Nexia 4lS TT Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Audited Financial Statements Under Financing Agreement No. 6429-VN between the International Development Association and the Government of the Socialist Republic of Vietnam Period from 29 November 2019 to 31 December 2021 - HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the International Development Association and the Government of the Socialist Republic of Vietnam Contents STATEMENT OF THE PROJECT MANAGEMENT UNIT.......................................................2 INDEPENDENT AUDITORS' REPORT .............................................................................5 STATEMENT OF FINANCIAL POSITION....................................................................... 11 STATEMENT OF FUNDS AND EXPENDITURES.............................................................12 STATEMENT OF SOURCES AND USES OF FUNDS .......................................................U113 STATEMENT OF DESIGNATED ACCOUNT...................................................................14 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 46010371488998................................15 NOTES TO THE FINANCIAL STATEMENTS ...................................... ...................... 16 1 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Fnancing Agreement No. 6429- VN between the International Development AssocIation and the Government of the Socialst Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit of Dynamic cities integrated development Project - Hai Duong city, Hai Duong province ("the Project Management Unit") was assigned by Hai Duong city People's Committee as the Owner Representative for the Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong Province" ("the Project") using the World Bank's credits, and the counterpart funds from the Government of Vietnam. The Project Management Unit of Dynamic cities integrated development Project - Hai Duong city, Hai Duong province is responsible for the Financial Statements of the Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" ("the Project") for the period from 29 November 2019 to 31 December 2021. The Project The Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province", financed by the World Bank's credits, was approved under Official Letter No. 4850/VPCP-QHQT dated 11 May 2017 by the Government Office for the project proposal; Decision No. 1427/QD-TTg dated 26 October 2018 by the Prime Minister for the project investment policy, and amended Decision No. 601/QD-TTg dated 4 May 2020. The Project was granted under Financial Agreement No. 6429-VN dated 29 November 2019 between the International Development Association and the Government of the Socialist Republic of Vietnam. The Project was approved by the President of the People's Committee of Hai Duong province for the feasibility study report under Decision No. 967/QD-UBND dated 22 March 2019, and amended Decision No. 3582/QD-UBND dated 1 December 2021. The Project has been granted with credits from the World Bank through the International Development Association ("IDA") under Financing Agreement No. 6429-VN dated 29 November 2019, with the total amount of USD59,120,000, and counterpart funds of the Government of the Socialist Republic of Vietnam for six (6) years from 2019 to 2025. The objective of the Project is to increase access to urban infrastructure and to improve integrated urban planning in the Project Cities. The Project consists of the following parts: > Part 1: Structural Investments - Rehabilitation and Construction of Resilient Urban Infrastructure Supporting selected city-level investments in urban infrastructure, including: (a) urban drainage, including, inter alia, construction of new drains, dredging and embankment of ditches, streams, lakes and channels; (b) urban environmental sanitation, including, inter alia, rehabilitation and construction of sewer collection networks and construction of wastewater treatment plants; (c) urban transport, including, inter alia, rehabilitation and construction of strategic urban roads and bridges; and (d) urban amenities and public spaces, including resettlement sites. > Part 2: Non-Structural Investments - Technical Assistance and Implementation Support Providing: (a) Analytical and technical support for institutional capacity strengthening for: (i) the development or update of integrated strategic urban development plans; and (ii) the development of public transport development strategies and plans; and (b) Project implementation support, including: (i) development of technical designs for structural investments under the Project; and (ii) construction supervision and management, independent monitoring of environmental and social safeguards, independent financial audits, and monitoring and evaluation. 