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* Deloitte
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT
Credit Agreement No. 5207-VN
I AUDITED FINANCIAL STATEMENTS
AND MANAGEMENT LETTER
For the year ended 31 December 2016
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT
Credit Agreement No. 5207-VN
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g TABLE OF CONTENTS
CONTENTS PAGE(S)
PART I FINANCIAL STATEMENTS
STATEMENT OF THE PROJECT MANAGEMENT UNIT 2
I INDEPENDENT AUDITORS' REPORT 3-5
1.1 OFF-BUDGET FINANCIAL STATEMENTS - PROJECT COMPONENT 2
OFF-BUDGET BALANCE SHEET 6
OFF-BUDGET STATEMENT OF INCOME AND EXPENDITURES 7
OFF-BUDGET STATEMENT OF SOURCES AND USES OF FUNDS 8
OFF-UDGI-T STATEMENT OF DESIGNATED ACCOUNT 9
OFF-BUDGET STATEMENT OF WITHDRAWALS 10
1.2 ON-BUDGET FINANCIAL STATEMENTS - PROJECT COMPONENT 1
I ON-BUDGET STATEMENT OF FUND ALLOCATION AND USES OF FUNDS 11.
ON-BUDGET STATEMENT OF USES OF FUNDS DETAILED BY PROVINCE 12 - 13
ON-BUDGET STATEMENT OF FOREIGN CURRENCY DEPOSIT ACCOUNT/SUB- 14
I ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS 15-18
PART II APPENDIX: ADDITIONAL INFORMATION FOR THE ON-BUDGET 19
STATEMENT OF FUND ALLOCATION AND USES OF FUNDS
PART III REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL 20-21
PART IV INDEPENDENT ASSURANCE REPORT ON COMPLIANCE 22
I PART V MANAGEMENT LETTER 23-33
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PARTI
FINANCIAL STATEMENTS
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT
Credit Agreement No. 5207-VN
STATEMENT OF THE PROJECT MANAGEMENT UNIT
The Project Management Unit of School Readiness Promotion Project (the "Project Management Unit")
presents this report together with the financial statements of School Readiness Promotion Project (the
"Project") for the year ended 31 December 2016.
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:
Ms. Ly Thi Hang Project Director
Mr. Le Khanh Tuan Deputy Project Director
Ms. Nguyen Viet Ha Chief Accountant
THE PROJECT MANAGEMENT UNIT'S STATEMENT OF RESPONSIBILITY
The Project Management Unit is responsible for preparing the financial statements which comprises
the off-budget balance sheet as at 31 December 2016, off-budget statement of income and
expenditures, off-budget statement of sources and uses of funds, off-budget statement of designated
account, off-budget statement of withdrawals, on-budget statement of fund allocation and uses of
funds, on-budget statement of uses of funds detailed by province and statement of foreign currency
deposit account/sub-account 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 as at 31 December 2016 and its off-budget income, expenditures, receipts and
disbursements as well as fund allocation and uses of on-budget funds, and on-budget statement of
uses of funds detailed by province for the year then ended, in accordance with the accounting
convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the financial
statements and the covenants contained in Credit Agreement No. 5207-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 materal
departures disclosed and explained in the financial statements;
6 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
minimize 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 are prepared in accordance with the accounting convention and the accounting
policies set out in Note 2 and Note 3 of the Notes to the financial statements. The Project
Management Unit is responsible for using the Project's funds as intended for the Project and for
complying with Credit Agreement No. 5207-VN as well as laws and regulations applicable to the
Project. The Project Management Unit is also responsible for safeguarding the assets of the Project
and hence for taking reasonable steps for the prevention and detection of frauds and other
irregularities.
The Project Management Unit confirms that they have complied with the above requirements in
preparing these financial statements.
For and on behalf of the Project Management Unit,
Ly Thi Hang
Project Director
15 June 2017
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Deloitte Vietnam Company Ltd.
i AA ilo,-, ViIaC::Iex Tower,
SD eloitte 134 [Lan Ha Sireet, L Ha1 -I Ward,
Don Di s ct Hano1, 1V:etanam
3 ~owwdeloite.coam/vn
No.: /VN{ A-HN-BC
3 INDEPENDENT AUDITORS' REPORT
To: The Project Management Unit of School Readiness Promotion Project
Opinion
We have audited the financial statements of the School Readiness Promotion Project (the "Project"),
which comprise the off-budget balance sheet as at 31 December 2016, off-budget statement of
income and expenditures, off-budget statement of sources and uses of funds, off-budget statement of
designated account, off-budget statement of withdrawals, on-budget statement of fund allocation arid
uses of funds, on-budget statement of uses of funds detailed by province, on-budget statement of
foreign currency deposit account/sub-account for the year then ended and the notes to the financial
statements, including a summary of significant accounting policies.
