Deloitte CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - KON TUM PROVINCE Financing Agreement - Credit number Cr. 5330-VN AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER For the year ended 31 December 2018 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - KON TUM PROVINCE Financing_Agreement - Credit number Cr. 5330-VN TABLE OF CONTENTS CONTENTS PAGE(S) PART I FINANCIAL STATEMENTS Statement of the Project Management Unit 2 Independent Auditors' Report 3 -4 Balance Sheet 5 Statement of Incomes and Expenditures 6 Statement of Sources and Uses of Funds 7 Statement of Designated Account 8 Statement of Withdrawals 9 Notes to the financial statements 10 - 12 PART II INDEPENDENT AUDITORS' ASSURANCE REPORT ON 13 -14 INTERNAL CONTROL PART III INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE Statement of the Project Management Unit on Compliance 15 Independent Auditors' Assurance Report on Compliance 16 - 17 PART IV MANAGEMENT LETTER 18 -23 U1 fl5 fl PATl FIACAfSAEET U CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - KON TUM PROVINCE Financing Agreement - Credit number Cr. 5330-VN STATEMENT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit of the Central Highlands Poverty Reduction Project - Kon Turn Province (the "Project Management Unit") presents this report together with the financial statements of the Central Highlands Poverty Reduction Project - Kon Turn Province (the "Project") for the year ended 31 December 2018. The Project Management Unit The members of the Project Management Unit who held office during the year and to the date of this report are as follows: Mr. Phan Van The Director Mr. Nguyen Van Sy Deputy Director Mr. Phan Van Binh Chief Accountant The Project Management Unit's Statement of Responsibility The Project Management Unit 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 ended 31 December 2018 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 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 and the covenants contained in Financing Agreement - Credit number Cr. 5330-VN. In preparing these financial statements, the Project Management Unit 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 business; 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 Project Management Unit 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 Project Management Unit 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 Project Management Unit 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. The Project Management Unit confirms that they have complied with the above requirements in preparing these financial statements. For a n cl hf cf the Project Management Unit, Direcbr<. - " Kon Tum, 1I9 tme 2019 2 Deloitte Vietnam Company Ltd. 151hFloor, Vinaconex Tower, D elo itte34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+B4 24 6288 3568 Fax:+84 24 6288 5678 Website: www.deloitte.com/vn No.: 0097/VN1A-HN-BC INDEPENDENT AUDITORS' REPORT To: The Project Management Unit of the Central Highlands Poverty Reduction Project - Kon Turn Province Opinion We have audited the financial statements of the Central Highlands Poverty Reduction Project - Kon Tum Province (the "Project") prepared on 19 June 2019, as set out from page 05 to page 12, 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. 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 Auditor's 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. Responsibilities of the Project Management Unit and those charged with governance for the Financial Statements The Project Management Unit is responsible for the preparation of the financial statements in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements, and for such internal control as the Project Management Unit determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Project Management Unit is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Project Management Unit either intends to liquidate the Project, or to cease operations, or has no realistic alternative but to do so. Those charged with governance are responsible for overseeing the Project's financial reporting process. 