I I MAZA RS I I I 1 U I I New Model University Project - Components implemented by Project Management Unit - Ministry of Education and Training Financial Statements Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association (IDA) For the year ended 31 December 2016 I I I I I I I I I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I Contents STATEMENT OF THE PROJECT MANAGEMENT UNITNT......... ....................................................2 IN D EPEN D ENT A U D ITO R S' R EPO RTOT .................................................................................... 4 B A LA N C E S H E ET...... - .......... .................-0............................. ...... ............................ ..............1 0 STATEMENT OF SOURCES AND USES OF FUNDS ..............1.... ... .... .................... .... -11 STATEMENT OF DESIGNATED ACCOUNT (USD)... ............ ...... .......... ...............................13 STATEMENT OF LOAN W ITHDRAW ALS........... .... ..... ........ ............ ...................... .14 I NOTES TO THE FINANCIAL STATEMENTS . .... . ........... ..................................... .....-15 II IN I I I I I I I I I I I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I STATEMENT OF THE PROJECT MANAGEMENT UNIT The Project Management Unit - Ministry of Education and Training ("PMU" or "Project Management Unit") is responsible for the Financial Statements of the New Model University Project - Credit No. 4786 - VN - Components implemented by Project Management Unit - Ministry of Education and Training ("the Project") for the year ended 31 December 2016. The Project The New Model University Project operates under Credit Agreement - Credit No. 4786 - VN dated 13 August 2010 signed between the Socialist Republic of Vietnam and the International Development Association (IDA), The IDA Credit source provided for SDR119.4 million (equivalent to USD180.4 million) and the counterpart fund provided for USD20,2 million for the period of 2010 - 2017. The Project's initially expected closing date is 30 November 2017. The Project has been in progress of restructuring and waiting for official approval of 36-month extension until 2020. The Project is implemented by two agencies: the New Model University Project Management Unit under the Ministry of Education and Training ("PMU") and Project Management Unit of Vietnamese - German University ("VMU") The objective of the Project is to develop an autonomous research-based university to demonstrate a new policy framework on governance, financing, and quality in Vietnam's higher education system. The Project consists of four (4) components: * Component 1: Policy and Regulatory Framework Development of policy, regulations, procedures, and capacity for Vietnamese - German University ("VGU")'s governance and management including in: (a) governance and management; (b) financial management and sustainable financing; (c) institutional quality management; (d) human resources management; (e) management and operational systems; and (f) admissions and student services. a Component 2: Academic and Research Development Development of policy, regulations, procedures, and capacity for VGU's academic programs and research work including: (a) academic and research policies including roles and responsibilities; (b) teaching and research strategy; (c) academic program accreditation and quality assurance (d) research and professoriate development including provision of Research Grants; (e) library development; and (f) research facilities and support services including provision of Scholarship Grants. * Component 3: Campus and Facilities Development Development of a VGU campus including: (a) designing, constructing, and equipping a new campus and related facilities for VGU; and (b) capacity building for campus maintenance and facility management. * Component 4: Project management, Monitoring and Evaluation Support for effective: (a) Project management and coordination; and (b) Project monitoring and evaluation. PMU implements Sub-Component 3,a and other related activities under Component 4 (hereafter referred to "Components implemented by Project Management Unit - Ministry of Education and Training"). In accordance with Decision No. 3719/QD-BGDDT dated 25 August 2011 by the Ministry of Education and Training, VGU is authorised to implement Component 1, Component 2, Sub- Component 3.b and other related activities under Component 4 (hereafter referred to "Components implemented by VMU"). I U New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I STATEMENT OF THE PROJECT MANAGEMENT