ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES DEVELOPMENT PROJECT
PHU LY CITY SUB-PROJECT
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN
AUDITED FINANCIAL STATEMENTS
For the period from 15 December 2017 to 31 December 2020
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES DEVELOPMENT PROJECT - PHU LY CITY
SUB-PROJECT
Fn A N - N au- iarc' Agremnt No 6371
TABLE OF CONTENTS
CONTENT PAGE(S)
PART I FINANCIAL STATEMENTS - .... .............. .1 .....S........ ...... .......... 1
STATEME NT OF THL 'ROJECT MANAGEM[EN UNIT
INDEPLNIDENT AUDITORS RELPOR ON THE FINANCIAL STATAELN 1 . ...
EALANCE SHEET . .
STATE MENT OF PROJECT IMPLFMENTING E-XPENDI TURES .
STATFIENT OF FUNLS AND FXPENDITURES
STATEMENT OF SOURSES AND USES OF FUNDS .
T OF DES UHATED ACCOUNT
STA EMENT OF WITHDRAWAL VVIT. .......A
TO THE FINANCIAL STAT EMEN ..... 1
PART II INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE ............ 18
PART III INDEPENDENT AUDITOR'S ASSURANCE REPORT ON THE INTERNAL CONTROL ..... .. ..... 22
PART IV M ANAG EMENT LETTER ............................. ---------- ............................ ....... .... 25
PART I
FINANCIAL STATEMENTS
1
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES DEVELOPMENT PROJECT - PHU LY CITY SUB-
PROJECT
Financing Agreement No,6070-VN and Financing Agreement No-6071-VN
STATEMENT OF THE PROJECT MANAGEMENT UNIT
The Project Management Unit of Phu Ly Urban Development, Ha Nam Province (hereinafter referred to as the
PMU") submits its report together with the audited financial statements of Additional Financing of Vietnam
Medium Cities Development Project - Phu Ly City Sub-project (hereinafter referred to as "the Project") for the
period from 15 December 2017 (the date of Financing Agreement) to 31 December 2020.
Project Management Unit
Members of the Project Management Unit who held office during the period and to the date of this report include:
Mr- Nguyen Ha Anh Tuan Director Appointed from 29/04/2020
Mr. Nguyen Van Hoc Director Dismissed from 01/05/2020
Mr. Trinh Huy Cuong Vice Director Dismissed from 01/12/2020
Ms. Pham Thi Quynh Chi Vice Director
Mr- Nguyen Hong Thanh Vice Director
Mr. Do Viet Hung Chief Accountant Dismissed from 01/01/2021
Ms. Lai Thuy Hoa Chief Accountant Appointed from 28/04/2021
Responsibilities of the Project Management Unit
The PMU is responsible for preparing Financial Statements which give a true and fair view of balance of assets,
liabilities and funds as at 31 December 2020 as well as the funds received and disbursements made for the period
from 15 December 2017 to 31 December 2020 in accordance with the accounting policies as stated in Note 2 and
Note 3 of the Notes to the Financial Statements and provisions of the Financing Agreement No.6070-VN and
Financing Agreement No.6071-VN. In preparing those financial statements, the PMU is required to:
* Select suitable accounting policies and then apply them consistently;
* Make judgments and estimates that are reasonable and prudent;
* State whether applicable accounting principles have been followed, subject to any material departures
disclosed and explained in the financial statements;
* Prepare the financial statements on the going concern basic unless it is inappropriate to the presume
that the Project will continue in operation; and
* Design and maintain an effective intemal control over compliance with requirements that could have a
direct and material financial effect on the financial statements as well as over financial reporting for the
purpose of properly preparing and presenting the financial statements so as to minimize errors and
frauds; and take responsibility for its assertions as to the effectiveness of such internal control.
The PMU is responsible for ensuring that proper accounting records are kept which disclose, with reasonable
accuracy at any time, the financial position of the Project and to ensure that the financial statements comply with
the accounting systems as described in Notes to the Financial Statements as well as laws and other provisions
applicable to the Project- They are 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 PMU confirms that they have complied with the above requirements in preparing the Financial Statements-
For and on behalf of the Project Management Unit,
Nguyen Ha Anh Tuan
Director
Phu Ly City, 25 June 2021
2
NoxJt/2021/UHY - BCKT
INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS
To: The Project Management Unit
Additional Financing of Vietnam Medium Cities Development Project
Phu Ly City Sub-project
Opinion
We have audited the financial statements of Additional Financing of Vietnam Medium Cities Development
Project - Phu Ly City Sub-project (the Project), which comprise the Balance Sheet as at 31 December 2020, the
Statement of Project Implementing Expenditures, the Statement of Funds and Expenditures, and the Statement
of Sourses and Use of Funds, the Statement of Designated account, and the Statement of withdrawal for the
period from 15 December 2017 to 31 December 2020, and notes to the financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying financial statements give a true and fair view of the financial position of the
Project as at 31 December 2020, and of its receipts, disbursements, expenditures and fund withdrawals of the
Project for the period from 15 December 2017 to 31 December 2020, in accordance with the accounting
convention and the accounting policies set out in Note 2 and Note 3 of the Notes to the Financial Statements.
Emphasis of matter - Basis of Accounting
We draw attention to Note 2 and Note 3 of the Notes to the financial statements, which describes the accounting
convention and the summary of the significant accounting policies. The financial statements are prepared in
accordance with the accounting conveption and the accounting policies set out in Note 2 and Note 3 of the
Notes to the financial statements and the requirements of the World Bank.
