A JOINT VENTURE BETWEEN VIETNAM AUDITING AND EVALUATION COMPANY LIMITED AND NEXIA STT COMPANY LIMITED MINISTRY OF AGRICULTURE & RURAL DEVELOPMENT Forest Sector Modernization and Coastal Resilience Enhancement Project Portion implemented in Hai Phong City Financing Agreement - Credit number Cr. 6079-VN Audited Financial Statements and Management Letter For the fiscal year ended December 31, 2022 HANOI, JUNE 2023 FOREST SECTOR MODERNIZATION AND COASTAL RESILIENCE ENHANCEMENT PROJECT - PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN TABLES OF CONTENTS CONTENTS PAGE(S) Statement of the Project Management Unit 2-3 Statement of the Project Management Unit on Compliance 4 Independent Auditors' Report 5 - 10 Statement of Financial Position 11 - 12 Statement of Incomes and Expenditures 13 Statement of Sources and Uses of Funds 14 - 17 Statement of Disbursement by Category 18 - 20 Statement of Designated Account 21 Statement of Withdrawals 22 Notes to the Financial Statements 23 - 31 Management Letter 32 - 37 1 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT STATEMENT OF THE PROJECT FOREST SECTOR MODERNIZATION AND COASTAL MANAGEMENT UNIT RESILIENCE ENHANCEMENT PROJECT attached to Financial Sataments PORTION IMPLEMENTED IN HAI PHONG CITY for the fiscal year ended Financing Agreement - Credit number Cr. 6079-VN December31, 2022 STATEMENT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit of Forest Sector Modernization and Coastal Resilience Enhancement Project - Hai Phong City ("the Project Management Unit") presents this report together with the Financial Statements of the Forest Sector Modernization and Coastal Resilience Enhancement Project - Portion implemented in Hai Phong City ("the Project") for the fiscal year ended December 31, 2022. 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. Bui Quang Hoang Director Ms. Le Thi My Thanh Accountant in charge The Project Manaqement Unit's Statement of Responsibility The Project Management Unit is responsible for preparing the Financial Statements of the Project, which comprise the Statement of Financial Position as at December 31, 2022, the Statements of Incomes and Expenditures, Statements of Sources and Uses of Funds, Statement of Disbursement by Category, Statements of Designated Account, Statements of Withdrawals for the year then ended and the Notes to the Financial Statements, including a summary of significant accounting policies which give a true and fair view of the financial position of the Project and its designated account balances as at December, 2022, as well as of incomes and expenditures, receipts and disbursements of the Project, designted account movements and fund withdrawals for the year then ended, in accordance with the accounting convention and the accounting policies and the covenants contained in Financing Agreement - Credit number Cr. 6079-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 operation; and - Design and maintain an 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 accounting policies set out in Note 2 and Note 3 of 'I A 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. 6079-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. 2 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT STATEMENT OF THE PROJECT FOREST SECTOR MODERNIZATION AND COASTAL MANAGEMENT UNIT RESILIENCE ENHANCEMENT PROJECT attached to Financial Sataments PORTION IMPLEMENTED IN HAI PHONG CITY for the fiscal year ended Financing Agreement - Credit number Cr. 6079-VN December31, 2022 STATEMENT OF THE PROJECT MANAGEMENT UNIT (continued) The Project Management Unit confirms that they have complied with the above requirements in preparing these Financial Statements. For and on behalf of the Project Management Unit, Bui Quang Hoang Director Hai phong, June 22, 2023 3 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FOREST SECTOR MODERNIZATION AND COASTAL RESILIENCE ENHANCEMENT PROJECT PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN STATEMENT OF THE PROJECT MANAGEMENT UNIT ON COMPLIANCE The Project Management Unit is responsible for complying with Financing Agreement - Credit number Cr. 6079-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. 