In our op nion:
* The accompanying financial statements give a true and fair view of the financial position of the
Project as at 31 December 2016, and its off-budget income arid expenditures, off-budget
receipts and disbursements, on-budget statement of fund allocation and uses of funds and on
budget statement of uses of funds detailed by province 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.
* The off-budget statement of designated account under Component 2 gives a true arid fair view of
the balance of the designated account as at 31 December 2016 and the Project's receipts and
disbursements via the designated account for the year then ended in accordance with the
relevant covenants of Credit Agreement No. 5207-VN and prevailing relevant regulations
estabished by the World Bank.
* The withdrawal applications were reconciled to the statements of expenditures (SOEs) prepared
by the Project Management Unit for the year ended 31 December 2016 and those SOEs were
adequately supported by accounting documents.
* The on-budget statement of foreign currency deposit account/sub-account under Comulponent 1
gives a true and fair view of the receipt of funds from the Donor and the transfer of these funds
to the State Budget.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor's Responsibilities for tie
Audit of the Financial Statements section of our report. We are independent of the Project -n
accordance with the ethical requirements that are relevant to our audit of the financial statements,
and we have fulfillee 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
I our opinion.
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iDelaM- rfr iu ne r more I - I ' l miolM To uk:h. .i Llmited . I ik n omparry limiId [y gdaranilei
( Dit7 n- i ok mtmi ori i i l at ll ii l la- DTTL in u iih oi ts m mr firmuri lgaliy
* Deloitte
INDEPENDENT AUDITORS' REPORT (Continued)
Emphasis of Matters
* We draw attention to Note 2 and Note 3 of the Notes to the financial statements, which
describes the accounting convention and the summary of the significant accounting policies. The
financial statements are prepared in accordance with the accounting convention and the
accounting policies set out in Note 2 and Note 3 of the Notes to the financial statements and
the requirements of the World Bank. As a result, the financial statements may not be suitable
for another purpose.
I * We also would like to draw readers' attention to Note 3 of the Notes to the financial statements,
the Project implementing expenditures of the on-budget component (Component 1) are
recognized when funds are transferred out of the State Treasury of all levels to make payments
or advances for the Project's activities. The Project implementing expenditures of the on-budget
component include payments or advances made during the year of correcting and editing the
budget finalization report as stipulated in Circular No. 108/2008/TT-BTC dated 18 November
2008 issued by the Ministry of Finance guiding year-end State budget settlement and
preparation of the annual State budget finalization report.
Our opinion is not modified in respect of these matters.
U Responsibilities of Management and those charged with governance for the Financial
Statements
Management 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 the covenants contained in Credit Agreement No. 5207-VN, and for such
internal control as management 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, management 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.
Those charged with governance are responsible for overseeing the Project's financial reporting
process.
Auditor's 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 International Standards on Auditing (ISAs) will always
detect a material misstatement when it exists, Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain
professional skepticism throughout the audit. We also:
* Identify and assess the risks of material misstatement of the financial statements, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is suffic ent 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,
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Deloitte
INDEPENDENT AUDITORS' REPORT (Continued)
Auditor's Responsibilities for the Audit of the Financial Statements (Continued)
Conclide 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.
U * Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates, if any, and related disclosures made by management.
We communicate with those charged with governance and the Project Management Unit regarding,
among other matters, the planned scope and timing of the audit and significant audit findings,
including any significant deficiencies in internal control that we identify during our audit.