Our opinion is not modified in respect of this matter.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Our responsibilities
under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial
Statements section of our report. We are independent of Project in accordance with the international Ethics
Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), together with
the ethical requirements that are relevant to our audit of the fnancial statements in Vietnam and we have
fulfilled our other ethical responsibilities in accordance with the these requirements and IESBA Code. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Responsibilities of the Project Management Unit and those charged with governance for the Financial
Statements
The Project Management Unit is responsible for the preparation and presentation, of the financial statements in
accordance with the accounting convention and the accounting policies set out in Note 2 and Note 3 of the
Notes to the financial statements and for such internal control as the Management determines is necessary to
enable the preparation and presentation of the financial statements that are free from material misstatement,
whether due to frauds of errors.
Head Offie 5th Floor. 82 lowe,
Romon P'az., io Huu Street, Dai Mo Ward,
Narn T I i m District. iianoi, Vietnari.
Pone 84 24 5678 3999 I ax: 84 24 'it78 3(999
w EP Iuhy v it
tnrerrbtt of UHlY Intecmationa
INDEPENDENT AUDITORS' REPORT (CONT'D)
Responsibilities of the Project Management Unit and those charged with governance for the Financial
Statements (cont'd)
In preparing the financial statements, the management is responsible for assessing the Project"s ability to
continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going
concern basis of accounting unless the management either intends to liquidate the Project or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Project's financial reporting process.
Auditor's Responsibilities
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 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.
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.
Conclude on the appropriateness of management's use of the going concern basic 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 concen. 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.
4
INDEPENDENT AUDITORS' REPORT (CONT'D)
We communicated with those charged with governance 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-
UHY AUDITING AND CONSULTING AASC AUDITING FIRM
COMPANY LIMITED COMPANY LIMITED
Nguyen Thi Thu Ha Nguyen Pham Hung
Auditor Auditor
Auditor's Practicing Certificate Auditors Practicing Certificate
No2277-2018-112-1 No. 2893 2020-002-1
Nguyen Thi Phuong Thao Do Man Cuong
Deputy Peneral Director Deputy General Director
Audilor's Practicing Certificate Auditor's Practicing Certificate
No 0933-2018-112-1 No. 0744-2018-002-1
Hanoi, 25 June 2021
5
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No-6070-VN and Financing Agreement No-6071-VN to 31 December 2020
BALANCE SHEET
As at 31 December 2020
3i/12/2020
Note VND
ASSETS
I. Current assets 30,537,252,416
Cash 25,764,785,982
Cash in bank 6 25,764,785.982
Receivables 4,772,466,434
Advances to suppliers 7 4,772,466,434
11. Project's expenditures 95,655,114,768
Project implementing expenditures 95,655,114,768
TOTAL ASSETS 126,192,367,184
1. Liabilities 20,942,128,890
Payables to suppliers 8 20,931,822,800
Other payables 10,306,090
11. Funds 105,250,238,294
IDA funds 9 83,939,027,310
Counter-part funds 10 21,613,000.000
Foreign exchange difference (321,789.016)
Receipts from Sale of bidding documents 20,000,000
TOTAL RESOURCES 126,192,367,184
OFF BALANCE SHEET ITEMS 31/12/2020
USD
Designated Account 451,370.62
Nguyen Ha Anh Tuan Lai Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
Phu Ly City, 25 June 2021
The accompanying notes are an integral part of the Financial Statements 6
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No-6070-VN and Financing Agreement No.6071-VN to 31 December 2020
STATEMENT OF PROJECT IMPLEMENTING EXPENDITURES
For the period from 15 December 2017 to 31 December 2020
Period from 15/12/2017 Accumulated to
No. Contents to 3111212020 31/12/2020
VND VND
1 Urban Basic Infrastructure Upgrading and Service 46,734,815,100 46,734,815,100
Improvement
2 Urban Environment Sanitation 39,672,851,000 39,672,851,000
3 Urban Roads and Bridges
4 Project Management Support and Technical 2,821,471,500 2,821,471,500
Assistance
5 Land Acquisition, Resettlement and Oher Expenses 1.932,481,668 1,932,481,668
6 Profiect Management expenses 4,473,514,700 4:473,514,700
7 Other (Bank charges, Bidding expenses) 19,980,800 19,980,800
95,655,114,768 95,655,114,768
Nguyen Ha Anh Tuan Lal Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
Phu Ly City, 25 June 2021
The accompanying notes are an integral part of the Financial Statements 7
-4 - - - - - - -M -M 4 au am m ai ml * *u mi IL * *1 .i m w . w
ADIf10WN I INANCIN G F VIET NAM MEDIUM Cll LS DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT FINANCI I TATk,I MEN
I iwi11 A)~tiiI ~(i, i ViN avvII ori AIIri url NoFl/ MI iii,,pýrr f li,i m 15 1i *
STATEMENT OF FUNDS AND EXPENDITURES
F r e rn i Kr- 15 'De,t'v - 217 - , a' 3
Contentis From 15 December 2017 to 31 December 2020 Aceumulated to 31/12/2020
IDA funds Counterpart Other funds Total IDA funds Counterpart Otlihr funds Tota l
funds funds
VND VND VND VND VND VND VND Vr
I. FUNDS 83,617,238,294 21,613,000,000 20,000,000 105,250,238,294 83,617,238,294 21,613,000,000 20,000,000 105,250,238.294
- IDA funds 83,939,027,310 - - 8393 02,310 83,939,027,310 .3,939,027 311
Counterpan funds r) - 2 C13,000 000 21,3'00 21,613,000 - 21613,0 000
-2 For n ve'cae c 'Xr e ( 321 789 Ø016- (32,/9,16 ba321,769 016) - ,21,78 -,
- Sak ns1 --
Sale i I 1 1 do ,vn Is - 20,.000, 000 2000'0,000 -, O G 20,. 0
Il, EXPENDITURES 89,229,485,400 6,405,996,368 19,633,000 95,655,114,768 89,229,485,400 6,405,996,368 19,633,000 95,655,114,768
Urbhan Bar irasruur 1..'i46,734,815 100 - 46,73415,100 46,734,815,1i - 10734150
Upran In Ser,ice imp'.rovemen
Urban Envrnrin .Salon 39,6723511000 39,672i50000 ,672,00-7
Urban I'ds and Bidges
Prjc 3,nagement'1 Supax; and 2,821 711 01 - 2,82j31,1i0 2,82,471,30 - ,21 /
L- 1 32,48,16681 O ,00 1,'3148133 -
Project Managernefl expenses (*) - 4A73,514,700 4,473 14,700 4,473>14,700 1,l,4 A3,51,/
anok vhars 34/,0(10 -347.00 3471 3'
ddmg expenses - - 1633,:1 19 3 00 19'if i 5 6 C
I SURPLUS/(DEFICIT) (5 612 247 16 15 207,003,632 367 000 9(595123 26 (5,612,247,106 15.271003å632 367,000 9595123921
RepresOnted by;
D 47 of counterpart funds and VND 1. 947,000,000 of Projec rers financed ba funds r r in 2018 frr hoigi
Ngujýyeni Ha Anh Tuaný La Thuiy Hoa LaiThu Ha
eor countant
... .. . ...
