I I I I I Project "Vietnam Energy Efficiency for Industrial Enterprises" Audited Financial Statements Under IBRD Loan Agreement No. 8739-VN and IDA Financing Agreement No. 6011-VN between the International Bank for Reconstruction and Development, International Development Association and the Government of the Socialist Republic of Vietnam I Period from 1 January 2018 to 31 December 2019 I I I I I I I I I I I I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socis&t Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Soclal/5t Republic of Vietnam Contents I STATEMENT OF THE PROJECT MANAGEMENT BOARD......... .......2 INDEPENDENT AUDITORS' REPO RT ............................................................................................4 CONSOLIDATED STATEMENT OF SOURCES AND USES OF FUNDS............................................... 10 STATEM ENT O F FUND BALANCE................................................................................................ 11 STATEMENT OF SOURCES AND USES OF FUNDS - Component 1 - BIDV..................................... 12 STATEMENT OF SOURCES AND USES OF FUNDS - Component 1 - VCB ...................................... 13 STATEMENT OF SOURCES AND USES OF FUNDS - Component 2 - Project Management Board .... 14 STATEMENT OF DESIGNATED ACCOUNT - Component 1 - BIDV ................................................ 15 STATEMENT OF DESIGNATED ACCOUNT - Component 1 - VCB.................................................. 16 STATEMENT OF DESIGNATED ACCOUNT - Component 2 - PMB ....................MB*.................... 17 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 220402001.......................................................18 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 068289802021 ................................................. 19 SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 1888400700000120............................................ 20 NOTES TO THE FINANCIAL STATEMENTS.................................................................................. 21 I I I I I I I I I1 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socia/&t Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International DevelopmentAssociation and the Government of the Socialst Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT BOARD The Project Management Board of the Vietnam Energy Efficiency for Industrial Enterprises Project ("the Project Management Board") under the Ministry of Industry and Trade is responsible for the Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the Project") for the period from 1 January 2018 to 31 December 2019. I The Project The Project "Vietnam Energy Efficiency for Industrial Enterprises" is implemented by the Ministry of Industry and Trade (MO1T) - the Socialist Republic of Vietnam, and is funded by the World Bank's credits through International Bank for Reconstruction and Development ("IBRD") under Loan Agreement No. 8739-VN dated 18 August 2017 and through International Development Association ("IDA") under Financing Agreement No. 6011-VN dated 18 August 2017, with amounts of USD100,000,000 and 1,300,000 Special Drawing Rights ("SDR"), respectively, and the counterpart funds from the Project Financial Institutions ("PFIs"), the Industrial Enterprises, and the Government of the Socialist Republic of Vietnam. The Project involves the participation of commercial banks including the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) under the Project Agreement dated 18 August 2017 among International Bank for Reconstruction and Development ("IBRD"), BIDV and VCB. I The Project became effective on 29 December 2017 and will be closed by 31 July 2022. The development objective of the Project is to improve energy efficiency in industrial sector, thereby contributing to achieving the government's energy saving targets and greenhouse gas emissions reduction objectives. The Project consists of two (2) components: - Component 1 - Energy Efficiency Investment Lending has been managed by two (2) banks, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB). The Component's objective is to carry out an energy efficiency investment lending program through the provision of a credit line for the Project Financial Institutions (PFIs) providing Energy Efficiency Sub-loans to Industrial Enterprises (IEs) or Energy Services Companies; and - Component 2 - Project Implementation Support is implemented by the Project Management Board under the MOIT. This Component's objective is to provide technical assistance and capacity building support to the MOIT on Project monitoring and supervision, including audits of Project activities and safeguards implementation. I Project Management Board The members of the Project Management Board responsible for the management of the Project during the period and at the date of this report are as follows: Mr. Phuong Hoang