Tran Huy Cong Nguyen Tien Quoc
Deputy General Director Auditor
Audit Practising Registration Certificate Audit Practising Registration Certificate
3 No. 0891-2013-001-1 No, 3008-2014-001-1
DELOITTE VIETNAM COMPANY LIMITED
15 June 2017
Hanoi, S,R. Vietnam
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
orr-BUDGET BALANCE SHEET
As at 31 December 2016
Notes 2L,20 16 31/12/2015
ASSETS VND VND
CURRENT ASSETS 15,938,082,490 20,140,965,262
Cash 5 15,883,084,903 20,132,432,644
Cash on hand 9,694,043 19,380,961
Cash in bank 15,873,390,860 20,113,051,683
Accounts receivable 29,997,587 4,532,618
Other receivables 29,997,587 4,532,618
Other current a5sets 25,000,000 4,000,000
Advances to employees 25,000,000 4,000,000
TOTAL ASSETS 15,938,082,490 20,140,965,262
LIABILITIES
Current liabilities 4,359,301,199
Trade payab[es 6 4,299,299,500 -
Taxes and amounts payable to the State Budqet 1,583,673 -
Payables to staff 32,953,057 -
Other payables 25,464,969 -
TOTAL LIABILITIES 4,359,301,199 -
NET ASSETS 11,573,781,291 20,140,965,262'
Surplus of income over expenditures 10,487,266,823 19,429,084,641
Foreign exchange differences 1,091,514,468 711,880,621
TOTAL 11,578,781,291 20,140,965,262
OFF BALANCE SHEET ITEMS 31112/2016 31/12/2015
Foreign currencies
USD (Designated Account) 718,967.58 918,822.45
USD (Interest of Designated Account) 0.34 0.84
X" /
Do Truong Viet Nguyen Viet Ha Ly-Thi Hang
Preporer Chief Accountant Project Director
1 S June 2017
The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
I OFF-BUDGET STATEMENT OF INCOME AND EXPENDITURES
I For the year ended 31 December 2016
Contents Notes Accumulated
NoesYear 2016 to 31L12L2015
INCOME VND VND
IDA Fund 7 18,308,939,080 83,500,973,073
Counterpart Fund 1,499,164,780 3,655,100,120
Other Funds 10,500,817 42,326,657
TOTAL INCOME 19,818,604,677 87,198,399,850
EXPENDITURES
Goods 9,549,022,700 14,502,164,300
Consulting services 9,299,754,306 26,847,504,314
Training/Workshop 7,778,267,513 28,598,200,105
Incremental operating costs 2,105,402,067 6,646,513,224
Bank charges 25,475,909 84,751,083
Others 2,500,000 32,000,000
TOTAL EXPENDITURES 28,760,422,495 76,711,133,027
SURPLUS OF INCOME OVER EXPENDITURES 10,487,266,823
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Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
15 June 2017
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3 The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
OFF-BUDGET STATEMENT OF SOURCES AND USES OF FUNDS
For the year ended 31 December 2016
Accumulated to
Contents Notes Year 2016 31/12/2016
VND VND
RECEIPTS 19,818,604,677 87,198,399,850
IDA Fund 7 18,308,939,080 83,500,973,073
Counterpart Fund 1,499,164,780 3,655,100,120
Other Funds 10,500,817 42,326,657
DISBURSEMENTS 24,461,122,995 72,411,833,527
Goods 5,267,559,200 10,220,700,800
Consulting services 9,299,754,306 26,847,504,314
Training/Workshop 7,778,267,513 28,598,200,106
Incremental operating costs 2,087,566,067 6,528,677,224
Bank charges 25,475,909 84,751,083
Provision and others 2,500,000 32,000,000
SURPLUS OF RECEIPTS OVER DISBURSEMENTS (4,642,518,318) 14,786,566,323
OPENING BALANCE 20,140,965,262
Foreign exchange differences 379,633,847 1,091,514,468
CLOSING BALANCE 15,878,080,791 15,878,080,791
Represented by balances as at 31 December 2016 of:
Cash 15,883,084,903
Other receivables 29,997,587
Advances 25,000,C00
Taxes and amounts payable to the State budget (1,583,673)
Payables to staff (32,953,057)
Other payables (25,464,969)
Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
3 15 June 2017
The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
I OFF-BUDGET STATEMENT OF DESIGNATED ACCOUNT
Period : From 01 January 2016 to 31 December 2016
Account number :01101370002357
Bank : Vietnam Maritime Commercial Stock Bank
Agreement No. : 5207-VN
Currency : USD
I Amount
PART A: ACCOUNT ACTIVITY