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 clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. Deloitte INDEPENDENT AUDITORS' REPORT (Continued) 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 Project Management Unit's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Project to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Project Management Unit. We communicate with those charged with governance and the Project Management Unit regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 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 4 3 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31/12/2018 BALANCE SHEET As at 31 December2018 Ne 31/12/2018 31/12/2017 Notes VND VND ASSETS Current assets 38,532,786,196 23,651,180,629 Cash 5 30,724,287,579 22,730,037,230 Cash on hand 76,970,000 65,000,000 Cash in bank 30,647,317,579 22,665,037,230 Receivables 7,808,498,617 921,143,399 Prepayments to suppliers 6 7,808,086,764 921,143,399 Other receivables 411,853 Total assets 38,532,786,196 23,651,180,629 LIABILITIES Current liabilities 44,789,391,331 63,336,722,489 Taxes and amounts payable to the State Budget 4,598,332 - Payables to suppliers 7 44,467,855,068 62,487,540,205 Payables to employees 271,330,666 782,614,746 Other payables 8 45,607,265 66,567,538 Total liabilities 44,789,391,331 63,336,722,489 5 A NET ASSETS (6,256,605,135) (39,685,541,860) Exchange differences 7,037,301,170 3,554,098,960 Deficit of incomes over expenditures (13,293,906,305) (43,239,640,820) TOTAL (6,256,605,135) (39,685,541,860) Phan \VanThe Phan Van Binh Directo Chief Accountant/Preparer Kon Turn, 19 June 2019 The accompanying notes are an integral part of these financial statements 5 W CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended 3 Financing Agreement - Credit number Cr. 5330-VN 31/12/2018 STATEMENT OF INCOMES AND EXPENDITURES For the year ended 31 December 2018 Accumulated to Notes 2018 31 December 2018 INCOMES VND VND IDA funds 9 167,951,394,198 382,496,232,214 Fund disbursed in cash 167,951,394,198 377,405,232,214 Fund disbursed by fixed assets 5,091,000,000 Counterpart funds 5,089,999,752 18,343,750,989 Otherfunds 11,982,406 70,559,219 TOTAL INCOMES 173,053,376,356 400,910,542,422 EXPENDITURES Part 1: Village and Commune Infrastructure 56,440,814,768 140,085,166,008 Development Part II: Sustainable Livelihoods Development 31,921,683,319 100,631,925,797 Part III: Connective Infrastructure Development, Capacity Building, and 41,739,955,159 120,773,212,007 Communications Part IV: Project Management 12,949,744,722 52,628,563,508 Others (Bank charges) 55,443,874 85,581,408 TOTAL EXPENDITURES 143,107,641,842 414,204,448,727 SURPLUS/(DEFICIT) OF INCOMES 29,945,734,514 (13,293,906,305) OVER EXPENDITURES -11 Phan Van The Phan Van Binh Director Chief Accountant/Preparer Kon Tum, 19 ne 2 019 The accompanying notes are an integral part of these financial statements 6 . . 〕〕〕:仰__〕\ . . CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31/12/2018 STATEMENT OF DESIGNATED ACCOUNT For the period from 0 1/0 112 018 to 3111212 018 Account Number., 5100201009391 Depositary Bank: Vietnam Bank for Agriculture and Rural Development - Kon Tum Branch Address: No. 88, Tran Phu Street, Kon Tum City, Kon Tum Province Financing Agreement: Credit Number Cr. 5330-VN Currency: USD Amount PART A: ACCOUNT ACTIVITIES Opening balance (01/01/2018) 696,590.44 TY Add: 7,432,782.06 Total amount replenished by the World Bank to the Designated Account in the 7,432,782,06 year Deduct: 7,512,094.07 Total amount withdrawn from the Designated Account 7,511,964.07 Total bank charges incurred for the year 130.00 Closing balance (31/12/2018) 617,278.43 PART B: ACCOUNT RECONCILIATION "IN 1 Opening balance of advances by the World Bank 2,500,000.00 2 Add: Amount advanced by the World Bank to the Designated Account in the year 1,274,922.19 (withdrawal application No. 31-KON TUM) 3 DeducU Expense accepted by World Bank for disbursement by deducting from 1,274,922.19 the Designated Account (withdrawal application No. 28-KON TUM) 4 Total advances to the Designated Account as at 31/12/2018 2,500,000.00 5 Closing balance of the Designated Account as at 31/12/2018 617,278.43 6 Add: Amount withdrawn but not yet claimed for reimbursement 941,813.96 7 Add: Amount withdrawn and claimed but not yet replenished by the World Bank 939,201.19 (withdrawal application No. 38-KON TUM) 8 Add: Bank charges (if not included in lines 6 and 7 above) 1,706.42 9 Total advances to the Designated Account as at 31/12/2018 2,500,000.00 N Phan Van Tha Phan Van Binh Director... Chief Accountant/ Preparer Kon Tum, 19 lu,,te 2019 The accompanying notes are an integral part of these financial statements . 讓 〕〕〕〕!!斗〕, . . CENTRAL HIGHLANDS POVERTY REDUCTION PROIECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended Financing Agreement - Credit number Cr. 5330-VN 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (These notes are an integral part of and should be read in conjunction with the accompanying ffriancial statements) 1. GENERAL INFORMATION The Central Highlands Poverty Reduction 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"). The objective of the Central Highlands Poverty Reduction Project is to improve living standards through improved livelihood opportunities for poor communes in the project area by improving infrastructure systems and communal villages and hamlets; increased autonomy and livelihood opportunities through strengthening food security and nutrition, and promote diversification of livelihoods, developing market linkages; improve infrastructure conditions connected at the district level; staff capacity building at all levels. 