2 HAl DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No, 6429-VN between the International DevelopmentAssocation and the Government of the Socialst Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT UNIT (CONTINUED) The total investment of the entire Project is VND1,774,584 million, equivalent to USD78,870,419, in which, IDA loan is VND1,330,166 million, equivalent to USD59,118,507; and the counterpart funds from the Government of the Socialist Republic of Vietnam is VND444,418 million, equivalent to USD19,751,192. The Project Management Unit The Project Management Unit of Dynamic cities integrated development Project - Hai Duong city, Hai Duong province was established by the Project Responsible Party - Hai Duong city People's Committee under Decision No. 1318/QD-UBND dated 5 April 2019 and amended according to Decision No. 743/QD-UBND dated 30 March 2020. Members of the Project Management Unit responsible for the project management during the period from 29 November 2019 to 31 December 2021 and at the date of this report are as follows: Mr. Truong Manh Long Director Mr. Nguyen Dinh Khanh Deputy Director Ms. Pham Thu Huong Chief accountant (up to 15/4/2022) Ms. Le Quynh Mai Accountant in-charge (from 15/4/2022) Auditors The accompanying Financial Statements for the period from 29 November 2019 to 31 December 2021 have been audited by NEXIA STT Co., Ltd. Responsibility of the Project Management Unit in respect of the Financial Statements The Project Management Unit is responsible for the Financial Statements which give a true and fair view of the financial position and the designated account balance of the Project as at 31 December 2021 and of its funds and expenditures, sources and uses of funds, operations of the Designated Account and total funds withdrawn for the period from 29 November 2019 to 31 December 2021. In preparing the Financial Statements, the Project Management Unit was required to select suitable accounting policies and then apply them consistently. The Project Management Unit was responsible for ensuring that proper accounting records were kept which enabled the Financial Statements to be prepared in compliance with the basis of accounting set out in Note 2 to the Financial Statements. The Project Management Unit was also responsible for safeguarding the assets of the Project and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Project Management Unit assumed the responsibility to provide, and has provided, the auditors with all accounting records, supporting and other documents, minutes, any pertinent information and explanations, either orally or by written confirmation, necessary for the audit. 3 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the International Development Association and the Government of the Socialist Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT UNIT (CONTINUED) Approval of the Financial Statements We hereby approve the accompanying Financial Statements of the Project "Dynamic Cities - Integrated Development Project - Hai Duong city, Hai Duong province" on page 11 to 23 which give a true and fair view of the financial position and the designated account balance of the Project as at 31 December 2021 and its funds and expenditures, the sources and uses of funds, operations of the designated account and total funds withdrawn for the period from 29 November 2019 to 31 December 2021 in accordance with the accounting policies as described in Note 2 to the Financial Statements and withdrawals have been adequately reconciled to the Statements of Expenditures prepared by the project during the period, and such Statements of Expenditures were adequately supported by payment records. The Financial Statements were prepared in compliance with the Applicable Provisions of the Agreement and other guidance from the World Bank. On behalf of the Project Management Unit Mr. Truong Manh Long Director Hai Duong, 4 HanoI Office NexiaOO 242 '3aa791 P 842) 9509- F -: +4(4 935 0991 -TTlai Phong Office 2452 B Dang Thuang Ly Hong Bang HaiPhong P:,, 225 3399 9 5 555 -794 225) 59 Hochiminh City Office 9 F: Estar Bg 14B-4 V anTa Dar ric 3 Hh - n C P: 84(28)39300488 F:*4(28)330 484 E: ne sttne a vn W: www ea INDEPENDENT AUDITORS' REPORT On the Project Financial Statements To: The Project Management Unit of Dynamic cities integrated development project - Hai Duong city, Hai Duong province Audit opinion We have audited the accompanying Statement of Financial Position as at 31 December 2021, the Statement of Funds and Expenditures, the Statement of Sources and Uses of Funds, the Statement of Designated Account, and the SOE Withdrawal Schedules for the period from 29 November 2019 to 31 December 2021 (collectively referred to as the "Financial Statements"), and summary of significant accounting policies and other explanatory information of the Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" ("the Project") implemented by the World Bank's credits through the International Development Association ("IDA") and counterpart funds. In our opinion, in all material respects: a) The Statement of Financial Position, the Statement of Funds and Expenditures, and the Statement of Sources and Uses of Funds give a true and fair view of the financial position of the Project as at 31 December 2021 and of its funds and expenditures, sources and uses of funds for the period from 29 November 2019 to 31 December 2021 in conformity with the accounting policies described in Note 2 to the Financial Statements; and b) the Statement of Designated Account and the SOE Withdrawal Schedules give a true and