6079-VN, laws and regulations applicable to the Project; * The project has complied with laws, regulations and bidding process as well as other regulations under Financing Agreement - Credit number Cr. 6079-VN that could have a direct and material financial effect on the Project's Financial Statements for the fiscal year ended December 31, 2022; * The Project's receipts and disbursements via the designated account for the fiscal year ended December 31, 2022 are in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 6079-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 fiscal year ended December 31, 2022 and these SOEs were adequately supported; * The proceeds of the loan were used only for the purposes of the Project. For and on behalf of the Project Management Unit, Bui Quang Hoang Director Hai Phong, June 22, 2023 4 A Joint venture between Vietnam Auditing and Evaluation Company Limited and Nexia STT Company Limited Vietnam Auditing and Evaluation Company Limited Nexia STT Company Limited 11 Floor, Song Da Building, No. 165 Cau Giay Road, 19 Floor, C'Land Tower, No. 156 Xa Dan II Road, Cau Giay District, Hanoi Nam Dong Ward, Dong Da Distric, Hanoi Tel: (84-24) 62 670 491/492/493 Tel: (84-24) 39 350 990 Fax: (84-24) 62 670 494 Fax: (84-24) 39 350 991 No: 2406.05 -23/BC-TC/VAE-NEXIA Hanoli, June 24, 2023 INDEPENDENT AUDITORS' REPORT On Financial Statements To: The Management Board for Forestry Projects The Project Management Unit of Forest Sector Modernization and Coastal Resilience Enhancement Project - Hai Phong City Opinion We have audited the Financial Statements of the Forest Sector Modernization and Coastal Resilience Enhancement Project - Portion implemented in Hai Phong City ("the Project"), which comprise the Statement of Financial Position as at December 31, 2022, the Statement of Incomes and Expenditures, Statement of Sources and Uses of Funds, Statement of Disbursement by Category, 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 balance as at December 31, 2022, as well as of the incomes and expenditures, the receipts and disbursements, disbursement by category of the Project, designated account movements and fund withdrawals for the year then ended, in accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the Financial Statements. Basis for Opinion We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities under those standards are further described in the Auditors Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the Financial Statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note 2 and Note 3 of the Notes to the Financial Statements, which describes the accounting convention and the summary of the significant accounting policies. The Financial Statements are prepared in accordance with the accounting convention and 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 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 Managemnet 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 management either intends to liquidate the Project or to cease operations, or has no realistic alternative but to do so. 5 INDEPENDENT AUDITORS' REPORT On Financial Statements (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 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 audit in order to design audit procedures that are appropriate in the circumstances. * Conclude on the appropriateness of management'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 auditor's 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 auditor's report. However, future events or conditions may cause the Project to cease to continue as a going concern. * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates, if any, and related disclosures made by the Project Management Unit. We communicate with 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. Other Matter The Financial Statenents of Project for the year ended December 31, 2021, were audited by another auditor who expressed an unmodified opinion on those statements on June 23, 2022. Tran Quoc Tuan Nguyen Thi Hong Van General Director Auditor Audit Practicing Registration Certificate Audit Practicing Registration Certificate No. 0148-2023-034-1 No. 0946-2023-034-1 VIETNAM AUDITING AND EVALUATION COMPANY LIMITED 6 A Joint venture between Vietnam Auditing and Evaluation Company Limited and Nexia STT Company Limited Vietnam Auditing and Evaluation Company Limited Nexia STT Company Limited 11 Floor, Song Da Building, No. 165 Cau Giay Road, 19 Floor, C'Land Tower, No. 156 Xa