ADDITIONAL FINANCING OF VIETNAM MEDIUM CITIES DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT FINANCIAL S!AH-MHNIS
Iinan1cing Agreemien N V.070 VN and Finrancing Areen N.671 -VN Fc, I: f :'i ; 17 11 .l 0
STATEMENT OF SOURSES AND USES OF FUNDS
For the period from 15 [December 2017 to 31 December 2020
From 15 December 2017 to 31 December 2020 Accumulated to 3111212020
IDA funds Counterpart Other funds Total IDA funds Counterpart Other funds Total
funds funds
VND VND VND VND VND VND VND VND
I. RECEIPTS 83,939,027,310 21,613,000,000 20,000,000 105,572,027,310 83,939,027,310 21,613,000,000 20,000,000 105,572,027,310
IDAfunds 83,939,027,310 - 83,939,027.310 83,939,027,310 - - 83,939,027,310
Counterpart funds (*) - 21,613,000,000 21,613,000,000 - 21,613,000,000 - 21,613,000,000
Bank interest - - -
Sale of bidding documents - 20.000,000 20,000,000 - 20,000,000 20,000,000
IL, DISBURSEMENTS 73,235,7?4,034 6,240,411,368 19,633,000 79,495,758,402 73,235,714,034 6,240,411,368 19,633,000 79,495,758,402
- Urban Basic Infrastructure Upgrading 36,088.201.800 - - 36,088.201,800 36,088,201,800 - - 36,088,201,800
and Service Improvement
- Urban Environment Sanitation 33,299,482,000 - - 33,299,482,000 33,299,482,000 - - 33,299,482000
- Urban Roads and Bridges -
- Project Management Support and 3,847,682,434 - 3,847,682,434 3,847,682,434 - - 3,847,682,434
Technical Assistance
Land Acquisition, Resettlement and - 1,766,896,668 - 1,766,896,668 - 1,766,896,668 - 1,766,896,668
Oher Consultation Expenses
- Profiect Management expenses () - 4,473,514,700 - 4,473,514,700 - 4,473,514,700 - 4,473,514,700
- Bank charges 347,800 - - 347,800 347,800 347,800
- Bidding expenses - 19,633,000 19,633,000 - - 19,633,000 19,633,000
Excess/(Deficits) of Receipts over 10,703,313,276 15,372,588,632 367,000 26,076,268,908 10,703,313,276 15,372,588,632 367,000 26,076,268,908
Disbursements (I - Il)
III. Foreign exchange differences (321,789,016) - (321,789,016) (321,789,016) - (321,789,016)
IlL. OPENING BALANCE - - - -_--
V. ENDING BALANCE 10,381,524,260 15,372,588,632 367,000 25,754,479892 10,381524,260 15372588 632 67 00 25,754,479,892
Represented by:
Cash 25,764,785,982
Other payables not related to expenditures (10,306,090)
25 754 79 892
(*) The statement includes VND 947,000,000 of counterpart funds and VND 947,000,000 of Project related expenditures financed by counterpart funds, transferred in 2018 from the original
project to the additional project (according to the data reconciliation on funding, lending and payment of state budget capital with the State Treasury of Ha Narm province).