fair view of the designated account balance as at 31 December 2021 and of operations of the designated account, and of the funds withdrawn for period from 29 November 2019 to 31 December 2021 in conformity with the accounting policies described in Note 2 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 in accordance with International Ethics Standards, 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. Nexia SSTT Responsibilities of the Project Management Unit for the Financial Statements The Project Management Unit is responsible for the preparation and fair presentation of the Financial Statements in accordance with Note 2 and for such internal control as management determines is necessary to enable the preparation of Financial Statements that is free from material misstatement, whether due to fraud or error. 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 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 the Financial Statements. A further description of the auditors' responsibilities for the audit of the Financial Statements are included in Appendix I of this auditors' report. This description, which is represented at page 24, forssrt of our auditors' report. NFXIA STT 'o., Ltd. Nguyen Yiet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 142/2022/HN-AUD/WB DL Hai Duong - Hanoi, 15 -06- 2022 Hanoi Office Nei-1 we, 156)(2iOan l Dcng Da. Han- P 8 3 9 0990 F: 84 (24) 3 935 0991 STT Hai Phong Office 24F Ba:r Dang n h n Hong Banc, Ha Phong P 42 3 39 99/666/555 - F -84 (25)539 789 Hochininh City Office 9 F Estar B! dw Tan D stc3Hh C P 84 (28 30488 F 4 2 9 484 E ne, sttCinexa.vn W ww nei n INDEPENDENT AUDITORS' REPORT On Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Grant Agreements To: The Project Management Unit of Dynamic cities integrated development project - Hai Duong city, Hai Duong province Audit opinion We have audited the Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Financing Agreement No. 6429-VN of the Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" ("the Project") implemented by the World Bank's credits through International Development Association ("IDA"), and counterpart funds for the period from 29 November 2019 to 31 December 2021. In our opinion, the Project was, in all material respects, in compliance with the applicable laws, regulations, the procurement procedures and other provisions of Financing No. 6429-VN that could have a direct and material effect on the Project's Financial Statements for the period from 29 November 2019 to 31 December 2021. Basis for Opinion We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. Our responsibility is to express an opinion on the Project's compliance with the requirements, based on our procedures. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the compliance with the applicable laws, regulations and other provisions, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Project Management Unit The Project Management Unit is responsible for compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Financing Agreement No. 6429-VN that could have a direct and material effect on the Project's Financial Statements for the period from 29 November 2019 to 31 December 2021. Nexia - MSTT Auditors' Responsibilities Our responsibility is to express an opinion on the Project's compliance with the requirements, based on our procedures. We conducted our engagement in accordance with International Standards on Assurance Engagements 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. That standard requires that we comply with ethical requirements, plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with the requirements. An assurance engagement to report on the compliance with regulatory and contractual requirements at the Project involves performing procedures to obtain evidence about whether the Project's activities are free of material noncompliance 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 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 re uirements are complied by the Project. N-XIA S-rt 96., Ltd. Deru-l-eNer,3 /Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 142/2022/HN-AUD/WB DL Hai Duong Hanoi, 1 Hanoi Office N xi1 F CL T?wer. 56 X@ D - I.. iar.3, P -84 Q4) 3 935 0990 -84 (24 3 35 991 STTHai Phong Office 245 BachD Dan jng Ly. Hong Bcang H, Pa g P:*4(25133999/66/55 F:+842253 7. 89, Hochiminh City Office 9 FI EstarBIdgc, 47 143 o An TanDist'ict Hociminh C tv -84 28 3 300488 - - 84 28 3 0084 INDEPENDENT AUDITORS' REPORT 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 of internal control over financial reporting To: The Project Management Unit of Dynamic cities integrated development project - Hai Duang city, Hai Duong Province Audit Opinion We have audited, in accordance with the International Standards on Auditing, the Financial Statements of the Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" ("the Project") implemented by the World Bank's credits through the International Development Association ("IDA"), and counterpart funds for the period from 29 November 2019 to 31 December 2021 and issued the auditors' report thereon expressing an unqualified opinion on the Audited Financial