Dan II Road, Cau Giay District, Hanoi Nam Dong Ward, Dong Da Distric, Hanoi Tel: (84-24) 62 670 491/492/493 Tel: (84-24) 39 350 990 Fax: (84-24) 62 670 494 Fax: (84-24) 39 350 991 No: 2406.05 -23/BC-TC/VAE-NEXIA Hano, June 24, 2023 INDEPENDENT AUDITORS' REPORT On compliance To: The Management Board for Forestry Projects The Project Management Unit of Forest Sector Modernization and Coastal Resilience Enhancement Project - Hai Phong City Report on compliance We have audited, in accordance with the International Standards on Auditing, the Financial Statements of the Forest Sector Modernization and Coastal Resilience Enhancement Project - Portion implemented in Hai Phong City ("the Project") for the fiscal ended December 31, 2022 and issued the independent auditors' report thereon dated June 24, 2023 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. 6079-VN, laws and regulations that have a direct and material financial effect on the Project's Financial Statements for the fiscal year ended December 31, 2022 ("the requirements"). Responsibilities of the Project Managerment Unit The Project Management Unit is responsible for complying with Financing Agreement - Credit number Cr. 6079-VN, laws and regulations applicable to the Project. c 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 engagements in accordance with the International Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing 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. A 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 7 INDEPENDENT AUDITORS' REPORT On compliance (continued) 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 a reasonable assurance that the requirements are complied by the Project. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, as well as our findings stated in the accompanying Management Letter. Opinion In our opinion: * The Project has complied, in all material respects, with laws, regulations and bidding process as well as other regulations under Financing Agreement - Credit number Cr. 6079-VN, that could have a direct and material financial effect on the Project's Financial Statements for the fiscal year ended December 31, 2022; * The Project's receipts and disbursements via the designated account for the fiscal year ended December 31, 2022 are in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 6079-VN and prevailing relevant regulations established by the World Bank; * The withdrawal applications were adequately reconciled to the statements of expenditures of (SOEs) prepared by the Project Management Unit for the fiscal year ended December 31, 2022 and those SOEs were adeq tely supported; * The procee s of the loan were used only for the purposes of the Project. Tran Quoc Tuan49 Nguyen Thi Hong Van General Director Auditor Audit Practicing Registration Certificate Audit Practicing Registration Certificate No. 0148-2023-034-1 No. 0946-2023-034-1 VIETNAM AUDITING AND EVALUATION COMPANY LIMITED 8 A Joint venture between Vietnam Auditing and Evaluation Company Limited and Nexia STT Company Limited Vietnam Auditing and Evaluation Company Limited Nexia STT Company Limited 11 Floor, Song Da Building, No. 165 Cau Giay Road, 19 Floor, C'Land Tower, No. 156 Xa Dan II Road, Cau Giay District, Hanoi Nam Dong Ward, Dong Da Distric, Hanoi Tel: (84-24) 62 670 491/492/493 Tel: (84-24) 39 350 990 Fax: (84-24) 62 670 494 Fax: (84-24) 39 350 991 No: 2406.05 -23/BC-TC/VAE-NEXIA Hanoi, June 24, 2023 INDEPENDENT AUDITORS' REPORT On internal control To: The Management Board for Forestry Projects The Project Management Unit of Forest Sector Modernization and Coastal Resilience Enhancement Project - Hai phong City Report on internal control We have audited, in accordance with International Standards on Auditing, the Financial Statements of the Forest Sector Modernization and Coastal Resilience Enhancement Project - Portion implemented in Hai Phong City ("the Project") for the fiscal year ended December 31, 2022 and issued the independent Auditor's report thereon dated June 24, 2023 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 Project Management Unit As stated in the Statement of the Project Management Unit on page 2 and page 3, 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 N 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 issused by the International Ethics Standars 