臓 . . . ■ . . . . 田OWNER:TRANSPoRT DEVELoPMENT AND STRATEGY INSTITUTE ■VIETNAM LoGISTICS STATISTlcAL SYSTEM PRoJECT 田G『ant Ag『eement No・TF0A4566-VLSS . AUDげED FINANC決L STA花MENTS FOR THE PERIOD FROM 26 SEPTEMBER 2017 TO 31 DECEMBER 2018 . . 2よ9-06-30 . . . . . . . . . . . . . . . . . . May 20ブ9 . TRANSPORT DEVELC PMENT AND STRATEGY INSTITUTE VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT Grant Agreement No. TFOA4566 TABLE OF CONTENT CONTENT PAGE PARTI FINANCIAL STATEMENTS 1 Statement of the Transport Development and Strategy Institute 2 Independent Auditors' Report 3-4 Balance Sheet 5 Statement of Receipts and Expenditures 6 Statements of Receipts and Disbursements 7 Statement of Actual Expenditures vs. Budget 8 Notes to the Financial Statements 9-11 PARTII AUDITORS'REPORT ON THE COMPLIANCE 12-14 PART III INDEPENDENT ASSURANCE REPORT ON EFFECTIVENESS 15-17 OF INTERNAL CONTROL U U U U U U U U U PART I FINANCIAL STATEMENTS U U U U U U U U U * N U U U U U U U U U U U U U TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT Grant Agreement No. TF0A4566 STATEMENT OF THE TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE The Transport Development and Strategy Institute - Vietnam Logistics Statistical System Project (hereinafter referred to as "TDSI") submits its report together with the audited financial statements of the Vietnam Logistics Statistical System Project (hereinafter referred to as "VLSS") for the period from 26 September 2017 (the effective date of the Grant Agreement) to 31 December 2018. TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE Members of TDSI who held office during the year and to the date of this report include: Mr. Nguyen Thanh Phong Director Ms. Nguyen Thi Phuong Hien Deputy Director: Team Leader Mr. Du Khanh Thang Planning and Finance Manager - Team Sub-leader Mr. Tran Van Kien Chief Accountant: Member Ms. Nguyen Thi Diem Hang STIC Manager - Member Ms. Nguyen Thi Diem Ngoc Accountant of Planning and Finance Department: Member Ms. La Tra Linh Researcher of STIC Department: Member - Secretary Ms. Ho Thi Hong Thuy Member Responsibilities of the Transport Development and Strategy Institute The Transport Development and Strategy Institute is responsible for preparing Financial Statements which give a true and fair view of balance of assets, liabilities and funds as at 31 December 2018 as well as the funds received and disbursements made and expenditures actually incurred for the period from 26 September 2017 to 31 December 2018 in accordance with the accounting policies as stated in Note 2 and Note 3 of the Notes to the Financial Statements and covenants of the Grant Agreement No. TF0A4566. In preparing those financial statements, TDSI 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; * Design and maintain an effective internal control system for preparation and presentation of the financial statements to minimize risks and frauds. The Transport Development and Strategy Institute 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 properly using the funds for the Project's purpose. It Is responsible for safeguarding the assets of TDSI and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Transport Development and Strategy Institute confirms that they have complied with the above requirements in preparing the Financial Statements. For and on behalf of the Transport Develoment and Strategy Institute, Nguyen Thanh Phong Director Hanoi, 3 May 2019 2 AUDITING AND CONSULTING CO LTD UY No: 294/2019/UHY - BCKT INDEPENDENT AUDITORS' REPORT To: The Transport Development and Strategy Institute Vietnam Logistics Statistical System Project Opinion We have audited the accompanying financial statements of the Vietnam Logistics Statistical System Project (hereinafter referred to as "the Project") for the period from 26 September 2017 to 31 December 2018, prepared on 03 May 2019 as set out on pages 5 to 11 herein, including the Balance Sheet as at 31 December 2018, the Statement of Sources and Use of funds, the Statement of Receipts and Disbursement, the Statement of Actual Expenditures vs Budget for the period from 26 September 2017 to 31 December 2018 and the Notes thereto (hereinafter collectively referred to as "the financial statements"). In our opinion, the accompanying financial statements give a true and fair view, in all material respects, of the financial position of the project as at 31 December 2018 as well as the funds received and disbursements made of the Project for the period from 26 September 2017 to 31 December 2018 in accordance with the basis of the principal accounting policies described in the Notes to the Financial Statements. Basis of opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of TDSI in accordance with the international Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Management for the Financial Statements TDSI is responsible for the preparation and presentation of the financial statements in accordance with financial reporting regulations described in Note 2 and Note 3 of the Notes to the Financial Statements, and for such internal control as the management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. U Head Office: 9th Floor, HL Tower, 82 Duy Tan Str., Cau Giay Dist., Hanoi, Vietnam Phone: 84 243755 7446 Fax: 84 24.3755 7448 3 www.uhy.vn AnindependentmemberofUHY Intemational INDEPENDENT AUDITORS' REPORT (CONT'D) Auditor's Responsibilities Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. * Obtain an understanding of internal control relevant to the Project's preparation and fair presentation of the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by 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 governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in interai control that we identify during our audit. Nguyen Thi Phuong Thao Nguyen Thi Thu Ha Deputy General Director Auditor Auditor's Practicing Certificate Auditor's Practicing Certificate No.0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY AUDITING AND CONSULTING COMPANY LIMITED Hanoi, 03 May 2019 U 4 TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTS VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period from GRANT AGREEMENT NO. TF0A4566 26/09/2017 to 31/12/2018 BALANCE SHEET As at 31 December 2018 Unit: VND Note 31/12/2018 VND ASSETS Cash Cash on hand Cash at bank, State Treasury - Project implemenation cost 6 200,000,000 Project implemenation cost 200,000,000 TOTAL ASSETS 200,000,000 RESOURCES II. 