Public Disclosure Authorized NEXIA STT...NEXIA STT Audit -Tax Advisory U U Component C "Technical Assistance and Capacity Builiding for Electricity Regulatory Authority of Vietnam"

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NEXIA STTAudit -Tax Advisory

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Component C "Technical Assistance andCapacity Builiding for Electricity RegulatoryAuthority of Vietnam" - Distribution EfficiencyProject

Audited Special Purpose Financial Statements

Under the Grant Agreement No. TF01 3456-VNbetween the Government of the Soc6alist Republic ofVietnamr and the International Bank forReco-nstruction and Development/Internatio-ial

For the year ended 31 December 2015

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Distribution Efficiency ProjectComponent C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam"

Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Developmentinternational DevelopmentAssociation

Contents

STATEMENT OF THE COMPONENT MANAGEMENT BOARD ........ ............. 1

STATEMENT OF THE COMPONENT MANAGEMENT BOARD (CONTINUED)..2

INDEPENDENT AUDITORS' REPORT.............................................3

INDEPENDENT AUDITORS' REPORT.................. .... ........ 5

INDEPENDENT AUDITORS' REPORT............................... 6

BALANCE SHEET ............................................... 8

* SOE WITHDRAWAL SCHEDULE ................................... 11

NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS .......... 12

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g Distribution Efficiency ProjectComponent C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam"

Under the Grant Agreement No, TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/International DevelopmentAssociation

STATEMENT OF THE COMPONENT MANAGEMENT BOARD

The Component Management Board, Electricity Regulatory Authority of Vietnam ("ERAV"), theMinstry of Industry and Trade ('the Component Management Board") is responsible for the SpecialPurpose Financial Statements of the Component C "Technical Assistance and Capacity building forElectricity Regulatory Authority of Vietnam" of Distribution Efficiency Project ("the Component") forthe year ended 31 December 2015.

The Component

The development objectives of the Distribution Efficiency Project ("the Project") are to improve theperformance of Vietnam's power corporations (PCs) in providing quality and reliable electricityservices, and to reduce greenhouse gas emissions through demand side response and efficiencygains.

The Project comprises three (3) components:- Component A; System Expansion and Reinforcement;- Component B: Introduction of Smart Grid Technologies in Distribution; and- Component C: Technical Assistance and Capacity Building.

Of which, Component C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam" ("the Component") belongs to the Distribution Efficiency Project. TheComponent is implemented by the Electricity Regulatory Authority of Vietnam ("ERAV"), Ministry ofIndustry and Trade of the Socialist Republic of Vietnam. The Component is funded by AustralianTrust Fund for the AusAID and the World Bank through International Bank for Reconstruction andDevelopment (IBRD)/International Development Association (IDA), acting as administrator of theAustralian Trust Fund for the AusAID-World Bank Strategic Partnership in Vietnam under the GrantAgreement No. TF013456-VN dated 8 November 2012 with an amount of AUD6.000,000 for four (4)years from 2012 to 2016.

The purpose of Component C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam" is to provide technical assistance to and capacity building of ElectricityRegulatory Authority of Vietnam for improvement of efficiency in electricity tariffs, enhancement ofefficiency of and incorporation of smart grid technologies in the grid and distribution codes,integration of renewable energy in the grid and d stribution codes, development of demand responseand smart grid programs, and Project management and monitoring and evaluation.

The Component officially came into operation from 7 February 2013

Component Management Board

The members of the Component Management Board who held office during the year and at the dateof this report are as follows:

Mr. Nguyen Anh Tuan Component DirectorMr. Nguyen The Huu Component CoordinatorMs. Nguyen Phuong Yen Component Accountant (until 29 September 2015)Ms. Le Th Thuy Hang Component Accountant (from 30 September 2015)

Ug Distribution Efficiency Project

Component C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam"

Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/international DevelopmentAssociation

STATEMENT OF THE COMPONENT MANAGEMENT BOARD (CONTINUED)

Auditors

The accompanying Special Purpose Financial Statements for the year ended 31 December 2015have been audited by NEXIA STT Co., Ltd.