Kim Director Mr. Trinh Quoc Vu Deputy Director Ms. Dang Thi Thuc Project Accountant I 2 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialst Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialist Republic of Vietnam STATEMENT OF THE PROJECT MANAGEMENT BOARD (CONTINUED) Auditors The accompanying Financial Statements for the period from 1 January 2018 to 31 December 2019 have been audited by NEXIA STT Co., Ltd. Responsibility of the Project Management Board in respect of the Financial Statements The Project Management Board is responsible for the Financial Statements which give a true and fair view of the financial position and designated account balances of the Project as at 31 December 2019 and of its sources and uses of funds, operations of designated accounts and total funds withdrawn for the period from 1 January 2018 to 31 December 2019. In preparing the Financial Statements, the Project Management Board is required to select suitable accounting policies and then apply them consistently. The Project Management Board is responsible for ensuring that proper accounting records are kept which enable the Financial Statements to be prepared in compliance with the accounting policies set out in Note 2 to the Financial Statements. The Project Management Board 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. I The Project Management Board 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. Approval of the Financial Statements 1 We hereby approve the accompanying Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" on pages 10 to 25 which give a true and fair view of the financial position and designated account balances as at 31 December 2019 and its sources and uses of funds, operations of designated accounts and total funds withdrawn during the period from 1 January 2018 to 31 December 2019 in accordance with the accounting policies as described in Note 2 to the Financial Statements and grant 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. The Financial Statements were prepared in compliance with the Applicable Provisions of the Loan and Financing Agreements and other Guidance from the World Bank. On behalf of the Project Management Board Mr. Phuong Hoang Kim Director Hanoi, 13 August 2020 3 I I N exica 19 Fl., C Land Tower. 156 Xa Dan Bn, Do a. Hanoi P: +84 (24) 39350990 - F: +84 (24)3 935 0991 Hai Phong Office 245 Bach Dang. Thuong Ly. Hong Bang. Hai Phong P: +84 (225) 3539 969/666/555 - F: +84 (225) 3539 789 Hochiminh City Office 9 Fl. Estar Bldg., 147-149 Vo Van Tan, District. 3, Hochiminh City P: +84 (28) 39 300 488 - F: +84 (28) 39 300 484 INDEPENDENT AUDITORS' REPORT E: nexiastt@nexia.vn WV: wwwnexia.vn On Project Financial Statements To: The Management Board of the Project "Vietnam Energy Efficiency for Industrial Enterprises" Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) Audit opinion We have audited the accompanying Consolidated Statement of Fund balance as at 31 December 2019, the Consolidated Statement of Sources and Uses of Funds, the Statements of Sources and Uses of Funds and Fund balance by Component, the Statements of Designated Accounts and the SOE Withdrawal Schedules for the period from 1 January 2018 to 31 December 2019 (collectively referred to as the "Financial Statements") of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the Project") implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA"), and summary of significant accounting policies and other explanatory information. I In our opinion, in all material respects: a) the Consolidated Statement of Fund balance and the Consolidated Statement of Sources and Uses of Funds give a true and fair view of the financial position of the Project as at 31 December 2019 and of its funds and expenditures for the period from 1 January 2018 to 31 December 2019 in conformity with the accounting policies described in Note 2; I b) the Statements of Designated Accounts and the SOE Withdrawal Schedules give a true and fair view of designated account balances as at 31 December 2019 and of operations of designated accounts, and of the funds withdrawn for the period from 1 January 2018 to 31 December 2019, in conformity with the accounting policies described in Note 2; and c) the Statements of Expenditures and Summary Sheets are fully prepared and maintained with adequate supporting documents to support for the replenishment requests submitted to the World Bank. Funds disbursed through the statements of expenditures and summary sheets are utilized for purposes defined in IBRD Loan Agreement No. 8739-VN and IDA Financing Agreement No. 6011-VN. I 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 Financi/ 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. IP2015 Nexia Intemat,ol Umntd. All right rsed Nex'ia I,nternatoal is a leading worldwide network of, ndependet accounting and consult,ng frms. pro,ding , Coprehersi