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N о � �О � а � ш � t' � � � й n' .� � � � г_ � о '- ш � � ш о сл � о С7 � �-° г� о с°°v с� � Ш�• Ш р о й -р О Q ■ Q и �� c N У Ш � i� � О О О � г ` � Q � о �� � а Е a��i О_ О � в� � � � и U = ` n � � � п � � � � � ~ �' (П -О � и I- � � L Qир п. � � �� U � й � ` _ � tD С.1 �� С и-О � т (6 � г Q`Ci' N �°' �� О � С G� _" = ПS Ш F"' Q 0 са'.� 'и � о'� � Ш С\') L д гq ■ О U~ �о с°�i а ш�'� � � а � � п� � j F- го � п т�•° с��о о г�а � г ZЛ ■ ши � °-° � °-о rnn�i � Z �, � � � > � � Z > с_ •� о� .о 'о ° � . �� i 0°-�в й 0� Н о ш 1-� '� � � Ш о йаа � � ■ Z�= г с- с� м �r и � t�- > С9 Q 1-�- � ■ TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTS VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period from Grant Agreement No. TFOA4566 26/09/2017 to 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (These notes are an integral part of and should be read in conjunction with the accompanying financial statement) 1 . PROJECT BACKGROUND The Vietnam Logistics Statistical System Project has been implemented on the basis of the Grant Agreement No. TFOA4566 signed on 26 September 2017 between the World Bank and the Socialist Republic of Vietnam. Total fund of the Project is USD 498,460, equivalent to VND 11,310 billion as financed by the World Bank and the counterpart fund is VND 500 million. The Project duration is 2 years, effective from 26 September 2017 to 26 September 2019. The Vietnam Logistics Statistical System Project consists of 4 components as follows: Component 1: Developing standardized logistics indicators and the methodology of collection, processing and reporting logistics data on an annual basis Component 2: Conducting one comprehensive pilot survey to collect data Component 3: Preparing and disseminating pilot annual report Component 4: Provision of support in project implementation. The Project commences from 26 September 2017 and is expected to be finished on 26 September 2019. Under the grant agreement, total grant from the World Bank to the project is USD 498,460. The counterpart fund is VND 500,000,000. Overall objectives: To enhance the Government's capacity in strategic planning, evidence-based policy making and monitoring the implementation of policies related to logistics development via developing the methodology of collection, processing and reporting logistics data on an annual basis. Specific objectives: a Developing standardized logistics indicators; having a clear methodology of development, mechanism and implementation. * Training to improve statistical capacity for project agencies; 0 Disseminating pilot annual report on logistics statistics of 2017; Develop a manual on guiding the collection and processing of transport and logistics statistics and preparation of the annual report on logistics statistics. The above objectives will assist the Ministry of Transport in setting up the system of collection, processing and preparing annual report on transport and logistics. These data will be used by state agencies for the purpose of strategic planning and monitoring the implementation of policies on transport and commercial logistics infrastructure and helping the private sector, especially logistics companies have access to reliable data for business development. 9 TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTS VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period from Grant Agreement No. TF0A4566 26/09/2017 to 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (These notes are an integral part of and should be read in conjunction with the accompanying financial statement) 2. BASIS OF PREPARATION AND ACCOUNTING PERIOD Basis of preparation The financial statements are expressed in Vietnam dong (VND) under the historical cost convention. The financial statements were prepared in accordance with requirements of the World Bank and book keeping is in line with Vietnamese Accounting Standards, non-business accounting system under Circular No. 107/2017/TT-BTC dated 10 October 2017. Accounting period The financial year of the Project begins on 1 January and ends on 31 December. The first accounting period of the Project is from 26 September 2017 (the effective date of the Grant Agreement) to 31 December 2018. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by TDSI in the preparation of these financial statements, are as follows: Recognition of funds and expenditures Funds and expenditures are recognized as actually incurred, specifically: * WB fund is recognized when being directly credited First advance account and paid to suppliers during the financial period. * The counterpart fund is recognized when being disbursed from the State treasury. * The project expenditures are recognized on the accrual basis, including those actually incurred and amounts payable to the suppliers. 