Responsibility of the Component Management Board In respect of the Special PurposeFinancial Statements

The Component Management Board is responsible for the Special Purpose Financial Statementswhich give a true and fair view of the financial position and designated account balance of theComponent as at 31 December 2015 and of its sources and uses of funds, operatons of designatedaccount and total funds withdrawn for the year ended 31 December 2015. In preparing the SpecialPurpose Financial Statements which give a true and fair view, the Component Management Boardis required to select suitable accounting policies and then apply them consistently.

The Component Management Board is responsible for ensuring that proper accounting records arekept which enable the Special Purpose Financial Statements to be prepared in compliance with theaccounting policies set out in Note 2 to the Special Purpose Financial Statements. The ComponentManagement Board is also responsible for safeguarding the assets of the Component and hence fortaking reasonable steps for the prevention and detection of fraud and other irregularities.

The Component Management Board is also responsible for maintaining an effective internal control asmanagement determines is necessary to enable the preparation of Special Purpose FinancialStatements that are free from material misstatement, whether due to fraud or error, and comply withrelevant laws, regulations and other provisions of the Financing and Grant Agreements that could havea direct and material financial effect on the Component's Special Purpose Financial Statements

The Project Management assumes the responsibility to provide, and has provided, the auditors withall accounting records, supporting and other documents, minutes, any pertinent information andexplanations, either orally or by written confirmation, necessary for the audit.

Approval of the Special Purpose Financial Statements

We hereby approve the accompanying Special Purpose Financial Statements of the Component C"Technical Assistance and Capacity building for Electricity Regulatory Authority of Vietnam" underDistribution Efficiency Project on pages 3 to 14 which give a true and fair view of the financialposition and designated account balance as of 31 December 2015 and its sources and uses offunds, operations of designated account and total funds withdrawn for the year ended 31 December2015 in accordance with the accounting policies as set out in Note 2 to the Special PurposeFinancial Statements and grant withdrawals have been adequately reconciled to the statements ofexpenditures prepared by the Component during the period, and such statements of expenditureswere adequately supported. The Special Purpose Financial Statements were prepared incompliance with the Applicable Provisions of the Agreement and other Guidance from the WorldBank

f he Component Management Board

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Component Director

Hanoi, 29 June 20162

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NEXIA STTAudit - Tax - Ad (vis-ory

INDEPENDENT AUDITORS' REPORTOn the Component Special Purpose Financial Statements

To: The Management Board of Component C "Technical Assistance and Capacity building forElectricity Regulatory Authority of Vietnam" under Distribution Efficiency Project

We have audited the accompanying Balance Sheet as at 31 December 2015, the Statement of Sourcesand Uses of Funds, the Statement of Designated Account and the SOE Withdrawal Schedule for the yearended 31 December 2015 of the Component C "Technical Assistance and Capacity Building for ElectricityRegulatory Authority of Vietnam" under Distribution Efficiency Project ("the Component") implemented bygrant of Australian Trust Fund for the AusAID and the World Bank through International Bank forReconstruction and Development/International Development Association. The Special Purpose FinancialStatements are prepared by the Component Management Board in accordance with the accountingpolicies set out in Note 2 of the Special Purpose Financial Statements.

