Stock Bank - Hai Phong Branch on the transaction date. Non-cash account related transactions in foreign currency are translated into VND using the central rate stated by the State Bank of Vietnam on the transaction date. Assets and liabilities denominated in foreign currencies are converted at the central rate on the Balance Sheet date. All exchange differences from these transactions are recorded into exchange rate different account and presented on the Summary of Sources and Uses of funds. N Recognition offunds and expenditures Funds are recognized when received, that is, IDA financing is recognized when remittance is effected into the Designated account and the counterpart fund (from the Government of Vietnam) when payments are made directly to suppliers/vendors of the Project or when such funds are transferred into the PMU's account for its running costs. Expenditures are recognized when incurred, that is, spending items under "Civil works, goods, consultancy services and training" are recognized when the obligation to pay them arises by the amount of work handed over between a contractor and the PMU; Land acquisition expenses and related administration costs are recognized provided that adequate supporting documents are availed of and that compensation money has been paid to affected individuals and entities; Other expenses are recognized when they are incurred. Proceeds flom sales of bidding documents Under the Ministry of Finance's Official Letter No.15033/BTC-DT dated November 07, 2011, the Project can use proceeds from selling procurement documents to cover printing expenses and bidding related costs and pay for taxes as statutorily regulated. The remaining amount after deduction of these expenses and taxes is paid to the State budget other than recognized as a source of income for the Project. 12 HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 NOTES TO THE FINANCIAL STATEMENTS (continued) (These Notes are an integral part of and should be read in conjunction with the attached Financial Statements) 4. Designated account and interest from Designated account The Designated Account is a deposit account in USD opened at Vietnam Technological and Commercial Joint Stock Bank - Hai Phong Branch for serving the Project's activities. The payment from the Designated Account is performed for the valid expenditures, in accordance with the related regulations of Financing Agreement for the Credit No.4900 - VN and the related regulations of the World Bank. Interests of Designated account are used to cover depository bank charges and considered as a source of income of the State's budget and presented into the item "Other payables" in Balance Sheet. When the Project is completed, the unused interest is returned to the Government of Vietnam. 5. Cash December 31, 2018 December 31, 2017 . CVND VND 5.1. Cash on hand 14,300,000 14,300,000 Cash in VND - Other sources 14,300,000 14,300,000 5.2. Cash in bank, State Treasury 57,262,358,323 30,932,189,421 Vietnam Technological and Commercial Joint Stock Bank - 52,989,562,781 28,422,771,267 Hai Phong Branch Cash in USD 52,989,228,105 28,422,448,070 IDA Designated account 52,981,392,054 28,414,412,968 IDA interest from Designated account 7,836,051 8,035,102 Cash in VND 334,676 323,197 Account of selling procurement documents 323,197 323,197 Other account 11,479 - Hai Phong State Treasury 4,272,795,542 2,509,418,154 Cash in VND 4,272,795,542 2,509,418,154 Expense account of Project Management Unit - 493,003,716 Temporary account of holding land acquisition amount 4,272,795,542 2,016,414,438 ; TV Total 57,276,658,323 30,946,489,421 M HUL 6. Advances to suppliers N December 31, 2018 December 31, 2017 VND VND Guangxi Road and Bridge Construction Co., Ltd 19,841,391,788 41,291,773,211 Construction Corporation No.1 Joint stock company - Tasco Joint 51,773,579,933 87,204,229,324 Stock Company Joint Venture. Duyen Hai Investment Consultancy JSC 169,000,000 169,000,000 Center for Assessing Construction Quality Conformity 327,000,000 327,000,000 VNC Construction JSC 975,573,000 968,866,625 Center for Land Development of Kien An district 5,669,191,835 35,111,386,857 Center for Land Development of Hai An district 19,206,387,697 234,602,706,276 Management Unit of Project Investment and Construction of An 31,002,467,692 210,959,480,879 Duong ward Center for Land Development of Le Chan district 7,904,339,366 7,973,971,366 An Viet Auditing Limited Company 572,500,000 572,500,000 Center for Land Development