portfolio faudit. accountancy, ta and ad-oryse is. N i, International is th t n eof Nexi nternational Lited o, - mpany in the Isl of Man. Company registatio nmbo 53513C Registered ofi: 1st Por Sixtyd0 C la, Road, Dougla s0. IofM-a 4 I ISA The tre kNEXIA INTERNATIONAL NEXIA nd the NEXIA logo a e owned by Ne tratio Lmted Nets Itto na a s rnernerfrmsare ot port ofa orldwide partner p Mmberrm n toial atrnaolareiepltownd ,aoperated Ne t e trnationaldoe nota cptanyrespo t tn bilty orthco ms o ioo y eat orost to c otr theiablti I 1 I I Responsibilities of the Project Management for the Financial Statements The Project Management 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 are 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 of the Project 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 26, forms part of our auditors' report. I1 NEXIA STT Co., Ltd. Nguyen Viet Nga Deputy General DIrector Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 2019/HN-AUD/WB-VEEIE Hanoi, 13 August 2020 I I I I s I Hanrol Office N exic" 19 FIL. C Land Tower, 156 Xa Dan II, Dong Da. Hno P: +84 (24) 3 935 0990 - F: +84 (24) 3 935 0991 S TyT Hai Phong Office 245 Bach Dang. Thuong Ly, Hong Bang, Hai Phong P +84 (225) 3539 969/666/555 - F: +84 (225) 3539 789 Hochiminh City Office 9' Fl. Estar Bldg., 147-149 Vo Van Tan, District. 3. Hochimninh City P: +84 (28) 39 300 488 - F: +84 (28) 39 300 484 IP NE E: nexiastt@nexia.vn W: www nexiaiv * ~IN DEPENDENT AUDITORS' REPORT On Compliance with the Applicable Laws, Regulations, Procurement Procedures I and Other Provisions of the Loan and Financing Agreements To: The Management Board of the Project "Vietnam Energy Efficiency for Industrial * Enterprises" Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) I Audit opinion We have audited the Compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN of the Project "Vietnam Energy Efficiency for Industrial Enterprises" implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA") for the period from 1 January 2018 to 31 December 2019. In our opinion, the Project was, in all material respects, in compliance with the applicable laws, regulations, the procurement procedures and other provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN that could have a direct and material effect on the Project's Financial Statements for the period from 1 January 2018 to 31 December 2019. 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 in accordance with International Ethics Standards, 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 The Project Management Board is responsible for compliance with the Applicable Laws, Regulations, Procurement Procedures and Other Provisions of Loan Agreement No. 8739-VN and Financing Agreement No. 6011-VN that could have a direct and material effect on the Financial Statements for the period from 1 January 2018 to 31 December 2019. I I I @ 2015II Neara internation Lal td All r,ghts, reserve Nia- int,-,nanal is I leading worldwide network of,independent accounting and consult,ng arms. proiding a comPrehenswe portfolio of audt. accountancy, tax and advisory serv-cs. Nex,a International is the trading name of Nexia ,nternatlonal Lim,ted. a company re,gistered in the Is]e OfMan, company regisrationrnumber: 53513C. Registered offce: 1st floor, Sixty Circu[ar Road, DOugqlas, Isle of M an . M1 15A, The trademarks NEXIA INTERNATIONAL, NEXIA and the NEXIA logo are owned by Nexea Interntional Limited. Nex,ia Internsaroal and,its-member,fimr are not part of a woldwide partnersh,p, M1emberfirmsofNexInterna tionalareindepen,dentlyowne.dandoperated.Nex,Iternationialdioesnota,cceptanyresponsibilityforthecommissionofanyact.oromissiontoactby.rthehhabilities, oa, any of its members. I I I 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 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 by the Project. I NEXIA STT Co., Ltd. Nguyen Viet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 2019/HN-AUD/WB-VEEIE I Hanoi, 13 August 2020 I I I I I I7 I N exiaHanoi Office N oxica 19 Fl, C Land Tower, 156 Xa Dan II, Dong Da, Hano P: +84 (24)3935 0990 - F: +84 (24)3 935 0991 ST T Hai Phong Office 245 Bach Dang Thuong Ly, Hong Bang, Hai Phong P: +84 (225) 3539 969/666/555 - F +84 (225) 3539 789 Hochiminh City Office 9 Fl. Estar Bldg., 147-149 Vo Van Tan, District. 