Nexia STT Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Audited Financial Statements Under Financing Agreement No. 5810-VN between the International Development Association and the Government of the Socialist Republic of Vietnam Year ended 31 December 2018 Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Under Fnancing Agreement No. 5810- VN between the International Development Association and the Government of the Socialst Republic of Vietnam Contents STATEMENT OF THE COMPONENT MANAGEMENT BOARD...................................2 INDEPENDENT AUDITORS' REPORT ....................................................................5 BA LA N C E S H EET.............................................................................................11 CONSOLIDATED STATEMENT OF FUNDS AND EXPENDITURES ...........................12 STATEMENT OF DESIGNATED ACCOUNT...........................................................13 NOTES TO THE FINANCIAL STATEMENTS.........................................................15 1 Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Under Flnancng Agreement No. 5810- VN between the International Development Association and the Government of the Soci/st Republic of Vietnam STATEMENT OF THE COMPONENT MANAGEMENT BOARD Project Management Unit 6 was assigned by the Ministry of Transport as the Owner Representative for Component 1 - Improvement, rehabilitation of local roads of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" ("the Component") using the World Bank's credit and the counterpart funds from the Government of Vietnam. Project Management Unit 6 ("the Component Management Unit") is responsible for the Financial Statements of Component 1 - Improvement, rehabilitation of local roads of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" ("the Project") for the year ended 31 December 2018 The Project The Project "Results-based Operation for Local Bridge Construction and Road Asset Management" was implemented by the Ministry of Transport (MOT) - the Socialist Republic of Vietnam according to Decision No. 330/QD-TTg dated 2nd March 2016 signed by the Prime Minister of the Socialist Republic of Vietnam and Decision No. 622/QD-BGTVT dated 2nd March 2016 signed by the Minister of the MOT. The Project was granted by the World Bank's credit through International Development Association ("IDA") under Financing Agreement No. 5810-VN dated 4th July 2016, with the total amounts equivalent to 278,800,000 Special Drawing Rights ("SDR"), and the :ounterpart funds from the Government of the Socialist Republic of Vietnam for seven (7) years from 2016 to 2023. The overall objective of the Project is to assist the Government and the Ministry of Transport in the National Strategy on Rural Transport Development and a National Program fcr Local Bridge Construction to ensure traffic safety in Ethnic Minority Areas and to improve access in rural areas with low accessibility, especially for areas where poor ethnic minority communities are located as well as other vulnerable groups such as single women and children. The Project consists of: (i) A Program using the Results-Based Program (PforR) instrument ("the Program"), supported by a IDA credit of USD380.5 million; and (ii) Technical Assistance ("the Project") using the Investment Project Financing (IPF) instrument, supported by a IDA credit of USD4.5 million. The Project's objectives are achieved by implementing the following components: - Component 1: Improvement, rehabilitation of local roads (managed by Project Management Unit 6); - Component 2: Local Bridge Construction (managed by Project Management 3); and - Technical Assistance Component (managed by Project Management 6). A Program using the PforR instrument to assist the Government's program, consisting of two (2) Components 1 and 2 of the Project. Component 1 - Improvement, rehabilitation of local roads has been managec by the Project Management Unit 6 and implemented in 14 provinces, including: Lao Cai, Ha Giang, Nam Dinh, Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Bac Kan, Quang Tri, Thua Thien -iue, Quang Nam, Lang Son, Cao Bang, and Binh Dinh. The Component's objective is to provide support to the National Strategy for Rural Transport Development, through: (a) strengthenirg its institutional capacity to plan, implement and improve maintenance activities of the local road network; and (b) the improvement, rehabilitation, periodic and rountine maintenance of local roads based upon rolling Medium Term Expenditure Plans. 2 Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Socialst Republic of Vietnam STATEMENT OF THE COMPONENT MANAGEMENT BOARD (CONTINUED) Component 2 - Local Bridge Construction has been managed by the Project Management Units 3, 4, 6 and 8 and implemented in 50 provinces, including: Ha Giang, Cao Bang, La Chau, Dien Bien, Son La, Lao Cai, Yen Bai, Lang Son, Bac Kan, Tuyen Quang, Thai Nguyen, Phu Tho, Hoa Binh, Quang Ninh, Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Thua Thien Hue, Quang Nam, Quang Ngai, Binh Dinh, Gia Lai, Kon Turn, Dak Lak, Dak Nong, Lam Dong, Bac Gianc, Vinh Phuc, Ninh Binh, Hai Duong, Phu Yen, Ninh Thuan, Khanh Hoa, Binh Thuan, Binh Phuoc, Tra Vinh, Dong Nai, Vinh Long, Hau Giang, Kien Giang, An Giang, Soc Trang, Bac Lieu, Ca Mau, Tay Ninh, Can Tho, Dong Thap, and Ben Tre. The Component's objective is to provide support to the National Strategy for Rural Transport Development, through: (a) the construction of small bridges in poor and ethnic minority communities and villages with missing or unsafe links in order to fac litate access to social services, schools, and clinics within the local road network; and (b) strengthening of local communities' capacity to carry out bridge maintenance activities. The Technical Assistance Component is implemented by Project Managment Unit 6, consisting of activities that are necessary to complete the PforR, namely activities related to: (a) auditing the Program; (b) improving the capacity of implementing agencies in environmental and social management; and (c) the Local Road Asset Management Systems support, cI mate resilience in the road network, and community and women based road maintenance. Component Management Board The members of the Component Management Board are responsible for the management of the Component 1 - Improvement, rehabilitation of local roads of the Project during the year and at the date of this report are as follows: Mr. Nguyen Huu Long Director Mr. Pham Ngoc Bien Deputy Director Mr. Le Tuan Khanh Head of Finance and Accounting Department Mr. Pham Xuan Trung Deputy Head of Project Implementation Department 1 Auditors The accompanying Financial Statements for the year ended 31 December 2018 have been audited by NEXIA STT Co., Ltd. Responsibility of the Component Management Board in respect of the Financial Statements The Component Management Board is responsible for the Financial Statements which give a true and fair view of the financial position and designated account balance of the Component 1 - Improvement, rehabilitation of local roads as at 31 December 2018 and of its funds and expenditures, operations of designated account and total funds withdrawn for the year ended 31 December 2018. In preparing the Financial Statements, the Component Management Board is required to select suitable accounting policies and then apply them consistently. 