of An Lao district - 42,412,500 Center for Land Development of Ngo Quyen district 510,269,026 21,245,934,717 Total 137,951,700,337 640,469,261,755 * 13 HAI PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 NOTES TO THE FINANCIAL STATEMENTS (continued) (These Notes are an integral part of and should be read in conjunction with the attached Financial Statements) 7. Payables to suppliers December 31, 2018 December 31, 2017 VND VND CDM Smith Inc. 254,587,683 Jiangsu Provincial Transportation Engineering Group Co., Ltd 8,586,877,775 8,520,835,599 Vietnam-Australia Group JSC 12,546,249,000 6,251,281,000 Hai Phong Transport Works JSC 3,310,735,972 3,310,735,972 Obrascon Huarte Lain, S.A. - Dat Phuong Joint Stock Corporation 35,040,978,261 90,408,998,424 Joint -Venture HaiPhong Transport and communication construcstion and 414,285,619 392,356,619 investment consultancy JSC Thang Long Infrastructure Development JSC 197,533,000 197,533,000 Hai Phong Construction Work Design Consultancy JSC 367,169,100 367,169,100 Center for Land Development of Kien An district 1,013,257,546 307,478,200 Technical Center for Environmental Natural Resources 132,446,000 132,446,000 Center for Land Development of Hai An district 5,000,012,889 1,142,950,880 Management Unit of Project Investment and Construction of An 12,100,850,569 9,230,412,620 Duong ward Center for Land Development of Le Chan district 725,395,700 153,632,000 Corporation No.319 257,197,000 257,197,000 Green House Architec JSC 113,218,000 113,218,000 Hai Phong Construction and Design JSC 172,265,000 254,118,000 Bach Dang Construction and Export-Import JSC 4,372,983,222 4,372,983,222 Sao Do Installation Construction JSC 3,228,261,000 2,163,163,200 Binh Minh Installation Construction Invsetment Consultancy JSC 454,621,000 454,621,000 International investment joint stock company 137,900,822 137,900,822 Nam Son Trade and Construction Co., Ltd 2,778,715,076 2,154,796,895 Civil Engineering Construction Corporation No 4 - Joint Stock 26,078,401,391 10,995,389,988 Company Vietnam Auditing and Evaluation Limited Company (VAE) - 120,510,422 Hai Phong Trading and Electric construction JSC 1,481,962,939 1,432,608,699 Center for Land Development of Ngo Quyen district 543,806,702 - International Construction and Investment Consultancy JSC 37,137,746 37,137,746 HaiPhong union of roads and bridge consulting JSC 1,369,000 1,369,000 Thuan Thien Design JSC 29,455,000 29,455,000 PVI Duyen Hai Insurance Company 139 139 Maritime construction technology consultant and development 386,700 386,700 center Transport Engineering Design Corporation 629,000 629,000 Thach Dinh Technology and Technical Consultancy JSC 26,429,000 26,429,000 Center for Environmental Resereach 26,511,000 26,511,000 Dai Viet Construction Design Consultancy JSC 18,609,000 18,609,000 14 U HAl PHONG URBAN TRANSPORT DEVELOPMENT PROJECT FINANCIAL STATEMENTS Credit No. 4900 - VN For the fiscal year ended December 31, 2018 NOTES TO THE FINANCIAL STATEMENTS (continued) (These Notes are an integral part of and should be read in conjunction with the attached Financial Statements) Construction and Environment Investment Joint Stock Company 21,450,000 02 Center for Land Development of An Lao district 14,163,000 - Hai Phong Military Command 12,403,000 12,403,000 Southern Information and Valuation Corporation - Ha Noi Branch 1,000 1,000 Total 119,498,254,851 143,025,267,247 8. Interest from Designated account - Souces of fund from IDA December 31, 2018 December 31, 2017 VND VND Interest from Designated account - Souces of fund from IDA 7,836,051 8,035,102 Pay ables from selling bidding documents 323,197 5,825,697 Other payables 13,459,516 13,567,376 Total 21,68764 27,428,175 9. Comparative figures Comparative figures are figures of the Financial Statements for the fiscal year ended December 31, 2017 of Hai Phong Urban Transport Development Project, which were audited by Vietnam Auditing and Evaluation Limited Company - VAE. Hai Phong, May 25, 2019 HAI PHONG TRANSPORT CONSTRUCTION PROJECTS MANAGEMENT DEPARTMENT Prepared by Chief Accountant General Director Tran Thi Le Thu Do Huong Le Thuong Do Tuan Anh M fl SETONI INEEDNfUDTR'RPR ONITENLCOTO fl flA fl fl * ETINI M LIVIET NAM AUDITING AND EVALUATION COMPANY LIMITED INDEPENDENT MEMBER OF LEA GLOBAL Specialized in Auditing, Evaluation, Consultancy on Finance, Accounting and Tax ,No.: 3{CJ-19/BC-TC/VAE Hanoi, June 20, 2019 INDEPENDENT AUDITORS' REPORT on internal control To: Project Management Unit of Hai Phong