Opening balance (01/01/2016) 918,822.45
Add, 828,364.58
Total amount deposited by the World Bank for the year 828,364.58
Bank interest of Designated account
Deduct: 1,028,219.45
Total amount withdrawn in the year 1,027,069.08
Bank charges 1,150.37
Interest transferred to a separate account -
Closing balance (31/12/2016) 718,967.58
I PART B: ACCOUNT RECONCILIATION
1. Amount advanced by the World Bank 1,000,000.0J
2. Add: Amount replenished by the World Bank
3. Total present outstanding amount advanced to the Designated Account as at 31/12/2015 1,000,000.00
4, Closing balance of the Designated Account (31/12/2015) 718,967.58
5. Add: Amount withdrawn but not yet claimed 279,673.13
6. Deduct: Interest earned
7. Add: Service charges 1,359.29
8. Total advance to the Designated Account accounted for as at 31/12/2016 1,000,000.00
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Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
15 June 2017
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The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Cre nded 31 December 2016
ON-BUDGET STATEMENT OF FUND ALLOCATION AND USES OF FUNDS
For the year ended 31 December 2016
ITEMS Notes Year 2016
FUND ALLOCATION VND
Fund from the Donor 8 179,441,166,114
Counterpart Fund 699,158,091,532
TOTAL 878,599,257,646
USESOFFUNDS
Meal allowances for children aged 5 and ethnic minority children aged 8781,599,257.,546
3 to 5 (Expenditure Code 6401 "Meal allowances")
TOTAL 878,599,257,646
4'
Do -Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
15 June 2017
The accompanying notes are an integral part of these financial statements
11
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
I ON-BUDGET STATEMENT OF USES OF FUNDS DETAILED BY PROVINCE
For the year ended 31 December 2016
Unit: VND
Meal allowances for children aged
5 and ethnic minority children
No. Provinces/Cities aged 3 to 5 Total
1 Hanoi 8,462,638,900 8,462,638,900
2 Hai Phong 3,283,920,000 3,283,920,000
3 Ho Chi Minh City 100,620,000 100,620,000
4 Da Nang 952,110,000 952,110,000
5 Nam Dinh 140,640,000 140,640,000
6 Ha Nam 1,420,130,000 1,420,130,000
7 Hai Duong 481,060,000 481,060,000
8 Hung Yen 1,304,760,000 1,304,760,000
9 Thai Binh 1,981,320,000 1,981,320,000
10 Long An 3,468,670,000 3,468,670,000
11 Tien Giang 803,520,000 803,520,000
12 Ben Tre 3,304,200,000 3,304,200,000
13 Dong Thap 6,278,075,000 6,278,075,000
14 Vinh Long 934,560,000 934,560,000
15 An Giang 3,307,966,948 3,307,966,948
16 Kien Giang 1,715,120,000 1,715,120,000
17 Can Tho 916,560,000 916,560,000
18 Bac Lieu 399,480,000 399,480,000
19 Ca Mau 803,250,000 803,250,000
20 Tra Vinh 13,257,664,025 13,257,664,025
21 Soc Trang 26,494,180,000 26,494,180,000
22 Bac Ninh 1,499,728,000 1,499,728,000
23 Bac Giang 18,288,435,000 18,288,435,000
24 Vinh Phuc 2,348,582,000 2,348,582,000
25 Phu Tho 17,329,150,000 17,329,150,000
26 Ninh Binh 3,633,120,000 3,633,120,000
27 Thanh Hoa 54,482,663,000 54,482,663,000
28 Nghe An 22,485,591,000 22,485,591,000
29 Ha Tinh 17,748,917,818 17,748,917,818
30 Quang Binh 14,618,840,000 14,618,840,000
31 Quang Tri 14,114,661,476 14,114,661,476
32 Hue 10,057,710,000 10,057,710,000
33 Binh Thuan 8,384,906,000 8,384,906,000
34 Vung Tau 10,815,600,231 10,815,600,231
35 Dong Nai 1,503,730,000 1,503,730,000
36 Binh Duong 3,060,080,000 3,060,080,000
37 Binh Phuoc 3,757,080,000 3,757,080,000
38 Tay Ninh 7,080,000 7,080,000
39 Quang Nam 17,523,890,000 17,523,890,000
40 Binh Dinh 14,150,190,000 14,150,190,000
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The accompanying notes are an integral part of these Financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
ON-BUDGET STATEMENT OF USES OF FUNDS DETAILED BY PROVINCE (Continued)
For the year ended 31 December 2016 Unit: VND
Meal allowances for children aged
5 and ethnic minority children
No. Provinces/ Cities aged 3 to 5 Total