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 Bank. The Project Management Unit of the Central Highlands Poverty Reduction Project - Kon Turn Province (the "Project Management Unit") was established under Decision No. 552/QD-UBND dated 31 October 2013. The Project started its operations on 31 October 2013 (the establishment date of the Project Management Unit) 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 requirements of the World Bank. Financial year The Project's financial year begins on 01 January and ends on 31 December. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The significant accounting policies, which have been adopted by the Project Management Unit in the preparation of these financial statements, are as follows: Foreign currency translation 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. 10 CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended Financing reement - Credit number Cr. 5330-VN 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) (These notes are an integral part of and should be read in conjunction with the accompanying financial statements) Expenditures are recognised on an accrual basis. 4. STATEMENT OF DESIGNATED ACCOUNT Designed Account is a deposit account in USD opened at Vietnam Bank for Agriculture and Rural Development - Kon Turn 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 VND VND Cash on hand 76,970,000 65,000,000 Kon Tum Provincial Project Management Unit 22,000,000 22,000,000 Kon Plong District Project Management Unit 54,969,000 42,999,000 Sa Thay District Project Management Unit 1,000 1,000 Cash in bank 30,647,317,579 22,665,037,230 IDA funds 30,647,317,579 22,665,037,230 Kon Turn Provincial Project Management Unit 14,031,232,815 15,639,151,969 Ngoc Hoi District Project Management Unit 779,428,951 6,605,415 Dak Glei District Project Management Unit 9,604,822,400 1,758,907,300 Kon Plong District Project Management Unit 161,492,920 29,737,785 Sa Thay District Project Management Unit 2,006,137,380 955,626,850 Kon Ray District Project Management Unit 2,445,890,888 1,034,772,618 Tu Mo Rong District Project Management Unit 1,618,312,225 3,240,235,293 30,724,287,579 22,730,037,230 6. PREPAYMENTS TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Kon Turn Provincial Project Management Unit 4,892,505,000 Kon Plong District Project Management Unit 1,271,109,800 - Kon Ray District Project Management Unit 1,644,471,964 905,673,900 Sa Thay District Project Management Unit - 15,469,499 7,808,086,764 921,143,399 U1 U CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - FINANCIAL STATEMENTS KON TUM PROVINCE For the year ended * Financing Agreement - Credit number Cr. 5330-VN 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS (Continued) (These notes are an integral part of and should be read in conjunction with the accompanying financial statements) W 7. PAYABLES TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Kon Turn Provincial Project Management Unit 793,978,819 3,515,399,118 Ngoc Hoi District Project Management Unit 2,394,885,871 13,243,216,814 Dak Glei District Project Management Unit 17,057,438,244 11,837,507,193 Kon Plong District Project Management Unit 191,342,851 3,014,003,451 Sa Thay District Project Management Unit 11,599,140,420 13,599,038,267 Kon Ray District Project Management Unit 5,724,206,636 4,157,755,708 Tu Mo Rong District Project Management Unit 6,706,862,227 13,120,619,654 44,467,855,068 62,487,540,205 8. OTHER PAYABLES 31/12/2018 31/12/2017 VND VND Bank interest payables 44,977,630 55,000,628 Kon Turn Provincia Project Management Unit 17,958,718 17,464,618 Ngoc Hoi District Project Management Unit 3,017,064 6,350,560 Dak Glei District Project Management Unit 11,279,544 11,500,916 Kon Plong District Project Management Unit 2,980,099 3,069,660 Sa Thay District Project Management Unit 3,941,502 5,007,220 Kon Ray District Project Management Unit 3,975,293 5,077,361 Tu Mo Rong District Project Management Unit 1,825,410 6,530,293 Other payables 629,635 11,566,910 45,607,265 66,567,538 9. IDA FUNDS 2018 Accumulated to 31 December 2018 USD VND equivalent USD VND equivalent Added to the Designated Account 7,432,782.06 167,951,394,198 16,913,151.41 377,405,232,214 Fund disbursed by fixed assets - 232,818.81 5,091,000,000 7,432,782.06 167,951,394,198 17,145,970.22 382,496,232,214 10. COMPARATIVE FIGURES Comparative figures are the figures of the Project's audited financial statements for the year ended 31 December 2017. Phan Vah The Phan Van Binh Director, Chief Accountant/Preparer Kon Tum, 19 Juffe 2019 12 . . . . . . . . . .~&~一’- 一pART 11缨 .--------.---.--------一____________________· 一INDEPENDENT AUDITORS,ASSURANCE REPORT ON .INTERNALCONTROL . .