VIETNAM SCALING UP ENERGY EFFICIENCY PROJECT GCF Grant No. TFOB4389 AUDITED FINANCIAL STATEMENTS For the period from 01 March 2022 to 31 December 2023 Vietnam Scaling Up Energy Efficiency Project GCF Grant No. TFOB4389 CONTENTS Trang PART I INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS Report of the Project Management Board 3 Independent Auditors' Report on the Financial Statements 4-5 Audited Financial statements Statement of Funds and Disbursements 6 Statement of Funds Balance 7 Statement of Designated Account 8 Statement of Withdrawals 9 Notes to the Financial Statements 10-12 PART II INDEPENDENT AUDITORS' REPORT ON 13-14 THE INTERNAL CONTROL SYSTEM PART III INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE 15-16 PART IV MANAGEMENT LETTER 17-19 2 Vietnam Scaling Up Energy Efficiency Project GCF Grant No. TFOB4389 REPORT OF THE PROJECT MANAGEMENT BOARD Project Management Board for the Vietnam Scaling Up Energy Efficiency Project ("Project Managament Board") presents this report and the Financial Statements of the Vietnam Scaling Up Energy Efficiency Project ("The Project") for the period from 01 March 2022 to 31 December 2023. The Project The Project is implemented under the GCF Grant No TFOB4389 dated 05 March 2021 and Amendment letter for GCF Grant No. TFOB4389 dated 15 December 2021 between the Government of the Socialist Republic of Vietnam and the the International Bank for Reconstruction and Development /International Development Association ("IDA"). Project Management Board Members of the Project Management Board in the period and to the reporting date are: Mrs. Nguyen Thi Lam Giang Director Mrs. Dang Thi Thuc Accountant in charge Auditors The auditors of AASC Limited have taken the audit of financial statements of the Project. Responsibilities of the Project Management Board The Project Management Board is responsible for preparing the project financial statements, including Statement of Funds and Disbursements, Statement of Funds balance, Statement of Designated Account and Statement of Withdrawals, which comply with the accounting policies described in the attached Notes to the Financial Statements. The Project Management Board assures that the accounting policies are appropriately selected and consistently applied. The Project Management Board assures that the accounting records were fully maintained to prepare the financial statements in accordance with the applied accounting policies and to disclose, with reasonable accuracy at any time, the financial position of the Project. The Project Management Board is also responsible for maintaining an effective internal control as management determines necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and comply with relevant laws, regulations and other provisions of the funding agreement that could have a direct and material financial effect on the Project financial statements. On behalf of the Project Management Board g en Thi Lam Giang Ha Noi, 22 July 2024 3 aasc No: 220724.007/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE FINANCIAL STATEMENTS To: Project Management Board for the Vietnam Scaling Up Energy Efficiency Project Opinion We have audited the accompanying financial statements of the Vietnam Scaling Up Energy Efficiency Project, which comprise Statement of Funds balance as at 31 December 2023, Statement of Funds and Disbursements, Statement of Designated Account, Statement of Withdrawals, and Notes to the Financial Statements for the period from 01 March 2022 to 31 December 2023, 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, including the balance of the Designated Account as at 31 December 2023, funds received and disbursements paid, movements of the Designated Account for the period then ended in accordance with the basis of the principal accounting policies described in the Notes to the Financial Statements and the provisions of the GCF Grant No. TFOB4389; In addition, with respect to Statements of Expenditure, adequate supporting documents have been fully maintained to support to the replenishment requests submitted to the World Bank. The disbursements are eligible and in right purposes of the GCF Grant No. TF0B4389. Basis of 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 Management Board in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of Management for the Financial Statements The Project Management Board is responsible for the preparation of the financial statements in accordance with the principal accounting policies described in Notes to the Financial Statements, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is responsible for assessing the Project's ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to cease operations, or has no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with 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. T:(84) 24 3824 1990 I F:(84) 24 3825 3973 I 1 Le Phung Hieu, Hanoi, Vietnam 14OLS