3 Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Soc/a//st Republic of Vietnam STATEMENT OF THE COMPONENT MANAGEMENT BOARD (CONTINUED) The Component Management Board is responsible for ensuring that proper accounting records are kept which enable the Financial Statements to be prepared in compliance with the accounting policies set out in Note 2 to the Financial Statements. The Component Management Board is also responsible for safeguarding the assets of the Component and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Component Management Board assumes the responsibility to provide, ard has provided, the auditors with all accounting records, supporting and other documents, minutes, any pertinent information and explanations, either orally or by written confirmation, necessary for the audit. Approval of the Financial Statements We hereby approve the accompanying Financial Statements of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" - Component I - Improvement, rehabilitation of local roads on pages 11 to 28 which give a true and fair view of the financial position and designated account balance as at 31 December 2018 and its funds and expenditures, operations of designated account and total funds withdrawn for the year ended 31 December 2018 in accordance with the accounting policies as described in Note 2 to the Finarcial Statements and grant withdrawals have been adequately reconciled to the statements of expenditures prepared by the Component during the year, and such statements of expenditures were adequately supported, The Financial Statements were prepared in compliance with the Applicable Provisions of the Agreement and other Guidance from the World Bank. On behalf of the Component Management Board Mr. Pham Ngoc Bien Deputy Director Hanoi, 30 July 2019 4 ClDHan i Office Nexia 3 C`andc..e.1a x Ong.. . a, o, :-84 174 935 0990 - F.+ 2-24)3 509c1I S T ai Phc Office STT ---T,nq q P)-g 23: 5 h ng Thuang Ly, Hong Bang Phon P 8 L 3539 9/6G66 / 5 - F : 22- 3 %9 79 Hoch,minh C fOffice 9 E Estzir Bdg 4 -149 Ve an Djstrjct. Hoch nhj City P: 34 (28 39304 - 3. Q8: 3 00 4 : ne> astt- e' - W w exi.. INDEPENDENT AUDITORS' REPORT On Component Financial Statements To: The Management Board of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Audit opinion We have audited the accompanying Balance Sheet as at 31 December 2018, the Consolidated Statement of Funds and Expenditures, the Statement of Designated Account and the SE Withdrawal Schedule for the year ended 31 December 2018 (collectively referred to as the "Financial Statements") of the Project "Results-based Operation for Local Br dge Construction and Road Asset Management" - Component 1 - Improvement, rehabilitation of local roads ("the Component") implemented by World Bank's credit through International Development Association ("IDA") and counterpart funds, and summary of significant accounting policies and other explanatory information. In our opinion, in all material respects: a) the Balance Sheet and the Consolidated Statement of Funds and Expenditures give a true and fair view of the financial position of the Component 1 - Improvement, rehabilitation of local roads as at 31 December 2018 and of its funds and expenditures for the year ended 31 December 2018 in conformity with the accounting policies described in Note 2; b) the Statement of Designated Account and the SOE Withdrawal Schedule give a true and fair view of the designated account balance as at 31 December 2018 and of operations of the designated account, and of the funds withdrawn for the year ended 31 December 2018, in conformity with the accounting policies described in Note 2; and c) the Statements of Expenditures and Summary Sheets are fully prepared and maintained with adequate supporting documents to support for the replenishment requests submitted to the World Bank. Funds disbursed through the statements of expenditures and summary sheets are utilized for purposes defined in Financing Agreement No. 5810-VN. 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 Auditcr's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Component in accordance with the ethical requirements that are relevant to our audit of the Financial Statements in accordance with ISAs, 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. iiiii lip 2'- :222,'ax;venr x; 5 Nexia STT Responsibilities of Component Management for the Financial Statements Component Management is responsible for the preparation and fair presentation of the Financial Statements in accordance with Note 2 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. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the Financial Statements of the Component as a whole are free from material misstatement, whether due tc 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 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. A further description of the auditors' responsibilities for the audit of the Financial Statements are included in Appendix I of this auditors' report. This description, which is represented at page 29, forms part of our auditors' report. NEXI STT, Nguyen ..Trung General Dhrector Audit Practicing Registration Certificate No. 0518-2018-225-1 Audit report No.: 2019/HN-AUD/WB-LRAMP Hanoi, 30 July 2019 6 In Han Office P -84 '24) C 935 0990 - F:-4 4 3 35 091 ~~Hai ,ePhoi Office STT245 Bach Dang Thuo Ly. Honl Sanc i Phonrg Q:-8. N,22513539 676/5 - +8 220c 39i789 Hoch minh C Office F. Estar B d 49 nTan Ds . nh Cit P:84 2 300488 F:. 