3. Hochiminh City P: +84 (28) 39 300 488 - F: +84 (28) 39 300 484 E: nexiastt@gcnexia.vn VV: ww. nexiaLvn IN DEPENDENT AUDITORS' REPORT On the effectiveness of internal control over the 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 Management Board of the Project "Vietnam Energy Efficiency for Industrial Enterprises" Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) Audit opinion We have audited, in accordance with International Standards on Auditing, the Financial Statements of the Project "Vietnam Energy Efficiency for Industrial Enterprises" ("the Project") implemented by the International Bank for Reconstruction and Development's credits ("IBRD") and the World Bank's credits through International Development Association ("IDA") for the period from 1 January 2018 to 31 December 2019 and issued the auditors' report thereon expressing an unqualified opinion on those Financial Statements. In connection with our audit of these Financial Statements, we also examined the effectiveness of internal control over the compliance with requirements that could have a direct and material financial effect on these 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 these Financial Statements as well as of internal control over financial reporting for the period from 1 January 2018 I to 31 December 2019. Basis for Opinion I 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 the compliance with requirements that could have a direct and material effect on these 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 of internal control in preparation of 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 evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Project Management The Project management 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. I 2015 N a Itran al rmted, A r.ghts rle ved Nexia International S a leading worldo-de network of independnt accounng and consulting firm" providing a comprehense portf. ofaudit accortancy taxad a dvisory services Nex,a Iternat oa is the trading name of Interna i Limited. a company rstrd in the isle ofMan Company registration nu r 53513C Registeredo c Six C r Road Doas, IseoMan. 8 IM1 15A. The tradearks NEXIA INTERNATIONAL. NEXIA and the NEXIA logo are owned by Nexa International Uimited. Nex,a InternatlIoa and its member fnrms are not part o a-wrldw,de partnership. - Memoberfirms ofNi International are ind pndently ow,nd and oper,ted Ni Internationa does n ot.accept any repnsib,ity for the commission of any ct, or to act by or the liabilities of,anyofitsmembers I I 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. I 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 the degree of compliance with the policies or procedures may deteriorate. I NEXIA STT Co., Ltd. Nguyen Viet Nga Deputy General Director Audit Practicing Registration Certificate No. 2041-2018-225-1 Audit report No.: 2019/HN-AUD/WB-VEEIE Hanoi, 13 August 2020 I I I I I9 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socia/ist Republic of Vietnam Under IDA FInancing Agreement No, 6011-VN between the International Development Association and the Government of the Socia/lst RepublIc of Vietnam CONSOLIDATED STATEMENT OF SOURCES AND USES OF FUNDS Period from 1 January 2018 to 31 December 2019 Accumulated Yearended Yearended from 1/1/2018 31/12/2019 31/12/2018 to 31/12/2019 USD USD USD Sources Funds received from the 3 12,670,624.25 68,515.00 12,739,139.25 World Bank Other income - 7.70 7.70 12,670,624.25 68,522.70 12,739,146.95 Uses of funds 1. Energy Efficiency Sub-loans under Component 1 of 4 4,649,123.33 - 4,649,123.33 the Project 2. Goods, Works, non- consulting services, consultants' services, and cnreental Oeran 5 78,053.89 35,773.20 113,827.09 ~Incremental Operating costs under Component 2 of the Project I 4,727,177.22 35,773.20 4,762,950.42 Surplus of sources against 7,943,447.03 32,749.50 7,976,196.53 uses of funds Fund balance, beginning of the 32,749.50 year/period Fund balance, end of the 7,976,196.53 32,749.50 7,976,196.53 year/period Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 13 August 2020 The accompanying notes form an integral part of the Financa Statements 10 I 1 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialt RepublIc of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialst Republic of Vietnam CONSOLIDATED STATEMENT OF FUND BALANCE As at 31 December 2019 Asat Asat Note 31/12/2019 31/12/2018 USD USD FUND BALANCE, END OF THE YEAR 7,976,196.53 32,749.50 Represented by. Cash at bank - Designated account (USD) 7,936,637.75 at BIDV Cash at bank - Designated account (USD) at VCB Cash at bank - Designated account (USD) 39,558.78 32,749.50 at PMB Cash at bank - Payment account (VND) at PMB _ _ _ _ _ _ _ _ _ _ 7,976,196.53 32,749.50 Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 13 August 2020 I I I I I 3 The accompanying notes form an integral part of the Financial Statements 11 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialit Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socla/l5t Republic of Vietnam STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE Component 1 - BIDV Period from 1 January 2018 to 31 December 2019 Accumulated Yearended Yearended from 1/1/2018 31/12/2019 31/12/2018 to 31/12/2019 I USD USD USD Sources Funds received from the World 10,000,000.00 1 I Bank 10,000,000.00 - 10,000,000.00 I Uses of funds 1. Energy Efficiency Sub-loans under Component 1 of the Project Goods 2,063,362.25 - 