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. Auditor's 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 9 INDEPENDENT AUDITORS' REPORT On internal control (continued) 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, as well as our findings stated in the accompanying Management Letter. Opinion In our opinion, thy Project Management Unit has maintained, in all material respects, effective internal control over com libnce 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 fiscal year ended December 31, 2022. Tran Quoc Tuan Nguyen Thi Hong Van General Director Auditor Audit Practicing Registration Certificate Audit Practicing Registration Certificate No. 0148-2023-034-1 No. 0946-2023-034-1 VIETNAM AUDITING AND EVALUATION COMPANY LIMITED 10 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN STATEMENT OF FINANCIAL POSITION As at December 31, 2022 Unit: VND Notes December 31, 2022 December 31, 2021 ASSETS I. Current assest 11,009,621,455 3,288,740,858 1. Cash 2,230,525,459 539,600,353 Cash in bank 167,222,279 352,073,280 Cash in bank - Designated Account 5.1.1. 134,711,206 96,438,180 Cash in bank - VND 5.1.2. 32,511,073 255,635,100 Cash in State Treasury 5.2. 2,063,303,180 187,527,073 2. Receivables 8,779,095,996 2,749,140,505 Advances to contractors/suppliers 6. 8,779,095,996 2,749,140,505 II. Fixed assets 167,970,000 233,340,000 1. Tangible fixed assets 154,620,000 206,640,000 Historical cost 293,100,000 293,100,000 Accumulated depreciation (138,480,000) (86,460,000) 2. Intangible fixed assets 13,350,000 26,700,000 Historical cost 53,400,000 53,400,000 Accumulated amortization (40,050,000) (26,700,000) III. Project implementation expenditures 39,007,468,750 5,376,125,927 1. Project implementation expenditures 14. 39,007,468,750 5,376,125,927 TOTAL ASSETS 50,185,060,205 8,898,206,785 (The accompanying notes are an integral part of these FInancial Statements) 11 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN STATEMENT OF FINANCIAL POSITION (Continued) As at December 31, 2022 Unit: VND Notes December 31, 2022 December 31, 2021 RESOURCES I. Short-term liabilities 4,024,632,868 984,936,908 1. Payables to contractors/suppliers 7. 1,815,359,105 192,010,715 2. Payables to employees 8. - 255,635,100 3. Other payables 9. 2,209,273,763 537,291,093 II. Funds 46,160,427,337 7,913,269,877 1. IDA fund 11.&13. 39,973,481,135 3,843,473,490 2. Counterpart fund 12. 5,997,724,506 3,834,147,127 3. Fund invested in fixed assets 167,970,000 233,340,000 4. Foreign exchange differences 21,251,696 2,309,260 N TOTAL RESOURCES 50,185,060,205 8,898,206,785 Hal Phong, June 22, 2023 Preparer Accountant in charge Director Bui Thi Phuc Le Thi My Thanh Bui Quang Hoang (The accompanying notes are an integral part of these Financial Statements) 12 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN STATEMENT OF INCOMES AND EXPENDITURES For the fiscal year ended December 31, 2022 Unit VND Notes The year ended Accumulated to Accumulated to December 31, 2022 December 31, 2022 December 31, 2021 INCOMES IDA funds 11.&13. 36,130,007,645 39,973,481,135 3,843,473,490 - Funds disbursed by the Ministry of 23,130,007,645 25,069,843,645 1,939,836,000 Agriculture and Rural Development - Funds in disbursement obligation of 6,500,000,000 7,451,818,745 951,818,745 local authority - Funds borrowed by local authority 6,500,000,000 7,451,818,745 951,818,745 Counterpart funds 12. 2,163,577,379 5,997,724,506 3,834,147,127 - Funds disbursed by the Ministry of 630,000,000 780,000,000 150,000,000 Agriculture and Rural Development - Funds in disbursement obhgation of 1,533,577,379 5,217,724,506 3,684,147,127 focal authority TOTAL INCOMES 38,293,585,024 45,971,205,641 7,677,620,617 , EXPENDITURES iv Component 1: Enabling Effective Coastal Forest Management Component 2: Coastal Forest 26,915,694,750 27,875,724,750 960,030,000 Development and Rehabilitation Component 3: Generating Sustainable 4,306,874,000 4,306,874,000 Benefits from Coastal Forests Component 4: Project Management, 2,408,774,073 6,824,870,000 4,416,095,927 Monitoring and Evaluation Others (Bank charges) - TOTAL EXPENDITURES 14. 33,631,342,823 39,007,468,750 5,376,125,927 (DEFICIT)/ EXCESS OF INCOMES OVER 4,662,242,201 6,963,736,891 2,301,494,690 EXPENDITURES Hai Phong, June 22, 2023 Preparer Accountant in charge Director Bul Thi Phuc Le Thi My Thanh Bul Quang Hoang (The accompanying notes are an integral part of these Financial Statements) 13 � � N Q � � N ^ � оо оо � � � О � О � о z �р д: ,-� � о о �° e�v e�V � N > ` м � ` й о v= ` $ Ш.