Statements. In connection with our audit of the 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. In our opinion, the Project has maintained, in all material respects, effective 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 for the period from 29 November 2019 to 31 December 2021. Basis of Opinion We conducted our engagement in accordance with International Standards on Assurance Engagements 3000. Our responsibility is to express an opinion on the effectiveness of internal control over compliance with requirements that could have a direct and material effect on the Financial Statements as well as internal control over financial reporting based on our examination. We are independent of the Project in accordance with the ethical requirements that are relevant to the audit to evaluate the effectiveness of internal controls on the compliance of the requirements that may directly and materially affect the financial statements as well as internal control purposes in preparation of financial statements, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Project Management Unit The Project Management Unit is responsible for designing and maintaining effective internal control over compliance with requirements that could have a direct and material 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. - pNexia STT 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 effect on the Financial Statements as well as internal control over financial reporting based on our examination. Our examination was conducted in accordance with International Standard on Assurance Engagement 3000, accordingly, included obtaining an understanding of internal control over compliance with requirements that could have a direct and material 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 prevented or detected on a regular basis. 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 reeocompliance with the policies or procedures may deteriorate. 'NEXIA ST o., Ltd. NgluyeffVWet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 142/2022/HN-AUD/WB DL Hai Duong Hanoi, .15 -06- ?22 - HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the International Development Assoclaton and the Government of the Socialist RepublIc of Vietnam STATEMENT OF FINANCIAL POSITION As at 31 December 2021 As at Note 31/12/2021 VND ASSETS Current assets 50,196,551,318 Cash at bank - Designated account 3 10,729,378,003 Advances to contractors/suppliers 4 39,467,173,315 TOTAL ASSETS 50,196,551,318 RESOURCES Liabilities 11,121,085,758 Payables to contractors/suppliers 5 9,963,231,460 Other payables 6 1,157,854,298 Fund balance 39,075,465,560 Fund balance, end of the period 39,075,465,560 TOTAL RESOURCES 50,196,551,318 Prepared by: Approved by: Le Quynh Mai Truong Manh Long Accountant in-charge Director Hai Duong, 15 - 2022 The accompanying notes form an integral part of the Financial Statements 11 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Fnancing Agreement No. 6429- VN between the International Development Association and the Government of the Socialst Republic of Vietnam STATEMENT OF FUNDS AND EXPENDITURES Period from 29 November 2019 to 31 December 2021 Period Accumulated Note from 29/11/2019 from 11/5/2017 (*) to 31/12/2021 to 31/12/2021 VND VND Funds Funds received from the World Bank 7 46,016,970,462 46,016,970,462 Counterpart funds 8 53,971,919,752 68,913,295,552 99,988,890,214 114,930,266,014 Expenditures 1. Part I: Construction of 9 8,638,451,880 8,638,451,880 Infrastructure and urban transport 2. Part II; Technical Assistance and 10 30,892,839,046 55,752,814,329 Implementation Support 3. Other expenses 11 10,746,710,006 10,746,710,006 50,278,000,932 75,137,976,215 Surplus of funds against 49,710,889,282 39,792,289,799 expenditures during the period Foreign exchange differences 12 (716,824,239) (716,824,239) Fund balance, beginning of the period 13 (9,918,599,483) Fund balance, end of the period 39,075,465,560 39,075,465,560 (*) 11 May 2017 is the date on which the Project proposal was approved by the Government Office under Official Letter No. 4850/VPCP-QHQT. During the period from 11 May 2017 to 28 November 2019, the Project made some payments from counterpart funds for the costs of consulting to develop pre-feasibility study and feasibility study reports and the project management costs. These costs were included in the total investment costs of the Project. 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О tiG ашс г � м а � с- СУ Q � 2 О. cL � И а +7а w t° �,-; r.i м й а � LL *.., � С n. �� х HAI DUONG CITY PEOPLES COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Pro ject "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under FInancing Agreement No 6429-VN between the InternattonalDevL-lopmentA550clation and the Go vernment of the Socialist Republic of Vietnam STATEMENT OF DESIGNATED ACCOUNT Period from 29 November 2019 to 31 December 2021 A croun t No., 46010371488998 Accountholber.- Pro)ect Management Unit of clynamic cities integrated oeVelOpMent PfO)eCt - Hai Duong city Hai Duong province sank.