* Deloitte MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT Financing Agreement - Credit Number Cr. 5330-VN AUDITED FINANCIAL STATEMENTS, ASSURANCE REPORTS AND MANAGEMENT LETTER For the year ended 31 December 2018 W W MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT Financing Agreement - Credit number Cr. 5330-VN U * TABLE OF CONTENTS CONTENTS PAGE($) PART I FINANCIAL STATEMENTS Statement of the Central Project Coordination Office 2 - 3 Independent Auditors' Report 4 - 6 Balance Sheet 7 Statement of Incomes and Expenditures 8 Statement of Sources and Uses of Funds 9 Statement of Designated Accounts 10 Statement of Withdrawals 11 - 14 Notes to the f nancial statements 15 - 19 PART II INDEPENDENT AUDITORS' ASSURANCE ON INTERNAL CONTROL 20 - 21 PART III INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE Statement of the Central Project Coordination Office on Compliance 22 Independent Auditors' Assurance Report on Compliance 23 - 24 PART IV MANAGEMENT LETTER 25 - 45 PART I FINANCIAL STATEMENTS * MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT Financial 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 (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 The Central Project Coordination Office's Statement of Responsibility 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 Accounts, 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 accounts balance as at 31 December 2018 as well as of the incomes and expenditures, the receipts and disbursements of the Project, Designated accounts 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 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 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 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. The Central Project Coordination Office confirms that they have complied with the above requirements in preparing these financial statements. 2 MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT Financial Agreement - Credit number Cr. 5330-VN STATEMENT OF THE CENTRAL PROJECT COORDINATION OFFICE (Continued) rn behalf of the Central Project Coordination Office, Tran Duy Dong Director Hanoi, 25 June 2019 U3 U U Deloitte Vietnam Company Ltd. 15i"Floor, Vinaconex Tower, SD elo itte 34 Lang Ha Street, Lang Ha Ward, Dong Da District, HanoU, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website:www.deloitte.com/vn No.: ONA /VN1A-HN-BC INDEPENDENT AUDITORS' REPORT To: The Central Project Coordination Office of the Central Highlands Poverty Reduction Project Opinion We have audited the financial statements of the Central Highlands Poverty Reduction Project (the "Project") prepared on 25 June 2019, as set out from page 07 to page 19, 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 Accounts, 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 accounts balance as at 31 December 2018 as well as of the incomes and expenditures, the receipts and disbursements of the Project, Designated accounts 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. Deloitt refers to ore or more of Deloitte Touche Tohmatsu Lt , a UK private company inited by gJarantee ("DTTL ), its network of member firms, and their related entities. DTTI ano 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.doloittOcom/about for a more detailed description of DTTL and its membeir firms. 4 U * Deloitte INDEPENDENT AUDITORS' REPORT (Continued) n 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 these financial statements n 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 n Coordination Office determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. U 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 n Coordination Office either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. n 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 3 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 n 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 n statements or, if such disclosures are inadequate, to modify our opinion. Our conc usions are based on the audit evidence obtained up to the date of our auditors' report. However, future U 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 E5 Un W * Deloitte INDEPENDENT AUDITORS' REPORT (Continued) We communicate with those charged with governance and the Central Project Coordination Office regardng, 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 25 June 2019 Hanoi, S.R. Vietnam 6 MINISTRY OF PLANNING AND INVESTMENT FINANCIAL STATEMENTS CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT 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 158,543,933,395 98,493,357,965 Cash 5 144,345,285,819 81,554,574,161 Cash on hand 121,232,387 210,458,517 Cash in bank 142,450,368,100 80,078,669,244 Cash in State treasury 1,773,685,332 1,265,446,400 Receivables 14,198,647,576 16,938,783,804 Prepayments to suppliers 6 13,990,377,663 16,824,202,399 Other receivables 7 208,269,913 114,581,405 Total assets 158,543,933,395 98,493,357,965 LIABILITIES Current liabilities 159,404,965,073 191,838,852,312 