Deloitte MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT COORDINATION OFFICE Financing Agreement - Credit Number Cr. 5330-VN AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER For the year ended 31 December 2018 201 06 MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT COORDINATION OFFICE Financing Agreement - Credit number Cr. 5330-VN TABLE OF CONTENTS CONTENTS PAGE(S) PARTI FINANCIAL STATEMENTS Statement of the Central Project Coordination Office 2 - 3 0 Independent Auditors' Report 4-6 Balance Sheet 7 11 Statement of Incomes and Expenditures 8 Statement of Sources and Uses of Funds 9 Statement of Designated Account 10 Statement of Withdrawals 11 Notes to the financial statements 12- 15 PART II INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL 16 - 17 CONTROL PART III INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE Statement of the Central Project Coordination Office on Compliance 18 Independent Auditors' Assurance Report on Compliance 19 - 20 PART IV MANAGEMENT LETTER 21-24 U1 ÖN( NHM ÊET PART I * cö FINANCIAL STATEMENTS El 11E * CD u CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT COORDINATION OFFICE Financing Agreement - Credit number Cr. 5330-VN STATEMENT OF THE CENTRAL PROJECT COORDINATION OFFICE The Central Project Coordination Office of the Central Highlands Poverty Reduction Project (the "Central Project Coordination Office" or "CPO") presents this report together with the financial statements of the Central Highlands Poverty Reduction Project - parts implemented by the Central Project Coordination Office (the "Project") for the year ended 31 December 2018. The Central Project Coordination Office The members of the Central Project Coordination Office who held office during the year and to the date of this report are as follows: Mr. Tran Duy Dong Director (assigned on 06 May 2019) Mr. Tran Ngoc Hung Director (resigned on 06 May 2019) Mr. Hoang Trung Dinh Deputy Director (assigned on 06 May 2019) Mr. Do Thanh Trung Deputy Director (resigned on 06 May 2019) Ms. Dao Thi Hong Lien Chief Accountant NA Ul The Central Project Coordination Office's Statement of Responsibility 19 The Central Project Coordination Office is responsible for preparing the financial statements of the Project, which comprise the Balance Sheet as at 31 December 2018, the Statement of Incomes and Expenditures, Statement of Sources and Uses of Funds, Statement of Designated Account, Statement of Withdrawals for the year then ended and the Notes to the financial statements including a summary of significant accounting policies, which give a true and fair view of the financial position of the Project and designated account balances as at 31 December 2018 as well as of the incomes and 1EMI expenditures, the receipts and disbursements of the Project, designated account movements and fund O1 withdrawals for the year then ended, in accordance with the accounting convention and the r N, accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements and the covenants contained in Financing Agreement - Credit number Cr. 5330-VN. In preparing these financial statements, the Central Project Coordination Office is required to: * Select suitable accounting policies and then apply them consistently; * Make judgments and estimates that are reasonable and prudent; * State whether applicable accounting principles have been followed, subject to any material departures disclosed and explained in the financial statements; * Prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Project will continue in operation; and * Design and maintain 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. The Central Project Coordination Office is responsible for ensuring that proper accounting records are kept, which disclose, with reasonable accuracy at any time, the financial position of the Project and that the financial statements comply with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements. The Central Project Coordination Office is responsible for ensuring that the funds have been used as intended for the Project and for complying with Financing Agreement - Credit number Cr. 5330-VN as well as laws and regulations applicable to the Project. The Central Project Coordination Office is also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of frauds and other irregularities. 