- Joint Stock Commercial Bank for Investment and Lke velopment of Vietnam - HL31 Duong Branch Address: No 2 Le 777anh Nghi, P17am Ngu Lao Want Hai Duong Clty Finanang Agreement NO.' 6429- VN Part A - Account activities Note USD Balance as at 29 November 2019 Add: Total amount advanced to the Designated Account 7 1,989,837,00 Deduct: Total amount withdrawn (1,525,883,96) Balance as at 31 December 2021 3 463,953,04 Part B - Account reconciliation Amount advanced from the World Bank - Add: Amount advanced from the World Bank 1,989,837,00 Outstanding amount advanced to the Designated Account 1,989,837,00 as at 31 December 2021 Balance of the Designated Account as at 31 December 2021 3 463,953,04 Add: Amount withdrawn and not yet claimed 14 1,525,883,96 Total advances to the Designated Account as at 31 1,989,837,00 December 2021 Prepared by: Approved, by: Le Quynh Mai Truong Manh Long Accountant in -charge Director Hai Duong, rl7e accotnpanylng notes lotin an integral pait of the Financial Statement5 14 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the International Development Association and the Government of the Socialist Republic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 46010371488998 Period from 29 November 2019 to 31 December 2021 Unit: USD Withdrawal application Categories No. Date Advances 0001 16/12/2021 1,989,837.00 Total amount advanced 1,989,837.00 Prepared by: Approved by: Le Quynh Mai Truong Manh Long Accountant in-charge Director Hai Duong, 15 -06 2022 The accompanying notes form an integral part of the Financial Statements 15 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Fnanc1ig Agreement No. 6429-VN between the International Development Association and the Government of the Socialist Republic of Vietnam NOTES TO THE FINANCIAL STATEMENTS Period from 29 November 2019 to 31 December 2021 1. Project background The Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province", financed by the World Bank's credits, was approved under Official Letter No. 4850/VPCP-QHQT dated 11 May 2017 by the Government Office for the project proposal; Decision No. 1427/QD-TTg dated 26 October 2018 by the Prime Minister for the project investment policy, and amended Decision No. 601/QD-TTg dated 4 May 2020. The Project was granted under Financial Agreement No. 6429-VN dated 29 November 2019 between the International Development Association and the Government of the Socialist Republic of Vietnam. The Project was approved by the President of the People's Committee of Hai Duong province for the feasibility study report under Decision No. 967/QD-UBND dated 22 March 2019, and amended Decision No. 3582/QD-UBND dated 1 December 2021. The Project has been granted with credits from the World Bank through the International Development Association ("IDA") under Financing Agreement No. 6429-VN dated 29 November 2019, with the total amount of USD59, 120,000, and counterpart funds of the Government of the Socialist Republic of Vietnam for six (6) years from 2019 to 2025. The objective of the Project is to increase access to urban infrastructure and to improve integrated urban planning in the Project Cities. The Project consists of the following parts: Part 1: Structural Investments - Rehabilitation and Construction of Resilient Urban Infrastructure Supporting selected city-level investments in urban infrastructure, including: (a) urban drainage, including, inter alia, construction of new drains, dredging and embankment of ditches, streams, lakes and channels; (b) urban environmental sanitation, including, inter alia, rehabilitation and construction of sewer collection networks and construction of wastewater treatment plants; (c) urban transport, including, inter alia, rehabilitation and construction of strategic urban roads and bridges; and (d) urban amenities and public spaces, including resettlement sites. Part 2: Non-Structural Investments - Technical Assistance and Implementation Support Providing: (a) Analytical and technical support for institutional capacity strengthening for: (i) the development or update of integrated strategic urban development plans; and (ii) the development of public transport development strategies and plans; and (b) Project implementation support, including: (i) development of technical designs for structural investments under the Project; and (ii) construction supervision and management, independent monitoring of environmental and social safeguards, independent financial audits, and monitoring and evaluation. The total investment of the entire Project is VND1,774,584 million, equivalent to USD78,870,419, in which, IDA loan is VND1,330,166 million, equivalent to USD59,118,507; and the counterpart funds from the Government of the Socialist Republic of Vietnam is VND444,418 million, equivalent to USD19,751,192. 