у` i7 N�.�-i N � гм» � О О F- ш L � +°•' � м с1= � oi t� о М М а`-� � ^� амо ^ о й о N N F� �� tC м м �О г� и J � t�.i 1� 1� � а `� н а� О г r�., ^ i ^ ^ i i о ^ i � � i � а о ,ы, с10i � � � °о .`�-+ г`L со . �' С А `�- �+ д^' � �V � т'� 'и ё о • �о ° с О д�,` � д: с^v й С � о = и и � и 7 А�+ 7 � м t�o м с" й с, f° м м � °� '_ .с „ � о го � � о р � о � � � � � � � .и �,Aj �р � С А Q � � р � � � г° О. 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"�ь;ы".г� � � � •� ;� f- о н ш й О� га t� � F. � r_ и,11 � h N V 1 � И г ш .° с � � � t��t�;`�° 6 ш g и _ � � �. �.+ � оо � � � � � и 'в � < < ; � � а а � ,� •а a�i ,� �л � � ' �-�- ш tа- и °' о г=о � � � м � - i � у 1� О � � ш а � � й`-о �° '-' � .,�, G О V> й'с_ �> � v р а � С7 � йf �С г�.� N й т а г г й 'as'�� и а aG L �а � °Gг�а� �i � `о, � ш а � а = � с � С г � ' г W Е"� ''_' i ,� � .�""а �� ш ш ,., i а т н О Z ш U � rn� � ~ С �' ++ � L �„'�- с9�=ш ш о � � � го а Гr-' т с а о г �� и =_ _.v. _ ,, � � .�+ и г6 а.� О U ш� � t'' ° ш� о Е° т W �.% и � U V � �'л Q L а � 'й � и г г й� и ' ш пJ 1-1-н0 с о� � о о °� о о � ш н F•� � а ш � z а о~ т г � и � f° г ,� г�I м д- и ш г� � ���aii MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December 31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN STATEMENT OF DESIGNATED ACCOUNT For the period : From Janualy 01, 2022 to December 31, 2022 AccountNo. :2100227000177 Depositoty Bank : Vietnam Bank for Agriculture and Rural Development - Hal Phong City Branch Address : No 283 Lach Tray, Dang Glang Ward, Ngo Quyen D15trict, Hal Phong City Financing Agreement : Credit Number Cr 6079- VN Currency unit : USD Amount PART A: ACCOUNT ACTIVITIES Opening balance (01/01/2022) 4,252.00 Add: Total amount replenished by the World Bank to the Designated Account in the year 555,978.00 Bank charge recovered - Deduct: Total amount withdrawn from the Designated Account 554,475.57 Closing balance (31/12/2022) 5,754.43 PART B: ACCOUNT RECONCILIATION 1. Opening balance of advances by the World Bank 48,644.00 2. Add: Amount advanced by the World Bank to the Designated Account in the year 555,978.00 3. Deduct: Total amount claimed and approved for advance clearance by Designated 234,805.84 Account deduction by World Bank I y 4. Total advances to the Designated Account as at 31/12/2022 369,816.16 01NO GO 5. Closing balance of the Designated Account as at 31/12/2022 5,754.43 6. Add: Amount withdrawn but not yet claimed 364,061.73 7. Total advances to the Designated Account as at 31/12/2022 369,816.16 Hai Phong, June 22 2023 Preparer Accountant in charge Director Bu!ThiPhuc Le Thi My Thanh Bui Quang Hoang (The accompanying notes are an Integral part of these FInandal Statements) 21 м Z � N (Z ( N с ш� М б7 � � � � � � N� О � � � N ` � _ ш с _,� -,�.. F- �� � i J � � С и C�i � V Ф 1 i� � � ���, Ф � � � � � о; � ' �.,,� � � � в О г`о о �. l ��� ��. 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Z �' с'� Е � ш й� й ^ й � � о д й � г�., �� ш й � о, � � И ,� м ,л с о J а а'�о � й и �а, J а � �о �� ш � � О ''~� > � �' � о � о г о �` о о о о L а � г� �о � � � � � � = а � а uv, _ � �' с'� � aai �-_ го г ^ °' � а � � a�i г� ооС а.д V сNч nNi пNi пNi �.- т с Q 1- а=� � V о о о о с ш ��°+ Z н с г�о � м � rn с`ч � � Z ш +' G � о о о\ � � ш� ш ш '� м м д+ °.�' и L С а� нОгшU �й �-' °с �� а� � � о о о о � а 0 Z � Ё с, С7 с7 с� с� .с �,,, ш а ш .� z z z z с о� ш��' � о о о о а ш U н� с +� а а а а � Н й н о с г �_= г г � н W н F~- � ;��� а � г а и� г� � с� с� с� �R � toi � no. ii в���� 1с- MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL attached to Financial Sataments RESILIENCE ENHANCEMENT PROJECT for the fiscal year ended PORTION IMPLEMENTED IN HAI PHONG CITY December 31, 2022 Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (These notes are an Inteqral paft of and should be read In conjunction w1th the accompanyIng Financial Statements) 1. General information The Forest Sector Modernization and Coastal Resilience Enhancement Project Cthe Project") operates under financing Agreement - Credit number Cr. 6079-VN dated August 03, 2018 signed between the Socialist Republic of Vietnam and the International Development Association ("IDA' . The value of the Financing Agreement is 109,500,000 SDRs, which is equivalent to 150 million US dollars. Objectives of Project The Project's development objective is to improve coastal forest management in the project provinces to enchance coastal resilience to extreme weather events and sea level rise. The Project's specific development objective is to contribute to the Government's strategy to increase the resilience and adaptation to climate change of coastal areas, specifically: - Using modern approaches to strengthen spatial planning of coastal zones; - Effective organization of resource management; - Apply silvicultural practices on planting, tending and managing forests effectively to increase their resilience to to extreme weather events; - Create mechanisms to encourage households, communities, businesses and local governments to participate in the sustainable management and protection of existing resources. Total investment fund of the proJect G I The total revised investment of the Forest Sector Modernization and Coastal Resilience Enhancement Project according to the Prime Minister's Decision No.1387/QD-Ttg dated October 23, 2018 is USD 195 million, of which IDA fund is USD 150 million, local and central counterpart fund is USD 45 million. In which, the Project portion implemented in Hai Phong City has a total of USD 38.426 million according to the Decision No. 2638/QD-UBND dated October 30, 2019 of People's Committee of Hai Phong City. The Project commenced its operation According-to the Financing Agreement, the effectiveness date is 90 days after August 03, 2018 (signing date of Financing Agreement) and is expected to be completed on December 31, 2023. The Project portion implemented in Hai Phong City started on October 30, 2019 and is expected to be completed on December 31, 2023 under Prime Minister's Decision No.1387/QD-TTg dated October 23, 2018. The Pro.ject consists the following components Component 1: Enabling Effective Coastal Forest Management Component 2: Coastal Forest Development and Rehabilitation Component 3: Generating Sustainable Benefits from Coastal Forests Component 4: Project Management, Monitoring and Evaluation 2. Accounting convention and financial year Accounting convention The financial statements of the Project 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. Statement of Sources and Uses of Funds and the Statement of Disbursement by Category are prepared on the cash basis. The financial statements are prepared in accordance with the accounting policies set out in Note 3 and the World Bank's requirements. 23 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL attached to Financial Sataments RESILIENCE ENHANCEMENT PROJECT for the fiscal year ended PORTION IMPLEMENTED IN HAI PHONG CITY December31, 2022 Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Finandal Statements) 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 currencies translation Transactions arising in foreign currencies are traslated into Vietnam Dong (VND) at exchange rates ruling on the transaction date. The balances of monetary items denominated in foreign currencies at the Statement of Financial Position date are retranslated at the transfer buying rates of the commercial bank on the same date. 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 Statement of Financial Position. Recognition of funds and expenditures IDA funds and counterpart funds are recognized on the basis of the receipt - payment vouchers or confirmation of the State Treasury until the end of January 31, 2023 for transaction arising form January 01, 2022 to December 31, 2022. The disbursement of funds by category is recognised on the cash basic. Expenses are recognised on accrual basis. Fixed asset and depreciation and amortisation Fixed assets are recognised at cost less accumulated depreciation/amortisation and depreciated or amortized using the straight-line method. In which, depreciation rate is in accordance with Circular No.45/2018/TT-BTC dated May 07, 2018 by the Ministry of Finance, and amortisation rate is in accordance with Decision No.987/QD-BNN-TC dated March 20, 2020 by Ministry of Agriculture and Rural Development. 