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田 OWNER:TRANSPoRT DEVELoPMENT AND STRATEGY INSTITUTE

■ VIETNAM LoGISTICS STATISTlcAL SYSTEM PRoJECT田 G『ant Ag『eement No・TF0A4566-VLSS

. AUDげED FINANC決L STA花 MENTS

FOR THE PERIOD FROM 26 SEPTEMBER 2017 TO 31 DECEMBER 2018

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TRANSPORT DEVELC PMENT AND STRATEGY INSTITUTEVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECTGrant Agreement No. TFOA4566

TABLE OF CONTENT

CONTENT PAGE

PARTI FINANCIAL STATEMENTS 1

Statement of the Transport Development and Strategy Institute 2

Independent Auditors' Report 3-4

Balance Sheet 5

Statement of Receipts and Expenditures 6

Statements of Receipts and Disbursements 7

Statement of Actual Expenditures vs. Budget 8

Notes to the Financial Statements 9-11

PARTII AUDITORS'REPORT ON THE COMPLIANCE 12-14

PART III INDEPENDENT ASSURANCE REPORT ON EFFECTIVENESS 15-17OF INTERNAL CONTROL

UUUUUUUUU

PART I

FINANCIAL STATEMENTS

UUUUUUUUU* N

UUUUUUUUUUUUU

TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTEVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECTGrant Agreement No. TF0A4566

STATEMENT OF THE TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE

The Transport Development and Strategy Institute - Vietnam Logistics Statistical System Project(hereinafter referred to as "TDSI") submits its report together with the audited financial statementsof the Vietnam Logistics Statistical System Project (hereinafter referred to as "VLSS") for the periodfrom 26 September 2017 (the effective date of the Grant Agreement) to 31 December 2018.

TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE

Members of TDSI who held office during the year and to the date of this report include:

Mr. Nguyen Thanh Phong Director

Ms. Nguyen Thi Phuong Hien Deputy Director: Team Leader

Mr. Du Khanh Thang Planning and Finance Manager - Team Sub-leader

Mr. Tran Van Kien Chief Accountant: Member

Ms. Nguyen Thi Diem Hang STIC Manager - Member

Ms. Nguyen Thi Diem Ngoc Accountant of Planning and Finance Department: Member

Ms. La Tra Linh Researcher of STIC Department: Member - Secretary

Ms. Ho Thi Hong Thuy Member

Responsibilities of the Transport Development and Strategy Institute

The Transport Development and Strategy Institute is responsible for preparing Financial Statementswhich give a true and fair view of balance of assets, liabilities and funds as at 31 December 2018 aswell as the funds received and disbursements made and expenditures actually incurred for theperiod from 26 September 2017 to 31 December 2018 in accordance with the accounting policiesas stated in Note 2 and Note 3 of the Notes to the Financial Statements and covenants of the GrantAgreement No. TF0A4566.

In preparing those financial statements, TDSI 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;* Design and maintain an effective internal control system for preparation and presentation of

the financial statements to minimize risks and frauds.

The Transport Development and Strategy Institute is responsible for ensuring that properaccounting records are kept which disclose, with reasonable accuracy at any time, the financialposition of the Project and properly using the funds for the Project's purpose. It Is responsible forsafeguarding the assets of TDSI and hence for taking reasonable steps for the prevention anddetection of fraud and other irregularities.

The Transport Development and Strategy Institute confirms that they have complied with the aboverequirements in preparing the Financial Statements.

For and on behalf of the Transport Develoment and Strategy Institute,

Nguyen Thanh PhongDirectorHanoi, 3 May 2019

2

AUDITING AND CONSULTING CO LTD

UY

No: 294/2019/UHY - BCKT

INDEPENDENT AUDITORS' REPORT

To: The Transport Development and Strategy InstituteVietnam Logistics Statistical System Project

Opinion

We have audited the accompanying financial statements of the Vietnam Logistics Statistical SystemProject (hereinafter referred to as "the Project") for the period from 26 September 2017 to 31December 2018, prepared on 03 May 2019 as set out on pages 5 to 11 herein, including theBalance Sheet as at 31 December 2018, the Statement of Sources and Use of funds, the Statementof Receipts and Disbursement, the Statement of Actual Expenditures vs Budget for the period from26 September 2017 to 31 December 2018 and the Notes thereto (hereinafter collectively referred toas "the financial statements").