Payables to suppliers 8 157,756,556,683 189,531,402,485 Tax and amount payables to State budget 151,871,693 42,376,700 Payables to employees 583,314,860 1,055,315,721 Other payables 9 913,221,837 1,209,757,406 Total liabilities 159,404,965,073 191,838,852,312 NET ASSETS (861,031,678) (93,345,494,347) Exchange differences 35,683,093,766 22,630,835,490 (Deficit) of incomes over expenditures (36,544,125,444) (115,976,329,837) TOTAL (861,031,678) (93,345,494,347) U ANDOIffUPHOi \ /DLANTRUNGLIONG\ \ VJC~UDU AN GIAMN \ 42013 -201 Vo Trinh Vinh Dao Thi Hong Lien Tran Duy Dong Preparer Chief Accountant Director Hanoi, 25 June 2019 The accompanying notes are an integral part of these financial statements 7 MINISTRY OF PLANNING AND INVESTMENT FINANCIAL STATEMENTS CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT 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 Notes Accumulated to Year 2018 31/12/2018 VND VND INCOMES IDA funds 10 770,742,559,104 2,125,420,389,762 Counterpart funds 29,071,839,520 132,822,300,265 Other funds 142,648,002 2,470,174,758 TOTAL INCOMES 799,957,046,626 2,260,712,864,785 EXPENDITURES Part 1: Village and commune infrastructure development 264,742,315,525 766,757,192,459 Part 2: Sustainable livelihoods development 148,880,935,746 496,851,443,298 Part 3: Connective infrastructure development, capacity 240,037,737,752 711,981,023,423 building, and communications Part 4: Project management 66,636,177,213 320,629,665,751 Others (Bank charges) 227,675,997 1,037,665,298 TOTAL EXPENDITURES 720,524,842,233 2,297,256,990,229 SURPLUS/(DEFICIT) OF INCOMES OVER EXPENDITURES 79,432,204,393 (36,544,125,444) PAN CO PHAti / -~ DUAN TRUNG UONGV~ oU4N GIAM N(HEOI V C¶A;NG E Vo Trinh Vinh Dao Thi Hong Lien Tran Duy Elong Preparer Chief Accountant Director Hanoi, 25 June 2019 The accompanying notes are an integral part of these financial statements 8 � � и -о аа , Q � � w �, s^ w �; � � _ °' ` � � = � й � , , °� � п� F-' Я1 r°1 i с О n^ + а+ �_ �' w�. ср �°'' ~ � ��:� � м � с�с� а � � п м � N с: л � tv р' д^^ �,,, VJ 'С (V .. . 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F- � ы <у г � La. �- �....ь г4 и а.n с о о ��L <7 `у � � ш � �- +.. +� сг, гв п , го_ Z�' 3 �аэ �-' _t-' � г� � 1 СЛ н � С � - - £? го • ', 4; � �� Q ,�, � в � а~!' а �ь с� со тз z '� с � � -� � � � `-' � и j с Q � � 2 - ; ггs � О t3 � � � ¢ � � ° ,,4 � � � а � ег? а п�ч � � �� т и н и � -р -� го � � � � га � U � � �� • � v а� � � � � � ��' q � � � J �. ,. �_ � сз со � о о, � �' = 6r � с � �' г�1 � ;•,i с и, (7 �рΡ� с> й й �' � с � L ш �>, ® 3. _ > t� �г о и � .,� � '', �- ® F'' � ! � �' � й о � � �'`•_�---' С � го � � , С � А L г53 � � ti й. � п. г Е- � � MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT FINANCIAL STATEMENTS Financing Agreement - Credit number Cr. 5330-VN For the year ended 31/12/2018 NOTES TO THE FINANCIAL STATEMENTS These notes are an integralpart of and should be read in conjunction with the accompanying financial 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 Internationa Development Association ("IDA"). With the support from the World Bank ("WB"), the Government of Vietnam has been implementing the Central Highlands Poverty Reduction Project (GNTN) 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 poor 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 Bank. The project inc udes four parts: Part 1: Development of communal and village infrastructure, with a total value estimated at USD 45 million from World Bank's borrowing fund (or 85cl/o of borrowing amount, equivalent to VND 945 billion), consisting of two subparts: (i) Development of communal and village infrastructure, (ii) Operation and maintenance. The Project decentralizes 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 85% 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. 0 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. MINISTRY OF PLANNING AND INVESTMENT CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT FINANCIAL STATEMENTS Financing Agreement - Credit number Cr. 5330-VN For the year ended 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 1. GENERAL INFORMATION (Continued) 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 since the establishment of the Central Project Coordination Office and Province Project Management Units ("PPMU") 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 Accounts 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. The financial statements were prepared on the basis of aggregation and offsetting of figures and internal transactions and balances of seven (07) Project implementing units, including the Central Project Coordination Office and Provincial Project Management Units (PPMUs) of Kon 2 Tum, Gia Lai, Dak Lak, Dak Nong, Quang Nam and Quang Ngai. 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. 