4. Designated account Designated Account are deposit account in USD opened in Vietnam Bank of Agriculture and Rural Development - Hai Phong City Branch for the Project's operation. Payments out of the Designated Account are made in accordance with the relevant covenants of Financing Agreement - Credit number Cr. 6079-VN and relevant regulations established by the World Bank. 24 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Financial Statements) 5. Cash 5.1. Cash in bank 5.1.1. Cash in bank - Designated Account 31/12/2022 31/12/2021 USD VND USD VND Vietnam Bank for 5,754.43 134,711,206 4,252.00 96,438,180 Agriculture and Rural Development - Hai Phong City Branch Total 5,754.43 134,711,206 4,252.00 96,438,180 5.1..2 Cash in bank - VND 31/12/2022 31/12/2021 VND VND G Vietnam Bank for Agriculture and Rural Development - Hai 32,511,073 - Phong City Branch Vietnam Maritime Commercial Joint Stock Bank - Hai Phong City - 255,635,100 VI Branch Total 32,511,073 255,635,100 5.2. Cash in State Treasury 31/12/2022 31/12/2021 VND VND Cash in State Treasury of Hai Phong City 2,063,303,180 187,527,073 Total 2,063,303,180 187,527,073 6. Advances to contractors/suppliers 31/12/2022 31/12/2021 VND VND Advances to contractors/suppliers related to expenditures of the Project Hai Phong Concrete and Construction JSC 2,543,384,648 Dai An Investment and Construction JSC 2,543,384,648 Construction and Hydraulic Ecology ISC 1,616,631,000 Hanoi Construction and Investment ISC 1,500,000,000 - Hai An Science and Technology Service and Trading Co., Ltd 207,518,000 310,638,000 Institute for Forest Ecology and Environment 183,896,000 1,538,504,000 Dat Cang Construction Consulting JSC 114,281,700 Hai Phong Construction design and Consultant JSC 70,000,000 - PDI Project Development and Investment JSC - 899,998,505 Total 8,779,095,996 2,749,140,505 25 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December 31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Financial Statements) 7. Payables to contractors/suppliers 31/12/2022 31/12/2021 VND VND Payables to contractors/suppliers related to expenditures of the Project Hai Phong Transport & Communication Construction and 1,291,187,600 - Investment Consultancy JSC Institute for Forest Ecology and Environment 180,182,750 192,006,000 12 Thang Long Technology Conversion and Construction 211,321,100 - Consultant JSC Research Institute for Forest Ecology and Environment 82,143,355 PEC Construction and Investment ISC 50,524,300 - PDI Project Development and Investment ISC - 4,715 NG Total 1,815,359,105 192,010,715 8. Payables to employees NVA 31/12/2022 31/12/2021 TN VND VND Payables to employess related to expenditures of the Project - 255,635,100 Total - 255,635,100 9. Other payables 31/12/2022 31/12/2021 VND VND Temporary receipt of IDA funds 113,459,510 94,130,970 Temporary receipt of counterpart funds 2,063,303,180 443,160,123 Temporary receipt of other funds - - Operating expenditures payable to organizations and individuals 32,511,073 - not related to the Project's funds Welfare Fund 12,645,305 - Career Development Fund 19,865,768 - Total 2,209,273,763 537,291,093 10. IDA amounts received The year 2022 Accumulated to December 31, 2022 VND USD equivalent VND USD equivalent Advance to the 13,019,328,540 555,978.00 15,017,097,000 643,752.00 Designated account Funds disbursed by 23,130,007,645 - 25,069,843,645 - the Ministry of Agriculture and Rural Development Total 36,149,336,185 555,978.00 40,086,940,645 643,752.00 26 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Financial Statements) 11. Reconciliation of IDA funds in the Statement of Incomes and Expenditures to receipts of IDA funds in the Statement of Sources and uses of funds 31/12/2022 31/12/2021 VND VND Statement of Incomes and Expenditures IDA funds [1] 39,973,481,135 3,843,473,490 Statement of Sources and uses of funds IDA funds receipts [2] 39,973,481,135 3,843,473,490 Difference [3] = [1] - [2] 12. Reconciliation of counterpart funds in the Statement of Incomes and Expenditures to receipts of counterpart funds in the Statement of Sources and Uses of funds 31/12/2022 31/12/2021 VND VND Try Statement of Incomes and Expenditures 'Ihj [ Counterpart funds [1] 5,997,724,506 3,834,147,127 P!NH ( Statement of Sources and Uses of funds Counterpart funds receipts [2] 5,997,724,506 3,834,147,127 Difference [3] = [1] - [2] 13. Reconciliation of IDA funds in the Statement of Incomes and Expenditures to IDA amounts receipt (VND) in the Note 10 of the Notes to the