In our opinion, the accompanying financial statements give a true and fair view, in all materialrespects, of the financial position of the project as at 31 December 2018 as well as the fundsreceived and disbursements made of the Project for the period from 26 September 2017 to 31December 2018 in accordance with the basis of the principal accounting policies described in theNotes to the Financial Statements.

Basis of opinion

We conducted our audit in accordance with International Standards on Auditing ("ISAs"). Ourresponsibilities under those standards are further described in the Auditors' Responsibilities for theAudit of the Financial Statements section of our report. We are independent of TDSI in accordancewith the international Ethics Standards Board for Accountants' Code of Ethics for ProfessionalAccountants ("IESBA Code"), and we have fulfilled our other ethical responsibilities in accordancewith the IESBA Code. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our opinion.

Responsibilities of the Management for the Financial Statements

TDSI is responsible for the preparation and presentation of the financial statements in accordancewith financial reporting regulations described in Note 2 and Note 3 of the Notes to the FinancialStatements, and for such internal control as the management determines is necessary to enable thepreparation of financial statements that are free from material misstatement, whether due to fraud orerror.

U

Head Office: 9th Floor, HL Tower,82 Duy Tan Str., Cau Giay Dist., Hanoi, VietnamPhone: 84 243755 7446 Fax: 84 24.3755 7448 3www.uhy.vn

AnindependentmemberofUHY Intemational

INDEPENDENT AUDITORS' REPORT (CONT'D)

Auditor's Responsibilities

Our objectives are to obtain reasonable assurance about whether the financial statements as awhole are free from material misstatement, whether due to fraud or error, and to issue an auditor'sreport that includes our opinion. Reasonable assurance is a high level of assurance, but is not aguarantee that an audit conducted in accordance with ISAs will always detect a materialmisstatement when it exists. Misstatements can arise from fraud or error and are consideredmaterial if, individually or in the aggregate, they could reasonably be expected to influence theeconomic 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 maintainprofessional skepticism throughout the audit. We also:

* Identify and assess the risks of material misstatement of the financial statements, whetherdue to fraud or error, design and perform audit procedures responsive to those risks, andobtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. Therisk of not detecting a material misstatement resulting from fraud is higher than for oneresulting 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 Project's preparation and fairpresentation of the audit in order to design audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing an opinion on the effectiveness of theProject's internal control.

* Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by management.

* Evaluate the overall presentation, structure and content of the financial statements, includingthe disclosures, and whether the financial statements represent the underlying transactionsand events in a manner that achieves fair presentation.

We communicate with those charged with governance regarding, among other matters, the plannedscope and timing of the audit and significant audit findings, including any significant deficiencies ininterai control that we identify during our audit.

Nguyen Thi Phuong Thao Nguyen Thi Thu HaDeputy General Director AuditorAuditor's Practicing Certificate Auditor's Practicing CertificateNo.0933-2018-112-1 No. 2277-2018-112-1For and on behalf ofUHY AUDITING AND CONSULTING COMPANY LIMITEDHanoi, 03 May 2019

U 4

TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTSVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period fromGRANT AGREEMENT NO. TF0A4566 26/09/2017 to 31/12/2018

BALANCE SHEETAs at 31 December 2018

Unit: VND

Note 31/12/2018VND

ASSETS

CashCash on handCash at bank, State Treasury -

Project implemenation cost 6 200,000,000Project implemenation cost 200,000,000

TOTAL ASSETS 200,000,000

RESOURCES

II. Resources 200,000,000

Project fund 200,000,000Counterpart fund 7 200,000,000WBfund -

TOTAL RESOURCES 200,U0,UUU

Hanoi, 03 May 2019

Prepared by Chief Accountant Director

Nguyen Thi Diem Ngoc Tran Van Kien Nguyen Thanh Phong

The accompanying notes are an integral part of these consolidated financial statements

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TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTSVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period fromGrant Agreement No. TFOA4566 26/09/2017 to 31/12/2018

NOTES TO THE FINANCIAL STATEMENTS(These notes are an integral part of and should be read in conjunction with the accompanying financial statement)

1 . PROJECT BACKGROUND

The Vietnam Logistics Statistical System Project has been implemented on the basis of theGrant Agreement No. TFOA4566 signed on 26 September 2017 between the World Bank andthe Socialist Republic of Vietnam. Total fund of the Project is USD 498,460, equivalent to VND11,310 billion as financed by the World Bank and the counterpart fund is VND 500 million. TheProject duration is 2 years, effective from 26 September 2017 to 26 September 2019.

