I

* GrantThorntonUUU

Financial Statements and Independent Auditors' ReportsUa Da Nang - Quang Ngai Fxpressway Development Project

* (Component I and 2A funded by World Bank - Financing

Agreements No. 4942-VN, No. 4941-VN and Loan

Agreement No. 8049-VN)U

1For the year ended 31 December 2016

U

UUA

Ua

IUUU

a

3 uN 201O

U

Grant Thornton (Vietnam) LimitedA r,ernber of Grait Thornton n:te nal Lid GTIL i GTIL aid lie mem ir !) irms a>e n:la worldvide partnesh D Services are deiive-edndependenIv b i he member fms

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

Pub

lic D

iscl

osur

e A

utho

rized

S Da Nang - Quang Ngal Expressway Development Project(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No.4941-VN and LoanAgreement No. 8049-VN)

a

ContentsA

UUIU

Page

1 Part 1: Financial Statements 1

Report of the Project Owner 2

Independent Auditors' Report 4

Statement of Sources and Uses of funds 7

Statement of Fund balance 8

Statement of Designated account 9

Statement of Loan withdrawals 10

Notes to the financial statements 11

Part II Auditors' Report on the Internal Control 20

Part III: Auditors' Report on the Compliance 23

UUUUUU

UUU

UUUUUI

8 Da Nang - Quang Ngai Expressway Development Project1(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN and Loan3 Agreement No. 8049-VN)

UU

UUUUU

a Part I:* Financial StatementsIUUUIIIUUUUUUUUUUIU

1 Da Nang - Quang Ngal Expressway Development Project 2(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VNand Loan Agreement No. 8049-VN)

U

Report of the Project OwnerU

U

Vietnam Expressway Corporation (hereinafter called "VEC" or "the Project Owner") submits itsreport together with the audited financial statements of the Da Nang - Quang Ngai ExpresswayDevelopment Project (Component 1 and 2A funded by World Bank - Financing Agreements No.4942-VN, No. 4941-VN and Loan Agreement No. 8049-VN) ("the Project") for the year ended 31December 2016.

UAuditorsThe financial statements for the year ended 31 December 2016 have been audited by Grant Thornton(Vietnam) Limited.aThe Project OwnerThe members of the Board of Management of Vietnam Expressway Corporation managing theProject's activities during the period and to the date of the report are:

UName PositionMr Tran Van Tam General Director Appointed on 1 June 2017Mr Mai Tuan Anh General Director Resigned on 31 May 2017Mr Nguyen The Cuong Deputy General DirectorMr Pham Hong Quang Deputy General Director Resigned on 22 September 2016Mr Nguyen Manh Hung Deputy General DirectorMr Le Quang Hao Deputy General DirectorMr Nguyen Van Nhi Deputy General Director

Statement of the Project OwnerThe Project Owner is responsible for preparing Financial Statements for the year ended 31 December2016 ("the year") which give a true and fair view of:

* the financial position of the Project;

* the funds received and expended for the year;* the activities of the designated account for the period and the balance of this account as at

31 December 2016; and* the funds withdrawn for the year.

In preparing those Financial Statements, the Project Owner is required to:

* select suitable accounting policies and then apply them consistently in accordance with the

Financial Agreements No.4942-VN, No.4941 -VN between Socialist Republic of Vietnam andInternational Development Association ("IDA"), and Loan Agreement No.8049-VN between

the Socialist Republic of Vietnam and the International Bank for Reconstruction and

Development (IBRD) and the Project Administration Manual;

* make judgements 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; and

* design and implement an effective internal control system for the purpose of properlypreparing and presenting the financial statements so as to minimise errors and frauds.

UU£U

Da Nang - Quang Ngal Expressway Development Project 3(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VNand Loan Agreement No. 8049-VN)

UThe Project Owner confirms that they have complied with the above requirements in preparing theFinancial Statements.

The Project Owner 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 theaccounting records comply with the accounting system as described in the Project ImplementationManual. They are also responsible for safeguarding the assets of the Project and hence for takingreasonable steps for the prevention and detection of fraud and other irregularities.

Approval of the financial statementsWe hereby approve the accompanying financial statements on pages 7 to 19 which give a true and fairview of the fund balance of the Da Nang-Quang Ngai Expressway Development Project (ComponentI and 2A funded by the World Bank-Financing Agreement No.4942- VN, 4941-VN and LoanAgreement No.8049- VN) as at 31 December 2016, the movement and balance of the designatedaccount for the Credit fund as at 31 December 2016 and the funds received and disbursed during theyear then ended, in accordance with the accounting policies as described in Note 2 to the financialstatements and in the opinion of the Project Owner, the loan withdrawals have been adequatelyreconciled to the statements of expenditure during the year, and such statements of expenditures wereadequately supported.

On behalf of the Project Owner,

Tran Van TamGenefal DirectorVietnam Expressway Corporation

3Hanoi, Vietnam15 June 2017

I

UU

UUUUUU3UUI

8

B

4

* GrantThorntonU

£ Independent Auditors' Reporton the financial statements of

the Da Nang - Quang Ngai Expressway Development Project

(Component I and 2A funded by World Bank -Financing Agreements No. 4942-VN, No. 4941-VN and Grant Thonnion (Vietiam) Umited

18t Floot Hoa Binh InemationAl OMie BiulidingLoan Agreement No. 8049-VN) 106 Hoang Quos Viet Streel

for the year ended 31 December 2016 CauGiayDistrictHanoi, Vletnam

T +4 (24) 3850 1686F 84 (24) 3850 1688

No. 03/HDTV- VEC/2017 www.grantthomtan com vn

U To: Vietnam Expressway Corporation

International Development Association

International Bank for Reconstruction and Development

Auditors' opinionWe have audited the accompanying financial statements of the Da Nang - Quan Ngai

Expressway Developm&nt Project (C%4tponent 1 and 2A funded by World Ba - Financing

Agreements No. 4942-VN, No. 4941-VN and Loan AgreemcMNo. 8049-VN) ('the Project") for

the year ended 31 December 2016, prepared on 15 June 2017, including the Statement of Fund

balance as at 31 December 2016, the Summary of Sources and Uses of funds, the Statement of

Designated account, the Statement of Loan withdrawals for the year then ended, and a summary of

significant accounting policies and other explanatory notes as presented on pages 7 to 19.