Nguyen Ha Anh Tuan Lai Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
Phu Ly Cify, 25 Jine 2021
The acc;opayingnotes are an inogral pad of the Finan--i Sta---tents
1
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
STATEMENT OF DESIGNATED ACCOUNT
For the period from 15 December 2017 to 31 December 2020
Account No-: 1014712914
Depositary Bank: Saigon - Ha Noi Commercial Joint Stock Bank - Ha Nam Branch
Credit Agreement: 6070-VN va 6071-VN
Currency: USD
From 15/12/2017
to 31/12/2020
USD
PART A: ACCOUNT ACTIVITIES
Opening balance of designated account
Add
Total amount advanced by the World Bank to the Designated Account in the period 3,620,245.00
Deduct
Total amount withdrawn 3,168,85938
Bank charges 15.00
Ending balance of designated account 451,370.62
PART B: RECONCILIATION
Opening balance of advances by the World Bank
Add
Total amount advanced by the World Bank to the Designated Account in the period 3,620,245.00
Deduct
Total amount applied for advance clearance and approved by the World Bank 1,914,424.80
Oustanding advance from WB at the year end 1,705,820.20
Ending balance of advance account 451,370.62
Add
Amount withdrawn but not yet claimed 8.307.86
Amount claimed in but not yet approved 1,246,126-72
Overseas bank charges 15-00
Total advance accounted for at the-year end 1 ,705,820.20
Nguyen Ha Anh Tuan Lai Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
Phu Ly City, 25 June 2021
The accompanying notes are an integral part of the Financial Statements 10
-- - - - - - - - - - m w m *0 mL m, u, aj ik t4 UJ A b *
ADJDITIQNAL F-INANC NG OF VILT NAM MEDIUM CITIES 1EVELOPMENT PROJECT - PH LY CITY SUB-PROJECT FINANCIAL STA [MENT1
STATEMENT OF WITHDRAWAL
F or the period ro 15 December' 2 7 lo 31 December 2t2 3
Witldrawal Applications Amount Anount claimed for advance cleararce Amount dlsbursed accepted for advance clearance Difference
claimed for
disbursemr <4entUP Mn nnr p
Currer sey (Advance) Eni n iu idppor a Total (b) Dab sbrd for aavance
0t 0ISP/ daneUpgraling and -. and Bdiges T,cd , b-dlr>rerac
Service iprovement Sanjli
A ccumulated to 15/1212017 ---
Increases during the period 4,050,680.00 1,561,341.09 1440,896.53 158,313.90 3,160,551,52 3,620,245.00 1,914,424.80 1,676,561-72
Impresf account 4,050,68000 1,561,341.09 1,440,896,53 158,313.90 3,160,551,52 3,620,245 00 1,914,424-80 1,676,56172
01/DAPMDA 20 05 22 USD 1410,880,00 - 260/020 ' 910 8
02/D0AP -UF 20 05 2022 USD 484,257.00 - - 26/05/2020 484.2257 00-
10 DAP - A 231 '2020 USD 1 225,1089.02 1039.12? Il 716,988 82 1 756,110 90 2810/ 2020 1 225 10 i0 1,756,>11' 90'
14DAP SUF 06 0 2<0 LUS - 14<373 9 14,373 97 ??2 1.79
05DAPMDA 291 12 2020 UD 430,435.00 22,219.01 623,907.1 246,12&72 0012027
U6/DAP-SUF 250? 2120 USD - -39 143,931 93 2122020 143.939 i 3
Accumulated to 31122020 40506800 1 341.09 1,40,9653 - 158,31390 3,160,551.52 362024500 1,914,4240 1,676,561/72
(*) D3 trence is due :o the W?hdrawal applcaluns for advance clearance No 0,P DP A rm t Fi rancing Aqrcernent No, Gr 6070-Vn th! was dted 29 De er 202 Lt accep
by Word Ban o 08Jaury 22
Nguyen Ha Anh Tuan Lai Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
P3hu _y Ci Y, 25 Jun 2021
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071 -VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS
(These notes are an integral part of and should be read in conjunction with the accornpanying financial statements)
1 . PROJECT BACKGROUND
1.1 The Medium Cities Development Project
The Medium Cities Development Project (hereinafter referred to as the 'Original project") operates under
Credit Agreement No. 5013-VN dated 12 January 2012 signed between the Socialist Republic of Vietnam
and the International Development Association ("IDA").
The objective of the Medium Cities Development Project is to increase access to improve urban
infrastructure service in Lao Cai City, Phu Ly City and Vinh City in a sustainable and efficient manner.
The Medium Cities Development includes 03 Parts: (i) Part A: Support to Lao Cai City (ii) Part B: Support
to Phu Ly City; (iii) Part C: Support to Vinh City.
The Medium Cities Development Project - Part B: Support to Phu Ly City includes the following
components:
Urban Basic Infrastructure Upgrading and Service Improvement: Improvement of urban infrastructure and
service conditions in existing or newly developed urban areas including construction and rehabilitation of
basic infrastructure systems such as water supply and sanitation, drainage, power supply, lighting, roads,
schools-
Urban Environment Sanitation: Construction and rehabilitation of primary and secondary infrastructure for
drainage, wastewater collection and treatment, and flood mitigation, including construction and
rehabilitation of selected small lakes-
Urban road and Bridges: Construction of urban roads and bridges.
Project Management Support and Technical Assistance: Provision of support for (a) project management
and supervision; (b) independent social, environment and financial account monitoring; (c) urban planning,
asset management, safeguards, and internal audit capacity building; (d) equipment and facilities including
the acquisition of one car; (e) training and capacity building: and (f) management and administration.
The total fund of the Project is USD 68.7 million, including:
IDA funds : USD 57.5 million
Counterpart funds : USD 11.2 million
The Project has been implemented since 12 January 2012 (the date of the Credit Agreement) and
completed on 31 December 2019 (Disbursement Deadline Date of the Project according to the
Announcement dated 26 June 2019 of the World Bank)-
1.2 Additional Financing of Vietnam Medium Cities Development Project
The total cost of the Additional Financing of Vietnam Medium Cities Development Project (the "Project") is
USS 325,15 million, of which the total investment for the Parent Project is US$ 258,9 million and for the
Additional Financing stage is US$ 53,0 million. This amount includes investments and costs related to land
acquisition and resettlement, and all taxes. The Bank will finance 74% of the investments, while the Cities
will finance the remaining 26% which is principally for land acquisition, resettlement, and PMU operational
costs. The total financing from the Bank will be US$238.5 million, on IDA/IDA-SUF Terms.
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
(These notes are an integral part of and should be read in conjunction with the accompanying financial statements)
1 . PROJECT BACKGROUND (CONT'D)
1.3 Additional Financing of Vietnam Medium Cities Development Project - Phu Ly City Sub-project
The total fund of the Project (according to Decision No. 351/OD-TTg dated March 21, 2017 of the Prime
Minister) is USD 32,91 million, including:
IDA funds : USD 26 million
Counterpart funds : USD 6.91 million
The Project has been implemented since 15 December 2017 (the date of the Financing Agreement).