4. ADVANCE ACCOUNT The project account is opened at Vietnam Bank for Agriculture and Rural Development - Hanoi branch. Payments from the advance account are made in accordance with provisions of the Grant Agreement No. TF0A4566 dated 26 September 2017 and related covenants of the World Bank. U 5. STATEMENT OF RECEIPTS AND DISBURSEMENTS The statement of receipts and disbursements is prepared on the basis of actual cash flows, specifically: Cash inflows represents receipts actually received from the World Bank and the State budget. Cash outflows represents disbursements actually made from TDSI for cost items of the project in the year and payments for suppliers during the year. The closing balance is presented based on the opening balance of the cash flow plus receipts and minus expenditures incurred in the year. The accumulated amount is presented based on receipts and disbursements accumulated from the commencement date to the end of the reporting year. 10 W TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTS VIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period from Grant Agreement No. TF0A4566 26/09/2017 to 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (These notes are an integral part of and should be read in conjunction with the accompanying financial statement) 6. PROJECT IMPLEMENTATION COST For the period from 26/09/2017 to 31/12/2018 VND Developing logistics indicators and method of collection, processing and reporting of logistics data Surveying and collecting data Developing a reporting template on transportation and logistics data of 2017 Training, capacity building and workshop organization - Project management cost 200,000,000 Total 200,000,000 7. COUNTERPART FUND For the period * from 26/09/2017 to 31/12/2018 VND Counterpart fund of the Vietnamese Govemment 200,000,000 Total 200,000,000 Hanoi, 03 May 2019 Prepared by Chief Accountant Director Nguyen Thi Diem Ngoc Tran Van Kien Nguyen Thanh Phong * 11 PART II AUDITORS' REPORT ON THE COMPLIANCE * T1 12 ( I AUDITNG AND CONSULTNG CO LTD AUDITORS' REPORT ON THE COMPLIANCE To: The Transport Development and Strategy Institute The Vietnam Logistics Statistical System Project We have examined the compliance of the Vietnam Logistics Statistical System Project in Vietnam with the Grant Agreement No. TF0A4566 for the period from 26 September 2017 to 31 December 2018 and expressed our unqualified opinion on these financial statements. Regarding to the audit of the Project's financial statements, we have examined the compliance of the Project with the Grant Agreement No. TF0A4566 dated 26 September 2017 between the World Bank (WB) and the Socialist Republic of Vietnam, regulations on disbursement, contract signing, procedures of receipts and payments via the advance account and reconciliation for the advance account, use of project funds, statements of expenditures (SOEs), financial articles, special provisions, laws and regulations that may have a direct and significant financial impact on the financial statements of the Project for the period from 26 September 2017 to 31 December 2018 (referred to as the "Regulations"). TDSI is responsible for complying with covenants mentioned in Statement of Compliance. Our responsibilities are to express an opinion on the TDSI's compliance with respect to these Regulations based on our audit work. We performed our work in accordance with International Standard on Assurance Engagements (ISAE) 3000. That standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with the regulations. Based on applying Quality Control Standard No. 1, whereby we have maintained a comprehensive quality control system, including the design and recording of policies and procedures regarding to the compliance with standards and regulations on professional ethics, professional standards, law and relevant regulations. We have complied with the requirements of independence and other ethical requirements in accordance with the Code of Professional Ethics and Auditing, which is based on fundamental ethical principles on integrity, objectivity, professional competence and prudence, confidentiality and professional conduct. Inspections include the implementation of procedures to collect evidence that the Project has no non- compliance activities, in all material respects, including the investigation of the internal control system for complying with these Regulations. The appropriate procedures depend on the auditor's judgment, including the assessment of the risk that the Project does not comply with the Regulations as well as the assessment of non-compliance may have a direct and significant impact of the Project's financial statements. Our procedures also include checking the compliance of the Project with respect to the Regulations that we deem necessary to provide reasonable assurance that the Project has complied with the Regulations. We strongly believe that our audit has provided a reasonable basis for our opinion. Head Office: 9th Floor, HL Tower, 13 82 Duy Tan Str., Cau Giay Dist., Hanoi, Vietnam Phone: 84 243755 7446 Fax: 84 24.3755 7448 www.uhy.vn An independent member of UHY International AUDITORS' REPORT ON THE COMPLIANCE (CONTINUED) Our opinian In our op nion, the use of funds, in all material aspects, has complied with provisions in :he Grant Agreement No. TF0A4566 dated 26 September 2017 between the World Bank (WB) and the Socialist Republic of Vietnam. Other matters During the period from 26 September 2017 to 31 December 2018, the Project had neither receipts and expenditures via the advance account nor withdrawal applications been made, we, therefore, do