I I I I I I I PROJECT MANAGEMENT UNIT NO. 3 VIETNAM ROAD ASSET MANAGEMENT PROJECT Credit Number 5331 - VN and Grant Number TF 015733 AUDITED FINANCIAL STATEMENTS Fiscal year ended 31 December 2017 I I 2018 -06- 2 1 I I I I I I I I I 1 Vietnam Road Asset Management Project Credit Number 5331 - VN / Grant Number TF 015733 I I I I 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 Expenditures 6 Statement of Funds balance 7 Statement of Designated accounts 8-9 Statement of Withdrawals 10 Notes to the Financial statements 11-16 PART II INDEPENDENT AUDITORS' REPORT ON 17-18 THE INTERNAL CONTROL SYSTEM PART III INDEPENDENT AUDITORS' REPORT ON 19-20 THE COMPLIANCE PART IV MANAGEMENT LETTER 21-23 I I I I I I I 2 I 1 Vietnam Road Asset Management Project Credit Number 5331 - VN I Grant Number TF 015733 REPORT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit No.3 ("Project Management Unit" or "PMU3") presents this report and the Financial Statements of the Vietnam Road Asset Management Project ("the Project") for the fiscal year ended 31 December 2017. The Project The Project is implemented under the Credit Number 5331 - VN and the Grant Number TF 015733 dated 14 January 2014 ("the Agreements") between the Government of the Socialist Republic of Vietnam and the World Bank. The Project Management Unit Members of the Project Management Unit in the year and to the reporting date are: Mr. Nguyen Xuan Truong Director Mr. Nguyen Tien Dat 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 Expenditures, Statement of Funds balance, Statement of Designated Accounts and Statement of Withdrawals, 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 Project financial statements. On behalf of the Project Management Unit I Nguyen Xuan Truong Director Hanoi, 15 May 2018 I I I f-aasc No.: 150518.014/BCTC.FIS2 INDEPENDENT AUDITORS' REPORTS ON THE FINANCIAL STATEMENTS To: The Project Management Unit No. 3 Vietnam Road Asset Management Project * Opinion We have audited the financial statements of the Vietnam Road Asset Management Project ("the Project") which comprise Statement of Funds balance as at 31/12/2017, Statement of Funds and Expenditures, Statement of Designated Accounts, Statement of Withdrawals and Notes to the Financial Statements for the 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, including the balance of the Designated Account as at 31 December 2017, funds received and expenditures incurred, movements of the Designated Account for the year 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 Credit Number 5331 - VN and Grant Number TF 015733; 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 Credit Number 5331 - VN and Grant Number TF 015733. Basis of Opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of Project Management Unit in accordance with the international Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements The Project Management Unit is responsible for the preparation 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. 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 4 f . '/ A member of International 84 1 I 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 Project's preparation and fair presentation of 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; I 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; t- 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 those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. AASC Limited Do IlManh Cuong Doan Thi Thuy Deputy General Director Auditor in-charge CPA Registered No.: 0744-2018-002-1 CPA Registered No.: 0937-2018-002-1 Hanoi, 15 May 2018 I I Ik < � .�; � v г-� р �t о м е� о r- о и cV v оо ог с о �э t' z о о о о со о о М v� о о� �N � о} � о о ао с;� cfl г� и ш о> оо � о r eF ti r= ш оэ оо w v � Q � сй о о.- �v о и ш cv cv сд и ' �- r. о �r т- со r. М со с� � о о ' �° � � � сл c�i �n пi с� о�r о оз й сч о и� �м� r.ишоа r-�t��оо.