2 * CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT COORDINATION OFFICE * Financing Agreement - Credit number Cr. 5330-VN STATEMENT OF THE PROJECT COORDINATION OFFICE (Continued) The Central Project Coordination Office confirms that they have complied with the above requirements U in preparing these financial statements. * For and on behalf of the Central Project Coordination Office, KNU V HAh E Hanoi, 19 June 2019 0 FYt. * TE 33 Deloitte Vietnam Company Ltd. 15thFloor, Vinaconex Tower, D elo itte ., 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website: www.deloitte.com/vn No.: 0110 /VN1A-HN-BC INDEPENDENT AUDITORS' REPORT W TThe Central Project Coordination Office of the Central Highlands Poverty Reduction Project U Opinion We have audited the financial statements of the Central Highlands Poverty Reduction Project - parts implemented by the Central Project Coordination Office (the "Project") prepared on 19 June 2019, set out from page 07 to page 15, which comprise the Balance Sheet as at 31 December 2018, t 2 Statement of Incomes and Expenditures, Statement of Sources and Uses of Funds, Statement D Designated Account, Statement of Withdrawals for the year then ended, and the Notes to the financi 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 and designated account balances as at 31 December 2018 as well as of the incomes and expenditures, the receipts and disbursements of the Project, designated account movements and fund withdrawals for the year then ended, in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements. Basis for 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 2 and Note 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 2 and Note 3 of the Notes to the financial statements and the requirements of the World Bank. Our opinion is not modified in respect of this matter. Deloitte refers to one or more of Deloitte Touche Tohmatsu Ltd., a UK private company limited by guarantee ("DTTL"), its network of member firms, and their related entities. DTTL and each of its member firms are legally separate and independent entities. DTTL (also referred to as "Deloitte Global") does not provide services to dients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. 4 Deloitte INDEPENDENT AUDITORS' REPORT (Continued) Responsibilities of the Central Project Coordination Office and those charged with governance for the Financial Statements The Central Project Coordination Office is responsible for the preparation of the financial statements in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements, and for such internal control as the Central Project Coordination Office determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Central Project Coordination Office 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 Central Project Coordination Office either intends to liquidate the Project, or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with International Standards on Auditing (ISAs) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * Conclude on the appropriateness of the Central Project Coordination Office'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 Central Project Coordination Office. 5 U . Deloitte, INDEPENDENT AUDITORS' REPORT (Continued) We communicate with those charged with governance and the Central Project Coordination Office 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. E L1 VIET N Vu guyen guyen Tien Quoc Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0764-2018-001-1 No. 3008-2019-001-1 DELOITTE VIETNAM COMPANY LIMITED 19 June 2019 Hanoi, S.R. Vietnam 6V1 6¾ CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT FINANCIAL STATEMENTS COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 2018 BALANCE SHEET As at 31 December 2018 ASSETS Notes 31/12/2018 31/12/2017 VND VND Current assets 4,248,679,318 11,531,455,873 Cash 5 4,245,611,457 11,528,388,012 Cash on hand 4,245,611,457 11,528,388,012 C hReceivables 3,067,861 3,067,861 Other receivables 3,067,861 3,067,861 *V Total assets 4,248,679,318 11,531,455,873 LIABILITIES Current liabilities 3,000,075,879 2,273,153,961 Payables to suppliers 6 2,837,174,560 2,192,821,133 Taxes and amounts payable to State budget 93,168,288 18,308,100 Payable to employees 69,733,031 57,846,555 Other current payables - 4,178,173 Total liabilities 3,000,075,879 2,273,153,961 NET ASSETS 1,248,603,439 9,258,301,912 Exchange differences 1,731,680,464 1,535,102,232 (Deficit)/Surplus of incomes over expenditures (483,077,025) 7,723,199,680 TOTAL 1,248,603,439 9,258,301,912 Vo Trinh Vinh Dao Thi Hong Lien ,p Tr 4ho Dong Preparer Chief Accountant Airesr Hanoi, 19 June 2019 The accompanying notes are an integral part of these financial statements 7 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT FINANCIAL STATEMENTS COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 2018 STATEMENT OF INCOMES AND EXPENDITURES For the year ended 31 December 2018 Accumulated to Notes Year 2018 31/12/2e1t 31/12/2018 VND VND INCOMES IDA funds 7 - 54,630,929,351 - Fund disbursed in cash - 79,481,929,351 - Decreases due to assets transfer to Provinces - (24,851,000,000) Counterpart funds 1,595,129,129 9,529,081,398 Other funds - 1,628,247,057 E TOTAL INCOMES 1,595,129,129 65,788,257,806 0. EXPENDITURES Part 1: Village and Commune Infrastructure Development Part 2: Sustainable Livelihoods Development - Part 3: Connective Infrastructure Development, Capacity 1,512,814,462 24,207,855,742 Building, and Communications Part 4: Project Management 8,280,264,470 42,000,666,803 Others (Bank charges) 8,326,902 62,812,286 TOTAL EXPENDITURES 9,801,405,834 66,271,334,831 SURPLUS OF INCOMES OVER EXPENDITURES (8,206,276,705) (483,077,025) BAN DU PH iy *DVlANTRUNGOUG 0 Du AUNGIAM NGH > * KHUVUCTAVNGV~ Vo Trinh Vinh Dao Thi Hong Lien uy Dong Preparer Chief Accountant Director Hanoi, 19 June 2019 The accompanying notes are an integral part of these financial statements 8 � ■ � Qi. �_. - lD � ы -� CQ Г- н . i ... н tn t�д 'д' � ..