Additional Financing project duration: 03 years, from 31/12/2017 to 31/12/2020. The project has been
extended to 30 June 2022 according to Decision No. 2235/QD-CTN dated 17 December 2020 of the
President on extending the loan closing date of the Financing Agreements No. 6070 - VN and SUF
Financing Agreement No- 6071 - VN for Vietnam Medium Cities Development Project.
The Sub-project includes the following components:
Component 1: Urban Basic Infrastructure Upgrading and Service tmprovement (USD 7.7 million)
a. Investment items using IDA fund: USD 6.5 million:
- Construction of Phu Van kindergarten in Phu Van Commune, Phu Ly City: for 500 pupils; Construction
of a kindergarten to meet the design criteria of national standard school according to Decision No
36/2008 / QD-BGDDT dated 16/07/2008 in compliance to National Kindergarten Standards The
construction activities includes: classrooms and functional rooms; Areas for outdoor activities of
children within kindergarten age range: Bio-landscape garden, sand playground, water-splash tank;
green vegetable garden etc-
- Upgrading Tran Quoc Toan Primary School, Hai Ba Trung Ward: Construction of a kindergarten to
meet the design criteria of National Kindergarten Standards according to Decision No. 3212005/OD-
BGDDT dated 24/10/2005- The construction activities includes: classrooms and functional rooms;
Areas for outdoor activities of children within kindergarten age range: io-landscape garden, sand
playground, water-splash tank; greens and vegetable garden etc
b. Investment items using IDA SUF fund: USD 19.5 million
- Upgrading infrastructure for the 03 low -incomes residential area, including: (1) Upgrading
infrastructure for the residential area in the North Quang Trung Ward; (2) Upgrading infrastructure in
Duong Am Community, Lam Ha Ward; and (3) Upgrading infrastructure in Quynh Chan Community,
Lam Ha Ward.
- Investments includes: (i) Upgrading existing internal roads; (ii) Installation of combined drainage-sewer
pipelines; (iii) water supply pipeline expansion network connecting to the existing main supply; and (iv)
Power supply for lighting system at some main roads.
Component 2: Urban Water Supply and Environmental Sanitation (USD 9.2 million)
a Investment items using IDA fund: USD 6.5 million:
- Upgrading Lam Ha 1 regulation lake, Lam Ha Ward: Investments includes: Lake embankment
improvement, Tree planting, lighting system ; Construction of path walk; Installation of interceptor
sewers and wastewater separation wells or combine sewer overflow (CSO) around the lake to collect
and transport wastewater to wastewater treatment plant.
- Upgrading Drainage and Technical Infrastructure System for Bien Hoa Road. Installing the surface
water and wastewater drainage system; Re-surfacing of road and intersections; Rehabilitation of
lighting power system; Upgrading sidewalk and greenery system.
13
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Fnancing Agreement No6070-VN and Financing Agreement No.6071-VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
(These notes are an integral part of and should be read in conjunction with the accompanying financial s/a toments)
1. PROJECT BACKGROUND (CONT'D)
1.3 Additional Financing of Vietnam Medium Cities Development Project - Phu Ly City Sub-project
(Cont'd)
b. Investment items using IDA SUF: USD 19 5 million
- Construction of Chau Giang River Southern Embankment from Liem Chinh Bridge to Cau Gie-Ninh
Binh Expressway: construction of embankment segment at the North riverside to prevent inland flood,
facilitate the inspection and management of dikes in the storm and flooding season. Construction of
Chau Giang River southern embankment from Liem Chinh Bridge to Cau Gie-Ninh Binh Expressway
with total length of 3.300 km and construction of the prevention/ dike road of 1.8 km long and 13-5 m
wide.
Component 3: Urban Roads and Bridges (USD 6.5 million)
Investment items using IDA SUF fund: USD 19-5 million
- Upgrading Tran Hung Dao Road from Liem Chinh Bridge to Cau Gie-Ninh Binh Expressway:
Upgrading the route with alignment and cross-sectional size constructed based on the current existing
road- Investments include: Rehabilitation with expansion of the existing road; drainage/lighting system;
facilities for pedestrians; lighting system and greenery system.
Alignment is followed the old DT 491 Road, in compliance with the city master planning-
Component 4: Project Management and Technical Assistance (USD 1,2 million)
Including: (I) IBRD/IDA SUF source supports all activities of construction supervision, procurement,
contracts management; Independent environmental and social safeguard monitoring, independent auditing
etc. (iI) CF fund: costs of reviewlexamination and evaluation; PMU staff salaries, office and other expenses
related to P MU's management of the project.
2. ACCOUNTING CONVENTION AND FINANCIAL YEAR
Accounting convention
The accompanying financial statements, expressed in Vietnam Dong (VND), are prepared under the
historical cost convention, except for the Statement of Designated Account and statement of Withdrawals
which are expressed in original currencies. These financial statement are prepared in accordance which
the accounting policies set out in Note 3 and the requirement of the World Bank.
The accompanying financial statements exclude figures in the Project preparation period.
Financial year
The Project's financial year begins on 01 January and ends on 31 December-
These financial statements were prepared for the first operating period from 15 December 2017 (the date
of the Financing Agreement) to 31 December 2020.
14
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No-6070-VN and Financing Agreement No.6C71-VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
(These notes are an integral part of and should be read in conjunction with the accompanying financial statements)
3. 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:
Foreign currency translation
Transactions arising in foreign currencies are translated into Vietnam Dong (VND) at exchange rates riling
on the transaction date- The balances of monetary items denominated in foreign currencies at the balance
sheet date are retranslated at the exchange rates on the same date.
Foreign exchange differences are not cash flows. However, the effect of changes in foreign exchange
rates is reported separately in the Statement of Sources and Uses of Funds in order to reconcile with
balances of assets and liabilities in the Balance Sheet.