41 Khanh Hoa 7,793,874,120 7,793,874,120
42 Quang Ngai 16,362,020,000 16,362,020,000
43 Phu Yen 6,893,460,000 6,893,460,000
44 Ninh Thuan 7,033,640,000 7,033,640,000
45 Thai Nguyen 17,234,873,000 17,234,873,000
46 Bac Kan 12,909,700,000 12,909,700,000
47 Cao Bang 24,393,700,000 24,393,700,000
48 Lang Son 23,623,073,000 23,623,073,000
49 Tuyen Quang 29,128,020,000 29,128,020,000
50 Ha Giang 43,009,015,171 43,009,015,171
51 Yen Bai 18,298,080,000 18,298,080,000
52 Lao Cai 28,683,806,400 28,683,806,400
53 Hoa Binh 4,929,360,000 4,929,360,000
54 Son La 78,379,020,000 78,379,020,000
55 Dien Bien 32,521,900,000 32,521,900,000
56 Quang Ninh 10,177,745,796 10,177,745,796
57 Lam Dong 13,963,960,000 13,963,960,000
58 Gia Lai 62,114,240,000 62,114,240,000
59 Dak Lak 48,596,091,932 48,596,091,932
60 Kon Tum 20,075,564,096 20,075,564,096
61 Dak Nong 27,097,648,000 27,097,648,000
62 Hau Giang 2,105,252,000 2,105,262,000
63 Lai Chau 27,654,804,733 27,654,804,733
Total 878,599,257,646 878,599,257,646
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Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
15 June 2017
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The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
I ON-BUDGET STATEMENT OF FOREIGN CURRENCY DEPOSIT ACCOUNT
/SUB-ACCOUNT
For the year ended 31 December 2016
Foreign currency account Local currency account
U Date of Money transferred from IDA Money transferred from the
receipts from Notes and partners to the foreign foreign currency account ton rec fom
recepts rom otesforeign currency account
Donor currency account during the the local currency account
year during the year
USD USD VND
Iotal0 8 8,112,168.45 ,112,168.45 179,441,166,114
Total 8 8,112,168.45' 8,112,168.45i 179,441,166,114
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Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
15 June 2017
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The accompanying notes are an integral part of these financial statements
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
NOTES TO THE FINANCIAL STATEMENTS
3 These notes are an integral part of and should be read in conjunction with the accompanying financial
statements
1. GENERAL INFORMATION
The School Readiness Promotion Project (the "Project") operates under Credit Agreement No.
5207-VN signed on 14 May 2013 between the Socialist Republic of Vietnam and the
International Development Association (IDA).
The objective of the Project is to assist the Government in implementing Decision No.
239/2010/QD-TTg dated 09 February 2010 on universalization of preschool education for
children aged 5 for the period from 2010 to 2015 and Decision No. 60/2011/QD-TTg dated 26
October 2011 of the Prime Minister providing some policies on preschool education
development for the period from 2011 to 2015 to be implemented in 63 provinces/cities.
The Project consists of two components:
Component I - On-budget fund (USD 95 million) shall be used to provide the following
financial supports to Project provinces/cities through the annual State budget allocated by the
Ministry of Finance:
* Meal allowances for lunches of children aged 5 in accordance with Decision No,
239/2010/QD-Trg dated 09 February 2010 on universalization of preschool education for
children aged 5 for the period from 2010 to 2015.
* Meal allowances for lunches of ethnic minority children aged 3 to 5 under Circular No.
03/2011/TTLT BGDDT-BTC-BLDTBXH dated 19 January 2012 of the Ministry of Education
and Training, Ministry of Finance and Ministry of Labour, Invalids and Social Affairs
guiding the implementation of policies for children, pupils, students of ethnic minorities
according to Decision No. 2123/QD-TTg dated 22 November 2010 of the Prime Minister
approving the project on development of education for ethnic minorities for the period
from 2010 to 2015.