16 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financng Agreement No. 6429- VN between the International Development Association and the Government of the Socialst RepublIc of Vietnam 2. Summary of significant accounting policies The significant accounting policies, which have been adopted by the Project Management Unit in the preparation of the Financial Statements, are as follows: Reporting currency The Financial Statements, including the Statement of Financial Position, the Statement of Funds and Expenditures and the Statement of Sources and Uses of Funds are expressed in Vietnam Dong ("VND"), except for the Statement of Designated Account and SOE Withdrawal Schedule which are expressed in United States Dollar ("USD"), are prepared considering the requirements of the World Bank. Basis of preparation of the Financial Statements The Financial Statements are prepared and presented by the Project, in accordance with requirements of the World Bank (WB), complied with Circular No. 79/2019/TT-BTC dated 14th November 2019 ("Circular 79") issued by the Ministry of Finance ("MOF") guiding the accounting regime applicable to public investment project management boards, replacing all provisions in Chapter II, Part II "Accounting instructions for investors of public service units" of Circular No. 195/2012/TT-BTC dated 15t November 2012 issued by the MOF guiding the accounting regime applicable to investors. Circular 79 is effective for the financial year beginning on or after 1 January 2020, The accounting policies have been consistently applied by the Project during the period. Funds IDA funds are recorded when credited to the Designated Account of the Project. The counterpart funds of the Vietnamese Government are recorded when payments are made directly from the Vietnamese Government to contractors/suppliers of the Project or when received. Expenditures Expenditures financed by IDA are recorded when the obligation to pay them arises rather than when actually paid. Expenditures financed by the counterpart funds are recorded when they are approved by the State Treasury except for expenditures for contractors/suppliers on completion of contracts, and advances to staffs, advances to contractors/suppliers. Overall management expenses are recognized and paid in accordance with their corresponding annual budget allocated to the Project. Fiscal year The first fiscal period of the Project is from 29 November 2019 to 31 December 2021. Succeeding fiscal years will be from 1 January to 31 December. 17 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Fnancing Agreement No. 6429-VN between the International Development Assocation and the Government of the Socialist Republic of Vietnam Foreign exchange difference Funds from the World Bank received in United States Dollars ("USD") are converted into Vietnam Dong ("VND") using the exchange rate announced by the Ministry of Finance in the month of fund receipts. Transactions incurred in the period via the Designated Account are converted into VND using exchange rates ruled by the Project bank at the transaction dates for expenditures denominated in VND, Transactions incurred in the period denominated in USD are converted into Vietnam Dong using exchange rates ruled at the date of receipt of funds using the first-in first-out method. Foreign exchange differences are taken up in the Statement of Funds and Expenditures. Designated Account Designated Account is a deposit account in USD opened at the Joint Stock Commercial Bank for Investment and Development of Vietnam - Hai Duong Branch, which was held by the Project Management Unit for settlements of the Project's activities. Payments made via the Designated Account are for eligible expenditures of the Project in accordance with provisions of Financing Agreement No. 6429-VN dated 29 November 2019. 3. Cash at bank - Designated account This represented the Designated Account balance of the Project Management Unit of Dynamic cities integrated development project - Hai Duong city, Hai Duong province at the Joint Stock Commercial Bank for Investment and Development of Vietnam - Hai Duong Branch, which was converted into Vietnam Dong ("VND") as at 31 December 2021 using the exchange rate of December 2021 announced by the Ministry of Finance. The original currency balance of this account as at 31 December 2021 was USD463,953.04. 4. Advances to contractors/suppliers As at 31/12/2021 Unit IDA Counterpart funds funds Total VND VND VND Halcom Vietnam Joint Stock Company 727,050,077 72,705,000 799,755,077 Site clearance board of Hai Duong city - 1,483,344,000 1,483,344,000 TPT Construction Joint Stock Company 1,205,309,103 120,530,900 1,325,840,003 Hai Duong Irrigation Construction 4,068,655,394 406,865,500 4,475,520,894 Joint Stock Company Construction Joint Stock Company 201 28,529,739,441 2,852,973,900 31,382,713,341 34,530,754,015 4,936,419,300 39,467,173,315 These represented advances to contractors for packages of civil works, site clearance and supervision consultancy services of the Project. 18 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the Internatonal Development AssocItion and the Government of the Socia/st RepublIc of Vietnam 5. Payables to contractors/suppliers Unit As at 31/12/2021 IDA Counterpart funds funds Total VND VND VND International Technical Consulting Joint - 407 407 Stock Company ATS Vietnam Investment Company 500,000,000 500,000,000 Limited Dong Duong Construction - 79,172,000 79,172,000 Consultant Company Limited Vietnam Urban and Industrial Construction Consulting Joint Stock - 173 173 Company Minh Ngoc Measurement and - 429,998,000 429,998,000 Construction Company Limited One Member Limited Company 49 - 473,000 473,000 Battalion 544 Hanoi Capital Command - 136,595,000 136,595,000 Center for urban and rural planning - 182,916,000 182,916,000 Construction Joint Stock Company 201 8,634,076,880 - 8,634,076,880 8,634,076,880 1,329,154,580 9,963,231,460 This represented payables for the volume of completed works. 