16 MINISTRY OF PLANNING AND INVESTMENT FINANCIAL STATEMENTS CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT 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 ACCOUNTS Designated Accounts are deposit accounts in USD opened at Vietnam Bank for Agriculture and Rural Development - Cau Giay Branch and branches in Kon Turn, Gia Lai, Dak Lak, Dak Nong, Quang Nam and Quang Ngai provinces to serve the Project's activities. Payments out of the Designated Accounts 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 121,232,387 210,458,517 Cash on hand at Provincial and District, Commune Project Management 76,970,000 65,000,000 Units of Kon Tum Province Cash on hand at Provincial and District, Commune Project Management 387 387 Units of Gia Lai Province Cash on hand at Provincial and District, Commune Project Management 19,532,000 110,034,000 Units of Dak Lak Province Cash on hand at Provincial and District, Commune Project Management 1,534,130 Units of Dak Nong Province Cash on hand at Provincial and District, Commune Project Management 24,000,000 33,500,000 Units of Quang Nam Province Cash on hand at Provincial and District, Commune Project Management 730,000 390,000 Units of Quang Ngai Province Cash in bank 142,450,368,100 80,078,669,244 Cash in bank at Central Project Coordination Office 4,245,611,457 11,528,388,012 Cash in bank at Provincial and District, Commune Project Management 30,647,317,579 22,665,037,230 Units of Kon Tum Province Cash in bank at Provincial and District, Commune Project Management 15,460,815,703 13,247,699,618 Units of Gia Lai Province Cash in bank at Provincial and District, Commune Project Management 45,460,339,013 24,255,802,050 Units of Dak Lak Province Cash in bank at Provincial and District, Commune Project Management 28,442,407,597 125,473,036 Units of Dak Nong Province Cash in bank at Provincial and District, Commune Project Management 12,450,016,596 7,889,182,308 Units of Quang Nam Province Cash in bank at Provincial and District, Commune Project Management 5,743,860,155 367,086,990 Units of Quang Ngai Province Cash in State treasury 1,773,685,332 1,265,446,400 Cash in state treasury at Provincial and District, Commune Project 1,236,048,843 989,852,742 Management Units of Dak Lak Province Cash in state treasury at Provincial and District, Commune Project - 20,553,179 Management Units of Gia Lai Province Cash in state treasury at Provincial and District, Commune Project 537,636,409 253,546,399 Management Units of Quang Nam Province Cash in state treasury at Provincial and District, Commune Project 80 1,494,080 Management Units of Quang Ngai Province 144,345,285,819 81,554,574,161 U 17 MINISTRY OF PLANNING AND INVESTMENT FINANCIAL STATEMENTS CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT 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 6. PREPAYMENTS TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Provincial and District, Commune Project Management Units of Gia Lai 669 3 , 0 Province2,766,259,000 3,623,428,000 Province Provincial and District, Commune Project Management Units of Kon Tum 7,8,07 1,14,399 Province 3 Provincial and District, Commune Project Management Units of Dak Lak 2718 10,6200 Province Provincial and District, Commune Project Management Units of Dak Nong 32,718,199 10,552,000 Province Provincial and District, Commune Project Management Units of Quang 475,695,000 6,598,431,500 Nai Province Provincial and District, Commune Project Management Units of Quang 180,700 4,360,023,000 U Ngai Province 13,990,377,663 16,824,202,399 7. OTHER RECEIVABLES 31/1212018 31/12/2017 VND VND Other receivables related to expenditures of the Project - 30,022,198 Other receivables not related to expenditures of the Project 208,269,913 84,559,207 208,269,913 114,581,405 8. PAYABLES TO SUPPLIERS 31/12/2018 31/12/2017 VND VND Central Project Coordination Office 2,837,174,560 2,192,821,133 Provincial and District, Commune Project Management Units of Kon Tum 44,467,855,068 62,487,540,205 Province Provincial and District, Commune Project Management Units of Gia Lai 32,510,946,626 4,478,986,774 Province Provincial and District, Commune Project Management Units of Dak Lak 39,091,858,595 36,555,302,449 Province Provincial and District, Commune Project Management Units of Dak Nong 23,279,395,359 52,584,227,323 Province Provincial and District, Commune Project Management Units of Quang 5,491,809,633 3,374,6,171 Nam Province Provincial and District, Commune Project Management Units of Quang 10,077,516,842 27,857,876,430 Ngai Province 157,756,556,683 189,531,402,485 U U 18 MINISTRY OF PLANNING AND INVESTMENT FINANCIAL STATEMENTS CENTRAL HIGHLANDS POVERTY REDUCTION PROJECT For the year ended FinancingAgreement - Credit number Cr. 5330-VN331 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 9. OTHER PAYABLES 31/12/2018 31/12/2017 VND VND Other payables related to expenditures of the Project 577,382,071 1,042,875,890 Central Project Coordination Office - 4,178,173 Provincial and District, Commune Project Management Units of Dak Lak 460,109,406 543,687,314 Province Provincial and District, Commune Project Management Units of Dak Nong - 139,470,725 Province Provincial and District, Commune Project