Management's Responsibility for the Special Purpose Financial Statements

The Management is responsible for the preparation and fair presentation of the Balance Sheet as at 31December 2015, the Statement of Sources and Uses of Funds, the Statement of Designated Accountand the SOE Withdrawal Schedule for the year ended 31 December 2015 (collectively referred to as the"Special Purpose Financial Statements") in accordance with the accounting policies set out in Note 2 andfor such internal control as management determines is necessary to enable the preparation of SpecialPurpose Financial Statements that are free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these Special Purpose Financial Statements based on ouraudit We conducted our audit in accordance with International Standards on Auditing, Those Standardsrequire that we comply with relevant ethical requirements, plan and perform our audit to obtainreasonable assurance about whether the Special Purpose Financial Statements are free from materialmisstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe Special Purpose Financial Statements. The procedures selected depend on the auditor's judgment,including the assessment of the risks of material misstatement of the Special Purpose FinancialStatements, whether due to fraud or error. In making those risk assessments, the auditor considersinternal control relevant to the Component's preparation and fair presentaton of the Special PurposeFinancial Statements in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of accounting policies used and the reasonableness ofaccounting estimates made by Component management, as well as evaluating the overall presentationof the Special Purpose Financial Statements,

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinion.

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Opinion

In our opinion, in all material respects:

a) the Balance Sheet and the Statement of Sources and Uses of Funds give a true and fair view of thefinancial position of the Component as at 31 December 2015 and of its sources and uses of fundsfor the year ended 31 December 2015 in conformity with the accounting policies set out in Note 2:

b) the Statement of Designated Account and the SOE Withdrawal Schedule give a true and fair view ofthe designated account balance as at 31 December 2015 and of operations of the designatedaccount, and of the funds withdrawn for the year ended 31 December 2015, in conformity with theaccounting policies set out in Note 2; and

c) the Statements of Expenditures are fully prepared and maintained with adequate supportingdocuments to support for the replenishment requests submitted to the World Bank. Funds disbursedthrough the statements of expenditures are utilized for purposes defined in the Grant AgreementNo. TF013456-VN.

NEXIA STT Co., Ltd.Nguyen Viet NgaPartner/Authorised signatureAudit Practising Registration CertificateNo. 2041-2014-225-1

Audit report No: HN-AUl247/2016/WB-ERAV-C Component

Hanoi, 29 June 2016

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* Distribution Efficiency ProjectComponent C "Technical Assistance and Capacity Building for Electricity Regulatory Authorityof Vietnam"

Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/International DevelopmentAssociation

BALANCE SHEETAs at 31 December 2015

As at As atNote 31/1212015 31/1212014

USD USDASSETS

Current assetsCash at bank - Designated Account 3 516.861.33 822,093.31Cash at bank - Interest Account 1.989.55 394.18Cash on hand 10,209.98 2,120.04

TOTAL ASSETS 529,060.86 824,607.53

RESOURCES

Fund balanceFund balance 529,060.86 824,607.53

TOTAL RESOURCES 529,060.86 824,607.53

Prepared by:

Le Thi Thuy HangComponent Accountant

Hanoi, 29 June 2016

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The accompanying notes form an integral part of the special purpose financial statements

U* Distribution Efficiency Project

Component C "Technical Assistance and Capacity Building for Electricity Regulatory Authorityof Vietnam"

* Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/lnternational DevelopmentAssociation

g STATEMENT OF SOURCES AND USES OF FUNDSFor the year ended 31 December 2015

Accumulated AccumulatedYear ended from 71212013 from 71212013Note 31/1212015 to 31/12/2014 to 31/12/2015

USD USD USDSources

Funds received from the World Bank 4 425,000.00 1,399,669.16 1,824,669.16Other funds 5 1,695.37 1,665.68 3,361.05

426,695.37 1,401,334.84 1,828,030.21

Uses of funds

Training/study tours 34,281.54 24,867,93 59,14947Consutants 647,190.09 464,688.70 1,111,878.79Incremental costs 38,713.14 86,258,54 124,971.68Fees 988,14 912.14 1,900.28Other costs 6 1,069.13 - 1,069.13

722,242.04 576,727.31 1,298,969.35

(Deficit)lsurplus of sources against uses of (295,546.67) 824,607.53 529,060.86funds during the year/period