6. Other payables These represented payables to the World Bank as at 31 December 2021 for its loan commitment costs incurred during the period from 1/9/2021 to 31/12/2021 and loan interest expenses incurred in the period from 20/12/2021 to 31/12/2021 with amounts of USD49,238.11, equivalent to VND1,138,680,532 and USD829.10, equivalent to VND19,173,766, respectively, These costs will be paid from the counterpart funds of the Project. 19 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VN between the International Development Association and the Government of the Socialist Republic of Vietnam 7. Funds received from the World Bank Designated account No. 46010371488998 Period from 29/11/2019 to 31/12/2021 Receipts under withdra wal applications Original Equivalent to No. Date amount VND USD 0001 20/12/2021 1,989,837.00 46,016,970,462 Total funds advanced to the Designated account 1,989,837.00 46,016,970,462 8. 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О � L' о � r` � �' 'L � 'L Q� �O г*д с � �+ i � ° � G С. � м м �' р�, "'i й+S1 4� р -4 � С] 1] .+- у.. � '� � ��r йЭ �0 � а� � di � ц ..� ш�►" - С`"'" V � с> � 1Sy � � � N � � '� iU ° а-+ � р. Ч. N CR � lii � Z с1 '� N � � � � � � � � С � i13 � н �; ьн С � д а`` и - О � � � � ,� �, � � � ° ` � � � ° 'f' F- � с р �и� .� а � � � тз � ш � � � � � о � ^ .� г�v � � с С1 � ыr �у '� � � � �, � ::. а � °v �s � ш ш i� �. '� с и U с �., к�г а� ,.., ш���.з i °- �7 t,J q � �' v • °'� � vi -�с, .-� � си .с С � сэ и с.а � � �� Ot а.�+ с�и � ._ � с � ,с � с .с ° ,� � в �'� С й с G) � С.�i �[7 � т� и�сr� .�. � � �Э С � � � ~ � � -'� � р � � Q � ш� � н � р' н t'i �� с� с� а°'з � !'i � � уΡ 4У � Q) Й с н[1 н С1. s- Q •� � L. у С й ��� � л � i а cti � а й с°� в. cL с� ,...� -_ с _ �+ r+ HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Flnancln_q A_qreement No. 6429- VN between the Internatlonal De velopment A55odatlon and the Government of tl7e Sbciali5t Republic of Vietnam Amount VND Costs for preparation of feasibility study report on construction 20,192,303,826 investment, report on investment policy Completed volume of contract No. 490/12/2018-HTg 404,103,657 Costs for preparation of pre-feasibility study report on construction 3,622,192,000 investment 24,218,599,483 11. Other expenses Period from 29/11/2019 Accumulated to 31/12/2021 to 31/12/2021 VND VND Expenses for dernining mines 703,568,000 703,568,000 Loan interest expenses 10,043,142,006 10,043,142,006 10,746,710,006 10,746,710,006 Expenses for clemining mines and loan interest expenses were fully paid from the counterpart funds of the Project. 12. Foreign exchange differences These represented the foreign exchange rate differences arising from receipt and disbursement transactions incurred in foreign currencies during the period and from the revaluation of the cash at bank balance in foreign currencies as at 31 December 2021, using exchange rate of December 2021 announced by the Ministry of Finance (i.e.: VND23,126/USD1). 13. Fund balance, beginning of the period The opening fund balance as at 29 November 2019 represented the deficit of counterpart funds from the State Budget against consulting expenses for the preparation of pre-feasibility study and feasibility study reports and project management costs under counterpart funds incurred during the Project's inception period from 11 May 2017 to 28 November 2019. 22 - HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429-VN between the International Development Assocaton and the Government of the Socia/ist Republic of Vietnam 14. Amount withdrawn and not yet claimed These represented payments for construction and consultancy contracts of the Project. These expenses will be included in the next SOE Withdrawals Schedule. Prepared by: Approved by: Le Quynh Mai Truong Manh Long Accountant in-charge Director Hai Duong, 15 -06- 2022 23 HAI DUONG CITY PEOPLE'S COMMITTEE PROJECT MANAGEMENT UNIT OF DYNAMIC CITIES INTEGRATED DEVELOPMENT PROJECT - HAI DUONG CITY, HAI DUONG PROVINCE Project "Dynamic Cities Integrated Development Project - Hai Duong city, Hai Duong province" Under Financing Agreement No. 6429- VV between the International Development Association and the Government of the Socsllt Republic of Vetnam Appendix I - Auditors' Responsibilities for the Audit of the Financial Statements Period from 29 November 2019 to 31 December 2021 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. * Evaluate the appropriateness of accounting policies used and related disclosures made by Project Management. . Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with those charged with 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. We also provide those charged with Project Management Unit with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. From the matters communicated with those charged with Project Management Unit, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication. 24