Recognition of funds and expenditures
Funds and expenditures are recognized when incurred, except for compensation expenditures for
households which are recognized based on actual payment to beneficiaries and under State Treasury
verification.
4. DESIGNATED ACCOUNT
Designated Account is a deposit account in United State Dollar opened at Saigon - Ha Noi Commercial
Joint Stock Bank - Ha Nam Branch for the implementation of the Project activities. Payments out of
Designated Account are for expenditures in accordance with the relevant covenants of Financing
Agreement No-6070-VN and Financing Agreement No.6071-VN and relevant regulations set by the World
Bank.
5. STATEMENT OF SOURCES AND USES OF FUNDS
Statement of Sourses and Uses of Funds is prepared based on actual cash flows; specifically:
Cash inflow is the actual cash flow received from the World bank (WB), counterpart fund and other funds.
Cash outflow is the actual cash outflow from the Project management unit for the projects cost items of
this year and the amount paid to the supplier during the current year and those brought forward.
Closing balance is based on the opening balance of cash flow plus cash inflows and minus cash outflow
for the year. This balance is reconciled with the balance sheet items as at the end of the fiscal year.
Accumulated figures are presented for the period from the commencement date of the Project to the end
of the reporting period.
15
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
(These notes are an integral part of and should be read in conjunction with the accompanying financial statements)
6. CASH
31/1212020
VND
Cash in bank, treasury
- Account in VND
+ Cash in treasury 15,372,955,632
+ BIDV 9,302,343
+ SHB 1,003,747
- Account in USD
+ Designated Account 10,381,524,260
25,764.785,982
7. ADVANCE TO SUPPLIERS
31/12/2020
VND
CEEN - Construction and Environmental Engineering,,JSC 199,567,600
Joint Venture Hiep Thanh Company Ltd and Thanh Dat Development Investment.,JSC 1,249,326,000
EXP International Services INC 3,323,572,834
4,772,466,434
8. PAYABLES TO SUPPLIERS
31/1212020
VND
Urban Development Investment Corporation - Joint Stock Company 6,373,369,000
CEEN - Construction and Environmental Engineering-,JSC 142,441,000
Vietnam Construction and Environment Joint Stock Company 2,354,488,500
Joint Venture Hiep Thanh Company Ltd and Thanh Dat Development Investment,JSC 11,895,939,300
Huy Hoang Measuring Design Survey Joint Stock Company 165,585,000
20,931,822,800
9. IDA FUND
From 15/12/2017 to 31/12/2020 Accumulated to 31/12/2020
USD VND equivalent USD VND equivalent
Designated Account 3,620,245.00 83,939,027,310 3,620,245.00 83,939,027,310
3,620,245.00 83,939,027,310 3,620,245.00 83,939,027,310
16
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES FINANCIAL STATEMENTS
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
NOTES TO THE FINANCIAL STATEMENTS (CONT'D)
(These notes are an integral pad of and should be read in conjunction with the accompanying financial statements)
10. COUNTERPART FUND
From 15/1212017 Accumulated
to 31/12/2020 to 31/1121020
VND VND
The Counterpart funds transferred from the Original 947,000,000 947,000,000
project to the Additional Financing
Budget for the Additional Financing 20,666,000,000 20,666,000,000
21,613,000,000 21,613,000,000
11. COMPARRATIVE FIGURES
As the period from 15 December 2017 to 31 December 2020 is the first operating period, no comparative
figures are available.
Nguyen Ha Anh Tuan Lai Thuy Hoa Lai Thuy Hoa
Director Chief Accountant Preparer
Phu Ly City, 25 June 2021
17
PART II
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE
18
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IN,' AND CONSULTING CO LTD
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE
To: The Project Management Unit
Additional Financing of Vietnam Medium Cities Development Project
Phu Ly City Sub-project
Report on compliance
We have audited, in accordance with International Standards on Auditing, the financial statements of Additional
Financing of Vietnam Medium Cities Development Project - Phu Ly City Sub-project (hereinafter referred to as the
"Project") for the period from 15 December 2017 to 31 December 2020 and issued the independent auditor's
thereon dated 25 June 2021 expressing an unqualified opinion on those financial statements.
In connection with the audit of the Financial statements, we also performed procedures on the Project's
compliance with the Financing Agreement No. 6070-VN and Financing Agreement No. 6071-VN, laws and
regulations that could have a direct and material financial effect on the Project's Financial statements for the
period from 15 December 2017 to 31 December 2020 (hereinafter referred to as "Requirements"),
Responsibilities of the Project Management Unit
The Project Management Unit is responsible for complying with the Financing Agreement No. 6070-VN and
Financing Agreement No, 6071-VN, laws and regulations applicable to the Project.
Our Independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional
Accountants issued by the International Ethics Standards Boards for Accountants, which is founded on
fundamental principles of integrity, objectivity, professional competence and due care, confidentially, and
professional behavior,
We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of cj iahty
control including documented policies and procedures regarding compliance and ethical requiremunts,
professional standards and applicable legal and regulatory requirements.
Auditor's Responsibilities
Our responsibility is to express an opinion on Project's compliance based on the evidence we have obtained, We
limited our tests of compliance to the requirements, and we did not test compliance with all laws and regulations
applicable to the Project. We conducted our reasonable assurance engagement in accordance with Internabonal
Standard on Assurance Engagements 3000, Assurance Engagements other than Audits and Reviews of
Historical Financial Information ("ISAE 3000"), issued by the International Auditing and Assurance Standards
Board, That standard requires that we plan and perform this engagement to obtain reasonable assurance about
whether, in all material respects, the Project has complied with the requirements.