Support the budget to pay salary for contract preschool teachers in accordance with legal
regulations on salary payments in State organizations; the salaries are subject to periodic
pay rise for preschool teachers (including principals and vice principals); the number of
beneficiary teachers are subject to approval of competent authorities and beneficiary
teachers whose salaries are paid lower than the civil servant payrolls according to legal
regulations and are not periodically increased are employed by State/private preschools
which participate in mandatory social Insurance program. According to the memorandum
of understanding to support the Project from 30 October 2015 to 4 November 2015, the
World Bank did not continue to fund the item "Support for periodic pay rise for contract
preschool teachers" in 2016.
Component 2 - Off-budget fund (USD 5 million) shall be directly transferred to the Ministry of
Education and Training for technical assistance and capacity building for the implementation
of the following activities:
* Strengthening planning and reporting systems;
* Strengthening professional development programs for early childhood education
personnel;
* Development of early childhood education policies and regulations;
* Project management and audit.
The Project starts from 2012 and is expected to be completed on 30 June 2017.
Project Funds:
* IDA : SDR 65,100,000 (equivalent to USD 100,000,000);
* Counterpart fund : USD 500,000.
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December. 2016
NOTES TO THE FINANCIAL STATEMENTS (Continued)
These notes are an integral part of and should be read in conjunction with the accompanying financial
statements
2. ACCOUNTING CONVENTION AND FINANCIAL YEAR
Accounting convention
The off-budget financial statements, prepared under the historical cost convention, are
expressed in Vietnam Dong (VND), except for the off-budget statement of designated
account, off-budget statement of withdrawals, which are presented in original currencies. The
off-budget financial statements are prepared in accordance with the International Public
Sector Accounting Standards and accounting policies as set out in Note 3.
The on-budget financial statements, prepared under the historical cost convention, are
expressed in Vietnam Dong (VND), except for the on-budget statement of foreign currency
deposit account/sub-account which is presented in original currencies. The Project's on-
budget statement of fund allocation and uses of funds and on-budget statement of uses of
funds detailed by province were prepared using the data reported by the Ministry of Finance
based on figures reported by the Central State Treasury for Expenditure Code 6401 "Meal
I allowances" in Section 491 "Pre-school education".
The Project includes two Components: Component 1 - On-budget: financial supports to
Project provinces/cities through the annual State budget allocated by the Ministry of Finance
for implementation of the Project and Component 2 - Off-budget: shall be directly transferred
to the Ministry of Education and Training for technical assistance and capacity building for the
implementation of activities. Due to the differences between management mechanism and
accounting policies applicable to these 2 components, the Project Management Unit decides to
separately prepare and present the Project's on-budget and off-budget financial statements.
The Project Management Unit believes that the separate preparation and presentation of the
Project's on-budget and off-budget financial statements fairly reflect financial position of the
Project.
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 management in the
preparation of these financial statements, are as follows:
Foreign currency translation
Transactions arising in foreign currencies are translated into Vietnam Dong (VND) at
exchange rates ruling on the transaction date. Closing balances of items denominated in
foreign currencies are retranslated at the exchange rate ruling on the balance sheet date.
Foreign exchange differences are neither receipts nor disbursements. However, foreign
exchange differences are presented as a separate item in the off-budget statement of sources
and uses of funds for the purpose of reconciling assets and liabilities balances in the off-
budget balance sheet.
Recognition of funds and expenditures
I Off-budget funds are recognized when received, and off-budget expenditures are recognized
when incurred.
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
NOTES TO THE FINANCIAL STATEMENTS (Continued)
These notes are an integral part of and should be read in conjunction with the accompanying financial
statements
On-budget IDA funds are recognized on the basis of the amount transferred out of foreign
currency account into local currency account as part of the State budget spending. On-budget
counterpart funds are recognized when the money is transferred out of the State Treasury of
all levels to make payments or advances for the Project's activities after deduction of the
amount of on-budget IDA funds.
The Project implementing expenditures of the on-budget component (Component 1) are
recognized when funds are transferred out of the State Treasury of all levels to make
payments or advarces for the Project's activities. The Project implementing expenditures of
the on-budget component include payments or advances made during the year of correcting
and editing the budget finalization report as stipulated in Circular No. 108/2008/TT-BTC dated
18 November 2008 issued by the Ministry of Finance guiding year-end State budget
settlement and preparation of the annual State budget finalization report.