AASC AUDMNG FIRM 4 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, but not for the purpose of expressing an opinion on the effectiveness of the Project's internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Project's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures 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 auditors' report. However, future events or conditions may cause the Project to cease to continue as a going concern. i 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 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. AASC Limited Do Manh Cuong Nguyen Pham Hung Deputy General Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2023-002-1 2893-2020-002-1 Ha Noi, 22 July 2024 5 Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 STATEMENT OF FUNDS AND DISBURSEMENTS For the period from 01 March 2022 to 31 December 2023 Incurred and Accumulated Note to 31/12/2023 USD I. FUNDS 2,522,265.92 1. Funds from the World Bank 3 2,522,265.92 II. DISBURSEMENTS 4 2,212,025.67 1. Part 1: Risk Sharing Facility 2,000,000.00 2. Part 2: Technical Assistance 212,025.67 Ill. SURPLUS 310,240.25 Presented by: Cash at bank - Designated account (USD) 310,240.25 310,240.25 6 Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 STATEMENT OF FUNDS BALANCE As at 31 December 2023 Note 31/12/2023 USD Surplus/(Deficit) Surplus in the period 310,240.25 Surplus as at closing 310,240.25 Represented by: Current assets 310,240.25 Cash at bank 5 310,240.25 Net worth 310,240.25 7 Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 STATEMENT OF DESIGNATED ACCOUNT For the period: From 01 March 2022 to 31 December 2023 Account number: 1020811786 Bank: Saigon - Hanoi Commercial Joint Stock Bank - Thang Long Branch Address: No. 8 Hang Hanh, Hoan Kiem, Ha Noi Credit No: TFOB4389 Note USD PART A: ACTIVITIES Opening balance - Add: Total amounts deposited by the World Bank 522,265.92 Deduct: Total amounts withdrawn (212,025.67) Closing balance 310,240.25 PART B: RECONCILIATION 1. Amount advanced by the World Bank 522,275.92 2. Deduct: Amount recovered by the WB (101,270.92) 3. Present outstanding amount advanced to 421,005.00 4. Closing balance 310,240.25 5. Add: Amounts withdrawn and not yet claimed (i) 110,754.75 Overseas Bank charges 10.00 6. Total advances accounted for 421,005.00 (i) Including: USD Part 2: Technical Assistance 110,754.75 110,754.75 8 им = си � с°v ш L Z �. д� � � � � � (6 N О N � � N И О о о � V р �� О U7 ln О _ � . 00 � !� OD � v N N N � О � о о о �- ...� v v г' N N О N �� aNi ш N о° °о й � о `" L � т со о °о °о й � -0 Q N с- е- О о N � > N ^ О О О N 1 �Ф И N М О О ц1 р � N N N � � � О � ` о с� м с� � Е о о о о а Q cv с= N N i-' � N О О � а c�l ,n � О � c�l c�l � � N , � �� 0�0 Со � О О 0�0 _� ~ v CF (D OD О О � р и � м о о и и N � о оо о N � и с� v о о и ,� с� ni с� о � У С � � � и � � � � � � т `°�_oL°� о о о � rn� и I г� г� t� L 5�U� N N сч о .� и т о � г � � о о� О О О � т � О :. [р -С7 U � � � +�--' о) и Q -`�в о О -в О U .� I � �z° �F= � � п� о с U � � 1 � � с Q 1 1 1 � �.�° о о I о О св Q � U о° °о °о � � � о о о � ш о о о с о ш о о о �ц � и N сч с� � `"' � � ° � � � ° � � � си р � ,� ш и � и � � N � а о а� ш си т с� V > � й о ti о � а � � c.i и С � Q с� � й с� � а> ар й No � � v с� Ш � � � 1 i� �N � �� О с�6 �� р° и � и и и � Ш � � N о � � � � � т V io Ф р LL � П3 °- � N N N � ��- и- � n с О� f6 � 'о с°�" с°�.i с°�� о' .�Z �O � Q � Го �, о � , v г т R о у о о И с Ш о � � � о c;i � о � Е� �� � � са С� ш � � _ °' с r LL ~ � � � ia ' U а �i й д .+ >С7 Й0. I Z 0 оо о о t�- v Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 NOTES TO THE FINANCIAL STATEMENTS Period from 01 March 2022 to 31 December 2023 1. Background Vietnam Scaling Up Energy Efficiency Project ("the Project") is implemented under the GCF Grant No. TFOB4389 dated 05 March 2021 and Amendment letter for GCF Grant No. TFOB4389 dated 15 December 2021 between the Government of the Socialist Republic of Vietnam and the International Bank for Reconstruction and Development /international Development Association (" I DA"). Total budget of the GCF Grant No. TFOB4389 is USD 11,300,000. The main objective of the Project including: Improving energy efficiency in the industrial sector of Vietnam; Contributing to achieving national goals of energy saving, ensuring energy security, and implementing tasks, reducing greenhouse emissions, and responding to climate change. The Project includes the following parts: Part 1: Risk Sharing Facility: Part 1.1 Guarantee Issuance: Issuing of Risk Sharing Facility ("RSF") Guarantees to the Participating Financial Institutions ("PFI") under the RSF to cover potential defaults on loans provided by said PFIs to Industrial Enterprise ("IE") an Energy Service Company ("ESCO") to finance eligible Energy Efficiency Sub-projects. Part 1.2 Supporting Program Implementing Entity ("PIE") operations: Supporting the management and the operation