UNIT (continued) Project Management Unit The members of the Project Management Unit during the year and to the date of this report were: Mr. Ngo Toan Thang Director of PMU Appointed on 11 April 2017 Mr. Phan Quang Dzung Director of PMU Resigned on 15 January 2017 Mr. Ngo Toan Thang Deputy Director of PMU Resigned on 11 April 2017 Auditor The accompanying Financial Statements for the year ended 31 December 2016 have been audited by Mazars Vietnam Co., Ltd. Responsibility of the Project Management Unit in respect of the Financial Statements for the components implemented by PMU The Project Management Unit is responsible for the Financial Statements which give a true and fair view of the financial position, balance of designated account and fund balance of the Project as at 31 December 2016 and of its receipts, disbursements and fund withdrawals for the year ended 31 December 2016. In preparing the Financial Statements which give a true and fair view, the Project Management Unit is required to select sui table accounting policies and then to apply them consistently. The Project Management Unit is responsible for ensuring that proper accounting records are kept which enable 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 is 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 is responsible for ensuring that all expenditure was disbursed only for agreed project objectives. The Project Management Unit assumes 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. I Approval of the Financial Statements We hereby approve the accompanying Financial Statements on pages 10 to 20 which give a true and fair view of the financial position, the balance of the designated account and the fund balance of the Project as at 31 December 2016 and the funds received and disbursed and the fund withdrawals for the year ended 31 December 2016 in accordance with the accounting policies as described in Note 2 to the Financial Statements. On behalf of the Pro ect anagement Unit Ngo Toan Thang Project Director Hanoi, 28 June 2017 U3 I RMAZARS Audit Report No: HN-AU/16/WB- 4786-VN-PMU.1 INDEPENDENT AUDITORS' REPORT On Project Financial Statements To: Project Management Unit of the New Model University Project Opinion We have audited the accompanying Balance Sheet as at 31 December 2016 and Statement of Sources and Uses of Funds for the year ended 31 December 2016 of the International Development Association ("IDA") fund and Counterpart fund for New Model University Project - Components implemented by Project Management Unit - Ministry of Education and Training (the "Project"). We have also audited the Statement of Designated Account and the Statement of Loan Withdrawals, which are prepared in United States Dollars, for the year ended 31 December 2016 (collectively referred to as the "Financial Statements") and the notes thereto including a summary of significant accounting policies as set out on pages 15 to 20. In our opinion, in all material respects: a) the Balance Sheet, 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 2016 and of the funds received and disbursed for the year ended 31 December 2016 in conformity with the accounting policies described in Note 2; and the funds was utilized for the purposes defined by the Credit Agreement No. 4786-VN dated 13 August 2010 between the Government of the Socialist Republic of Vietnam and IDA. b) the Statement of Designated Account and the Statement of Loan Withdrawals prepared in United States Dollar give a true and fair view of the balance of the designated account as at 31 December 2016 and activities of the designated account, and of the funds withdrawn for the year ended 31 December 2016 in conformity with the accounting policies described in Note 2. Basis for opinion We conducted our audit in accordance with International Standards on Auditing ("ISA"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Project in accordance with the ethical requirements that are relevant to our audit of the financial statements in Vietnam, and we have fulfilled our other ethical responsibilities in accordance with these requirements. I We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion Other matter The financial information of Appendix - Balance Sheet prepared under accrual basis of accounting on pages 21 and 22 to the Financial Statements for the year ended 31 December 2016, is extracted from the accounting books and records of the Project as a whole. The information does not form a stand- alone of the Statement, and we do not express an audit opinion on the Appendix. Management's Responsibility for