STATE AUDIT OFFICE OF VIET NAM AUDIT REPORT ON THE RESULTS-BASED RURAL WATER SUPPLY AND SANITATION PROGRAM IN 8 PROVINCES OF THE RED RIVER DELTA IN 2019 Hanoi, 2020 Code:.............. STATE AUDIT OFFICE SOCIALIST REPUBLIC OF VIETNAM Independence - Freedom - Happiness Ha Noi, 2020 AUDIT REPORT ON THE RESULTS-BASED RURAL WATER SUPPLY AND SANITATION PROGRAM IN 8 PROVINCES OF THE RED RIVER DELTA IN 2019 Under Decision No. 217/QĐ-KTNN dated February 27, 2020 of the Auditor General regarding auditing the results-based water supply and sanitation program in the 8 provinces of the Red River Delta in 2019; "Result-based scaling-up rural sanitation and water supply” Program in 2019 (refer to as the Program), an audit delegation of the Specialized Audit Department No. V conducted an audit of the Program from March 04, 2020 to March 31, 2020 and from May 06, 2020 to June 01, 2020. 1. Subject matter To audit the management and use of the Program budget; the compliance with the relevant State laws, policies and regulations; management, direction and coordination in implementing the Program; the fulfillment of the Program objectives; the effectiveness, efficicency and economy of the Program 2. Audit scope and scope limitation 2.1. Audit scope - Audit period: 2019 and the previous and following periods that concern. - Audited entities: Ministry of Agriculture and Rural Development (MARD), Quảng Ninh province, Hưng Yên province (for further details, please see Annex No. 01/BCKT-CTMT). 2.2. Scope limitation - Due to the shortage of time and human resources, the audit delegation did not check the quality of works and equipment, did not collate with the material, equipment and service providers; did not measure the length of water supply pipelines, the actual geometrical size of the unexposed items; ; did not audit the contributions of the citizen of the beneficial localities and other legal financial sources in form of work day or in kind (if any); - For financial statements prepared in the form required by the Program: As 1 the donor allowed to consider the construction works funded by the State Budget and other sources, except for the private investment fund; simultaneously the construction works determination and verification implemented by independent consulting units were considered a part of the Program outputs; for the targets determined by the output (receivables from donors, funds that formed fixed assets, revenues temporarily calculated from World Bank - allocated capital fund) and created from funds excluding from Program, the audit delegation just noted the situation according to the entities’ reports; entities took responsibility for the accuracy, reliability of the documents, data provided for the audit delegation. - The delegation did not audit again the contents and items which had been audited, verified, concluded and recommended on. 3. Audit basis - Law on State Audit, Law on State Budget, Law on Construction, Law on Tendering, other relevant laws and legal documents; - Audit standards, audit procedures, Regulation on the organization and operation of SAV audit delegations; - Financing Agreement for Credit 5176-VN signed by the Socialist Republic of Vietnam and the donor (IDA) on February 22, 2013. The audit report was prepared on basis of audit evidences; audit minutes on the meeting at the MARD, the two individual audit reports in the 2 provinces; financial statements, final account reports of the audited entites in 2019 as well as relevant documents. PART ONE AUDIT EVALUATION AND VERIFICATION I. THE TRUTH AND FAIRNESS OF THE PROGRAM FINAL ACCOUNT REPORTS (FINANCIAL DATA AND INFORMATION) The Audit Delegation audited the financial statements, program settlement figures prepared by the audited entities (see more details of the audit results in the Annexes No. 05.1/BCKT-CTMT to 06.5/BCKT- CTMT enclosed herewith). Responsibilities of the audited entities: Making and presenting the financial statements in a truthful and fair manner, complying with the 2 framework on making and presenting the Program financial statements in compliance with the templates required by the donor; conducting the internal controls which the entities found crucial to ensure the making and presenting the financial statements are free from material misstatements due to fraud or errors. Responsibilities of the audit delegation: Providing the independent audit opinions on the Program financial statements based on the audit results. The audit delegation has conducted the audit in line with the above-mentioned audit basis, scope, scope limitation (as mentioned in the Part One of this Report), documents provided by the entities; in compliance with the regulations on the professional ethics, audit planning and execution with neccessary professional methodologies lying on the auditors‘ judgements to gather audit evidences (By applying the basis audit techniques such as analysis, collation, detailed check: based on the State’s regulations on the project management to analyse and evaluate how the investment done by the entities was; Based on the allocated buget, allocated estimates by the competent authorities which were reported by the entities and which were stated in the official documents on the budget allocation by the competent authorities to check the completeness of investment capital: vouchers, accounting books; collating allocated budget and settled amount reported by the entities with those verified by the relevant budget and payment providers. Verification of the truth and fairness of the Program financial statements, the program settlement figures According to the audit delegation, except the impacts of the factors mentioned in the Audit Scope Limitation and material-but-not-pervasive misstatements, in the material aspects, after adjusting the data according to the audit results, the Program financial statements of the Results-based Water Supply and Ssanitation Program in the 8 provinces of the Red River Delta in the fiscal year 2019 in audited entities truthfully and fairly reflected the financial situation, revenues, expenditures and in compliance with the applicable regulations. 3