- м <л ао и иэ w М N r- г N r. � р� ¢� о ш v °�-° а`ro `4 �° ш п°Oi CO о г ' � г о О (О г о г �. Rj �ry N М N N С lL Ш � С � С6 � 'а ti р �r О оэ N сtэ О' cfl г N и ti , � Ш в- z ц� О 1� М �у' о М о V N О "= N} М О С'7 1� д' О г О и т !О ... ��. С� О г1" tn М и N И т М ���, ' L N с0 о и М д' 'д' и 1� СО О М �,',,....'. и` (О О д' t- 1� � и М О О е- }�" О С� dl М М О О(fI М tЛ 00 м L~П О t`n г� tii СО о М N ti дм' f` и СО б'1 д' �- N s- QY о N N е- м О 1`� Г N М ' г г г г � `:dti �� � 'L3 (О Q О О tn и �!' 1� О о.-- N М N ф/.ш. ' . ,j^ N г г ц) О N 1� (О (О О(Я ОО О 00 � /�(�.' О д' О tD О I� СО t.t) и< h N � N> N О�� (О � CU I� � СМО � N ��f , �` О О О� О� а0 с0 М n аО М О о i�%�'�. U г С7 О и ОО OD О) V б� N Р� �-- �/ ",.. V с'� о О О О М�t h- М г.О с'� аз N �j� `_ Q о М и о оо оо д� с� et ссэ со er м ,� .�, о вi о ai oi с� сд о г� л и � Г7 М� � а- а г � t� :,`'''�,, г � `, ' г .. г � 1.� ",',. о , � ,��,��,���,',,. о I `� �' _ , Z ' � м ch а Ш ' и и � � � � � ш � ш_i ho � ' о ш � w �с � а � а� т о �г к� -�� ' Ф N � � �� и с и й � С7 д,,, ш й � °v �' � и � } 0 � � � и с �. ' � , Z а � и � as р� � �� � аэ Й М LL' � (� .� Ф � 0 р tL <ц N ` 'й с$с `ш О�' a�i а rn =-� �- с с с � Е г U у и Ф� �? � Q� � и 7 > �- ' � и � Z 'ГL ч' �� О Х � 5� � О U'С = �� ai ��с.�ш и'Sc3�wU �О и . U t~Л ц�.. =�- с� м .- с� м v� и ш ' � � � _ ' ' ' , ' Vietnam Road Asset Management Project Financial Statements Credit Number 5331 - VN I Grant Number TF 015733 Year ended 31 December 2017 STATEMENT OF FUNDS BALANCE As at 31 December 2017 Note 31/1212017 31/12/2016 VND VND Surplus/ (Deficit) Surplus as at begining 74,321,921,292 334,343,727,388 Surplus I (Deficit) in the year 39,438,133,607 (260,021,806,096) Surplus as at closing 113,760,054,899 74,321,921,292 Represented by: Current assets 326,296,700,574 237,486,608,429 Cash at bank 5 274,724,069,585 90,132,670,530 Advances to contractors 6 51,572,630,989 147,353,937,899 Current liabilities 212,536,645,675 163,164,687,137 Payables to contractors 7 212,534,406,091 163,162,474,117 Other payables 2,239,584 2,213,020 Net worth 113,760,054,899 74,321,921,292 7 I Vietnam Road Asset Management Project Financial Statements Credit Number 5331 - VN / Grant Number TF 015733 Year ended 31 December 2017 STATEMENT OF DESIGNATED ACCOUNT For the period: from 01/01/2017 to 31/12/2017 Account holder: Project Management Unit No. 3 Account No: 99999908 8888 Bank: Lien Viet Post Bank - Ha Dong Transaction Office Address No. 10 Tran Phu street, Mo Lao Ward, Ha Dong District, Hanoi City Agreement No.: 5331 - VN PART A: ACTIVITIES Note USD Opening balance 3,814,832.48 Add: Amounts deposited by the World Bank 57,521,276.16 Deduct: Amounts withdrawn (49,610,381.15) Closing balance 11,725,727.49 I PART B: RECONCILIATION 1. Amount advanced by the World Bank 15,000,000.00 2. Add: Amount supplemented by the World Bank 3. Present outstanding amount advanced to 15,000,000.00 ,Eq 1 4. Closing balance 11,725,727.49 5. Add: Amounts withdrawn and not yet claimed (1) 3,274,272.51 6. Total advances accounted for 15,000,000.00 (1) Amounts withdrawn and not yet claimed related to Civil Works which have been claimed at Withdrawal No. L24 dated 07 February 2018. I I I I I I I I Vietnam Road Asset Management Project Financial Statements Credit Number 5331 - VN I Grant Number TF 015733 Year ended 31 December 2017 STATEMENT OF DESIGNATED ACCOUNT For the period: from 01/01/2017 to 31/12/2017 Account holder: Project Management Unit No. 3 Account No: 99999908 6666 Bank: Lien Viet Post Bank - Ha Dong Transaction Office Address No. 10 Tran Phu street, Mo Lao Ward, Ha Dong District, Hanoi City Agreement No.: TF 015733 PART A: ACTIVITIES Note USD Opening balance I Add: Amounts deposited by the World Bank Deduct: Amounts withdrawn I Closing balance - I PART B: RECONCILIATION 1. Amount advanced by the World Bank 250,000.00 2. Deduct: Amount recovered by the World Bank (250,000.00) 3. Present outstanding amount advanced to - 4. Closing balance ' 5. Total advances accounted for - I I I I I I I I I ' ' �,и � _ � и °' "' z° ш � ' �.+ S] и � � � � � � � � � т � о Го ''' с� � t� Ф s- � � � � � с �- > ' �6 М С -� V- -6 �� 00 О� М М И�t (.