28 484 F n isttthnexia v ex v INDEPENDENT AUDITORS' REPORT On Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of the Financing Agreement To: The Management Board of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Audit opinion We have audited the Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Financing Agreement No. 5810-VN of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" - Component 1 - Improvement, rehabilitation of local roads ("the Component") implemented by World Bank's credit through International Development Association ("IDA") and counterpart funds for the year ended 31 December 2018. In our opinion, the Component was, in all material respects, in compliance with the applicable laws, regulations, the procurement procedures and other provisions of Financing Agreement No. 5810-VN that could have a direct and material effect on the Component's Financial Statements for the year ended 31 December 2018. Basis for opinion We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financia Information", issued by the International Auditing and Assurance Standards Board. Our responsibility is to express an opinion on the Component's compliance with the requirements, based on our procedures. We are independent of the Component in accordance with the ethical requirements that are relevant to our audit of the financial statements in accordance with ISAs, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Component Management The Component Management Board is responsible for compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Financing Agreement No. 5810-VN that could have a direct and material effect on the Financial Statements for the year ended 31 December 2018. 5 FOR Vs I -'i . '221N,x r, arV00A 0'0 00' 7 02T' , n o --'n ,, 't 9r,'00Ioc 0e e.tvoc Oc . 03,0 '0N~'rrr Nexia STT Auditors' Responsibilities Our responsibility is to express an opinion on the Component's compliance with the requirements, based on our procedures. We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with ethical requirements, plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Component has complied with the requirements. An assurance engagement to report on the compliance with regulatory and contractual requirements at a Component involves performing procedures to obtain evicence about whether the Component's activities are free of material noncompliance with the requirements. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Component does not comply with the requirements and whether such noncompliance could have a direct and material effect on the Component'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 Component. NEX C ,Ltd. Nguyen ru General Director Audit Practicing Registration Certificate No. 0518-2018-225-1 Audit report No.: 2019/HN-AUD/WB-LRAMP Hanoi, 30 July 2019 8 Har i Office Nexia 18 -!C'LandTcwe, 1aDan I Donrg " , Hani P1: -84 Q24, 95090-F (24)7 OG4 91 STT ag 24.5 Sach DEn hun Ly, Hon ag hn P 8 22 353- z 9/66555 - F -+ 225) ;39 759 Hoch mininh C y Office 9 r Sidg 14 4 -an . DStriCt Hoch nh C, P 84 28 3300 488 - 28) 3 500 -84 INDEPENDENT AUDITORS' REPORT E:Vatewnexi w exwaer 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 of internal control over financial reportirg To: The Management Board of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" Component 1 - Improvement, rehabilitation of local roads Qualified opinion We have audited, in accordance with International Standards on Auditing, the Financial Statements of the Project "Results-based Operation for Local Bridge Construction and Road Asset Management" - Component 1 - Improvement, rehabilitation of local roads ("the Component") implemented by World Bank's credit through International Development Association ("IDA") and counterpart funds for the year ended 31 December 2018 and issued the auditors' report thereon expressing an unqualified 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 of internal control over financial reporting. In our opinion, except for the possible effects of the matter described in the "Basis for Qualified Opinion" paragraph, the Component has maintained, in all material respects, effective 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 for the year ended 31 December 2018. Basis for Qualified opinion Quang Tri and Binh Dinh PPMUs did not perform reconciliation with contractors at the end of the fiscal year. We conducted our engagement in accordance with International Standards on Assurance Engagements 3000. Our responsibility is to express an opinion on the effectiveness of internal control over compliance with requirements that could have a direct and material effect on the Financial Statements as well as internal control over financial reporting based on our examination. We are independent of the Component in accordance with the ethical requirements that are relevant audit evaluates the effectiveness of internal controls on the compliance of the requirements that may directly and materially affect the financial statements as well as internal control purposes in preparation of financial statements in accordance with ISAs, and we have fu filled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion. S*Fs. 4 m4 %4. 2.9 Nexia STT Responsibilities of Component Management The Component management is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material 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 assertions as to the effectiveness of such internal control. 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 effect on the Financial Statements as welI as internal control over financial reporting based on our examination. Our examination was conducted in accordance with International Standard on Assurance Engagement 3000, accordingly, included obtaining an understanding of internal control over compliance with requirements that could have a direct and material 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 qualified 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 prevented or detected on a regular basis. 