Fund balance, beginning of the year/period 824,607,53 - -

Fund balance, end of the year/period 529,060.86 824,607.53 529,060.86

Prepared by: App, ed by

Le Thi Thuy Hang i TuanComponent Accountant mponent Director

Hanoi, 29 June 2016

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* The accompanying notes form an integral part of the special purpose financial statements

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Component C "Technical Assistance and Capacity Building for Electricity Regulatory Authority* of Vietnam"

U Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Developmentinternational DevelopmentAssociation

a STATEMENT OF DESIGNATED ACCOUNTFor the year ended 31 December 2015

Account No.: 0681370000250Account holder Distribution Efficiency Project Management Board - Electricity Regulatory AuthorityBank: Joint Stock Commercial Bank for Foreign Trade of Vietnam - Head OfficeAddress: 198 Tran Quang Khai, HanoiGrant Agreement No: TF013456-VN

Part A - Account Activity Note USD

Balance as at 1 January 2015 822,093.31

Add:Total amount advanced to Designated Account 4 425,000.00

Deduct:Total amount withdrawn (730,231.98)

UEnding balance as at 31 December 2015 3 516,861.33

UPart B - Account Reconciliation

Amount advanced by the World Bank 1,355,5680Add:

Amount advanced by the World Bank in 2014 44,101.14Amount advanced by the World Bank in 2015 425,000.00

Less:Amount submitted documentation of prior advances to the World Bank (577,504.12)

Outstanding amount advanced to Designated Account as at 1,247,165.0431 December 2015

Ending balance of Designated Account as at 31 December 2015 516,86133

Add:Amount withdrawn and not yet submitted documentation 7 730,531.92

Deduct:Bank interests (2268.21)

Total advance to Designated Account as at 31 December 2015 1,247,165.04

Prepared by: d by

Le Thi Thuy Hang gComponent Accountant mponent Director

Hanoi, 29 June 2016

The accompanying notes form an integral part of the special purpose financial statements 10M1

Distribution Efficiency ProjectComponent C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam"

Under the Grant Agreement No. TFO 13456- VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/International DevelopmentAssociation

SOE WITHDRAWAL SCHEDULEFor the year ended 31 December 2015 Unit: USD

Withdrawal applications Categories

No. Date Tralning/ Consultants Incremental Advances Totalstudy tours

05-ERAV 29/12/2015 - 307,472.16 61,221.99 - 368,694.1506-ERAV 24/9/2015 - - - 425,000.00 425,000.0007-ERAV () 25/12/2015 - - 2,630,887.02 2,630,887.02

Total claimed amount - 307,472.16 61,221.99 3,055,887.02 3,424,581.17

(') Withdrawal Application No. 07-ERAV was prepared by the Project Management Board on 25 December2015 and came into effective in the World Bank's Client Connection on 5 January 2016.

Prepared by: d by:

Le Thi Thuy Hang N nir



Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/Intemational DevelopmentAssociation

NOTES TO THE SPECIAL PURPOSE FINANCIAL STATEMENTS

For the year ended 31 December 2015

1. Project backgroundThe development objectives of the Distribution Efficiency Project ("the Project") are to improve theperformance of Vietnam's power corporations (PCs) in providing quality and reliable electricity services,and to reduce greenhouse gas emissions through demand side response and efficiency gains.

The Project comprises three (3) components:- Component A: System Expansion and Reinforcement;- Component B: Introduction of Smart Grid Technologies in Distribution; and- Component C: Technical Assistance and Capacity Building.

Of which, Component C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam" ("the Component") belongs to the Distribution Efficiency Project. The Componentis implemented by the Electricity Regulatory Authority of Vietnam ("ERAV"), the Ministry of Industry andTrade of the Socialist Republic of Vietnam. The Component is funded by Australian Trust Fund for theAusAID and the World Bank through International Bank for Reconstruction and Development (IBRD)IInternational Development Association (IDA), acting as administrator of the Australian Trust Fund forthe AusAID-World Bank Strategic Partnership in Vietnam under the Grant Agreement No. TF013456-VN dated 8 November 2012 with an amount of AUD6,000,000 for four (4) years from 2012 to 2016.