О t0 С � � О О г 00 (f� 'д" (О М г ' N О N О о О h- N О М СО , � � ОМО О oN0 ti д�- о� Соо п�i � } �¢ N О � пИ0 � N М М N _� М О 00 О И OJ � О� И � ОО И(Л СLэ о� И И Г� t� .. ' � и ' з о г�г`rrr•г�ГГ � г г г г _ _ �,. О О О О О О О О � Q � N N N N N N N N ',,. � � � -�. � � � ❑ О О О О О О`Г � � �. •� � � � � � (О ОО М О V' а0 И О ', О г О N О N О М �. ' �� 00 О Г� М М И V' СО СО ,�,�,.. О � О О г а0 Cf� '�7' (D М с� � N О� О 1� N О М (D �.. М О CV f�• �Г О 1` (U N_ �'�,.. ' N О д� �П М N о0 V .- ,.�'. N О д' 00 О) N г М N М О о0 О И о0 О'� О'� t!f ао iл о� т ао �n иэ г� г� и ' -6 � со � М и М со оо о сч '' � � N г(f� ОО 1` 'д' О N � �. !г �, �,. ' � И И �Г 1` д 0�0 й О f�D '�l � U � ONO MV � М ��� с~- о ' = U lП Г� (� V N д' N V �•, , �. О М Е Q ' И О ' гУ � И б) (fl (П V' ,',.. �С 00 О г f`- СО г М 01 О 1� N N�t о СО М � I� �� М f� М N М � ОО Г� б� О � N И fD_ ' •� о О О Cfl а0 О f� М � М О М�Л (О 1� М О U 1� ��Т г И V(О �r � о� и� ��п и� r� oi �r ' т � � � � � � � � w о о и� � о о о ci о ,,, ti � °о °о , � 1- Q о о � о °о � � г� �л vi а � � +� � о йZ J i ' � � а � �, �� � � с О❑ 0❑ 0 0 ❑ 0 �� � и� сд с� (Л сЛ сЛ сЛ cn <Л ' � ? _ ? Q р U � � � � � � � � � � м �пs � V С Г •п � й с� м г� Q о г_ r г` г- г` г- г< r• М (L М Ш - ' а и и а � � о о о о о о о о а � � � �у � � с� cv си cv с� с� с� N � пs � F- �� � м �r r со со rn cv cv � о� г-�� � ❑ п оооооо.-�- � �� Ш� а о °? сл Г со й м г= v й о � г ��>, � � О N о N О N � ��. �� Q� L � � I � Cfl 1� СО � О с-- N М •��' ' ш � � '� ,�,,,�'' >U �C��l Z ❑ i � i����`� !о- ' ' ' Vietnam Road Asset Management Project Credit Number 5331 - VN Financial Statements Grant Number TF 015733 Year ended 31 December 2017 NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2017 1. Background The Vietnam Road Asset Management Project is implemented under the Credit Number 5331 - VN and the Grant Number TF 015733 dated 14 January 2014 (the "Agreements") between the Government of the Socialist Republic of Vietnam and the World Bank. The main objectives of the Project are to improve the efficiency and sustainability of the road asset management and maintenance practices performed by the Ministry of Transport on national road in Vietnam. The Project includes components as follows: Road Asset Management System Development; Road Asset Preservation; r, Road Asset Improvement; i , Institutional Strengthening. The Project officially came into operation since 14 January 2014 and is expected to close on 31 December 2020. The Project is managed by Project Management Unit No. 3, and its office is located at No. 23 Group, Linh Nam Ward, Hoang Mai District, Ha Noi City. 2. Principal Accounting Policies a. Basis of preparation of the Financial Statements c6 The annual accounting period commences from 1't January and ends at 31't December. N' 0 K The financial statements are prepared in accordance with the requirements of the World Bank AA and presented in Vietnam Dong (VND), except for the Statement of Designated Accounts and Statement of Withdrawals, which are prepared in United State Dollar (USD). i The principal accounting policies are summarized as below: b. Foreign currencies Funds received from the World Bank in the foreign currencies are translated into VND under the inter-bank exchange rate at transaction dates. Monetary assets and liabilities denominated in foreign currencies are revalued at the inter-bank exchange rate at the reporting dates. 