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. NEXI TT Co Ltd. Nguyen rung General Director Audit Practicing Registration Certificate No. 0518-2018-225-1 Audit report No.: 2019/HN-AUD/WB-LRAMP Hanoi, 30 July 2019 10 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Socialist Republic of Vietnam BALANCE SHEET As at 31 December 2018 As at As at Note 31/12/2018 31/12/2017 VND VND ASSETS Current assets 136,264,344,832 87,945,456,604 Cash on hand 3 2,259,689,390 70,888,000 Cash at bank - Designated Account 4 Cash at bank - State Treasury 5 15,565,789,277 28,815,339,604 Cash at bank - Commercial Bank 6 4,801,155,000 Advances to staff 15,000,000- Advances to contractors/suppliers 7 110,256,306,900 58,026,985,000 Other advances 8 3,371,913,375 432,244,000 Internal receivables 9 120,000,000 600,000,000 Other receivables 10 258,349,490 - TOTAL ASSETS 136,648,203,432 87,945,456,604 RESOURCES Current liabilities 130,995,454,137 13,826,408,933 Payables to contractors 11 129,867,842,295 13,618,053,111 Internal payables 12 419,387,014 - Other payables 13 708,224,82E 208,355,822 Fund balance 5,652,749,295 74,119,047,671 Fund balance, end of the year/period 21 5,652,749,295 74,119,047,671 TOTAL RESOURCES 136,648,203,432 87,945,456,604 Prepared by: Approved by: Le Tuan Khanh Pham Ngoc 3ien Head of Finance and Accounting Department Deputy Director Hanoi, 30 July 2019 The accompanying notes form an integral part of the Financial Statements 11 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financi7g Agreement No. 5810- VN between the International Development Association and the Government of the Socialist Republic of Vietnam CONSOLIDATED STATEMENT OF FUNDS AND EXPENDITURES Year ended 31 December 2018 Period Accumulated Year ended from 4/10/2016 from 4/10i 2016 31/12/2018 to 31/12/2017 to 31/12/2018 VND VND VND Funds Funds received from the 14 653,047,237,070 93,238,125,000 746,285,3-2,070 World Bank Counterpart funds 15 92,344,605,830 35,455,545,621 127,800,131,451 Counterpart funds for routine 20 613,419,558,333 458,334,847,211 1,071,804,405,544 maintenance activities 1,358,811,401,233 587,078,517,832 1,945,889,919,065 Expenditures 1. Civil works 16 707,011,263,164 236,545,000 707,297,808,164 2. Consultants on construction instmet,ot 17 48,388,656,524 30,738,633,111 79,177,239,635 investment, other expenses 3. Project management 18 16,526,208,465 10,999,119,839 27,525,328,304 expenses 4. Site clearance, demining and other 19 41,932,013,123 12,500,325,000 54,432,338,123 expenses Disbursements for routine 20 613,419,558,333 458,384,847,211 1,071,804,4]5,544 maintenance activities 1,427,277,699,609 512,959,470,161 1,940,237,169,770 Surplus of funds against (68,466,298,376) 74,119,047,671 5,652,749,295 expenditures Fund balance, beginning of the 74,119,047,671 year/period Fund balance, end of the 21 5,652,749,295 74,119,047,671 5,652,749,295 year/period Prepared by: Approved by: Le Tuan Khanh Pham Ngoc Bienq Head of Finance and Accounting Department Deputy Director Hanoi, 30 July 2019 The accompanying notes form an integral part of the Financia Statements 12 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Socalst RepublIc of Vietnam STATEMENT OF DESIGNATED ACCOUNT Year ended 31 December 2018 Account No.: 174297 Account holder: Local Bridge Construction and Road Asset Man3gement (WB) Bank: Transaction Head Office - State Bank of Vietnam Address: No 49 Ly Thai To, Hoan Klem district, Hano Financing Agreement No.: 5810-VV Part A - Account activities Note USD Balance as at 31 January 2018 Add: Total amount advanced to the Designated Account 14 28,857,432.98 Deduct: Total amount withdrawn (28,857,432.98) Balance as at 31 January 2019 4 Part B - Account reconciliation Amount advanced from the World Bank 4,157,000.00 Add: Amount advanced by the World Bank 14 28,857,432.98 Deduct: Amount recovered by the World Bank according to DLIs results (24,556,196.00) Outstanding amount advanced to the Designated Account as at 31 8,458,236.98 December 2018 Balance of Designated Account as at 31 January 2019 4 Add: Amount withdrawn and not yet claimed 22 8,458,236.98 Total advances to Designated Account as at 31 December 2018 8,458,236.98 Prepared by: Approved by: Le Tuan Khanh Pham Ngoc Bien Head of Finance and Accounting Departn7ent Deputy Director Hanoi, 30 July 2019 The accompanying notes form an integral part of the Financial Statements 13 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Socialst Republic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 174297 Year ended 31 December 2018 Unit: USD Withdrawal applications Categories No. Date Advances 03-PMU6-HPD 23/1/2018 260,000.00 04-PMU6-HPD 26/1/2018 865,000.00 05-PMU6-HPD 30/1/2018 1,580,000.00 06-PMU6-HPD 26/3/2018 4,149,000.00 07-PMU6-HPD 3/4/2018 771,000.00 08-PMU6-HPD 9/4/2018 2,315,000.00 09-PMU6-HPD 4/5/2018 4,334,000.00 10-PMU6-HPD 6/6/2018 1,898,000.00 11-PMU6-HPD 24/72018 2,e33,000.00 12-PMU6-HPD 11/9/2018 1,226,000.00 13-PMU6-HPD 6/11/2018 1,667,675.70 14-PMU6-HPD 6/12/2018 7,3 58,757.28 Total advanced amount 28,857,432.98 Prepared by: Approved by: Le Tuan Khanh Pham Ngoc Bien Head of Finance and Accounting Department Deputy DIretor Hanoi, 30 July 2019 The accompanying notes form an integral part of the Financial Statements 14 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VN between the International Development Assocation and the Government of the Sociahst Repubhc of Vietnam NOTES TO THE FINANCIAL STATEMENTS Year ended 31 December 2018 1. Project background The Project "Results-based Operation for Local Bridge Construction and Road Asset Management" was implemented by the Ministry of Transport (MOT) - the Socialist Republic of Vietnam according to Decision No. 330/QD-TTg dated 2nd March 2016 signed by the Prime Minister of the Socialist Republic of Vietnam and Decision No. 622/QD-BGTVT dated 2nd March 2016 signed by the Minister of the MOT. The Project was granted by the World Bank's credit through International Development Association ("IDA") under Financing Agreement No. 5810-VN dated 4h July 2016, with the total amounts equivalent to 278,800,000 Special Drawing Rights ("SDR', and the counterpart funds from the Government of the Socialist Republic of Vietnam for seven (7) years from 2016 to 2023. The overall objective of the Project is to assist the Government and the Ministry of Transport in the National Strategy on Rural Transport Development and a National Program for Local Bridge Construction to ensure traffic safety in Ethnic Minority Areas and to improve access in rural areas with low accessibility, especially for areas where poor ethnic minority communities are located as well as other vulnerable groups such as single women and children. The Project consists of: (i) A Program using the Results-Based Program (PforR) instrument ("the Program"), supported by a IDA credit of USD380.5 million; and (ii) Technical Assistance ("the Project") using the Investment Project Financing (IPF) instrument, supported by a IDA credit of USD4.5 million. The Project's objectives are achieved by implementing the following components: - Component 1: Improvement, rehabilitation