Management Units of Quang 2,385,000 162,976,000 Nam Province Provincial and District, Commune Project Management Units of Quang 114,887,665 192,563,678 Ngai Province Other payables not related to expenditures of the Project 335,839,766 166,881,516 Provincial and District, Commune Project Management Units of Kon Tum 45,607,265 66,567,538 Province Provincial and District, Commune Project Management Units of Gia Lai 40,148,257 45,666,113 Province Provincial and District, Commune Project Management Units of Dak Lak 80,816,086 Province Provincial and District, Commune Project Management Units of Dak Nong 118,415,760 - Province Provincial and District, Commune Project Management Units of Quang 50,852,398 54,647,865 Nam Province 913,221,837 1,209,757,406 10. IDA FUNDS Year 2018 Accumulated to 31/12/2018 USD VND equivalent USD VND equivalent Designated Account 33,866,357.25 770,742,559,104 95,628,705.91 2,125,420,389,76) 33,866,357.25 770,742,559,104 95,628,705.91 2,125,420,389,762 11. COMPARATIVE FIGURES Comparative figures are the figures of the Project's audited fi statements for the year ended 31 December 2017. U / ~ 3AN blEU PHOI1' I iXjAN TRUNCULONG"\ -~[) AN GIAM NGHEO I~ U '%XHU vUC TAY,,iQUyENi Vo Trinh Vinh Dao Thi Hong Lien Tran Duy Dong Preparer Chief Accountant Director Hanoi, 25 June 2019 19 U U U K U U U 5 U U U U PART II INDEPENDENT AUDITORS' ASSURANCE REPORT ON K INTERNAL CONTROL U 3 2 U U U U 3 A U r U U U U U U U U U U U U Deloitte Vietnam Company Ltd. D elo itte 15hFloor, Vinaconex Tower, 34 Lang Ha Street, Lang Ha Ward, Dong Da District, Hanoi, Vietnam Tel :+84 24 6288 3568 Fax:+84 24 6288 5678 Website: wvw.deloitte.com/vn INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL To: The Central Project Coordination Office of the Central Highlands Poverty Reduction Project We have audited, in accordance with International Standards on Auditing, the financial statements of the Central Highlands Poverty Reduction Project (the "Project") for the year ended 31 December 2018 and issued the Independent auditors' report thereon dated 25 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 the Central Project Coordination Office and Project Management Units As stated in the Statement of the Central Project Coordination Office on page 2 and page 3, the Central Project Coordination Office and Project Management Units are 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 minimize 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 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. Deloitte refers to one or more of Deloitte Touche Tohmatsu Ltd., a UK private company lim ted 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 "Delortte Global") does not provide services to clients. Please see www.deloitte.cm/abOt for a more detailed description of DTTL and its member fIrms. 3 20 Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON INTERNAL CONTROL (Continuted) 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 25 to page 45. Opinion In our opinion, the Central Project Coordination Office and Project Management Units have 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 pia,tdia reporting for the year ended 31 December 2018. VFuc4guyen 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 25 June 2019 Hanoi, S.R. Vietnam 21 l〕INDEPENDEN一 , 朧 認 . 一， 認 觀 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: a 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; 0 The Project's receipts and disbursements via the Designated accounts 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 regu ations 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. nd aff of the Central Project Coordination Office, 51-r and o eh, Train Duy Dong Director Hanoi, 25 lune 2019 22 Deloitte Vietnam Company Ltd. 151hFloor, Vnaconex Tower, SD 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.corn/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 (the "Project") for the year ended 31 December 2018 and issued the Independent auditors' report thereon dated 25 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 financia statements for the year ended 31 December 2018 (the "requirements"). Responsibilities of the Central Project Coordination Office and Project Management Units The Central Project Coordination Office and Project Management Units are 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 25 to page 45. Delimtte refers to one or more of Deloitte Touche Tohiatsu Ltd., a UK private company lrmted 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 provlde services to clients. Please see mw .deloittecom/about for a more detailed descrIption of DTTL and its member firms. 23 Deloitte INDEPENDENT AUDITORS' ASSURANCE REPORT ON COMPLIANCE (Continued) 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 accounts 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 estabished 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. Vu DUC dNgyen 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 25 June 2019 Hanoi, S.R. Vietnam 2 U U2