the Financial Statements for the components implemented by Project Management Unit - Ministry of Education and Training The Management is responsible for the preparation and fair presentation of the Balance Sheet as at 31 December 2016, Statement of Sources and Uses of Funds, the Statement of Designated K') F L0 R VILID ? ,T- , Li. -,1 v ISiu L ~I 1 ' I1 -1 o 1 S. , 3 - I I gMAZARS I Accounts and the Statement of Loan Withdrawals for the year ended 31 December 2016, in accordance with basis of accounting practices as described in Note 2, 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 related 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. Auditor's Responsibility Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain I 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 the reasonableness of accounting estimates and related disclosures made by management * Conclude on the appropriateness of managements 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. We communicate with The Project Management Unit regarding, among other matters, the planned scope and timm"wof the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Matats Vietnam Co., Ltd. Pham Phuong Anh Partner Audit Practicing Registration Certificate No. 1102-2013-177-1 Hanoi, 28 June 2017 10 a F LO VIET III NTO E , NCaval' Du1STRE:If ) IR t P - I O I M Il IfI I1 I.II' I I MAZARS Report No: HN-AU/1 6/WB- 4786-VN-PMU.2 INDEPENDENT AUDITORS' REPORT On Compliance with the Applicable laws, regulations and Provisions of the Credit Agreement and other Guidance from the IDA To: Project Management Unit of the New Model University Project We have audited the accompanying Balance Sheet as at 31 December 2016 and Statement of Sources and Uses of Funds for the year ended 31 December 2016 of the International Development Association ("IDA") fund and Counterpart fund for New Model University Project - Components implemented by Project Management Unit - Ministry of Education and Training (the "Project"). We have also audited the Statement of Designated Account and the Statement of Loan Withdrawals, which are prepared in United States Dollars, for the year ended 31 December 2016 (collectively referred to as the "Financial Statements") and the notes thereto and have issued our report thereon. As part of the audit of the Project Financial Statements per the Terms of Reference, we have examined the Project's compliance with applicable laws, regulations and provisions of the Credit Agreement No. 4786-VN dated 13 August 2010 and other Guidance from IDA that has a direct and material financial effect on the Project's financial statements. Management's Responsibility for the compliance of the Project Management of the Project is responsible for the compliance of the Project with laws, regulations and provisions of the Credit Agreement that have a direct and material financial effect on the Project's financial statements. 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 Engagement 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with relevant ethical requirements, plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has complied with requirements. An assurance engagement to report on the compliance with the regulatory and contractual requirements at a 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 requirements are complied with by the Project. We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. I I I 1"'Y ~~r '-''1I I" e EL IL,IA ,Sl ;r )J<'t,t V- I " I I MAZARS I Opinion I In our opinion, the Project was, in all material respects, in compliance with the applicable laws, regulations and other provisions of the Credit Agreement No. 4786-VN dated 13 August 2010, and other Guidance from IDA that could have a direct and material financial effect on the Project's Financat-Staterlents for the year ended 31 December 2016. Mazars Vietnamto., Ltd. Pham Phuong Anh Patner Audit Practicing Registration Certificate No. 1102-2013-177-1 Hanoi, 28 June 2017 I I I I I I I I I I 1 o V Dr 141 NCU I (E I I I MMAZARS Report No: HN-AU/16/VB- 4786-VN-PMU.3 INDEPENDENT AUDITORS' REPORT On Internal Control To: Project Management Unit of the New Model University Project We have audited the accompanying Balance Sheet as at 31 December 2016 and Statement of Sources and Uses of Funds for the year ended 31 December 2016 of the International Development Association ("IDA") fund and Counterpart fund for New Model University Project - Components implemented by Project Management Unit - Ministry of Education and Training (the "Project"). We have also audited the Statement of