-о г р., �1 ,� Q OG М i��j Q М Q � LЛ 4 N � R м V' оЗ ! .. r °' oi r. ira гч о ' W N,��', у+ И i3+ � 6 Q N И СЭ � �Q 01 ш h tд о � ��., С, N. 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'-+ �,у н гС. ц д .�� L3. � F-- � � CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT FINANCIAL STATEMENTS COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 2018 STATEMENT OF DESIGNATED ACCOUNT For the period: From 01 3anuary 2018 to 31 December 2018 Account No: 1507201062695 Depositary Bank: Vietnam Bank for Agriculture and Rural Development - Cau Giay Branch Address: No. 99, Tran Dang Ninh Street, Cau Giay District, Hanoi Financing Agreement: Credit number Cr. 5330- VN Currency unit: USD )0 Amount T, PART A: ACCOUNT ACTIVITIES 513,491.07 Opening balance (01/01/2018) Add- Total amount replenished by the World Bank to the Designated Account in the year - Deduct: 326,706.58 Total amount withdrawn from the Designated Account 326,706.58 00 Closing balance (31/12/2018) 186,784.49 T) HAl PART B: ACCOUNT RECONCILIATION TT] 1. Opening balance of advances by the World Bank 1,038,884.29 2. Add: Amount advanced by the World Bank to the Designated Account in the year - 3. Minus: Expenses accepted by World Bank for disbursement by deducting from Designated Account 642,032.89 (withdrawal applications No. CPO-20 and CPO-23) 4. Total advances to the Designated Account as at 31/12/2018 396,851.40 5. Closing balance of the Designated Account as at 31/12/2018 186,784.49 6. Add: Amount withdrawn and claimed but not yet replenished by the World Bank 167,321.56 (withdrawal application No. CPO-22) 7. Add: Amounts paid but not yet applied for withdrawals 42,605.35 8. Add: Bank charges (if not included in lines 6 and 7 above) 140.00 9. Total advances to the Designated Account as at 31/12/2018 396,851.40 H BAND16 M610 DV AN TRUNI . 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О П3 w д !� °' � � � � а � v о ы '� .� � с�а� G и� и са �� �� г Е- � � CENTRAL HIGHLANDS POVERTY REDUCTION PR03ECT PARTS IMPLEMENTED BY THE CENTRAL PROJECT FINANCIAL STATEMENTS COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 2018 NOTES TO THE FINANCIAL STATEMENTS These notes are an integral part of and should be read in conjunction with the accompanying financlal statements 1. GENERAL INFORMATION The Central Highlands Poverty Reduction Project (the "Project") operates under Financing Agreement - Credit number Cr. 5330-VN dated 24 April 2014 signed between the Socialist Republic of Vietnam and the International Development Association ("IDA"). With the support from the World Bank ('WB"), the Government of Vietnam has been implementing the Central Highlands Poverty Reduction Project (the "Project") in the form of a community driven development project in the Central and Highlands Region of Vietnam. The Project focuses on 130 communes in 26 poor districts of 6 provinces which are Dak Lak, Dak Nong, Gia Lai, Kon Turn, Quang Nam and Quang Ngai. The development objective of the Project is to improve livelihood opportunities for po$r households and communities in the Central and Highlands of Vietnam through: (i) improve accessibility to basic services in community level, particularly concerning agricultural production and income increase; (ii) resolve difficulties in approach to natural resources and market opportunities; and (iii) provide investment support for local (district level and below) to strengthen linkages. Total fund of the Central Highlands Poverty Reduction Project is USD 165.000.000. The fund includes the State budget of the Government of Vietnam and ODA loans from the World B k. The project includes four parts: Part 1: Development of communal and village infrastructure, with a total value estimat d at USD 45 million from World Bank's borrowing fund (or 85% of borrowing anno t, equivalent to VND 945 billion), consisting of two subparts: (i) Development of communal and village infrastructure, (ii) Operation and maintenance. The Project clecentralizes commune as an investor for the sub-projects in this part and discourages infrastructure works requiring land acquisition and land clearance. The sub-projects will be selected through the planning process with the participation of the community. Part 2: Sustainable livelihoods development, with a total value estimated at USD 30.24 million from World Bank's borrowing fund (or 850/0 of borrowing amount, equivalent to VND 635 billion) consisting 02 subparts: (i) Autonomy and income diversification and (ii) market linkages development. The sub-project of Autonomy and income diversification includes activities which are strengthening food security & nutrition, and income diversification for beneficiaries by improving and promoting the