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 Expenditures. c. Funds and Expenditures Funds: Funds received from the World Bank are recorded when remittance made into Designated Accounts or direct payment made to contractors/suppliers-, Counterpart funds of the Vietnamese Government are recorded when payments are made directly from the Vietnamese Government to contractors1suppliers of the Project or funds are remitted to PMU3 for settlement of the Project's activities. Expenditures: Incremental operating cost is recorded in the connection with the counterpart fund received for this category; I Vietnam Road Asset Management Project Credit Number 5331 - VN Financial Statements Grant Number TF 015733 Year ended 31 December 2017 > Other expenditures are recorded when they are actually incurred. d. Designated accounts and their interests Designated Accounts are the deposit accounts in USD opened at LienViet Post Bank - Ha Dong Transaction Office for the Project's activities. Payments made via Designated Accounts are for eligible expenditures of the Project in accordance with the provisions of the Credit Number 5331 - VN and the Grant Number TF 015733 dated 14 January 2014. Interests of the Designated Accounts are considered as receipts of the State Budget and initially recorded as Other payables in Statement of Funds balance and used to cover bank charges. At the end of the Project, outstanding interests will be returned to the Vietnamese Government. In case bank charges are not fully covered by the interests, it will be settled by the Counterpart funds (according to Circular No. 11 1/2016/TT-BTC dated 30 June 2016). I I I TY I I I I I I II 12 I l -:-―》―--&------―『，:---―」―-―·뜨―--―·i-―· I ■ Vietnam Road Asset Management Project Credit Number 5331 - VN I Financial Statements Grant Number TF 0 15733 Year ended 31 December 2017 5. Cash at bank 31/12/2017 31112/2016 VND VND Designated account (IDA 5331 - VN) 262,949,438,963 84,53Z 872,924 Interest account of Designated account (IDA 5331-VN) 168,187 166,193 Interest account of Designated account (TF 015733) Z 071,397 Z 046,827 Current account (VND) 11,772,391,038 5,597,584,586 274,724,069,585 90,132,670,530 6. Advances to contractors 31112/2017 31/12/2016 VND VND Civil Works 41,839,621,809 137,179,955,628 QTCIC 22,708,324,800 47,667,007,246 TLC., JSCO 17,875,886,282 18,671,414,542 468 - CIC 1,255,410,727 14,846,658,465 Don Do Group - 18,607,414,131 Thi Son Co., Ltd. - 11,410,000,321 Xuan Quang Construction JSC - 9,823,239,855 Hoa Binh Construction and Infrastructure - 6,387,999,560 Development Invest Trico I - 4,857,124,775 Thai Binh Road Management JSC - 4,673,742,750 Phuong Nam MCS - 235,353,983 Consultant 9,733,009,180 10,173,982,271 Katahira & Engineers International 4,737,174,210 4,737,174,210 Intercontinental Consultants and Technocrats Pvt Ltd 3,142,787,650 3,309,196,700 ATC Firm Co., Ltd 1,147,200,000 SMEC International Pty Ltd 606,147,320 1,212,294,641 Transport Development and Strategy Institute 99,700,000 99,700,000 Apave Asia - Pacific Company - 815,616,720 51,572,630,989 147,353,937,899 14 I Vietnam Road Asset Management Project Credit Number 5331 - VN / Financial Statements Grant Number TF 015733 Year ended 31 December 2017 I 7. Payable to contractors 31/12/2017 31/12/2016 VND VND Civil Works 194,829,581,738 146,137,667,451 Investment and Contruction Project 656 Co., Ltd. 37,495,728,740 24,959,720,199 Hoa Hiep Co., Ltd. 21,293,246,434 19,059,279,298 Urban infrastructure development investment Corporation 12,711,497,888 8,211,912,432 Thuan An Trading and Deielopment Construction JSC 11,429,155,489 11,574,443,393 68 TCS JSC 10,797,634,819 8,263,939,772 Hoan Hao Co., Ltd. 9,569,782,554 9,335,608,982 Hiep Phu Co., Ltd. 9,486,590,433 6,487,414,352 Phu Thinh Construction JSC 9,312,722,229 9,762,857,028 Phuong Nam MCS 7,469,364,956 6,197,352,995 Dat Phuong JSC 6,460,199,487 6,882,120,145 QTCIC 5,665,588,071 8,238,914,354 Bao Son Co., Ltd. 5,357,640,288 7,053,692,852 COINCO 703JSC 5,088,471,993 4,562,247,027 Phuong Thanh Tranconsin JSC 4,304,374,313 5,703,899,602 TLC., JSCO 4,251,206,856 105,514,243 16 - CiencolJSC 4,041,035,423 3,262,120,787 468 - CIC 3,863,258,338 347,264,312 Dong Do Group 3,799,979,174 492,223,590 Cienco 1 3,254,957,857 - 26 1 Ngoc Minh - UDIC JSC 3,012,768,293 IHung Phat Construction JSC 2,684,410,259 2,565,131,933 Vinaconex 12 2,647,862,861 - Hoa Binh Construction and Infrastructure Development 2,626,512,920 435,833,407 Invest Vinadelta JSC 2,247,394,090 - Thi Son Co., Ltd. 2,223,501,530 Trung Duc Construction JSC 