Designated Account and the Statement of Loan Withdrawals, which are prepared in United States Dollars, for the year ended 31 December 2016 (collectively referred to as the "Financial Statements") and the notes thereto and have issued our report thereon. As part of the audit of the Project Financial Statements per the Terms of Reference, we have examined the design and operation of internal controls over 'compliance with requirements' that could have a direct and material financial impact on the financial statements, as well as internal controls over financial reporting. Management responsibility for the Project's internal control system The Internal Control System was set up for the purpose of managing risks to the achievement of the Project objectives, including the reasonable prevention and detection of errors, irregularities and fraud. Project management is responsible for maintaining an effective internal control system. Auditors' responsibilities Our responsibility is to express an opinion on the effectiveness of internal controls over "compliance with requirements" that could have a direct and material financial impact on the financial statements, as well as internal controls over financial reporting, based on our procedures. We conducted our audit in accordance with International Standards on Assurance Engagement 3000, "Assurance Engagements other than Audits or Reviews of Historical Financial Information", issued by the International Auditing and Assurance Standards Board. This standard requires that we comply with relevant ethical requirements, plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the controls are suitably designed and operating effectively. An assurance engagement to report on the design and operating effectiveness of controls involves performing procedures to obtain evidence about the design and operating effectiveness of the controls. The procedures selected depend on our judgment, including obtaining an understanding of internal controls over 'compliance with requirements' that could have a direct and material financial effect on the financial statements as well as internal controls over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of those controls based on the assessed risk, and performing such other procedures as we consider necessary in the circumstances. I We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion, I I I I } gMAZARZS I Opinion In our opinion, the Project maintained, in all material respects, effective internal controls over "compliance with requirements" that could have a direct and material financial effect on the financial statements, as well as internal controls over financial reporting throughout the year ended 31 December-201Q I I Mazats Vietnalm Co., Ltd. Pham Phuong Anh Partner Audit Practicing Registration Certificate No. 1102-2013-177-1 I Hanoi, 28 June 2017 I I I I I I I I I I F, - r VIFT I-- I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I BALANCE SHEET As at 31 December 2016 I As at As at As at As at Note 31/12/2016 31112/2016 31/1212015 3111212015 VND USD VND USO I ASSETS Cash Cash on hand 71,100,000 3,129 71,100,000 3,167 Cash at bank 3 19,275,093,632 848,375 30,324,295,519 1,350,748 Other receivables 1,363,000 60 - TOTAL ASSETS 19,347,556,632 851,564 30,395,395,519 1,353,915 LIABILITIES AND FUND BALANCE Payables to suppliers for performance guaranty of the Project's office rental contract 71,100,000 3,129 71,100,000 3,167 Personal Income Tax payable 1,262,861 56 - - Payables to employees 100,139 4 - - Fund balance 19,275,093,632 848,375 30,324,295,519 1,350,748 TOTAL LIABILITIES AND 19,347,556,632 851,564 30,395,395,519 1,353,915 I Prepared by: AppCoved by: I Dao Hoang Truong Ngt Toan TY@ng Chief Accountant Project Director Hanoi, 28 June 2017 I I I I The accompanying notes form an integral part of the financial statements * 10 I I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association STATEMENT OF SOURCES AND USES OF FUNDS For the year ended 31 December 2016 Note Year ended Year ended Accumulated Accumulated 3111212016 31/1212016 to 3111212016 to 31/1212016 VND USD VND USD Receipts [DA fund 4 46,612,412,108 2,067,918 188,122,114,882 8,754,045 Counterpart fund 5 8,027,231,038 355,186 24,602,271,384 1,128,879 Receipts from sales of bidding documents 86,000,000 3,785 89,500,000 3,953 Bank interest - - 103,719,371 4,992 Other sources - - 9,251,318 410 54,725,643,146 2,426,889 212,926,856,955 9,892,279 Disbursements 6 Consulting services 23,181,526,430 1,032,363 122,474,330,733 5,661,897 Training - - Goods - - 4,398,395,446 200,620 Construction 