Transport Construction Projects Management Department We have audited, in accordance with International Standards on Auditing, the Financial Statements of Hai Phong Urban Transport Development Project (hereinafter referred to as "Project") for the fiscal year ended December 31, 2018 and issued the Independent Auditor's Report thereon dated June 20, 2019 expressing an unmodified opinion on those Financial Statements. In connection with our audit of the Project's Financial Statements, we also examined the effectiveness of internal control system 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. As stated in the Statement of the Project Management Unit on page 2, the 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 take responsibility for its assertions as to the effectiveness of such internal control. 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. Our examination was conducted 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 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. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. In our opinion, the 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 over financial reporting for the year ended December 31, 2018. Pham Hung Son Dang Thi Thu Hang Deputy General Director Auditor Certificate ofAudit Practice Registration Certificate ofAudit Practice Registration No.: 0813-2018-034-1 No.: 3744-2016-034-1 For and on behalf of VIETNAM AUDITING AND EVALUATION CO., LTD Head Office: 11 Floor Song Da Building Branch: No. 15/4 Nguyen Huy Tuong No. 165. Cau Giay Street, Cau Giay Dist., Ha Noi Ward 6, Binh Thanh Dtst. Ho Chi Minh City Tel. 024 62 670 491/492/493 Fax: 024 62 670 494 16 OT 028, 6294 1117/6252 1818 Fax 028 6294 1119 U Website: www.oae.camn.oo . . . . . . . - - 国SECTION 111 . 園INDEPENDENT AUDITORS,REPORT . ON COMPLIANCE . ■ . . - ■ - . - - . . ’二2 - - . - . . . - VIET NAM AUDITING AND EVALUATION COMPANY LIMITED INDEPENDENT MEMBER OF LEA GLOBAL Specialized in Auditing, Evaluation, Consultancy on Finance, Accounting and Tax No.: 14 - I 91BC- TCIVA E Hanoi, June 20, 2019 INDEPENDENT AUDITORS'REPORT on compliance To: Project Management Unit of Hai Phong Transport Construction Projects Management Department We have audited, In accordance with International Standards on Auditing, the Financial Statements of Hai Phon- tJrban Transport Development Project (hereinafter referred to as the "Project") for the fiscal year ended Decen-iber 3 1, 2018 and issued Independent Auditors' Report thereon dated June 20, 2019, expressing an unmodified 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.4900 - VN signed on May 31, 2011, Amendments of Financing Agreement dated September 17, 2014 and June 09, 2015, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the fiscal year ended December 31, 2018 (the "requirements"). Pro icct Mana ernent Unit is responsible for complying with requirements. Our responsibility is to express an opinion oil 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 re-Ulations applicable to the Project. We performed our work in accordance with International Standard oil 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 cornplied with the requirements. Ail assurance engagement to report oil the compliance with the requirernents at the Project involves performing procedures to obtain evidences 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 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 effect on the Project's financial staternents. 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 tliat the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. III Our opinion, the Project lias complied, in all material respects, with Financing Agreement No.4900- VN signed oil May 31, 2011, Amendments to Financing Agreement dated September 17, 2014 and June 09, 2015, laws and regulations that could have a direct and material financial effect on the Project's financiji stalcirients for the fiscal year ended December ) 1, 2018. Pham Hung Son Dang Thi Thu Hang Deputy General Director Auditor Cerlificale qfAudil Practice Registration Certificate ofAudit Practice Registration No. 0813-2018-034-1 No. 3744-2016-034-1 For and on behalf ql' VIETNAM AUDITING AND EVALUATION CO., LTD Head Office: 11 - Floor Song Da Building Branch: No !T3 Nguyen Huy Tuong No 165, Can Gey Str et Car Gjay Dist., Ha Noi Ward 6. Binh Thanh Dist, Ho Chi Minh City Tei. 024 62 670 491,14'92 493 Fax 024 62 670 494 17 DT 028 6294 111T6252 1818 Fax 028 6294 1119 Website: xvae.coni