2,063,362.25 4 2,063,362.25 - 2,063,362.25 Surplus of sources against 7,936,637.75 7,936,637.75 uses of funds Fund balance, beginning of the year/period Fund balance, end of the 7,936,637.75 - 7,936,637.75 year/period Represented by: Cash at bank - Designated 7,936,637.75 7,936,637.75 account (USD) Prepared by: Approved by: Dinh Huong Thuy Nguyen Thi Kim Ngan Manager, International Entrusted Funds Director, International Entrusted Funds Hanoi, 13 August 2020 I I The accompanying notes form an integral part of the Financial Statements 12 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialst Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socia/t Republic of Vietnam STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE Component 1 - VCB Period from 1 January 2018 to 31 December 2019 Accumulated Note Yearended Yearended from 1/1/2018 31/12/2019 31/12/2018 to 31/12/2019 USD USD USD Sources Funds received from the World 3 2,585,761.08 2,585,761.08 Bank 2,585,761.08 - 2,585,761.08 I Uses of funds 1. Energy Efficiency Sub-loans under Component 1 of the Project Goods 2,585,761.08 - 2,585,761.08 4 2,585,761.08 - 2,585,761.08 Surplus of sources against uses of funds Fund balance, beginning of the year/period Fund balance, end of the year/period Prepared by: Approved by: Vu Xuan Truong Lai Ngoc Quy Officer, Offshore Funding Department DIrector, Offshore Funding Department Hanoi, 13 August 2020 I I The accompanying notes form an integral part of the Financial Statements I 13 I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialst Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialist Republic of Vietnam STATEMENT OF SOURCES AND USES OF FUNDS AND FUND BALANCE Component 2 - Project Management Board Period from 1 January 2018 to 31 December 2019 Accumulated Note Yearended Yearended from 1/1/2018 31/12/2019 31/12/2018 to 31/12/2019 USD USD USD Sources Funds received from the World 84,863.17 68,515.00 153,378.17 Bank Other income - 7.70 7.70 I 84,863.17 68,522.70 153,385.87 Uses of funds 2. Goods, Works, non-consulting services, consultants' services, and Incremental Operating costs under Component 2 of the Project Goods - . Consultants' services 78,008.89 35,750.50 113,759.39 Training/workshops - - Bank charges incurred at 67.70 intermediate banks 45.00 22.70 5 78,053.89 35,773.20 113,827.09 Surplus of sources against 6,809.28 32,749.50 39,558.78 uses of funds Fund balance, beginning of the 32,749.50 year/period Fund balance, end of the year/period 39,558.78 32,749.50 39,558.78 Represented by: Cash at bank - Designated 39,558.78 32,749.50 39,558,78 account (USD) Cash at bank - Payment account (VND) 39,558.78 32,749.50 39,558.78 Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 13 August 2020 The accompanying notes form an integral part of the Financial Statements 14 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- V/V between the International Development Association and the Government of the Socia/st Republic of Vietnam STATEMENT OF DESIGNATED ACCOUNT COMPONENT 1- BIDV Period from 1 January 2018 to 31 December 2019 Account No.: 220402001 IAccount ho/der: JoInt Stock Commercia/ Bank for Investment and Development of Vietnam Bank:u Joint Stock Commercial Bank for In vestment and Development of Vietnam Address: BID V Tower, 35 Hang Vo, Hoan Klem distrIct, Hanoi Loan Agreement No.: 8739- VN Part A - Account activities Note 31/12/2019 31/12/2018 USD USD Opening balance * Add: Total amount advanced to the Designated 3 10,000,000.00 Account Deduct: Total amount withdrawn (2,063,362.25) * Closing balance 7,936,637.75 3 Part B - Account reconciliation Amount advanced from the World Bank Add: Amount advanced by the World Bank 10,000,000.00 Outstanding amount advanced to the Designated Account as at 31 December 2019 10,000,000.00 Closing Balance of the Designated Account 7,936,637.75 Add: Amount withdrawn and not yet claimed 6 2,063,362.25 Total advances to the Designated Account as at 10,0001000.00 31 December 2019 Prepared by: Approved by: Dinh Huong Thuy Nguyen Thi Kim Ngan Manager, International Entrusted Fund DIrector, International Entrusted Fund Hanoi, 13 August 2020 I The accompanying notes form an integral part of the Fnancal Statements 15 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socllt Repubic of Vetnam Under IDA Financing Agreement No. 6011-VN between the International DevelopmentAssoclation and the Government of the Socialst RepublIc of Vietnam STATEMENT OF DESIGNATED ACCOUNT COMPONENT 1 - VCB Period from 1 January 2018 to 31 December 2019 Account No.: 068289802021 Account holder: Joint Stock Commercial Bank for Foreqn Trade of Vietnam Bank' Joint Stock Commercial Bank for Foreign Trade of Vietnam Address: 198 Tran Quang Khai, Ly Thai To ward, Hoan Klem district, Hanoi Loan Agreement No.: 8739-VN Part A - Account activities Note 31/12/2019 31/12/2018 USD USD Opening balance * Add: Total amount