31,745,987,072 1,421,243 35,416,025,419 1,606,341 Grants/Scholarship - . Operating costs 10,593,579,380 471,871 34,162,360,246 1,565,318 Bank charges and other expenses 86,000,000 3,785 221,784,069 10,093 65,607,092,882 2,929,262 196,672,895,913 9,044,269 (Deficit)/Surplus of receipts (10,881,449,736) (502,373) 16,253,961,042 848,010 over disbursements Foreign exchange (167,752,151) - 3,021,132,590 365 difference I Fund balance, beginning of 6 30,324,295,519 1,350,748 the year Fund balance, ending of the 6 19,275,093,632 848,375 19,275,093,632 848,375 year I I I I I 3 The accompanying notes form an integral part of the financial statements 11 1 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I STATEMENT OF SOURCES AND USES OF FUNDS (continued) For the year ended 31 December 2016 Note As at As at 31/12/2016 3111212016 VND USD Represented by: Cash on hand 71,100,000 3,129 Cash at bank 3 19,275,093,632 848,375 Other receivables 1,363,000 60 Payables to suppliers for performance guaranty of the Project's office rental contract (71,100,000) (3,129) Personal Income Tax payable (1,262,861) (56) Payables to employees (100,139) (4) 19,275,093,632 848,375 I Prepared by: Approved by: I Dao Hoang Truong Ngo T a ng Chief Accountant oj Director Hanoi, 28 June 2017 I I I I I I The accompanying notes form an integral part of the financial statements 12 I I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association STATEMENT OF DESIGNATED ACCOUNT (USD) For the year ended 31 December 2016 Account No.: 0681370000026-USD Bank: Joint Stock Commercial Bank for Foreign Trade of Vietnam Agreement No.: 4786-VN dated 13 August 2010 Year ended Year ended Part A - Account Activity Note 31/12/2016 31112/2015 USD USD Opening balance 1,350,74813 1,524,641.29 Add: Total amount advanced to designated account 1,000,000,00 Total amount replenished to designated account (refer to Statement of Loan Withdrawals) 4 1,067,918-42 1,669,09092 Deduct: Total amount withdrawn 7 (2,570,290.95) (1,842,98408) Ending balance 848,375.60 1,350,748.13 Part B - Account Reconciliation Amount advanced by World Bank 2,000,000.00 2,000,000.00 Add: Amount advanced by World Bank 1,000,000.00 Outstanding amount advanced to designated account 30000000 2,000,000.00 as at the year-end Ending balance of designated account 848,375 60 1,350,748-13 Add: Amount withdrawn and not yet claimed (*) 7 2,151,624,40 649,251.87 Total advance to designated account accounted for 3,000,000.00 2,000,000.00 as at the year-end (* Amounts withdrawn and not yet claimed represent expenditure claimed under applications for withdrawal No. V017MOET subsequent to 31 December 2016 and advances to contractors under applications for withdrawal No.020MOET not yet claimed upto audit fieldwork. Prepared by: App by: Dao Hoang Truong Ngo Toan hang I Chief Accountant Project D rector Hanoi, 28 June 2017 The accompanying notes form an integral part of the financial statements 13 I � � �r � � г� � � cv а �, С ❑ i ь � � ПЕ �g rJy � � � Ell а'�+.., да 'С$ и � � � � � � `t� � � © с�ц а ау ЕЛ � � � 7 � сtд 'Z ` � ш � 1� и С� С+С � ,� ас� и е� �F - � � ач � �c�c�n� ел � � а ��� �й � � � и � cw � � �, й � � ш со � � � �.. о т � � � � � Ф С�; � tгr � а ,�....-3, П3 д3 � а СО �1` �.' �,ti�, � � r- LL3 �• . �у 'tJ �` � _ ��_�-. � � � П3 � � \�j � ' .� � С � � � 4- � Ш ы' � OS � �, �.�`\;�, . �. � . ь.. 4} п� ц r- ц7 ' sy о \_� � � С1 4 � � �+ � w . � ti7 С4 � . � `�., � � .� (�° а � � s.��i о c�v_ г� т � � � `4 4 � � � `� � � � � � � � Q � ¢ sз. � � г� � . . � � - v r� , с � � I п� W � с°� о �' � � с] �� с р � с� и, � cv о � "� � с� о � М � � � � �,�у , ' ® в I � � � ��у � � � � � � � � г �- i � � i � ' �., � � ит гл � С '® r Q' � 4 eif � N tцt q � N t�] � tЛ G�1 � � [+�7 е4 Й � +-' � � `Vi-! � � С.7 � �3 �i7 а У-- т-. � 1 � � � � � � � � СС О �� � С�) С7 � • � �. � �,д � Q� � N у_ Сэ т � � � � � .�' .с � �'�° z ,� �� гЛ а л�а �r � = ссз с� ш � ��.� � ® �у �о� � .7 пзш.