of local roads (managed by Project Management Unit 6); - Component 2: Local Bridge Construction (managed by Project Management 3); and - Technical Assistance Component (managed by Project Management 6). A Program using the PforR instrument to assist the Government's program, consisting of two (2) Components 1 and 2 of the Project. Component 1 - Improvement, rehabilitation of local roads has been managed by the Project Management Unit 6 and implemented in 14 provinces, including: Lao Cai, Ha Giang, Nam Dinh, Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Bac Kan, Quang Tri, Thua Thien Hue, Quang Nam, Lang Son, Cao Bang, and Binh Dinh. The Component's objective is to provide support to the National Strategy for Rural Transport Development, through: (a) strengthening its institutional capacity to plan, implement and improve maintenance activities of the local road network; and (b) the improvement, rehabilitation, periodic and rountine maintenance of local roads based upon rolling Medium Term Expenditure Plans. 15 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VN between the International Development Assocition and the Government of the Socialist Republic of Vietnam Component 2 - Local Bridge Construction has been managed by the Project Management Units 3, 4, 6 and 8 and implemented in 50 provinces, including: Ha Giang, Cao Bang, Lai Chau, Dien Bien, Son La, Lao Cai, Yen Bai, Lang Son, Bac Kan, Tuyen Quang, Thai Nguyen, Phu Tho, Hoa Binh, Quang Ninh, Thanh Hoa, Nghe An, Ha Tinh, Quang Binh, Quang Tri, Thua Thien Hue, Quang Nam, Quang Ngai, Binh Dinh, Gia Lai, Kon Turn, Dak Lak, Dak Nong, Lam Dong, Bac Giang, VinI Phuc, Ninh Binh, Hai Duong, Phu Yen, Ninh Thuan, Khanh Hoa, Binh Thuan, Binh Phuoc, Tra Vinh, Dong Nai, Vinh Long, Hau Giang, Kien Giang, An Giang, Soc Trang, Bac Lieu, Ca Mau, Tay Ninh, Can Tho, Dong Thap, and Ben Tre. The Component's objective is to provide support to the National Strategy for Rural Transport Development, through: (a) the construction of small bridges in poor and ethnic minority communities and villages with missing or unsafe links in order to facilitate access to social services, schools, and clinics within the local road network; and (b) strengthening of local communities' capacity to carry out bridge maintenance activities. The Technical Assistance Component is implemented by Project Managment Unit 6, consisting of activities that are necessary to complete the PforR, namely activities related to: (a) auditing the Program; (b) improving the capacity of implementing agencies in environmental and social management; and (c) the Local Road Asset Management Systems support, cl mate resilience in the road network, and community and women based road maintenance. 2. Summary of significant accounting policies The significant accounting policies, which have been adopted by the Component Management Board in the preparation of the Financial Statements, are as follows: Reporting currency The Financial Statements, including the Balance Sheet and the Consolidated Statement Funds and Expenditures are expressed in Vietnam Dong ("VND'", except for the Statement of Designated Account and SOE Withdrawal Schedule which are expressed in United States Dollar ("USD"), are prepared considering the requirements of the World Bank. Basis of preparation of the Financial Statements The Financial Statements are prepared and presented by the Component in a:cordance with requirements of the World Bank (WB), complied with Circular No. 195/2012/TT-BTC dated 15th November 2012 issued by the Ministry of Finance guiding the accounting regime applicable to investors. The financial statements are prepared on modified cash basis unde, the financial year regulated by the Vietnamese Government, including payments in January of the following year for expenditures incurred before 31 December of the prior year. This basis of accounting is considered appropriate to the operation of Component by the management. Funds IDA funds are recorded when credited to the Designated Account of the Component. The counterpart funds of the Vietnamese Government are recorded when payments are made directly from the Vietnamese Government to contractors/suppliers of the Component or when received. The funds are recorded under the budget year, including payments from IDA funds and counterpart funds in January of the following year for expenditures incurred before 31 December of the prior year. 16 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VN between the International Development AssoCiation and the Government of the Socla/st Republic of Vietnam Expenditures Expenditures financed by IDA are recorded when the obligation to pay them arises rather than when actually paid. Expenditures financed by the counterpart funds are recorded when they are approved by the State Treasury except for expenditures for contractors/suppliers on completion of works or completion of contracts, and advances to staffs, advances to contractors/suppliers. Overall management expenses are recognized and monitored by functional and Provincial Project Management Units for all projects managed by functional and Provincial Project Management Units, then allocated to individual projects in accordance with their corresponding annual budget, ensuring that accumulated management expenses of each Project do not exceed its overall approved budget. Fiscal year The fiscal year will be from 1 January to 31 December for completion volume of works/contracts and to 31 January of the following year for disbursements volume. Foreign exchange differences IDA funds received in United States Dollar ("USD") are converted into Vietnam Dong ("VND") under the exchange rate announced by Transaction Head Office - State Bank of Vietnam at the date of receipt. Transactions incurred in the year via the Designated Account are converted into VND using exchange rates ruled by the Project bank at transaction dates for expenditures denomirated in VND and using exchange rates announced by the Transaction Head Office - State Bank of Vietnam at the month of transaction for expenditures denominated in USD. Foreign exchange differences are taken up in the Consolidated Statement of Funds and Expenditures. Designated Account Designated Account is a deposit account in USD opened at the Transation Head Office - State Bank of Vietnam, which was held by the Ministry of Finance for settlements of the Component 1 - Improvement, rehabilitation of local roads' activities. Payments made via the Designated Account are for eligible expenditures of the Component in accordance with provisions of F nancing Agreement No. 5810-VN dated 4th July 2016. 