A reasonable assurance engagement in accordance with [SAE 3000 to report on the Project's compliance with
the requirements Involves performing procedures to obtain evidence about whether the Project's activities are free
of material noncompliance with the requirements, including obtaining an understanding of the internal control
relevant to the Project's compliance with the requirements. The procedures selected depends on the auditor's
judgement, including the assessment of risks that the Project does not comply with the requirements and whether
such noncompliance could have a direct and material financial effect on the Project's financial statements. Our
procedures included testing the compliance with the requirements that we consider necessary to provide
reasonable assurance that the requirements are compiled by the Project.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our opinion,
Office- W i I I ,Di, 2 T i -,,
Jza, 1,0 Film r-1, 11 Mo
Iii Lienn Di ,Iru l, 20
1/8 3999
FT eml r of UH Y Intern abonal
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON COMPLIANCE (CONT'D)
Opinion
In our opinion:
* The Project has complied, in all material respects, with Financing Agreement No- 6070-VN and Financing
Agreement No. 6071-VN, laws and regulations that could have a direct and material financial effect on the
Projects financial statements for the period from 15 December 2017 to 31 December 2020;
* The Projects receipts and disbursements via the designated account for the period from 15 December 2017
to 31 December 2020 are in accordance with the relevant covenants of Financing Agreement No. 6070-VN
and Financing Agreement No- 6071 -VN and prevailing relevant regulations established by the World Bank:
* The withdrawal applications were adequately reconciled to the statements of expenditure (SOEs) prepared
by the Project Management Unit for the period from 15 December 2017 to 31 December 2020 and those
SOEs were adequately supported;
* The proceeds of the loan were used only for the purposes of the Project;
* The Project Management Unit has complied with the financial covenants of the Credit Agreement-
Other matter
Our audit works include assessing the PMU's compliance in the past at a specific point in time. Therefore, our
examination does not give an assurance fo( the future periods because of the risk that the Project's requirements
may change or the degree of compliance with the requirements may deteriorate-
UHY AUDITING AND CONSULTING AASC AUDITING FIRM
COMPANY LIMITED COMPANY LIMITED
Nguyen Thi Thu Ha Nguyen Pham Hung
Auditor Auditor
Audil4 Practicing Certificate Auditor s Practicing Certificate
N,27- 018-112-1 No. 2893 -2020-002-1
NquyonThi huong Thao Do Manh Cuong
Deputy General Director Deputy General Director
Auditor's Practicing Certificate Auditors Practicing Certificate
No.0933-2018-112-1 No. 0744-2018-002-1
Hanoi, 25 June 2021
21
PART III
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON THE INTERNAL CONTROL
22
IfD
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON THE INTERNAL CONTROL
To: The Project Management Unit
Additional Financing of Vietnam Medium Cities Development Project
Phu Ly City Sub-project
Report on internal control
We have audited, in accordance with International Standards on Auditing, the financial statements of Additional
Financing of Vietnam Medium Cities Development Project - Phu Ly City Sub-project (hereinafter referred to as the
"Project") for the period from 15 December 2017 to 31 December 2020 and issued the independent auditor's
thereon dated 25 June 2021 expressing an unqualified opinion on those financial statements.
In connection with our audit of the Project's financial statements, we also examined the effectiveness of internal
control over compliance with requirements that could have a direct and material financial effect on the financial
statements as well as of internal control over financial reporting, and issue the Independent Auditor's assurance
report on internal control.
Responsibilities of Project Management Unit
As stated in the Statement of the Project Management Unit on page 2, the Project Management Unite is
responsible for designing and maintaining effective internal control over compliance with requirements that could
have a direct and material financial effect on the financial statements as well as over financial reporting for the
purpose of properly preparing and presenting the financial statements so as to minimize errors and frauds; and
takes responsibility for its assertions as to the effectiveness of such internal controL
Our independence and Quality Control
We have complied with the independence and other ethical requirements of the Code of Ethics for Professional
Accountants issued by the International Ethics Standards Boards for Accountants, which is founded on
fundamental principles of integrity, objectivity, professional competence and due care, confidentially, and
professional behavior.
We apply International Standard on Quality Control 1 and accordingly maintain a comprehensive system of quality
control including documented policies and procedures regarding compliance and ethical requirements,
professional standards and applicable legal and regulatory requirements.
Auditors' Responsibility
Our responsibility is to express an opinion on the effectiveness of internal control over compliance with
requirements that could have a direct and material financial effect on the financial statements as well as internal
control over financial reporting based on our examination. We conducted our reasonable assurance engagement
in accordance with International Standard on Assurance Engagements 3000, Assurance Engagements other than
Audits and Reviews of Historical Financial Information ("ISAE 3000"), issued by the International Auditing and
Assurance Board That standard requires that we plan and perform this engagement to obtain reasonable
assurance about whether, in all material respects, the management has maintained effective internal control over
compliance with the requirements that could have a direct and material financial effect on the financial statements
as well as internal control over financial reporting.
Our examination included obtaining an understanding of internal control over compliance with requirements that
could have a direct and material financial effect on the financial statements as well as of internal control over
financial reporting, testing and evaluating the design and operating effectiveness of the internal control, and
performing such other procedures as we considered necessary in the circumstances to obtain sufficient
appropriate evidence on which to base our opinion. Because of inherent limitations of internal control over
financial reporting, including the possibility of collusion or improper management override of control, material
misstatements due to error or fraud may occur and not to be detected- Also, projections of any evaluation of the
effectiveness of internal control over financial reporting to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
We believe that our audit provides a reasonable basis for our opinion.