с� � т� lг-cv "� � ��а � � �•в ��� i �с � � ��� б в г� �� � � � СЭ � � v � Н F � д � р � ��,� ш � 3 шшtх� �, �' �� «, . � � � � С��., � а�., ` Q Г� (� С3 r� д rj � сц � � С7 Ш � °S � � г � rв 2 .,_. ��у � � � � � � � тt �t7 CL1 � Cj ,[U С � � U�7 С] fЛь � � � 7 7 ii С7 U 2 � New Model University Project Components implemented by Project Management Unit - Ministty of Education and Training Under the Credit Agreement No. 4786- VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 December 2016 Project background The New Model University operates under Credit Agreement - Credit No. 4786 - VIN dated 13 August 2010 signed between the Socialist Republic of Vietnam and the International Development Association (IDA), The IDA Credit source provided for SDR1 19.4 million (equivalent to USD1 80.4 million) and the counterpart fund provided for USD20.2 million for the period of 2010 - 2017. The Project's initially expected closing date is 30 November 2017. The Project has been in progress of restructuring and waiting for official approval of 36-month extension until 2020. The Project is implemented by two agencies: the New Model University Project Management Unit under the Ministry of Education and Training ("PMU") and Project Management Unit of Vietnamese - German University ("VMU"). The objective of the Project is to develop an autonomous research-based university to demonstrate a new policy framework on governance, financing, and quality in Vietnam's higher education system- The Project consists of four (4) components: Com ponent 1 Pol icy a nd Reg u latory F ramework Development of policy, regulations, procedures, and capacity for VGU's governance and management including in: (a) governance and management: (b) financial management and sustainable financing; (c) institutional quality management (d) human resources management; (e) management and operational systems; and (f) admissions and student services. Component 2: Academic and Research Development Development of policy, regulations, procedures, and capacity for VGU's academic programs and research work including: (a) academic and research policies including roles and responsibilities-, (b) teaching and research strategy: (c) academic program accreditation and quality assurance; (d) research and professoriate development including provision of Research Grants; (e) library development; and (f) research facilities and support services including provision of Scholarship Grants. Component 3: Campus and Facilities Development Development of a VGU campus including: (a) designing, constructing, and equipping a new campus and related facilities for VGU: and (b) capacity building for campus maintenance and facility management. Component 4: Project management, Monitoring and Evaluation Support for effective: (a) Project management and coordination; and (b) Project monitoring and evaluation, PMU implements Sub-Component 31 and other related activities under Component 4 (hereafter referred to "Components implemented by Project Management Unit - Ministry of Education and Train ing "). I n accorda nce with Decis io n No. 371 9/Q D- BG DDT dated 2 5 Aug ust 2011 by the M in istry of Education and Training, VGU is authorised to implement Component 1, Component 2, Sub- Component 3.2 and other related activities under Component 4 (hereafter referred to "Components implemented by VMU"). 15 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International De velopmen t Association The funding rates are as follows: Amount of the Financing Allocated Government Expenses (expressed in SDR) IDA Fund Fund 1. Goods 38,180,000 90% 10% 2. Works 61,340,000 90% 10% 3. Consultants' Service and Training 13,820,000 100% - 4. Research and Scholarship Grants 950,000 90% 10% 5. Unallocated 5,110,000 - - Total 119,400,000 2. Summary of significant accounting policies The significant accounting policies, which have been adopted by the Project Management Unit in the preparation of these Financial Statements, are as follows: Basis for preparation of the financial statements The financial statements are prepared only to cover fund receipts and disbursements of the components implemented by the Project Management Unit - the Ministry of Education and Training, and the related fund balance. The financial statements do not include receipts and disbursements of the components implemented by Vietnamese - German University. Basis of accounting The financial statements are prepared in accordance with the World Bank's financial reporting requirements. The Project maintains its accounting system applicable to investment owner as set out in Decision No.195/2012/TT-BTC dated 15 November 2012 by the Ministry of Finance for recording purpose under accrual basis of accounting. Certain adjustments have been made to prepare the financial statements that are under cash basis of accounting (refer to Appendix Balance Sheet). Accordingly, receipts are recognized by the Project when received rather than when the right to receive them arises, and disbursements are recognized when paid rather than when the obligation to pay them arises. This basis of accounting is considered appropriate to the operations of the Project by the Project Management. I Reporting currency and foreign currency