of, and the issuance of RSF Guarantees by, the RSF by providing Management Fees and Seed Capital to the Program Implementing Entity. t- Part 2: Technical Assistance: Part 2.1 Capacity building: Provision of technical and analytical support and associated capacity building to - The Program Management Board and Ministry of Industry and Trade for, inter alia, Project supervision, monitoring and evaluation, reporting, and independent verification of results-, and - Relevant government agencies, PFIs, lEs and ESCOs, for awareness raising of potential energy efficiency investment opportunities with knowledge sharing on successful energy efficiency investment, identification of energy efficiency investment opportunities, and development and implementation of a longer term engagement strategy with educational and domestic training institutions in the country for sustainable local capacity building. Part 2.2 National energy efficiency program and pipeline development: Provision of technical and analytical support to - MoIT and relevant government agencies for the development and implementation of energy efficiency policies and regulation necessary for scaling up energy efficiency investment, including the implementaion of voluntary agreements with relevant industries, the improvement of incentives for industry to carry out energy efficiency investments, and the development of mandatory energy efficiency standards and benchmarks in energy-intensive industries; and - PFIs for identification, appraisal, and implementataion of Energy Efficiency Sub-projects in the industrial sector and business development to generate Energy Efficiency lending pipeline; and (ii) lEs, ESCOs for the development of bankable Energy Efficiency Sub- projects. The Project officially came into effect since 25/02/2022 and is expected to close on 31/01/2026. 10 Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 The Project is managed by Project Management Board for the Vietnam Scaling Up Energy Efficiency Project, and its office is located at Room 309, building B, No 54, Hai Ba Trung, Hoan Kiem, Ha Noi. 2. Principal Accounting Policies a. Basis of accounting The annual accounting period commenced from 1st January to 31st December. The first accounting period commenced from 01 March 2022 to 31 December 2023. The financial statements are prepared under cash basis and are adjusted to meet the requirement of the World Bank. Accordingly, receipts are recognized by the Project when received, rather than the right to receive, and disbursements are recognized when being paid, rather than the obligation to pay. The financial statements are prepared in accordance with the requirements of the World Bank and presented in United State Dollar (USD). The principal accounting policies are summarized as below: b. Funds and Disbursements Funds: Funds received from the World Bank are recorded when remittance made into Designated Account or direct payment made to contractors/ suppliers/ PIE; Disbursements: Disbursements are recognized when payments are made by the Project to contractors/ suppliers/ PIE. c. Designated account Designated Account is the deposit account in USD opened at the Saigon-Hanoi Commercial Joint Stock Bank - Thang Long Branch. Payments made via the Designated Account are for eligible expenditures of the Project in accordance with the provisions of the GCF Grant No. TFOB4389. There is*no interest with deposit account in USD under the prevailing rule. 3. Funds received from the World Bank Incurred and Accumulated to 31/12/2023 USD Designated account 522,275.92 Advance 522,275.92 Direct Payment (USD) 2,000,000.00 2,522,275.92 __ _ ____ ____ ____ __ 11 Vietnam Scaling Up Energy Efficiency Project Financial Statements GCF Grant No. TFOB4389 Period from 01 March 2022 to 31 December 2023 4. Disbursements Incurred and Accumulated to 31/12/2023 USD Part 1: Risk Sharing Facility 2,000,000.00 Part 2: Technical Assistance 212,025.67 2,212,025.67 The Project's 100% eligible disbursements (including tax) in the categories of Goods, Consultanting and Non-Consulting Services, Incremental Operating Costs, Training and Workshops are financed by the GCF Grant No. TFOB4389. 5. Cash at bank 31/12/2023 USD Designated Account (USD) 310,240.25 310,240.25 6. Subsequent events There have been no significant events occurring after the reporting date, which would require adjustments or disclosures to be made in the financial statements. 