Financial statements 31/12/2022 31/12/2021 VND VND Statement of Incomes and Expenditures IDA funds [1] 39,973,481,135 3,843,473,490 Note 10 of the Notes to the Financial Statements IDA amounts received [2] 40,086,940,645 3,937,604,460 Difference [3] = [1] - [2] (113,459,510) (94,130,970) Represented by (113,459,510) (94,130,970) Temporaty recelpt of IDA funds (Note 9) 113,459,510 94,130,970 14. Reconciliation of expenditures in the Statement of Incomes and Expenditures to disbursement in the Statement of Sources and Uses of funds 31/12/2022 31/12/2021 VND VND Statement of Incomes and Expenditures Expenditures [1] 39,007,468,750 5,376,125,927 Statement of Sources and Uses of funds Disbursement [2] 45,971,205,641 7,677,620,617 Difference [3] = [1] - [2] (6,963,736,891) (2,301,494,690) 27 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the f1scal year ended RESILIENCE ENHANCEMENT PROJECT December31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Financial Statements) Represented by [4] (6,963,736,891) (2,301,494,690) Statement of Financial Position Advances to contractors/suppliers (8,779,095,996) (2,749,140,505) Payables to contractors/suppliers 1,815,359,105 192,010,715 Payables to employees - 255,635,100 15. Subsequent events There have been no significant events occurring after the reporting date, which would require adjustments or disclosures to be made in the Financial Statements. 16. Comparative figures Comparative figures are the figures of the audited Financial statements of the Project for the fiscal year ended December 31, 2021. Restatement of some Receipts and Disbursements on "Statement of Sources and Uses of Funds" and "Statement of Disbursement by Category" is presented as follows: a. Statement of Sources and Uses of Funds Unit: VND 31/12/2022 31/12/2021 (Previously Reclassification (Restated) presented) Receipts - IDA funds + Funds disbursed by the Ministry of 2,891,654,745 (951,818,745) 1,939,836,000 Agriculture and Rural Development + Funds in disbursement obligation of local - 951,818,745 951,818,745 authority - Counterpart funds + Funds disbursed by the Ministry of - 150,000,000 150,000,000 Agriculture and Rural Development + Funds in disbursement obligation of local 3,834,147,127 (150,000,000) 3,684,147,127 authority Disbursements * Component 2, Coastal Forest Development and Rehabilitation - IDA funds + Funds disbursed by the Ministty of 2,131,842,000 (192,006,000) 1,939,836,000 Agriculture and Rural Development + Funds in disbursement obhgation of - 951,818,745 951,818,745 local authority - Counterpart funds + Funds disbursed by the Ministfy of - 150,000,000 150,000,000 Agriculture and Rural Development + Funds in disbursement obligation of 150,000,000 (150,000,000) - local authority 28 MINISTRY OF AGRICULTURE AND RURAL DEVELOPMENT FINANCIAL STATEMENTS FOREST SECTOR MODERNIZATION AND COASTAL For the fiscal year ended RESILIENCE ENHANCEMENT PROJECT December 31, 2022 PORTION IMPLEMENTED IN HAI PHONG CITY Financing Agreement - Credit number Cr. 6079-VN NOTES TO THE FINANCIAL STATEMENTS (continued) (These notes are an integral part of and should be read in conjunction with the accompanying Financial Statements) * Component 4: Project Management, Monitoring and Evaluation - IDA funds + Funds disbursed by the Ministry of 759,812,745 (759,812,745) Agriculture and Rural Development b. Statement of Disbursement by Category Unit: VND 31/12/2022 31/12/2021 Category (Previously Reclassification (Restated) presented) * Construction - Counterpart funds + Funds in disbursement obligation of local 853,015,000 (28,087,000) 824,928, 000 authority * Consulting - IDA funds + Funds disbursed by the Ministry of 2,891,654,745 (951,818,745) 1,939,836,000' Agriculture and Rural Development + Funds in disbursement oblgation of - 951,818,745 951,818,745 local authority - Counterpart funds - + Funds disbursed by the Ministry of - 150,000,000 150, 000, 000 / Agriculture and Rural Development + Funds in disbursement obli7ation of 777,694,300 (125,913,000) 651,781,300,", local authority * Other cost - Counterpart funds + Funds in disbursement obliation of - 4,000,000 4,000,000 local authority 17. Approval of the Financial Statements The Financial Statements have been approved by the Project Management Unit for issuance on June 22, 2023. 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