livelihood models. The sub-project of market linkages development includes activities focus on the development of market linkages for some potential livelihoods modes, advancing partner relationship between farmers and enterprises through the project's supports. The Project's supports for the people in this part are done through support forms for livelihood enhancement group (LEG), including: (i) LEG of food security, (ii) LEG of livelihood diversity, (iii) LEG of market linkages. Each LEG has scale of 10-20 households, founded on the basis of voluntary participation of member households. Part 3: District-level connective infrastructure development, capacity building and communication, with a total estimated value of USD 44.2 million from World Bank's borrowing fund (or 85% of borrowing amount, equivalent to VND 928 billion), including 03 subparts: (i) district connective infrastructure development, (ii) capacity building, (iii) Communications. Capacity building at district level and connective infrastructure include the selection of inter-commune and district infrastructure which will support the inherent production connection and relate to local economic sectors. The part will also support district socio-economic integrated planning and technical capacity building for district staff to assist the planning and implementation of building infrastructure at communal level. 12 U CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT FINANCIAL STATEMENTS THE CENTRAL PROJECT COORDINATION OFFICE For the year ended * Financing Agreement - Credit number Cr. 5330-VN 31 December 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 U Part 4: Project Management, with a total estimated value of USD 8.4 million from World Bank's borrowing fund (or 85% of borrowing amount, equivalent to VND 176.4 billion), consists the basic objectives: (i) ensure the effective management of project activities is under the design and (ii) monitoring and evaluation system provides sufficient information on activities, results and impacts of the Project. The Central Project Coordination Office was established under Decision No. 1618/QD-BKDT dated 05 November 2013 issued by the Ministry of Planning and Investment. Duties and authorities of the Central Coordination Project include: * Support leaders of the Ministry of Planning and Investment in direct contact with the World Bank and other relevant agencies to coordinate, implement and manage the Project; Guide the provinces' project management units to manage and implement the Project. Periodically report the results of the entire project to the World Bank, the Ministry of Planning and Investment, and the Ministry of Finance as required. The Project started its operations on 05 November 2013 (the establishment date of the Central Project Coordination Office) and is expected to be completed in 2019. 2. ACCOUNTING CONVENTION AND FINANCIAL YEAR Accounting convention The accompanying financial statements, expressed in Vietnam Dong (VND), are prepared under the historical cost convention, except for the Statement of Designated Account and the Statement of Withdrawals which are prepared in original currency. The financial statements are prepared in accordance with the accounting policies set out in Note 3 and the requirement of the World Bank. Financial year The Project's financial year begins on 01 January and ends on 31 December. U 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the Central Project Coordination Office in the preparation of these financial statements, are as follows: Foreign currency translation Transactions arising in foreign currencies are translated into Vietnam Dong (VND) at exchange rates ruling on the transaction date. The balances of monetary items denominated in foreign currencies at the Balance Sheet date are retranslated at the December exchange rates announced by the Ministry of Finance. Foreign exchange differences are not cash flows. However, the effect of exchange rate changes is reported separately in the Statement of Sources and Uses of Funds in order to reconcile with balances of assets and liabilities in the Balance Sheet. Recognition of funds and expenditures Funds are recognised on the receipt of credit notes from the serving bank and the state treasury regarding the amount received. Expenditures are recognised on an accrual basis. 