replenished to the Designated 3 2,585,761.08 Account Deduct: Total amount withdrawn (2,585,736.08) Bank charges incurred at intermediate banks (25.00) I Closing balance __. Part B - Account reconciliation Amount advanced from the World Bank Add: Amount advanced by the World Bank Outstanding amount advanced to the Designated Account as at 31 December 2019 Closing Balance of the Designated Account Add: Amount withdrawn and not yet claimed 6 Total advances to the Designated Account as at 31 December 2019 I Prepared by: A roved by: Vu Xuan Truong Lai Ngoc Quy Officer, Offshore Funding Department Director, Offshore Funding Department Hanoi, 13 August 2020 The accompanyng notes form an integral part of the Financial Statements I 16 I 1 Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Assoclation and the Government of the Socialt Republic of Vietnam STATEMENT OF DESIGNATED ACCOUNT COMPONENT 2 - PMB Period from 1 January 2018 to 31 December 2019 Account No.: 188840070000012 Account holder: Project Management Board of the Vietnam Energy Efficiency for Industrial Enterprises Project Bank: Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) - I Hoan Klein Branch Address: No. 32 Tran Hung Dao, Hoan Keiem district, Hanoi Financing Agreement No.: 6011- VN Part A - Account activities Note 31/12/2019 31/12/2018 USD USD Opening balance 32,749.50 - Add: Total amount advanced to the Designated Account 3 84,863.17 68,515.00 Refund of bank charges - 7.70 Deduct: Total amount withdrawn (78,008.89) (35,750.50) Bank charges (45.00) (22.70) Closing balance 39,558.78 32,749.50 Part B - Account reconciliation Amount advanced from the World Bank 68,515.00 - Add: Amount advanced by the World Bank 84,863.17 68,515.00 Outstanding amount advanced to the Designated Account as at 31 December 2019 153,378.17 68,515.00 Closing Balance of the Designated Account 39,558.78 32,749.50 Add: Amount spent with documentation being 92,550.56 submitted92506- Amount withdrawn and not yet claimed 6 21,208.83 35,750.50 Bank charges incurred at intermediate banks 60.00 15.00 Total advances to the Designated Account as at 153,378.17 68,515.00 31 December 2019 Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 13 August 2020 The accompanying notes form an integral part of the Fnancial Statements I 17 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No 8739-VN between the International Bank for Reconstruction and Development and the Govemment of the Socia/lst RepublIc of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialt Republic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 220402001 Period from 1 January 2018 to 31 December 2019 Unit USD Withdrawal applications Amount claimed and received No. Date Advances BIDV-01 18/2/2019 10,000,000.00 Total advanced amount 10,000,000.00 Prepared by: Approved by: I Dinh Huong Thuy Nguyen Thi Kim Ngan Manager, International Entrusted Fund Director, International Entrusted Fund Hanoi, 13 August 2020 I I I I I I I I The accompanying notes form an integral part of the FInanca Statements I18 , , rn � , е-i О V � � .� � � � i � , � N � Ч� О о � t°/f О О � Q '� � � �О � , ,--i � � � Q � Й О +., и � � � .V N Й � � i N и � � аэ з � � , .С о ,-+ т � а � о � � ° � с ' С � N 4з � � � о �, � � � � ,о,� ° �о о� и � о �' и ° о о ш � � , � .-� �. �� ш � � � tO ш � � v � о й � с � � � � � � р� г" и v i о 'о W N О ч� , о � й �' � � о v °7 ° °. �, `�° v � _� о � аз Oi � � .� � � � о С � о ; � О `С •� � о N = ~ о � � �� � � о N � о о -о °' °, � и °о с � � � �°о ' й ° ,° , 'L' ё � о°'о а �- z � °`'' Q � � �у �.� о Q ¢ �О � s- г� +а; рр С�'`i о О Ш i С �0 .Ф �+.� о О о1 � С о О � �1 � О О С ' Ш а� � г Wm� о о а �, С �' Z �.р о ° с ° ' -р � � CN Wи� � `° � Н �4 = V N h ,. ' р � а � � и � v °j ° � � и i > �' ' � ° с � ' о V '� N Z ш ш о :ь. �о U v ш U о� _v � 0 � Ш � � ✓ ° г�р о *' о� � �' в, о, а� `� ° � о 1 а ° Ш с v 3 с 3 � � I � о � о `С° � ° i о п °'� � с � Q н о � � ~ � � i � ¢ � ' ШC � � � s т � о� � гв т� а ,� 3 г °° `0 -� � 4 � � i т i 3 -� > " � � ,�` Иа t�- � jp = � � j ; j � .о � г+,а � Х � .о � Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- M between the International Bank for Reconstruction and Development and the Government of the Sodallst Repubfic of Vletnam Under IDA FInancing Agreement No. 6011- VN between the International Development Association and the Government of the Socialist Reoubfic of Vietnam SOE WITHDRAWAL SCHEDULE - ACCOUNT NO. 188840070000012 Period from 1 January 2018 to 31 December 2019 Unit- USD Withdrawal applications Amount claimed and Amount received documented Goods, consultants services, No. Date Advances training and Date Amount worksl7ops and incremental under the Component 2 01 7/6/2018 68,515.00 - 19/6/2018 68,515.00 02 10/3/2019 16,886.88 35,750.50 9/4/2019 16,886.88 03 9/8/2019 19,183.04 35,021.81 20/9/2019 19,183.04 04 6/11/2019 48,793.25 21,778.25 17/12/2019 48,793.25 Total advanced/documented 153,378.17 92,550.56 153,378.17 amount Withdrawal applications No. 01, 02, 03, and 04 represented total documented amount of USD92,550.56 for disbursements recognised for the period from 1 January 2018 to 31 October 2019. Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director Hanoi, 13 August 2020 The accompanyIng notes form an Integralpart of the Finandal Statements 20 I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialst Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socialist Republic of Vietnam NOTES TO THE FINANCIAL STATEMENTS Period from 1 January 2018 to 31 December 2019 I1i.Project background The Project "Vietnam Energy Efficiency for Industrial Enterprises" is implemented by the Ministry of Industry and Trade (MOIT) - the Socialist Republic of Vietnam, and is funded by the World Bank's credit through International Bank for Reconstruction and Development ("IBRD") under Loan Agreement No. 8739-VN dated 18 August 2017 and through International Development Association ("IDA") under Financing Agreement No. 6011-VN dated 18 August 2017, with amounts of USD100,000,000 and 1,300,000 Special Drawing Rights ("SDR'", respectively, and the counterpart funds from the Project Financial Institutions ("PFIs"), the Industrial Enterprises, and the Government of the Socialist Republic of Vietnam. I The Project involves the participation of commercial banks including the Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and the Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) under the Project Agreement dated 18 August 2017 among International Bank for Reconstruction and Development ("IBRD"), BIDV and VCB. The Project became effective on 29 December 2017 and will be closed by 31 July 2022. The development objective of the Project is to improve energy efficiency in industrial sector, thereby contributing to achieving the government's energy saving targets and greenhouse gas emissions reduction objectives. The Project consists of two (2) components: - Component 1 - Energy Efficiency Investment Lending has been managed by two (2) banks, Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB). The Component's objective is to carry out an energy efficiency investment lending program through the provision of a credit line for the Project Financial Institutions (PFIs) providing Energy Efficiency Sub-loans to Industrial Enterprises (IEs) or Energy Services Companies; and Component 2 - Project Implementation Support is implemented by the Project Management Board under the MOIT. This Component's objective is to provide technical assistance and capacity building support to the MOIT on Project monitoring and supervision, including audits of Project activities and safeguards implementation. 2. Summary of significant accounting policies The significant accounting policies, which have been adopted by the Project Management Board in the preparation of the Financial Statements, are as follows: Basis of preparation of the Financial Statements The Financial Statements were prepared under the cash basis of accounting. This basis of accounting is considered appropriate to the operation of Project by the management. I I 21 I I Vietnam Energy Efficiency for Industrial Enterprises I Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Socialist Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socalst Republic of Vietnam Funds I Funds received from the World Bank were recorded when actual payments were made to the Project Financial Institutions ("PFIs") or remittance was made into the Designated Accounts or direct payments were made to contractors/suppliers. Expenditures Expenditures of Component 1 and 2 were recorded when actually paid rather than the obligation to pay them arose. Reporting currency and foreign currency transactions and translation The Financial Statements, which are expressed in United States Dollar ("USD"), are prepared considering the requirements of the World Bank. The format of the Financial Statements was created by the Project to meet the requirements of the World Bank. Project Financial Institutions ("PFIs") and Industrial Enterprises ("IEs") (related to Component 1) maintain their accounting books in Vietnam Dong ("VND"). For the purpose of reporting to the World Bank, the Statements of Sources and Uses of Funds were translated to USD using exchange rates ruled by the PFIs at transaction dates for expenditures denominated in VND and subsequently adjusted by using the exchange rate ruled by the World Bank at withdrawal dates for withdrawal transactions before the balance sheet date. Funds reimbursed by the World Bank were translated at the Bank's exchange rate on the date of reimbursement. The Project Management Board Vietnam Energy Efficiency for Industrial Enterprises (related to Component 2) maintains its accounting books in USD. Designated Accounts Designated Accounts included 2 