The Vietnam Logistics Statistical System Project consists of 4 components as follows:

Component 1: Developing standardized logistics indicators and the methodology of collection,processing and reporting logistics data on an annual basis

Component 2: Conducting one comprehensive pilot survey to collect data

Component 3: Preparing and disseminating pilot annual report

Component 4: Provision of support in project implementation.

The Project commences from 26 September 2017 and is expected to be finished on 26September 2019.

Under the grant agreement, total grant from the World Bank to the project is USD 498,460.The counterpart fund is VND 500,000,000.

Overall objectives:

To enhance the Government's capacity in strategic planning, evidence-based policy makingand monitoring the implementation of policies related to logistics development via developingthe methodology of collection, processing and reporting logistics data on an annual basis.

Specific objectives:

a Developing standardized logistics indicators; having a clear methodology of development,mechanism and implementation.

* Training to improve statistical capacity for project agencies;0 Disseminating pilot annual report on logistics statistics of 2017;

Develop a manual on guiding the collection and processing of transport and logisticsstatistics and preparation of the annual report on logistics statistics.The above objectives will assist the Ministry of Transport in setting up the system ofcollection, processing and preparing annual report on transport and logistics. These datawill be used by state agencies for the purpose of strategic planning and monitoring theimplementation of policies on transport and commercial logistics infrastructure and helpingthe private sector, especially logistics companies have access to reliable data for businessdevelopment.

9

TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTSVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period fromGrant Agreement No. TF0A4566 26/09/2017 to 31/12/2018NOTES TO THE FINANCIAL STATEMENTS(These notes are an integral part of and should be read in conjunction with the accompanying financial statement)

2. BASIS OF PREPARATION AND ACCOUNTING PERIOD

Basis of preparation

The financial statements are expressed in Vietnam dong (VND) under the historical costconvention. The financial statements were prepared in accordance with requirements of theWorld Bank and book keeping is in line with Vietnamese Accounting Standards, non-businessaccounting system under Circular No. 107/2017/TT-BTC dated 10 October 2017.

Accounting period

The financial year of the Project begins on 1 January and ends on 31 December.

The first accounting period of the Project is from 26 September 2017 (the effective date of theGrant Agreement) to 31 December 2018.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies, which have been adopted by TDSI in the preparation ofthese financial statements, are as follows:

Recognition of funds and expenditures

Funds and expenditures are recognized as actually incurred, specifically:

* WB fund is recognized when being directly credited First advance account and paid tosuppliers during the financial period.

* The counterpart fund is recognized when being disbursed from the State treasury.* The project expenditures are recognized on the accrual basis, including those actually

incurred and amounts payable to the suppliers.

4. ADVANCE ACCOUNT

The project account is opened at Vietnam Bank for Agriculture and Rural Development -Hanoi branch. Payments from the advance account are made in accordance with provisions ofthe Grant Agreement No. TF0A4566 dated 26 September 2017 and related covenants of theWorld Bank.

U5. STATEMENT OF RECEIPTS AND DISBURSEMENTS

The statement of receipts and disbursements is prepared on the basis of actual cash flows,specifically:

Cash inflows represents receipts actually received from the World Bank and the State budget.

Cash outflows represents disbursements actually made from TDSI for cost items of the projectin the year and payments for suppliers during the year.

The closing balance is presented based on the opening balance of the cash flow plus receiptsand minus expenditures incurred in the year.

The accumulated amount is presented based on receipts and disbursements accumulatedfrom the commencement date to the end of the reporting year.