13 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT FINANCIAL STATEMENTS THE CENTRAL PROJECT COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 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 4. DESIGNATED ACCOUNT Designed Account is a deposit account in USD opened at Vietnam Bank for Agriculture and Rural Development - Cau Giay Branch to serve the Project's activities. Payments out of the Designated Account are made in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 5330-VN and relevant regulations established by the World Bank. 5. CASH 31/12/2018 31/12/2017 C U1 VND VND Cash in bank 4,245,611,457 11,528,388,012 N Designated Account - USD 4,245,611,457 11,528,388,012 VI 4,245,611,457 11,528,388,012 6. PAYABLES TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Payable to consultant employees 1,857,776,795 428,944,000 Mr. Le Trong Hanh 544,500,000 181,500,000 5S Media Company Limited 80,950,000 766,120,000 Ha Anh Earonautical., ISC 46,202,800 302,665,000 Mekong Development Research Institute - 220,000,000 Other suppliers 307,744,965 293,592,133 2,837,174,560 2,192,821,133 7. IDA FUNDS Year 2018 Accumulated to 31/12/2018 USD VND equivalent USD VND equivalent Designated Account - 3,611,104.37 79,481,929,351 Decreases due to assets transfer to - (1,136,052.31) (24,851,000,000) Provinces - - 2,475,052.06 54,630,929,351 14 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT FINANCIAL STATEMENTS THE CENTRAL PROJECT COORDINATION OFFICE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31 December 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 8. COMPARATIVE FIGURES Comparative figures are the figures of the Project's audited financial statements for the year ended 31 December 2017. U <-7~4~~--OVAN LQNTUNGUONG0 Vo Trinh Vinh Dao Thi Hong Lien Duy Dong Preparer Chief Accountant Director Hanoi, 19 June 2019 U * * 15I WE U U U U U U U U U * 1: U 4" U U i a PART II INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL Ni * NJE .0 3 * I- U U U U U U U U U U U U U U U Deloitte Vietnam Co., Ltd. D elo itte 15th Floor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel: +84 24 6288 3568 Fax: +84 24 6288 5678 www.deloitte.com/vn INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL To: The Central Project Coordination Office of the Central Highlands Poverty Reduction Project Report on internal control We have audited, in accordance with International Standards on Auditing, the financial statements of S the Central Highlands Poverty Reduction Project - Parts implemented by the Central Project Coordination Office (the "Project") for the year ended 31 December 2018 and issued the Independent auditors' report thereon dated 19 June 2019 expressing an unmodified opinion on those financial statements. 1T In connection with our audit of the Project's financial statements, we also examined the effectiveness N) of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as of internal control over financial reporting, and issue the Report of Independent Auditor on internal control. Responsibilities of the Central Project Coordination Office 504 As stated in the Statement of the Central Project Coordination Office on page 2 and page 3, the Central Project Coordination Office 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 I1 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 Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditors'Responsibilities Our responsibility is to express an opinion on the effectiveness of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as internal control over financial reporting based on our examination based on the evidence we have obtained. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the management has maintained effective internal control over compliance with the requirements that could have a direct and material financial effect on the financial statements as well as internal control over financial reporting. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. 16 Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL (Continued) 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, as well as our findings as presented in the Management Letter on page 21 to page 24. Opinion In our opinion, the Central Project Coordination Office has maintained, in all material respects, effective internal control over compliance with requirements that could have a direct and material financial effect on the Project's financial statements as well as internal control over financial reporting for the ear ended 31 December 2018. DE0 Vu Duc Nguyen Nguyen Tien Quoc Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate No. 0764-2018-001-1 No. 3008-2019-001-1 DELOITTE VIETNAM COMPANY LIMITED 19 June 2019 Hanoi, S.R. Vietnam 17 . . . . - . , , . ．才 一k - 州「 口PARTi:z手 一以 口口＿____________) _IND七P〔N D E N T AUDITORS,ASSURANCE REPORT ON 口CO間PLIANCE . 俗 ．日 .，〞 ，審 莎 . . . . . • . . • . . . • . . . STATEMENT OF THE CENTRAL PROJECT COORDINATION OFFICE ON COMPLIANCE The Central Project Coordination office is responsible for complying with Financing Agreement - Credit number Cr. 5330-VN, laws and regulations applicable to the Project. The Central Project Coordination Office confirms the following: 0 An effective internal control has been designed and maintained over compliance with Financing Agreement - Credit number Cr. 5330-VN, law's and regulations applicable to the Project; 0 The Project has complied with Financing Agreement - Credit number Cr. 5330-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018; * The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 5330-VN and prevailing relevant regulations established by the World