4. DESIGNATED ACCOUNT
I Designated account is a deposit account in USD opened at Vietnam Maritime Commercial
Stock Bank for the implementation of the Project's activities. Payments out of the designated
account are for expenditures in accordance with the covenants of Credit Agreement No. 5207-
VN and relevant regulations established by the World Bank.
3 5. CASH
31/12/2015 31/12/2015
VND VND
Cash on hand 9,694,043 19,380,961
Cash in bank 15,873,390,860 20,113,051,683
VND 9,117 8,300
USD 15,873,381,743 20,113,043,383
15,883,084,903 20,132,432,644
6. TRADE PAYABLES
31/12/2016 31/12/2015
VND VND
Vicomex Trading and Construction Joint Stock Company 3,819,623,500
Others 479,676,000
4,299,299,500 -
7. OFF-BUDGET IDA FUND
2016 Accumulated to 31/1212016
I USD VND equivalent USD VND equivalent
Designated Account 828,364.58 18,308,939,080 3,871,599.58 83,500,973,073
828,364.58 18,308,939,080 3,871,599.58 83,500,973,073
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MINISTRY OF EDUCATION AND TRAINING
SCHOOL READINESS PROMOTION PROJECT FINANCIAL STATEMENTS
Credit Agreement No. 5207-VN For the year ended 31 December 2016
NOTES TO THE FINANCIAL STATEMENTS (Continued)
These notes are an integral part of and should be read in conjunction with the accompanying financial
statements
8. ON-BUDGET IDA FUND
2016 Accumulated to 31/12/2016
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Original currency Original currency
(USD) VND equivalent (USD) VND equivalent
IDA Fund 8,112,168.45 179,441,166,114 82,968,83578 1,771,684,685,724
179,441,166,114 1,771,684,685,724
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Preparer Chief Accountant Project Director
15 June 2017
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~APPENDIX: ADDITIONAL INFORMATION FOR THE ON-BUDGET
I STATEMENT OF FUND ALLOCATION AND USES OF FUNDS
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APPENDIX: ADDITIONAL INFORMATION FOR THE ON-BUDGET STATEMENT OF
FUND ALLOCATION AND USES OF FUNDS
STATEMENT OF RECEIPT - DISBURSEMENT ON BUDGET
For the year ended 31 December 2016
Items Year 2016 Accmuate1t
31/12/2016
FUND ALLOCATION VND VND
Fund from the Donor 179,441,166,114 1,771,684,685,724
Counterpart Fund 699,158,091,532 5,997,120,023,612
TOTAL 878,599,257,646 7,768,804,709,336
USES OF FUNDS
Meal allowances for children aged 5 and ethnic minority 878,599,257,646 3,038,766,161,131
children aged 3 to 5 (Expenditure Code 6401 "Meal
allowances")
Support for periodic pay rise for contract preschool teachers - 4,730,038,548,2C5
(Expenditure Code 6051 "Salary payment under permanent
labour contracts") (*)
TOTAL 878,599,257,646 7,768,804,709,336
(*) According to the memorandum of understanding to support the Project from 30 October 2015 to 4
November 2015, the World Bank did not continue to fund the item "Support for periodic pay rise for
contract preschool teachers" in 2016. Accordingly, this item has no amount recorded for 2016.
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Do Truong Viet Nguyen Viet Ha Ly Thi Hang
Preparer Chief Accountant Project Director
153 1ne 2017
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I PART III
~REPORT OF INDEPENDENT AUDITORS
U ~ON INTERNAL CONTROL
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Deloitte Vietnam Company Ltd.
e litte 0 12A Floor, Vinaconex Tower,
34 Lang Ha Street, Lang Ha Ward,
Dong Da District, Hanoi, Vietnam
Tel :+844 6288 3568
Fax:+844 6288 5678
www.delnitte.com/vn
REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL
To: The Project Management Unit of the School Readiness Promotion Project
We have audited, in accordance with International Standards on Auditing, the financial statements of
School Readiness Promotion Project (the "Project") for the year ended 31 December 2016 and issued
the independent auditors' report thereon dated 15 June 2017.
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.
As stated in the Statement of the Project Management Unit on page 2, the Project Management Unit
is responsible for designing and maintaining effective internal control over compliance with
requirements that could have a direct and material financial effect on the financial statements as well
as over financial reporting for the purpose of properly preparing and presenting the financial
statements so as to minimize errors and frauds; and takes responsibility for its assertions as to the
effectiveness of such internal control. 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.