17 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No, 5810- VN between the International Development Association and the Government of the Sociast RepublIc of Vietnam 3. Cash on hand As at As at Unit 31/12/2018 31/12/2017 VND VND Lao Cai 1,879,020,600 Ha Giang 116,212,790 Cao Bang 760,)00 - Bac Kan - 30,000,000 Nam Dinh 109,075,000 - Thanh Hoa 60,306,000 21,144,000 Quang Tri 19,744,000 19,744,000 Thua Thien Hue 74,571,000 - 2,259,689,390 70,888,000 Cash balances of Lao Cai and Ha Giang Provincial Project Management Units included advances from counterpart funds to pay for their site clearance and demining costs. Cash balances of Cao Bang, Bac Kan, Nam Dinh, Thanh Hoa, and Quang Tri Provincial Project Management Units included net cash income from selling bidding documents. Such amounts are to cover bidding related expenses in the next years or refunded to the State Budget. 4. Cash at bank - Designated Account This represented the designated account balance of the Component 1 - Improvement, rehabilitation of local roads at the Transaction Head Office - State Bank of Vietnam, which "as converted into Vietnam Dong ("VND") as at 31 January 2019 because payments from IDA funds were recorded under the budget year (year ended 31 January 2019). Balance of this account as at 31 January 2019 was nil (31/1/2018: nil). 18 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VN between the International Development Association and the Government of the Socia/st Republic of Vietnam 5. Cast at bank - State Treasury As at 31/1/2019 As at 31/1/2018 Unit Counterpart Counterpart IDA funds funds Total IDA funds funds Total VND VND VND VND VND VND Lao Cai - - - 21,754,528,000 1,000,000,000 22,754,5 8,000 Ha Giang 1,526,300,980 - 1,526,300,980 -- - Cao Bang - 94,637,000 94,637,000 3,244,351,000 180,685,000 3,425,036,000 Lang Son - - 1,000 - 1,000 Nam Dinh - 1,019,047,009 1,019,047,009 968,672,782 968,6-2,782 Ha Tinh (*) 6,416,997,845 - 6,416,997,845 - - Quang Binh - - - 9,000,000 9,0C 9,000 Quang Tri - 200,000,000 200,0C 9,000 Thua Thien - 682,138,000 682,138,000 1,220,728,000 1,220,7C 3,000 Hue Quang Nam - 563,615,500 563,615,500 115,603,822 115,6( 3,822 Binh Dinh 935 5,263,052,008 5,263,052,943 121,770,000 121,77 3,000 7,943,299,760 7,622,489,517 15,565,789,277 24,998,880,000 3,816,459,604 28,315,33 3,604 These represented the bank balances at State Treasury Accounts of Provincial Project Management Units as at 31 January 2019 because payments from IDA and counterpart funds were recorded under the budget year (year ended 31 January 2019). (*) Included in balance at the State Treasury Account of Ha Tinh PPMU, was an amount of VND202,534,000 for warranty retentions of civil contracts, being kept at the same State Treasury Account for temporary warranty of Ha Tinh Transport Construction Investmert Project Management Board. 6. Cash at bank - Commercial Bank As at Unit 31/1/2019 VND Nghe An 519,900,000 Ha Tinh 3,198,856,000 Quang Binh 1,082,399,000 4,801,155,000 These represented bank balances at same Commercial Banks of Provincial Prcject Management Units for temporary retention from civil contracts under the World Bank's funcs. 19 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Fnancing Agreement No. 5810- VN between the International Development Association and the Government of the 5ocia/5t Republic of Vietnam 7. Advances to contractors/suppliers As at 31/12/2018 As at 31/12/2017 Units Counterpart Counterpart IDA funds funds Total IDA funds funds Total VND VND VND VND VND VND Lao Cai 31,073,194,300 114,000,000 31,187,194,300 19,400,000,OOC - 19,400,0(0,000 Ha Giang 30,165,340,600 - 30,165,340,600 - Cao Bang - - 1,040,000,OOC - 1,040,0(-0,000 Bac Kan 464,300,000 - 464,300,000 - Lang Son - 415,800,000 415,800,000 8,298,382,OOC - 8,298,3Y2,000 Thanh Hoa 9,903,371,000 - 9,903,371,000 - Nghe An 30,874,002,000 - 30,874,002,000 -- Ha Tinh 4,049,327,000 - 4,049,327,000 25,328,009,000 3,960,594,000 29,288,6( 3,000 Quang Binh 856,000,000 150,000,000 1,006,000,000 -- Thua Thien 2,190,972,000 - 2,190,972,000 - Hue 109,576,506,900 679,800,000 110,256,306,900 54,066,391,OOC 3,960,594,000 58,026,965,000 8. Other advances As at As at Units 31/12/2018 31/12/2017 VND VND Lao Cai 188,177,3C0 80,000,000 Cao Bang (a) 257,244,000 257,244,000 Bac Kan 120,000,000 - Lang Son 80,000,00 95,000,000 Thanh Hoa (b) 690,597,OCO - Quang Nam (c) 2,035,895,075 3,371,913,375 432,244,000 (a) This represented advances to Compensation's Committees of Bao Lac and Nguyen Binh districts, Cao Bang province to carry out site clearance activities of Cao Eang Provincial Project Management Unit. (b) This represented advances to Compensation and Resettlement Assistance Council of Hoang Hoa district, Thanh Hoa province to carry out compensation and assistance fcr resettlement of Hoang Quy street - Hoang Giang, Thanh Hoa province. (c) This represented advances to Bac Tra My Land Fund Development Center Branch, and Land Fund Development Center of Hiep Duc, Phu Ninh, Tien Phuoc district, Quang Nam province to carry out site clearance activities of Quang Nam Provincial Project Management Unit. 20 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Assoclation and the Government of the Socia/st Republic of Vietnam 9. Internal receivables As at As at Unit 31/12/2018 31/12/2017 VND VND Binh Dinh 120,000,000 600,000,000 These represented receivables from Binh Dinh Project Management Board of Traffic Works relating to the counterpart funds budgeted for 2018 management expenses that have not been utilized and being kept in the same State Treasury account of Binh Dinh Project Management Board of Traffic Works. 10. Other receivables This represented receivables for compensation amounts being paid to households for site clearance of Xuan Thuong - Viet Tien - Minh Chuan road, Bao Yen district while waiting for the Decision from Bao Yen district People's Committee approving site clearance compensation to these households. 