10

W

TRANSPORT DEVELOPMENT AND STRATEGY INSTITUTE FINANCIAL STATEMENTSVIETNAM LOGISTICS STATISTICAL SYSTEM PROJECT For the period fromGrant Agreement No. TF0A4566 26/09/2017 to 31/12/2018NOTES TO THE FINANCIAL STATEMENTS(These notes are an integral part of and should be read in conjunction with the accompanying financial statement)

6. PROJECT IMPLEMENTATION COST

For the periodfrom 26/09/2017

to 31/12/2018VND

Developing logistics indicators and method of collection, processing andreporting of logistics data

Surveying and collecting data

Developing a reporting template on transportation and logistics data of 2017

Training, capacity building and workshop organization -Project management cost 200,000,000Total 200,000,000

7. COUNTERPART FUND

For the period* from 26/09/2017

to 31/12/2018VND

Counterpart fund of the Vietnamese Govemment 200,000,000

Total 200,000,000

Hanoi, 03 May 2019

Prepared by Chief Accountant Director

Nguyen Thi Diem Ngoc Tran Van Kien Nguyen Thanh Phong

* 11

PART II

AUDITORS' REPORT ON THE COMPLIANCE

*

T1

12

( I AUDITNG AND CONSULTNG CO LT D

AUDITORS' REPORT ON THE COMPLIANCE

To: The Transport Development and Strategy InstituteThe Vietnam Logistics Statistical System Project

We have examined the compliance of the Vietnam Logistics Statistical System Project in Vietnam withthe Grant Agreement No. TF0A4566 for the period from 26 September 2017 to 31 December 2018and expressed our unqualified opinion on these financial statements.

Regarding to the audit of the Project's financial statements, we have examined the compliance of theProject with the Grant Agreement No. TF0A4566 dated 26 September 2017 between the World Bank(WB) and the Socialist Republic of Vietnam, regulations on disbursement, contract signing,procedures of receipts and payments via the advance account and reconciliation for the advanceaccount, use of project funds, statements of expenditures (SOEs), financial articles, special provisions,laws and regulations that may have a direct and significant financial impact on the financial statementsof the Project for the period from 26 September 2017 to 31 December 2018 (referred to as the"Regulations").

TDSI is responsible for complying with covenants mentioned in Statement of Compliance.

Our responsibilities are to express an opinion on the TDSI's compliance with respect to theseRegulations based on our audit work.

We performed our work in accordance with International Standard on Assurance Engagements (ISAE)3000. That standard requires that we comply with ethical requirements and plan and perform ourprocedures to obtain reasonable assurance about whether, in all material respects, the Project hascomplied with the regulations.

Based on applying Quality Control Standard No. 1, whereby we have maintained a comprehensivequality control system, including the design and recording of policies and procedures regarding to thecompliance with standards and regulations on professional ethics, professional standards, law andrelevant regulations.

We have complied with the requirements of independence and other ethical requirements inaccordance with the Code of Professional Ethics and Auditing, which is based on fundamental ethicalprinciples on integrity, objectivity, professional competence and prudence, confidentiality andprofessional conduct.

Inspections include the implementation of procedures to collect evidence that the Project has no non-compliance activities, in all material respects, including the investigation of the internal control systemfor complying with these Regulations. The appropriate procedures depend on the auditor's judgment,including the assessment of the risk that the Project does not comply with the Regulations as well asthe assessment of non-compliance may have a direct and significant impact of the Project's financialstatements. Our procedures also include checking the compliance of the Project with respect to theRegulations that we deem necessary to provide reasonable assurance that the Project has compliedwith the Regulations.

We strongly believe that our audit has provided a reasonable basis for our opinion.

Head Office: 9th Floor, HL Tower, 1382 Duy Tan Str., Cau Giay Dist., Hanoi, VietnamPhone: 84 243755 7446 Fax: 84 24.3755 7448www.uhy.vn

An independent member of UHY International

AUDITORS' REPORT ON THE COMPLIANCE (CONTINUED)

Our opinian

In our op nion, the use of funds, in all material aspects, has complied with provisions in :he GrantAgreement No. TF0A4566 dated 26 September 2017 between the World Bank (WB) and the SocialistRepublic of Vietnam.

Other matters

During the period from 26 September 2017 to 31 December 2018, the Project had neither receipts andexpenditures via the advance account nor withdrawal applications been made, we, therefore, do notevaluate the Statement of Advance Account and expenditures made via the Statement ofExpenditures (SOEs).