not evaluate the Statement of Advance Account and expenditures made via the Statement of Expenditures (SOEs). Nguyen Thi Phuong Thao Nguyen Thi Thu Ha Deputy General Director Auditor Auditor's Practicing Certificate Auditor's Practicing Certificate No. 0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY Auditing and Consulting Company Limited Hanoi, 03 May 2019 14 U ~PART III N AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION * OF THE FINANCIAL STATEMENTS 11 UI II II II II II UI U U U 11 W W II Ul U W II 15 Ul NAUDITING AND CONSULTING CO LTD AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION OF THE FINANCIAL STATEMENTS To: The Transport Development and Strategy Institute The Vietnam Logistics Statistical System Project We have audited the effectiveness of the design and implementation of the internal control system that may have a financially direct and material effect on the financial statements of the Vietnam Logistics Statistical System Project ("the Project") for the period from 26 September 2017 to 31 December 2018. The internal control was set up for purpose of managing risks to the achievement of the Project's objectives, including the reasonable prevention and detection of errors, irregularities and fraud. The internal control is the responsibility of TDSI. Auditors' Responsibility Our responsibility is to express an opinion, based on our audit, on the effectiveness of the internal control that could have a financially direct and material effect on the financial statements of the Project for the period from 26 September 2017 to 31 December 2018. We conducted our audit in accordance with the principles of International Standard on Assurance Engagements 3000 - Assurance Engagements other than Audits of Reviews of Historical Financial Information ("IASE 3000) insofar this standard could be usefully applied in this audit and in its specific compliance context. This standard requires that we comply with Quality Control Standard No. 1, ethical requirements and that we plan and perform the audit to obtain reasonable assurance about whether the internal control for the Project is adequately designed for the purpose of the Project and was operating effectively during the period covered by the audit. Our audit included obtaining a sufficient understanding of the Project and the internal control for the Project; assessing the risk that a material weakness exists that could have a financially direct and material effect on the financial statements of the Project; testing and evaluating, on the sample basis, the design and operating effectiveness of internal control based on the assessed risk; and performing such other procedures as we considered necessary in the circumstances. We considered the following criteria in evaluating the effectiveness of the internal control: - The requirement for design and implementation of the internal control in the Project's Operations Manual ("POM"); - The appropriateness of the internal control for the Project's activities and objectives; - The implementation of the internal control by the TDSI to achieve its objective of prevention and detection of errors, irregularities and fraud that could have a financially direct and material effect on the financial statements of the Project; - The significance to the financial statements where one control or several controls did not operate as designed, if any; and - That a weakness or a deficiency existed where a control or several controls did not reasonably prevent or detect risks that could have an adverse impact on the objectives of those internal controls which are to provide reasonable assurance that the financial statements are prepared, in all material respects, in accordance with the adopted accounting policies and POM, that the funds are utilized for the purpose defined in the Grant Agreement between the Government of the Socialist Republic of Vietnam and the World Bank and that the Project complies with the Grant Agreement, POM and other laws and regulations applicable for the Project. We believe that our audit provides a reasonable basis for our opinion. Head Office: 9th Floor, HL Tower, 16 82 Duy Tan Str., Cau Giay Dist., Hanoi, Vietnam Phone: 84 24.3755 7446 Fax: 84 24.3755 7448 www.uhy.vn AnindependentmemberofUHYIntemational U AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION OF THE FINANCIAL STATEMENTS (CONTINUED) Auditor's Opinion The Project's internal control system that may have a financially direct and material effect on the financial statements of the project for the period from 26 September 2017 to 31 December 2018, in all material respects, is sufficiently designed for the Project's purposes and operated in an effective manner, based on the above-mentioned evaluation criteria. Other Matters We draw attention to Appendix 1 - Management letter dated 03 May 2019 in which we discussed findings from the internal control which have no financially direct and material effect on the financial statements of the Project but may put system objectives at risk. This audit involved a historical evaluation of internal control at a specific point of time. Thus, this audit does not provide assurance for future periods due to the risk that internal control may become inappropriate because of changes in conditions, or that the degree of compliance with policies or procedures may deteriorate. Nguyen Thi Phuong Thao Nguyen Thi Thu Ha Deputy General Director Auditor Auditor's Practicing Certificate Auditor's Practicing Certificate No. 0933-2018-112-1 No. 2277-2018-112-1 For and on behalf of UHY Auditing and Consulting Company Limited Hanoi, 03 May 2019 U1