11. Payables to contractors As at 31/1/2019 As at 31/1/ 2018 Units Counterpart Counterpart IDA funds funds Total IDA funds funds Total VND VND VND VND VND VND Lao Cai 477,846,200 531,794,000 1,009,640,200 531,846,200 388,056,000 919,9( 2,200 Ha Giang 590,213,360 309,975,600 900,188,960 - - - Cao Bang 2,286,830 - 2,286,830 - 12,218,000 12,2-8,000 Bac Kan 10,067,629,836 - 10,067,629,836 3,171,365,91:L - 3,171,3( 5,911 Lang Son 50,358,031,000 5,441,807,000 55,799,838,000 2,238,362,000 - 2,238,3E 2,000 Nam Dinh 24,728,232 392,649,342 417,377,574 - Thanh Hoa 8,366,079,110 - 8,366,079,110 2,841,100,000 - 2,841,1( 0,000 Nghe An 610,899,785 - 610,899,785 - - Ha Tinh 3,846,190,000 - 3,846,190,000 625,722,000 - 625,7 2,000 Quang Binh 1,085,051,000 - 1,085,051,000 1,458,572,000 - 1,458,5-12,000 Quang Tri 4,666,165,000 - 4,666,165,000 - 200,000,000 200,0( 3,000 Thua Thien 1,953,010,003 - 1,953,010,000 1,929,486,000 - 1,929,4E 5,000 Hue Quang Nam 14,758,082,000 48,735,000 14,806,817,000 175,082,000 46,243,000 221,32 5,000 Binh Dinh 26,336,669,300 - 26,336,669,000 - - 123,142,881,353 6,724,960,942 129,867,842,295 12,971,536,111 646,517,000 13,618,OE 3,111 Payables to contractors of Project Management Units included the volume of completed works to be paid as at 31 January 2019 to contractors and temporary retentions for warranties of completed civil and consultant contracts which would be paid to contractors at the end of warranty period. Payments from IDA and counterpart funds were recorded under the budget year (year ended 31 January 2019). 21 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the 5ociali&t Republic of Vietnam 12. Internal payables This represented the Project management expenses from counterpart funds that were paid from 2018 budget of Quang Nam Transport Construction Investment Project Management Board. These will be withdrawn and repaid to Quang Nam Transport Construction Investment Pro:ect Management Board in 2019. 13. Other payables As at As at Units 31/12/2018 31/12/2017 VND VND Lao Cai (i) 349,000,000 - Bac Kan - 30,000,000 Lang Son (ii) 80,000,000 - Nam Dinh 109,075,000 - Thanh Hoa 21,146,000 21,144,000 Quang Tri 19,744,000 19,744,000 Thua Thien Hue 14,000,000 - Quang Nam 37,890,820 15,697,822 Binh Dinh 77,369,008 121,770,000 708,224,828 208,355,822 (i) This represented a loan from Minh Duc General Construction Co. Ltd. to advance to the Compensation Council of Muong Khuong district and cover site clearance expenses to households to implement construction activities of the Project. (ii) These represented loans from 496 Construction Joint Stock Company anc Song Quang Construction Investment and Agricultural Development Joint Stock Company with amounts of VND50,000,000 and VND30,000,000, respectively, to advance to Land Fund Development Center in Dinh Lap district for site clearance to build Ban Chuong road. Other payables of Nam Dinh, Thanh Hoa, Quang Tri, Thua Thien Hue, Quang Nam, and Binh Dinh PPMUs represented surplus of income over expenses from selling bidding documents by Provincial Project Management Units. Such amounts were recorded as other payables under Circular No. 195/2012/TT-BTC dated 15 November 2012 issued by the Ministry of Finance - Accounting guidance applied to Investors; and will be disbursed for bidding related expenses in the next years or refunded to the State Budget. 22 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Social5t Republic of Vietnam 14. Funds received from the World Bank Ministry of Finance - Component 1 - Improvement, rehabilitation of local roads (funds received to Account 174297) Year ended 31/12/2018 Receipts under withdrawal Original Amount Equivalent to applications USD VND No. Date 03-PMU6-HPD 31/1/2018 260,000.OC 5,833,100,000 04-PMU6-HPD 31/1/2018 865,000.C 19,406,275,000 05-PMU6-HPD 6/2/2018 1,580,000.0c 35,467,840,000 06-PMU6-HPD 3/4/2018 4,149,000.0C 93,248,775,000 07-PMU6-HPD 16/4/2018 771,000.OC 17,384,508,000 08-PMU6-HPD 17/4/2018 2,315,000.OC 52,198,620,000 09-PMU6-HPD 17/5/2018 4,334,000.OC 97,900,726,000 10-PMU6-HPD 28/6/2018 1,898,000.OC 42,955,536,000 11-PMU6-HPD 9/8/2018 2,433,000.OC 55,199,904,000 12-PMU6-HPD 18/9/2018 1,226,000.OC 27,854,720,000 13-PMU6-HPD 15/11/2018 1,667,675.7C 37,927,948,445 14-PMU6-HPD 18/12/2018 7,358,757.28 167,669,284,625 Total funds replenished to Designated Account 28,857,432.98 653,047,237,070 Details of Funds received from the World Bank by province/unit for the year ended 31 December 2018 and accumulatively to 31 December 2018 were as follows: Units Year ended 31/12/2018 Accumulated to 31/12/2018 Equivalent to Equivalent to USD VND USD VND Lao Cai 884,000.00 20,006,688,000 2,920,000.00 65,676,204,000 Ha Giang 1,647,000.00 37,136,556,000 1,647,000.00 37,136,556,000 Cao Bang 3,457,162.00 78,457,762,170 3,840,162.00 87,048,835,170 Bac Kan 885,000.00 19,997,295,000 885,000.00 19,997,295,000 Lang Son 1,621,000.00 36,562,757,000 2,102,000.00 47,352,068,000 Nam Dinh 3,145,779.00 71,124,387,015 3,145,779.00 71,124,387,015 Thanh Hoa 3,480,884.98 79,095,893,890 3,480,884.98 79,095,893,890 Nghe An 2,815,099.00 63,899,341,215 2,815,099.00 63,899,341,215 Ha Tinh 2,090,517.00 47,428,393,845 3,347,517.00 75,616,618,845 Quang Binh 1,569,000.00 35,252,875,000 1,569,000.00 35,252,875,000 Thua Thien Hue 1,778,000.00 40,120,419,000 1,778,000.00 40,120,419,000 Quang Nam 1,833,000.00 41,196,675,000 1,833,000.00 41,196,675,000 Binh Dinh 3,650,991.00 82,768,193,935 3,650,991.00 82,768,193,935 28,857,432.98 653,047,237,070 33,014,432.98 746,285,362,070 23 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VN between the International Development Assoclation and the Government of the Socialist Republic of Vietnam 15. Counterpart funds Year ended Accumulated to Units 31/12/2018 31/12/2018 VND VND Project Management Unit 6 - Component 1 2,697,588,830 10,332,881,451 Lao Cai 12,100,000,00) 17,100,000,000 Ha Giang 4,230,000,00) 4,230,000,000 Cao Bang 1,714,005,00) 9,638,005,000 Bac Kan 720,000,00) 720,000,000 Lang Son 5,905,000,000 6,000,000,000 Nam Dinh 2,281,971,00) 3,960,000,000 Thanh Hoa 2,729,757,000 3,229,757,000 Nghe An 500,000,00) 500,000,000 Ha Tinh 3,577,110,00) 8,285,794,000 Quang Binh 1,332,829,000 1,514,407,000 Quang Tr - 1,375,000,000 Thua Thien Hue 596,728,000 1,817,456,000 Quang Nam (*) 45,709,617,000 50,246,851,000 Binh Dinh 8,250,000,000 8,850,000,000 92,344,605,83) 127,800,151,451 (*) Included in counterpart funds withdrawn in 2018 by Quang Nam Project Management Unit, was an advance of VND40,000,000,000 from 2019 provincial budget to ensure the construction progress of the Project in Quang Nam province. 