I Our examination was conducted in accordance with International Standard on Assurance
Engagements (ISAE) 3000. That standard requires that we comply with ethical requirements and plan
3and perform our procedures to obtain reasonable assurance about whether, in all material respects,
the Project has complied 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 evidence we have obtained is sufficient and appropriate to provide a basis for our
opinion,
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Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee
("DTTL"), its network of member firms, and their related entitles. DTTL and each of its member firms are legally
separate and independent entities. DTTL (also referred to as "Delaitte Global") does not provide services to clients.
Please see wwwdeloitte.com/abo,t for a more detailed description of DTTL and its member firms.
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REPORT OF INDEPENDENT AUDITORS ON INTERNAL CONTROL (Continued)
In our opinion, the Project Management Unit has maintained, In all material respects, effectve
internal control over compliance with requirements that could have a direct and material financial
effect on the Project's financial statements as well as over financial reporting for the year ended 31
December 2016,
an Muy Cong Nguyen Tien Quoc
Deputy General Director Auditor
Audit Practising Registration Certificate Audit Practising Registration Certificate
No. 0891-2013-001-1 No. 3008-2014-001-1
DELOITTE VIETNAM COMPANY LIMITED
15 June 2017
3 Hanoi, S,R. Vietnam
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唱‘NDEPEN叩NT ASsuRANcE REPORT。”c。卻LIANcE
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Deloitte Vietnam Company Ltd.
12A Floor, Vinaconex To"er,
D e lo itte 34 Lang Ha Street, Lang Ha Ward,
Deng Da District, Hanoi, Vietnam
Tf: ] +8-44 6288 3568
Fax:+844 6288 5678
WWw.deloitte.cem/vn
INDEPENDENT ASSURANCE REPORT ON COMPLIANCE
T9,: The Project Management Unit of School Readiness Promotion Project
We have audited, in accordance with International Standards on Auditing, the financial statements of
School Readiness Promotion Project (the "Project") for the year ended 31 December 2016 and Issued
the accompanying Independent auditors' report thereon dated 15 lure 2017.
In connection with the audit of the financial statements, we also performed procedures on the
Project's compliance with Credit Agreement No. 5207-VN, laws and regulations that could have a
direct and material financial effect on the Project's financial statements for the year ended 31
December 2016 (the "requirements").
The Project Management Unit is responsible for complying with Credit Agreement No. 5207-VN, laws
and regulations applicable to the Project. Our responsibility is to express an opinion or the Project's
compliance with the requirements based on our procedures. 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 performed our work in accordance with International Standard on Assurance Engagements (ISAE)
3000. That standard requires that we comply with ethical requirements and pian 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 the requirements at the Project involves
performing procedures to obtain evidence about whether the Project's activities are free of material
noncompliance with the requirements, including obtaining an understanding of the internal control
relevant to the Pro]ect'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 recessary to provide reasonable assurance that the requirements are complied by
the Project.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our
opirion.
In our opinion, the Project has complied, in all material respects, with Credit Agreement No. 5207-VN,
laws and regulations that could have a direct and material financial effect on the Project's financial
statements for the year ended 31 December 2016.
Emphasis of matter
Other matters related to the Project's compliance with the requirements that might not have a direct
and rraterlal financial effect on the financial statements of the Project for the year ended 31
Dccember 2016 are discussed in Part 11 - Section B of the accompanying Management Letter, Our
,opininn is ro, modified in respect of this matter-
Tran tong Nguyen Tien Quoc
Deputy General Director Auditor
Audit Practising Registration Certificate Audit Practising Registration Certificate
No. 0891-2013-001-1 No. 3008-2014-001-1
DELOITTE VIETNAM COMPANY LIMITED
15 3une 2017
Hanoi, S.R. Vietnam
Deloifte n0t ,r_, i one oi- more of DeloiLtc Toud e Tolimai _Ifnil(' J, 1 IJK privabi f.omoany limited by guararAcED
("DTTL" its rwtwork of men -r firms, and their rcl 'L, d en r i s, DTTL and esich of '- mennher firms are leqa y
and inclependert t, i r,t r-1 -1:3itte DTT1 -lobal") d, S not p -vi62 ;c_ rvral,, le d;enr_,;.
pi wv,,,-- I ,r 111 i d, , , UTT L a ri d r rm E;
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