1,930,477,683 2,636,076,748 Xuan Quang Construction JSC 1,804,218,760 TEDICO 208., JSC 1,792,821,696 1,622,382,791 Phuang Bac JSC 1,685,087,070- 236 JSC 1,491,972,145 HJC Group JSC 1,477,457,800 - Thai Binh Road Management JSC 1,449,231,428 244,409,082 Trico 1 1,301,583,574 233,812,766 Viet Duc Construction JSC 1,146,594,543 2,909,438,990 Son Tung Co., Ltd. 1,087,015,133 2,865,836,045 369 Construction Investment JSC 1,021,908,854 2,470,111,811 I I I 1 15 I I Vietnam Road Asset Management Project Credit Number 5331 - VN I Financial Statements Grant Number TF 015733 Year ended 31 December 2017 7. Payable to contractors (continued) 31/12/2017 31/12/2016 VND VND Land acquisition 1,760,026,593 2,480,912,426 319 Co., Ltd. 738,050,943 1,471,229,803 30 Corporation 406,902,850 395,857,623 Truong Son Construction Corporation 401,247,800 400,000,000 Tan Phat JSC 213,825,000 213,825,000 I Consultant 3,004,340,811 298,948,516 SMEC International Pty Ltd 2,875,152,765 - TEDI - RECO 81,286,246 IBTE-ITST 47,901,800 - E&Y Vietnam - 298,948,516 Others 486,784,706 3,899,054,239 Baoviet Ha Noi Co., Ltd. 486,784,706 1,606,390,057 PVI Thang Long Insurance Co., Ltd. - 1,406,664,000 Petrolimex Insurance Corporation (PJICO) - 352,129,292 Bao Minh Thai Binh Co., Ltd. - 216,000,000 Bao Long Ha Noi Insurance Co., Ltd. - 178,557,090 Bao Long North Central Insurance Co., Ltd. - 139,313,800 212,534,406,091 163,162,474,117 I 8. 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. 9. Corresponding figures I The corresponding figures are the financial statements for the year ended 31 December 2016 which were audited by AASC Limited. 10. Approval of the Financial Statements The financial statements were approved by Project Management Unit for issuance on 15 May 2018. Nguyen Xuan Truong Nguyen Tien Dat I Director Chief Accountant Hanoi, 15 May 2018 I * 16 I I I No.: 150518.014/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL SYSTEM To: Project Management Unit No. 3 Vietnam Road Asset Management Project We have audited, in accordance with International Standards on Auditing, the financial statements of the Vietnam Road Asset Management Project ("the Project") for the year ended 31 December 2017 and issued the auditors report thereon dated 15 May 2018 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 year I ended 31 December 2017. 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. I I i . e, ~ .. A momber of International 17 I I 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 financial statements for the year ended 31 December2017. AASG,Limited I Do ManhGong Doan Thi Thuy Deputy General Director Auditor in-charge CPA Registered No.: 0744-2018-002-1 CPA Registered No.: 0937-2018-002-1 I Hanoi, 15 May 2018 I I I I I I I I I I * 18 I I t _aasc No.: 150518.014/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE To: Project Management Unit No. 3 Vietnam Road Asset Management Project We have audited, in accordance with the International Standards on Auditing, the financial statements of the Vietnam Road Asset Management Project ("the Project") for the year ended 31 December 2017 and issued the auditors report thereon dated on 15 May 2018 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 Credit Number 5331 - VN and the Grant Number TF 015733 dated 14 January 2014, law and regulations that have a direct and material effect on the Project's financial statements for the year ended 31 December 2017 ("the Requirements"). Responsibilities of the Project Management Unit The Project Management Unit is responsible for complying with the Requirements applicable to 3 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. I 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. I I I 1 1 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 fiscal year ended 31 Deember 2017. AASC Lnimted I Do Manh Cuong Doan Thi Thuy Deputy General Director Auditor in-charge CPA Registered No.: 0744-2018-002-1 CPA Registered No.: 0937-2018-002-1 I Hanoi, 15 May 2018 I I I I I I I I I I 20 I