7. Approval of the Financial Statements The financia state ents were approved by Project Management Board for issuance on 22 July 2024 igpen Thi Lam Giang Dang Thi Thuc Director Accounting in charge Ha Noi, 22 July 2024 12 aasc No: 220724.007/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE INTERNAL CONTROL SYSTEM To: Project Management Board for the Vietnam Scaling Up Energy Efficiency Project We have audited, in accordance with the International Standards on Auditing, the financial statements of the Vietnam Scaling Up Energy Efficiency Project ("the Project") for the period from 01 March 2022 to 31 December 2023 and issued the auditors report thereon dated on 22 July 2024 expressing an opinion on those financial statements. In connection with our audit of the financial statements, we also examined the effectiveness of internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as the internal control over financial reporting for the period from 01 March 2022 to 31 December 2023. Responsibilities of the Project Management Board The Project Management Board is responsible for maintaining an effective internal control over compliance with requirements that could have a direct and material financial effect on the financial statements as well as the internal control over financial reporting. Auditor's Responsibility Our responsibility is to express an opinion on the effectiveness of internal control based on our examination. Our examination was conducted in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised). That standard requires that we comply with ethical requirements and plan and perform our procedures to obtain reasonable assurance about whether, in all material respects, the Project has maintained an effective 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. Our examination included obtaining an understanding, testing, and evaluating the design and operating effectiveness of the internal control, and performing other procedures as we considered necessary in the circumstances to obtain sufficient appropriate evidence to provide a basis for our opinion. Because of the 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. In addition, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. T:(84) 24 38241990 I F:(84) 24 3825 3973 I 1 Le Phung Hieu, Hanoi, Vietnam AASC AUDMNG FIRM 13 Auditors' opinion In our opinion, the Project has maintained an effective internal control over misstatements that could have a direct and material financial effect on the Project financial statements for the period from 01 March 2022 to 31 December 2023. AASC Limited bo Mant Cuong Nguyen Pham Hung Deputy Gcneral Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2023-002-1 2893-2020-002-1 Ha Noi, 22 July 2024 14 aasc No: 220724.007/BCTC.FIS2 INDEPENDENT AUDITORS' REPORT ON THE COMPLIANCE To: Project Management Board for the Vietnam Scaling Up Energy Efficiency Project We have audited, in accordance with International Standards on Auditing, the financial statements of Vietnam Scaling Up Energy Efficiency Project ("the Project") for the period from 01 March 2022 to 31 December 2023 and issued the auditors report thereon dated 22 July 2024 expressing an 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 GCF Grant No. TF0B4389, law and regulations that have a direct and material effect on the Project's financial statements for the period from 01 March 2022 to 31 December 2023 ("the Requirements"). Responsibilities of the Project Management Board The Project Management Board is responsible for complying with the Requirements applicable to the Project. Auditor's Responsibility Our responsibility is to express an opinion on the Project's compliance with the Requirements based on our procedures. We limited our tests of compliance to the Requirements, and we did not test compliance with all laws and regulations applicable to the Project. We performed our work in accordance with the International Standard on Assurance Engagements (ISAE) 3000 (Revised). That standard requires that we comply with ethical requirements and 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 the Requirements at the Project involves performing procedures to obtain evidence about whether the Project's activities are free of material non-compliance with the Requirements, including obtaining an understanding of the internal control relevant to the Project's compliance with the Requirements. The procedures selected depend on the auditors' judgment, including the assessment of risks that the Project does not comply with the Requirements and whether such non-compliance could have a direct and material financial effect on the Project's financial statements. Our procedures included testing the compliance with the Requirements we consider necessary to provide a reasonable assurance that the Requirements are complied by the Project. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. T:(84) 24 3824 1990 I F:(84) 24 3825 3973 I 1 Le Phung Hieu, Hanoi, Vietnam - AASC AUDlNG FIRM 15 Auditors' opinion In our opinion, the Project has complied with the Requirements that could have a direct and material financial effect on the Project's financial statements for the period from 01 March 2022 to 31 Decerte023. AASC Limited Do Manh Cuong Nguyen Pham Hung Deputy General Director Auditor in-charge CPA Registered No.: CPA Registered No.: 0744-2023-002-1 2893-2020-002-1 Ha Noi, 22 July 2024 16