Iad O 'fi : 5th Iloor 2 T owerL
Roman Plaza, To Huou 'teet. Lai Mo Waid,
Narn O Lmim Disrict, Hanoi, Vietnam- 23
Phon- 84 24 5678 99o9 Fax 84 '4 '6/8 39[0
'No iuld4:t UHY intenational
INDEPENDENT AUDITOR'S ASSURANCE REPORT ON THE INTERNAL CONTROL (CONTINUED)
Opinion
In our opinion, the Project Management Unit has maintained, in all material respects, effective internal control
over compliance with requirements that could have a direct and material financial effects on the Project's financial
statements preparation as well as the internal control system over the Project's financial statements preparation
for the period from 15 December 2017 to 31 December 2020-
UHY AUDITING AND CONSULTING AASC AUDITING FIRM
COMPANY LIMITED COMPANY LIMITED
/
Nguyen Thi Thu Ha Nguyen Pham Hung
Auditor Auditor
Auditor's Practicing Certificate Auditor's Practicing Certificate
No.2277-2018 112 1 No. 2893 -2020-002-1
Nguyen Thi Phuong Thao Do Man Cuong
Deputy General Director Deputy General Director
Auditor' Pracicing Certificate Auditor's Practicing Certificate
No.0933-2018-112-1 No- 0744-2018-002-1
Hanoi, 25 June 2021
24
日日日日日日国国園国日園国■■■…一
PART IV
MANAGEMENT LETTER
25
MANAGEMENT LETTER
T o: The Project Management Unit
Additional Financing of Vietnam Medium Cities Development Project
Phu Ly City Sub-project
Dear Sir/Madam,
We have audited the financial statements of the Additional Financing of Vietnam Medium Cities Development
Project - Phu Ly City Sub-project for the period from 15 December 20W to 31 December 2020 in accordance with
International Standards an Auditing and issued the Independent Auditors Report thereon dated 25 June 2021 -
In connection wiLh our audit, we noted certain matters concerning the Project's management which we wish to
bring to your attention, We enclose our comments and recommendations on the matters noteworthy to assist the
Project Management Unit In overcoming the identified weaknesses in management.
We would like to note, however, these findings were achieved as part of an ordinary audit aiming to enable us to
express an opinion on the Project's financial statements, and controls and compliance that could have a material
finandal effect on the Project's financial statements. Therefore, our comments and recommendations should riot
be seen as an all-inclusive study of the Internal control and accounting systems of the Project, This would be
achieved by a more detailed inspection.
The matters raised in the letter have been discussed with the Project Management Unit, whose comments are
presented in Section "Project Management Unit's responses".
We would like to take this opportunity to express our sincere thanks to member of the Project Management Unit
for their cooperation and courtesies extended to us during the course of our audit.
Yours sincerely!
UHY AUDITING AND CONSULTING AASC,AUDITING FIRM
COMPANY LIMITED COMPANY LIMITED
I.- r
41
Nguyen Thi Phuong Thao Do Manh Cuong
Deputy Genefal E) rector Deputy General Director
ALi6to - Practicing Certificate Auditor's Practicing Certificate
No-0933-2018-112-1 No. 0744-2018-002-1
Hanoi, 25 June 2021
Office- 5ai Floor, 132 lower,
' rian Plaza, To lluu Sir(!o, Dal Mo Ward,
u Tiern Distmit, Haoui, Vietnam-
.999 Fax 84 24 51 -1
26
ofl_Affintemofianal
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES MANAGEMENT LETTER
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
TABLE OF CONTENTS
CONTENT PAGE
L ISSUES RELATING TO ACTUAL EXPENDITURE COMPARED WITH BUDGET 27
27
ADDITIONAL FINANCING OF VIET NAM MEDIUM CITIES MANAGEMENT LETTER
DEVELOPMENT PROJECT - PHU LY CITY SUB-PROJECT For the period from 15 December 2017
Financing Agreement No.6070-VN and Financing Agreement No.6071-VN to 31 December 2020
L ISSUES RELATING TO DISBURSEMENTS COMPARED WITH BUDGET
Findings
The actual expenditure was much lower in comparison with the Project's plan:
Counterpart funds IDA Funds
Year Actual Absorption Actual Absorption
Budget expenditure rate Budget expenditure
2017
2018
2019 () 3,713,000,000 2,975,456,268 80.1% 33,041,000,000 - 0.00%
2020 (") 17,900,000,000 3,430,540,100 19.2% 126,003,000,000 89,229,485,400 70.82%
(*) 2019 Plan according to Decision No. 4918/QD-UBND dated 25 October 2019 of Phu Ly City People's
Committee on funding for 2019 capital construction (including cost of site clearance, project management,
professional activities of the ODA committee) with the amount of VND 2,766,000,000; and the source in 2018
transferred from the Original project to the Additional Financing is VND 947,000,000.
Decision No. 24581D-UBND dated 18 November 2019 on assigning details of adjustment of 2019
investment plan with foreign capital allocated from the central budget with the amount of VND
33,041,000,000.
(*) The 2020 plan according to Decision No. 603/QD-UBND dated 27 March 2020 of the People's
Committee of Ha Nam province on the assignment of details of adjustment and supplementation of the public
investment plan for the 2016-2020 period and the public investment plan in 2020 (phase 2) (amount
VND107,775,000,000) and the adjustment decisions No. 1599/QD-UBND dated 10 August 2020 (adding:
5,900,000,000 VND), Decision 1819/OD-UBND dated 09 September 2020 (adding: 8,528,000,000 VND) and
2566100-UBND dated 15 December 2020 (adding: VND 3,800,000,000).
Impact
The fact that the actual progress fell behind plan will affect the achievement of the Project's overall objective
on 30 June 2022.
Auditor's recommendation
The PMU should strictly follow the intended plan, as well as cooperate with beneficiaries and related
agencies to ensure the achievement of the Project's objectives.
Project Management Unit's responses
The effects of social distancng, travel restrictions due to the Covid 19 epidemic, along with delays in site
clearance and resettlement, affect the progress of construction and consultancy contracts in 2019, 2020,
resulting in the disbursement rate of the Project failing to reach the plan.
28