花 二粼坏 . . .‘缚 汀 .阶 .币 . . . . . . . . . . . . .{ .… .{ Deloitte Vietnam Co., Ltd. D elo itte 15"' Floor, Vinaconex Tower, 34 Larg Ha Street, Lang Ha Ward, Dong Da Distriu, Hanoi, Vietnam Tel: +84 24 6288 3568 Fax: +84 24 6288 5b78 www.de1oitte.com/vn INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL To: The Project Management Unit of the Central Highlands Poverty Reduction Project Kon Tum Province Report on internal control We have audited, in accordance with International Standards on Auditing, the financial statements of the Central Highlands Poverty Reduction Project - Kon Turn Province (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 our audit of the Project's 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, and issue the Report of Independent Auditor on internal control. Responsibilities of Project Management Unit As stated in the Statement of the Project Management Unit on page 2, the Project Management Unit is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as over financial reporting for the purpose of properly preparing and presenting the financial statements so as to minimise errors and frauds; and take responsibility for its assertions as to the effectiveness of such internal control. Our 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. 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 reporLing, 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. Deloitte refers to one or more of Deloitte TOLiche Tohrmi.su Limited (-DTIL"), its global network of nierriber firms, and their related entities. DTTL (also referred to as "Deloitte Cdoinal") and earh of its member firms and their affiliated entities are lcgally separate and independent entities. DTTL deps not provide services ro clients Please see www doloitte-ur-i/olhcur to leat n more. 13 W * Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL (Continued) 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 18 to page 23. Opinion In our opinion, the Project Management Unit has maintained, in all material respects, effective internal control over compliance with requirements that could have a direct and material financial effect on the Project's financial statements as well as over financial reporting for the year ended 31 December 2018. 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 14 甲1 •〕 • . . . . . . . .PARTii:《 ■ iNoEPENoENT AuoiToRs·AssuRANcE REPoRT oN :C&&PL&ANCE沫 . ■ ■ • 一 〕. 〕豐 〕甲 〕豐 〕甲 〕豐 ―甲 -. ―甲 -. ―豐 -. ―■ l& I& CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT - KON TUM PROVINCE Financing Agreement - Credit number Cr. 5330-VN STATEMENT OF THE PROJECT MANAGEMENT UNIT ON COMPLIANCE The Project Management Unit is responsible for complying with Financing Agreement - Credit number Cr. 5330-VN, laws and regulations applicable to the Project. The Project Management Unit confirms the following: " An effective internal control has been designed and maintained over compliance with Financing Agreement - Credit number Cr. 5330-VN, laws 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 adequatefy reconciled to the statements of expenditures (SOEs) prepared by the Project Management Unit 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. For and on behalf of the Project Management Unit, Phan V; n The -r ------------- -------------------------------- Director Kon Turri, 19 7i;rre )1319 15 Deloitte Vietnam Company Ltd. 15trFloor, Vinaconex Tower, D elo itte34 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 INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE To: The Project Management Unit of the Central Highlands Poverty Reduction Project - Kon Tum Province Report on compliance We have audited, in accordance with International Standards on Auditing, the financial statements of the Central Highlands Poverty Reduction Project - Kon Turn Province (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 Project Management Unit The Project Management Unit 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 appy 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 auditors' judgment, including the assessment of risks that the Project does not comply with the requirements and whether such noncompliance could have a direct and material financial effect on the Project's financial 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. 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 clients. Please see www.deloitte.com/about for a more detailed description of DTTL and its member firms. 16 Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE (Continued) 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 18 to page 23. Opinion In our opinion: * 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 Project Management Unit 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. 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