transaction and translation The accompanying Project's financial statements are expressed in Vietnam Dong ("VND"), except for the Statement of Designated Account and the Statement of Loan Withdrawals which are expressed in United States dollar ("USD") as required by the World Bank. Credit fund receipts are converted to Vietnam Dong using rate of disbursements claimed in Withdrawal Applications. Expenditures denominated in currencies other than Vietnam Dong under Credit fund are converted to that currency using rate at the date of withdrawal from the Designated Account. Monetary assets and liabilities dominated in currencies other than Vietnam Dong are converted into Vietnam Dong using exchange rate provided by Joint Stock Commercial Bank for Foreign Trade of Vietnam ("Vietcombank") ruling at balance sheet date. For counterpart fund and other fund, USD equivalents of the amounts on these statements are also presented for information and reconciliation purpose using the exchange rate as at 31 December 2016 of VND 22,720/USD1 (2015: VND 22,450/USD1). Foreign exchange differences are recorded in the Statement of Sources and Uses of Funds for reconciliation purpose between opening balance and closing balance of fund. I * 16 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association 2. Summary of significant accounting policies (continued) Designated account Designated account is the USD deposit account opened at the Vietcombank for implementing the project's activities. The payments from the designated account shall be effected only in accordance with the relevant provisions of the Credit Agreement No. 4786-VN signed on 13 August 2010 and the relevant Guidance of the World Bank. Bank interest payable In accordance with Circular No.218/2013/TT-BTC dated 31 December 2013 issued by the Ministry of Finance, the Project can use bank interest earned from the designated account to pay for bank charges. The remaining interest earned after deduction of bank charges is payable to the Government rather than treated as a sources of income for the Project Bank charges and bank interest used to finance bank charges are recorded as the Project's expenditure and income, respectively. Accounting period The Project's accounting period is from 1 January to 31 December. According to the current regulation on counterpart fund of Vietnamese Government, the accounting period ends on 31 January 2016. However, the disbursements of counterpart fund in this report covered the disbursements paid until 31 December 2016 in compliance with the World Bank requirements. I 3. Cash at bank 31 December 2016 31 December 2015 Original Original currency VND currency VND Designated Account at Vietcombank USD848,375.60 19,275,093,632 USD1,350,748.13 30,324,295,519 Bank interest of Designated Account at Vietcombank USD848,375.60 19,275,093,632 USD1,350,748.13 30,324,295,519 I 4. IDA fund Receipts under application for withdrawals No. of withdrawals Date of receipts USD V014MOET 16/2/2016 649,251.87 V015MOET 14/7/2016 418,666.55 Total amount replenished to designated account 1,067,918.42 V016MOET 15/12/2016 1,000,000-00 Total amount advanced to designated account 1,000,000.00 Total fund receipts 2,067,918.42 17 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association U 5. Counterpart fund Year ended Year ended Accumulated Accumulated 3111212016 3111212016 to 31/12/2016 to 31/12/2016 VND USD VND USD Construction 3,174,598,707 139,727 3,174,598,707 139,727 Operating costs 3,480,000,000 153,169 15,579,761,220 716,321 Goods - 243,883,086 11,674 Refunded to the World Bank's fund - 193,055,034 9,275 Consulting services 1,372,632,331 62,290 5,355,173,619 249,201 Salary for management not yet paid - 55,799,718 2,681 8,027,231,038 355,186 24,602,271,384 1,128,879 I I I I I I I I I I I I * 18 mM mmmm mmmm mmm- mm- New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association 6. Details of receipts and disbursements by activities and by sources of fund for the year ended 31 December 2016 Year ended 31 December 2016 Year ended 31 December 2016 Counterpart Fund Counterpart Fund and other funds Credit Fund Total and other funds Credit Fund Total VND VND VND USD USD USD Fund balance, beginning of the year - 30,324,295,519 30,324,295,519 - 1,350,748 1,350,748 Receipts Credit fund - 46,612,412,108 46,612,412,108 - 2,067,918 2,067,918 Counterpart fund 8,027,231,038 - 8,027,231,038 355,186 - 355,186 Other sources 86,000,000 - 86,000,000 3,785 - 3,785 8,113,231,038 46,612,412,108 54,725,643,146 358,971 2,067,918 2,426,889 Disbursements by categories Consulting services 