16. Civil works Year ended Accumulated to Units 31/12/2018 31/12/2018 VND VND Lao Cai 29,162,166,700 29,162,166,700 Cao Bang 80,311,224,000 80,311,224,000 Bac Kan 25,791,987,217 25,791,987,217 Lang Son 88,426,536,000 88,426,536,000 Nam Dinh 66,112,749,247 66,112,749,247 Thanh Hoa 72,222,910,000 72,222,910,000 Nghe An 29,372,231,000 29,372,231,000 Ha Tinh 59,162,101,000 59,448,646,000 Quang Binh 30,848,654,000 30,848,654,000 Thua Thien Hue 35,426,063,000 35,426,063,000 Quang Nam 89,320,473,000 89,320,473,000 Binh Dinh 100,854,168,000 100,854,168,000 707,011,263,164 707,297,808,164 These represented expenditures for civil work contracts of Provincial Project Management Units incurred during the year, which were disbursed from the World Bank's funds, except for expenditures of VND286,545,000 for civil contracts of Ha Tinh PPMU being paid from counterpart funds during the period from 4/10/2016 to 31/12/2017 24 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Fnancing Agreement No. 5810- VN between the International Development Association and the Government of the Sociallst Repubhi of Vietnam 17. Consultants on construction investment, other expenses Year ended Accumulated to Units 31/12/2018 31/12/2018 VND VND Lao Cai 871,855,000 5,918,689,200 Ha Giang 5,788,461,380 5,788,461,380 Cao Bang 2,433,176,000 6,739,898,000 Bac Kan 637,271,708 3,808,637,619 Lang Son 4,554,273,000 9,283,563,000 Nam Dinh 5,036,366,000 5,036,366,000 Thanh Hoa 2,494,592,000 5,335,692,000 Nghe An 3,744,108,000 3,744,108,000 Ha Tinh 3,121,646,000 6,607,584,000 Quang Binh 2,101,301,000 3,550,873,000 Quang Tri 4,666,165,000 4,666,165,000 Thua Thien Hue 1,953,392,000 3,882,878,000 Quang Nam 2,735,355,436 6,563,680,436 Binh Dinh 8,250,694,000 8,250,694,000 48,388,656,524 79,177,289,635 These represented expenditures for consultancy services and other related e>penses for construction activities incurred during the year, which were disbursed from the World Bank's funds. 18. Project management expenses Year ended Accumulated to Units 31/12/2018 31/12/2018 VND VND Project Management Unit 6 - Component 1 2,697,588,830 10,332,881,451 Lao Cai 1,000,000,000 2,000,000,000 Cao Bang 917,122,000 1,900,122,000 Bac Kan 600,000,000 600,000,000 Lang Son 905,000,000 905,000,000 Nam Dinh 1,101,555,737 1,810,911,955 Thanh Hoa 2,000,000,000 2,500,000,000 Nghe An 500,000,000 500,000,000 Ha Tinh 1,548,905,000 1,548,905,000 Quang Binh 781,660,000 781,660,000 Quang Tri 419,387,014 590,858,014 Thua Thien Hue 1,542,888,000 1,542,888,000 Quang Nam 1,654,878,884 1,654,878,884 Binh Dinh 857,223,000 857,223,000 16,526,208,465 27,525,328,304 These represented management expenditures, which were finalized during the year and disbursed from the counterpart funds. 25 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810-VNV between the International Development Association and the Government of the Socialist Republic of Vietnam 19. Site clearance, demining and other expenses Year ended Accumulated to Units 31/12/2018 31/12/2018 VND VND Lao Cai 10,218,190,610 13,526,246,610 Ha Giang 4,670,429,210 4,670,429,210 Cao Bang 869,953,000 7,385,242,000 Lang Son 10,121,007,000 10,121,007,000 Nam Dinh 1,522,690,378 1,522,690,378 Ha Tinh 6,016,742,000 6,478,287,000 Quang Binh 401,169,000 582,747,000 Quang Tri - 1,203,529,000 Thua Thien Hue 105,375,000 105,375,000 Quang Nam 5,319,362,925 6,149,690,925 Binh Dinh 2,687,094,000 2,687,094,000 41,932,013,123 54,432,338,123 These represented site clearance, demining expenditures incurred during the year, which were disbursed from the counterpart funds. 26 '^^р мазг�.�о�.аооиоог*�оо r� oc�vrvczзor-мr�г..�миоооt,�Сэ м ¢'�- ш�r��-,r��г-оwоомсэшvтиi гл N Н� ал' г� о цз r� сг �,rs` r: м а+` �° й ui ш со мrn�о.�оrvмг�глrnмпааэ и го rd о м n er �а .-а со т qr v� •--� *r и и а= ц� �о м ni �ci цi стi о ео` о rv с� .-ь +� м� о г~I сз �• С� r� оо r. м гч � v- ; � � со г.� м v cn r. -r �rs м а� па +v л�. и7 �r �сэ .-+` ич tp' oi ni �r' � 4д оо' �ii н' а= �-' ' г� � r-r 'д° �ь- rч м^+ :1 �� гv гц гv м--� с ,t, ` � LCt � � ои � оезооо � � � � ,r, ш �� о� �°о°о°о°о ° � v� �t �г м oi со пi �i .-�` {., �. о tr =г- � сл �о а гv � V �� т r. г�. tп г� ц- .�ti о сэ? � в•ч' й et оо Ci � � Lг1tt1 tT0'�мNм О Q .Q СЛ СО С] 0.7 ц? 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С'� С О.�_ !� L СО I- .� Z С � ы, � 'пз г� т� и р�� с_ о� а� � tr� tl t1? С3 � � � о � [з и �' � пs .� ~ п�о пs � т � CL' U� G � J=t�J+��Z�f�-z�CyQ'FC?'т О (V DpSUlts-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the 56clallst RepublIc of Vietnam 21. Fund balance, end of the year/period As at As at Units 31/1212018 31/12/2017 VND VND Lao Cai 32,169,101,490 41,314,625,800 Ha Giang 30,907,665,410 Cao Bang 350,354,170 4,710,062,000 Bac Kan (*) (9,483,329,836) (3,171,365,911) Lang Son (55,384,038,000) 6,155,021,000 Nam Dinh 601,669,435 968,672,782 Thanh Hoa 2,267,048,890 (2,841,100,000) Nghe An 30,783,002,215 Ha Tinh 9,818,990,845 28,662,881,000 Quang Binh 1,003,348,000 (1,449,572,000) Quang Tri (*) (5,085,552,014) Thua Thien Hue 980,671,000 (708,758,000) Quang Nam (12,245,197,245) (121,419,000) Binh Dinh (21,030,985,065) 600,000,000 5,652,749,295 74,119,047,671 Fund balances of Bac Kan, Lang Son, Quang Tri, Quang Nam, and Binh Dinh Provincial Project Management Units represented payables for completed works of some consultancy, civil contracts to which funds have not yet been allocated. Such amounts will be recovered by the World Bank's funds and local counterpart funds in the next years. 22. Amount withdrawn and not yet claimed These represented advances to Provincial Project Management Units in 2018 to implement contracts under the Component 1 - Improvement, rehabilitation of local roads of the Project. These expenditures will be recovered after results of DLIs indicators are accepted by the World Bank, _5AN Prepared by: Approved by: Le Tuan Khanh Pham Ngoc Bien Head of Finance and Accounti 7_q Depaltment Deputy DIrector rf Hanoi, 30 July 2019 28 Results-based Operation for Local Bridge Construction and Road Asset Management Component 1 - Improvement, rehabilitation of local roads Under Financing Agreement No. 5810- VN between the International Development Association and the Government of the Socialist Republic of Vietnam Appendix I - Auditors' Responsibilities for the Audit of the Financial Statemerts 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. * Evaluate the appropriateness of accounting policies used and related disclosures made by Component management. * 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 Component 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. We also provide those charged with Component Management Unit with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with Component Management Unit, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweig[ the public interest benefits of such communication. 29