Nguyen Thi Phuong Thao Nguyen Thi Thu HaDeputy General Director AuditorAuditor's Practicing Certificate Auditor's Practicing CertificateNo. 0933-2018-112-1 No. 2277-2018-112-1

For and on behalf ofUHY Auditing and Consulting Company LimitedHanoi, 03 May 2019

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U ~PART III

N AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATION* OF THE FINANCIAL STATEMENTS

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NAUDITING AND CONSULTING CO LT D

AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATIONOF THE FINANCIAL STATEMENTS

To: The Transport Development and Strategy InstituteThe Vietnam Logistics Statistical System Project

We have audited the effectiveness of the design and implementation of the internal control system thatmay have a financially direct and material effect on the financial statements of the Vietnam LogisticsStatistical System Project ("the Project") for the period from 26 September 2017 to 31 December2018. The internal control was set up for purpose of managing risks to the achievement of theProject's objectives, including the reasonable prevention and detection of errors, irregularities andfraud. The internal control is the responsibility of TDSI.

Auditors' Responsibility

Our responsibility is to express an opinion, based on our audit, on the effectiveness of the internalcontrol that could have a financially direct and material effect on the financial statements of the Projectfor the period from 26 September 2017 to 31 December 2018. We conducted our audit in accordancewith the principles of International Standard on Assurance Engagements 3000 - Assurance

Engagements other than Audits of Reviews of Historical Financial Information ("IASE 3000) insofarthis standard could be usefully applied in this audit and in its specific compliance context. Thisstandard requires that we comply with Quality Control Standard No. 1, ethical requirements and thatwe plan and perform the audit to obtain reasonable assurance about whether the internal control for

the Project is adequately designed for the purpose of the Project and was operating effectively during

the period covered by the audit.

Our audit included obtaining a sufficient understanding of the Project and the internal control for the

Project; assessing the risk that a material weakness exists that could have a financially direct andmaterial effect on the financial statements of the Project; testing and evaluating, on the sample basis,

the design and operating effectiveness of internal control based on the assessed risk; and performingsuch other procedures as we considered necessary in the circumstances.

We considered the following criteria in evaluating the effectiveness of the internal control:

- The requirement for design and implementation of the internal control in the Project'sOperations Manual ("POM");

- The appropriateness of the internal control for the Project's activities and objectives;- The implementation of the internal control by the TDSI to achieve its objective of prevention

and detection of errors, irregularities and fraud that could have a financially direct andmaterial effect on the financial statements of the Project;

- The significance to the financial statements where one control or several controls did not

operate as designed, if any; and- That a weakness or a deficiency existed where a control or several controls did not

reasonably prevent or detect risks that could have an adverse impact on the objectives ofthose internal controls which are to provide reasonable assurance that the financial

statements are prepared, in all material respects, in accordance with the adopted accountingpolicies and POM, that the funds are utilized for the purpose defined in the Grant Agreement

between the Government of the Socialist Republic of Vietnam and the World Bank and that

the Project complies with the Grant Agreement, POM and other laws and regulations

applicable for the Project.

We believe that our audit provides a reasonable basis for our opinion.

Head Office: 9th Floor, HL Tower, 1682 Duy Tan Str., Cau Giay Dist., Hanoi, Vietnam

Phone: 84 24.3755 7446 Fax: 84 24.3755 7448www.uhy.vn

AnindependentmemberofUHYIntemational

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AUDITORS' REPORT ON THE INTERNAL CONTROL OVER PREPARATIONOF THE FINANCIAL STATEMENTS (CONTINUED)

Auditor's Opinion

The Project's internal control system that may have a financially direct and material effect on thefinancial statements of the project for the period from 26 September 2017 to 31 December 2018, in allmaterial respects, is sufficiently designed for the Project's purposes and operated in an effectivemanner, based on the above-mentioned evaluation criteria.

Other Matters

We draw attention to Appendix 1 - Management letter dated 03 May 2019 in which we discussedfindings from the internal control which have no financially direct and material effect on the financialstatements of the Project but may put system objectives at risk.

This audit involved a historical evaluation of internal control at a specific point of time. Thus, this auditdoes not provide assurance for future periods due to the risk that internal control may becomeinappropriate because of changes in conditions, or that the degree of compliance with policies orprocedures may deteriorate.

Nguyen Thi Phuong Thao Nguyen Thi Thu Ha

Deputy General Director Auditor

Auditor's Practicing Certificate Auditor's Practicing Certificate

No. 0933-2018-112-1 No. 2277-2018-112-1

For and on behalf ofUHY Auditing and Consulting Company LimitedHanoi, 03 May 2019

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