The purpose of Component C "Technical Assistance and Capacity Building for Electricity RegulatoryAuthority of Vietnam" is to provide technica assistance to and capacity building of ElectricityRegulatory Authority of Vietnam for improvement of efficiency in electricity tariffs, enhancement ofefficiency of and incorporation of smart grid technologies in the grid and distribution codes, integrationof renewable energy in the grid and distribution codes, development of demand response and smartgrid programs, and Project management and monitoring and evaluation.

The Component officially came into operation from 7 February 2013.

A* 2. Summary of significant accounting policies

The significant accounting policies, which have been adopted by the Component Management Boardin the preparation of the Special Purpose Financial Statements, are as follows:

Basis of preparation the Special Purpose Financial Statements

The Special Purpose Financial Statements are prepared and presented by the Component inaccordance with requirements of the World Bank. The Special Purpose Financial Statements underthe Grant Agreement No. TF013456-VN were prepared under the cash basis of accounting.Accordingly, funds from World Bank are recognized when credited to Designated Account, other fundsare recognized when received. Expenditures are recognized when paid rather than when theobligation to pay them arises. This basis of accounting is considered appropriate to the operation ofthe Component by the Component Management Board.

* Reporting currency

The Component's Special Purpose Financial Statements are expressed in United States Dollar("USD"), in accordance with the requirements of the World Bank.

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Under the Grant Agreement No. TF013456- VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/International DevelopmentAssociation

Designated Account and interest of Designated Account

Designated Account of the Component (hereinafter referred to as 'the Designated Account") is adeposit account in USD opened at Joint Stock Commercial Bank for Foreign Trade of Vietnam("Vietcombank") for settlements of the Component's activities. Payments made via DesignatedAccount are for eligible expenditures of the Component in accordance with provisions of the GrantAgreement No. TF01 3456-VN dated 8 November 2012.

Interests of Designated Account are considered as receipts of the Project and presented as other fundsin the Statement of Sources and Uses of Funds and used to cover bank charges (according to CircularNo. 218/2013/TT-BTC dated 31 December 2013, replaced for Circular No. 10812007/TT-BTC dated 7September 2007)

U* 3. Cash at bank - Designated Account

This represented the Designated Account balance of the Component at Joint Stock Commercial Bankfor Foreign Trade of Vietnam ("Vietcombank") as at 31 December 2015.

U4. Funds received from the World Bank

Receipts under withdrawal applications

No. Date USD

06-ERAV 24/9/2015 425,000.00

* Total fund replenished to the Designated Account 425,00000

U5. Other funds

Year ended Year ended3111212015 31/1212014

USD USD

Bank interests 522.37 335.20Income from selling bidding invitation documents 1,173.00 1,181.00

1,695.37 1,516.20

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g Distribution Efficiency ProjectComponent C "Technical Assistance and Capacity Building for Electricity Regulatory Authority

* of Vietnam"

* Under the Grant Agreement No. TF013456-VN between the Government of the Socialist Republic ofVietnam and the International Bank for Reconstruction and Development/Onternational DevelopmentAssociation

U6. Other costs

This represented expenses for procurement process, and was paid through income from selling biddinginvitation documents.

7. Amount withdrawn and not yet submitted documentation

This represented payments for Component's activities in 2015. These expenses will be included in thenext SOE Withdrawal Schedules.

W Prepared by: Approved by:

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Le Thi Thuy Hang Nguyen An TComponent Accountant Component Director

Hanoi, 29 June 2016

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Documents

Public Disclosure Authorized NEXIA STT...NEXIA STT Audit -Tax Advisory U U Component C "Technical Assistance and Capacity Builiding for Electricity Regulatory Authority of Vietnam"