Bank; * The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Central Project Coordination Office for the year ended 31 December 2018 and those SOEs were adequately supported; A 0 The proceeds of the loan were used only for the purpose(s) of the Project. behalf of the Central Project Coordination Office, BAN DICU PH61 OU AN TRUNG LIONG DUANGIAMNGHto OUVUCT VWGUY 12013-201 N Tran Duy Dong Director Hanoi, 19 3une 2019 18 W Deloitte Vietnam Co., Ltd. D elo itte 15th Floor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel: +84 24 6288 3568 Fax: +84 24 6288 5678 www.deloitte.com/vn INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE To: The Central Project Coordination Office of the Central Highlands Poverty Reduction Project Report on Compliance We have audited, in accordance with International Standards on Auditing, the financial statements of the Central Highlands Poverty Reduction Project - parts implemented by the Central Project Coordination Office (the "Project") for the year ended 31 December 2018 and issued the Independent auditors' report thereon dated 19 June 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 Financing Agreement - Credit number Cr. 5330-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018 (the "requirements"). Responsibilities of the Central Project Coordination Office The Central Project Coordination Office is responsible for complying with Financing Agreement - Credit number Cr. 5330-VN, laws and regulations applicable to the Project. Our Independence and Quality Control We have complied with the independence and other ethical requirements of the Code of Ethics for Professional Accountants issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality, and professional behavior. We apply International Standard on Quality Control 1 and accordingly maintains a comprehensive system of quality control including documented policies and procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements. Auditors' Responsibilities Our responsibility is to express an opinion on Project's compliance based on the evidence we have obtained. We limited our tests of compliance to the requirements, and we did not test compliance with all laws and regulations applicable to the Project. We conducted our reasonable assurance engagement in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards Board. That standard requires that we plan and perform this engagement to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An reasonable assurance engagement in accordance with ISAE 3000 to report on the Project's compliance with the requirements involves performing procedures to obtain evidence about whether the Project's activities are free of material noncompliance with the requirements, including obtaining an understanding of the internal control relevant to the Project's compliance with the requirements. The procedures selected depend on the auditor's judgment, including the assessment of risks that the Project does not comply with the requirements and whether such noncompliance could have a direct and material financial effect on the Project's financial statements. Our procedures included testing the compliance with the requirements that we consider necessary to provide reasonable assurance that the requirements are complied by the Project. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion as well as our findings as presented in the Management Letter on page 21 to page 24. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited ("DTTL"), its global network of member firms, and their related entities. DTTL (also referred to as "Deloitte Global") and each of its member firms and their affiliated entities are legally separate and independent entities. DTTL does not provide services to clients. Please see www.deloitte.com/about to learn more. 19 W * Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE (Continued) Opinion In our opinion: *0 The Project has complied, in all material respects, with Financing Agreement - Credit number Cr. 5330-VN, laws and regulations that could have a direct and material financial effect on the Project's financial statements for the year ended 31 December 2018. * The Project's receipts and disbursements via the designated account for the year ended 31 December 2018 are in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 5330-VN and prevailing relevant regulations established by the World Bank. * The withdrawal applications were adequately reconciled to the statements of expenditures (SOEs) prepared by the Central Project Coordination Office for the year ended 31 December 2018 and those SOEs were adequately supported. * The proceeds of the loan were used only for the purpose(s) of the Project. guyen Nguyen Tien Quoc * Deputy General Director Auditor Audit Practising Registration Certificate Audit Practising Registration Certificate * No. 0764-2018-001-1 No. 3008-2019-001-1 DELOITTE VIETNAM COMPANY LIMITED * 19 June 2019 Hanoi, S.R. Vietnam %20 .Il GON 4zU QiTAC K U7 DE0U Uo 20421-011N.30821-0- DEOTEVENMUOPN IIE