1,372,632,331 21,808,894,099 23,181,526,430 62,290 970,073 1,032,363 Construction 3,174,598,707 28,571,388,365 31,745,987,072 139,727 1,281,516 1,421,243 Operating Costs 3,480,000,000 7,113,579,380 10,593,579,380 153,169 318,702 471,871 Bank charges and other expenses 86,000,000 - 86,000,000 3,785 - 31785 8,113,231,038 57,493,861,844 65,607,092,882 358,971 2,570,291 2,929,262 Disbursements by activities Project Management, Monitoring and 8,113,231,038 57,493,861,844 65,607,092,882 358,971 2,570,291 2,929,262 Evaluation Foreign exchange difference - (167,752,151) (167,752,151) - - Fund balance, ending of the year - 19,275,093,632 19,275,093,632 - 848,375 848,375 Fund balance, represented by: Cash on hand 71,100,000 - 71,100,000 3,129 - 3,129 Cash at bank - 19,275,093,632 19,275,093,632 - 848,375 848,375 Other receivables 1,363,000 - 1,363,000 60 - 60 Payables to suppliers for performance guaranty of the Project's office rental contract (71,100,000) - (71,100,000) (3,129) - (3,129) Personal Income Tax payable (1,262,861) - (1,262,861) (56) - (56) Payables to employees (100,139) - (100,139) (4) - (4) - 19,275,093,632 19,275,093,632 - 848,375 848,375 19 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Credit Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association U 7. Reconciliation of amount on the statement of loan withdrawn to expenditures funded by IDA 1 Year ended 31 December 2016 USD Total amount per Statement of Loan withdrawals 2,067,918.42 Add: Amounts withdrawn not yet claimed in 2016 2,151,624.40 Foreign exchange differences - less: 1Amounts withdrawn in 2015, and claimed in 2016 649,251.87 Amounts advanced during the year 1,000,000.00 Total expenditure of IDA fund (Note 6) 2,570,290.95 8. Subsequent events There have been no significant events occurring after the balance sheet date, which would require adjustments or disclosures to be made in the financial statements. * Prepared by: Approved by I Dao Hoang Truong Ngo-Toan Thing Chief Accountant Project Diretor Hanoi, 28 June 2017 I I I I I I 20 I I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Financing Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association Appendix: Balance Sheet (prepared under accrual basis) As at 31 December 2016 As at As at Note 31112/2016 31/12/2015 VND VND ASSETS A. Current assets 53,892,165,335 32,605,846,519 I. Cash 19,346,193,632 30,395,395,519 1. Cash on hand 71,100,000 71,100,000 2. Cash at bank 4 19,275,093,632 30,324,295,519 II. Accounts receivable 34,545,971,703 2,210,451,000 1. Advances to suppliers 34,544,608,703 2,210,451,000 2. Other receivables 1,363,000 B. Non-current assets 1,059,978,566 1,619,574,877 I. Fixed assets 1,059,978,566 1,619,574,877 1, Tangible fixed assets 1,049,178,566 1,584,574,877 Cost 4,065,416,196 4,065,416,196 Accumulated amortisation (3,016,237,630) (2,480,841,319) 2. Intangible fixed assets 10,800,000 35,000,000 Cost 224,000,000 224,000,000 Accumulated amortisation (213,200,000) (189,000,000) C. Program implementing expenditure 162,524,906,011 129,535,014,362 TOTAL ASSETS 217,477,049,912 163,760,435,758 RESOURCES 1. Current liabilities 469,081,801 750,762,331 1. Trade payables - 2. Payables to suppliers 396,618,801 679,662,331 3. Payables to suppliers for performance guaranty of the Project's office rental contract 71,100,000 71,100,000 4. Payables to employees 100,139 - 5. Personal Income Tax payable 1,262,861 II. Funds 217,007,968,111 163,009,673,427 1. Project funds 212,926,856,955 158,201,213,809 Credit fund 188,122,114,882 141,509,702,774 Counterpart fund 24,602,271,384 16,575,040,346 Other fund 202,470,689 116,470,689 2. Funds for fixed assets acquisition 1,059,978,566 1,619,574,877 3. Foreign exchange differences 3,021,132,590 3,188,884,741 TOTAL RESOURCES 217,477,049,912 163,760,435,758 I I 21 I New Model University Project Components implemented by Project Management Unit - Ministry of Education and Training Under the Financing Agreement No. 4786-VN signed on 13 August 2010 between the Government of the Socialist Republic of Vietnam and the International Development Association I Appendix: Balance Sheet (prepared under accrual basis) (continued) As at 31 December 2016 Reconciliation between Balance sheet prepared under accrual basis and Statement of Sources and Uses of funds is as follows: 31 December 2016 31 December 2015 VND VND Program implementing expenditure per 162,524,906,011 129,535,014,362 Balance sheet Add: Advances to suppliers 34,544,608,703 2,210,451,000 Less., Payable to suppliers (396,618,801) (679,662,331) sources and uses of funds I I I I I I I I I I I 22 I