deposit accounts in USD opened at Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) and Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) for the Component 1's activities, and 1 deposit account in USD at Ho Chi Minh City Development Joint Stock Commercial Bank (HD Bank) - Hoan Kiem Branch, which was held by the Project Management Board for settlements of the Component 2's activities. Payments made via Designated Accounts are for eligible expenditures of the Project in accordance with provisions of Loan Agreement No. 8739-VN dated 18 August 2017 and Financing Agreement No. 6011-VN dated 18 August 2017. I I I I I 22 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739-VN between the International Bank for Reconstruction and Development and the Government of the Soci/it Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialist Republic of Vietnam 3. Funds received from the World Bank Accumulated Year ended Year ended from 1/ 1/2018 31/12/2019 31/12/2018 to 31/12/2019 USD USD USD Loan Agreement No. 8739-VN 12,585,761.08 - 12,585,761.08 Advances 10,000,000.00 - 10,000,000.00 Reimbursements to PFIs 2,585,761.08 - 2,565,761.08 Financing Agreement No. 6011-VN 84,863.17 68,515.00 153,378.17 Advances 84,863.17 68,515.00 153,378.17 Rep/enishment: - - - 12,670,624.25 68,515.00 12,739,139.25 I Details of Funds received from the World Bank by designated account for the period from 1 January 2018 to 31 December 2019 were as follows: Joint Stock Commercial Bank for Investment and Development of Vietnam (BIDV) - Component 1 (funds received to Account No. 220402001) Receipts under withdrawal applications No. Date USD BIDV-01 15/3/2019 10,000,000.00 Total funds advanced to Designated Account 10,000,000.00 (a) Joint Stock Commercial Bank for Foreign Trade of Vietnam (VCB) - Component 1 (funds received to Account No. 068289802021) WIthdrawal applIcations Original amount Equivalent No. Date VND USD 01-VCB-IBRD 21/10/2019 60,000,000,000 2,585,761.08 I Total funds reimbursed to the Designated Account 60,000,000,000 2,585,761.08 (b) I I I I 23 I I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- V between the International Bank for Reconstruction and Development and the Government of the Socialst Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Deve/opment AssoCation and the Government of the Socialst Republic of Vietnam Project Management Board - Component 2 (funds received to Account No. 18884007000001 2) Receipts under withdrawal applications No. Date USD 01 19/6/2018 68,515.00 02 9/4/2019 16,886.88 03 20/9/2019 19,183.04 04 17/12/2019 48,793.25 I Total funds advanced to Designated Account 153,378.17 (c) I Total [(a) + (b) + (c)] 12,739,139.25 4. Expenditures - Energy Efficiency Sub-loans under Component 1 of the Project Accumulated Year ended 31/12/2019 from 1/1/2018 to 31/12/2019 Equivalent Equivalent VND USD VND USD BIDV 47,748,156,976 2,063,362.25 47,748,156,976 2,063,362.25 VCB 60,000,000,000 2,585,761.08 60,000,000,000 2,585,761.08 107,748,156,976 4,649,123.33 107,748,156,976 4,649,123.33 I 5. Expenditures - Goods, Works, non-consulting services, consultants' services, and Incremental Operating costs under Component 2 of the Project This represented expenditures for consultancy contracts incurred for the period from 1 January 2018 to 31 December 2019, which were covered by the World Bank's funds under Financing Agreement No. 6011-VN dated 18 August 2017. I I I I I 24 I I Vietnam Energy Efficiency for Industrial Enterprises OUnder IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialt Republic of Vietnam Under IDA Financing Agreement No. 6011- VN between the International Development Association and the Government of the Socia/&t Republic of Vietnam 6. Amount withdrawn and not yet claimed These represented payments for the Project's activities. These expenses will be included in the next SOE Withdrawal Schedules. Prepared by: Approved by: Dang Thi Thuc Phuong Hoang Kim Project Accountant Director I Hanoi, 13 August 2020 I I I I I I I I I I I I 25 I Vietnam Energy Efficiency for Industrial Enterprises Under IBRD Loan Agreement No. 8739- VN between the International Bank for Reconstruction and Development and the Government of the Socialt Republic of Vietnam Under IDA Financing Agreement No. 6011-VN between the International Development Association and the Government of the Socialst RepublIc of Vietnam Appendix I - Auditors' Responsibilities for the Audit of the Financial Statements As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also: * Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. * 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 the Project Management Board 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 the Project Management Board 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 the Project Management Board, 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. I I I I I I 26 I