In our opinion, in all material respects; 7* The accompanying financial statements give a true and fair view of the funds received and

expenditures of the Project for the year ended 31 December 2016 in conformity with the

accounting policies described in Note 2 of the Notes to the financial statements;

* The accompanying statement of designated account give a true and fair view of the balance

of the designated account as at 31 December 2016 and the Project's receipts and

disbursements via this designated account for the year ended 31 December 2016 in

conformity with the relevant covenants of the Components 1 and 2A funded by the World

Bank under Financing Agreements No. 4942-VN, No. 4941-VN and Loan Agreement No.

8049-VN, the Project Implementation Manual and relevant regulations established by the

World Bank; and

a Withdrawal Applications were adequately reconciled to the statements of expenditures

("SOEs") prepared by the Project Owner for the year ended 31 December 2016 and those

SOEs were adequately supported by accounting vouchers.

Basic for Opinion

a We conducted our audit in accordance with International Standards on Auditing (SAs). Our

responsibilities under those standards are further described in the Aieditor'r ResponfihilitiesJor the

Audit of/he FinandalStatements section of our report. We are independent of die Project in

accordance with the ethical requirements that are relevant to our audit of the financial statements

in Vietnam, and we have fulfilled our other ethical responsibilities in accordance with these

requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to

provide a basis for our opinion.

UU

Grant Thornton (Vietnam) LimitedA member of Grant Thornton Intemationaf Ltd ('GTIL} GTIL and the member firms ate aot a worldwide partnership. Services are deliveredindependently by the member firms

£ GrantThorntonUU

Other matters

U~Compamrie ji.gsThe financial statements of the Project as at and for the year ended 31 December 2015, included

for comparison purposes, were audited by other auditors whose report dated 25 May 2016

expressed an unqualified opinion.

UOther matterAs presented in Note 2 - Principal accounting policies - Basis of preparation of the financial

statements, the accompanying financial statements are prepared for the Components 1 and 2A

funded by the World Bank under Financing Agreements No. 4942-1N, No. 4941-VN and Loan

Agreement No. 8049-VN. These financial statements together with our auditors' teport do not

cover the activities of other components funded by Japan International Cooperation Agency and

implemented by other Project Management Units within the Ministry of Transport

Project Owner's responsibility for the financial statements

The Project Owner is responsible for the preparation and fair presentation of these financial

statements in accordance with accounting policies as described in Note 2 and for such internal

control as management determines is necessary to enable the preparation of financial statements

that are free from material misstatement, whether due to fraud or error.

UAuditors' responsibilityOur objectives are to obtain reasonable assurance about whether the financial statements of the

Project as a whole are free from material misstatement, whether due to fraud or error, and to issue

an 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 w%il always detect

ramistatement 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 scepticism 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, misrepresctations,

or the override of internal control;

Obtain an understanding of internal control relevant to the audit in order to design audit

procedures that arc appropriate in the circumstances; and

* Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estinates and related disclosures made by the Project Owner.

U

S8U5U

S 2016 Grant Thornton (Vietnam) Limited. All rights reserved.

GrantThornton 6

We communicaite with the Project Ovner, amoIg other mat ters, the planned scope an1d tim)ing of

the audit and signiftcant auidit fnidings, inclinmg ay significant deficienes tn internal coitrol that

xve identify during our aidit.

5GRANT TI IORNTON (VIETNAM) LIMITED

1 NgIvuyep Hog I la Bu Tran Plhuong Minh

Pdit acQtsing Certifieate Audilor's Praetising Cerifice

u71-v2014-068 l No. 2595-2014-08-1

DlJeputy General Director Adinor

I lanoi, Vietnam

15 June 2017

5

1

1

1

8 Da Nang - Quang Ngal Expressway Development Project 7(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN andLoan Agreement No. 8049-VN)

U

* Statement of Sources andg. Uses of fundsUU

£For the year ended Accumulated to

Note 31 December 2016 31 December 2016USD VND USD VND

Sources of funds

Credit fund - IDA 3 3,991,534.48 ' 88,972,555,359 99,613,585.06 2,131,896,901,425Credit fund - IBRD 3 62,085,112.17 1,386,848,918,183 63,303,297.41 1,412,229,862,903

Counterpart fund - Land Clearance 4,12 3,695,556.53 84,000,000,000 56,308,965 34 1,209,154,875,914Counterpart fund - VEC 4,12 (6,760,375.54) (153,663,336,056) (3,189,688.63) (75,605,578,977)Other funds 126,500.69 2,875,360,591 190,074,80 11,623,297,214

Uses of funds 63,138,328,33 1,409,033,498,077 216,226,233.98 4,689,299,358,479

Component 1 5

Constructions 74,644,148.93 1,696,661,505,076 102,372,114.14 2,318,681,671,473Consultants 3,838,726.17 87,254,246,862 8,983,682.65 200,319,915,582

Relocation of power lines 12 1,330,611.54 30,244,800,233 1,330,611.54 30,244,800,233

Land Clearance and Resettlement 12 3,695,556.53 84,000,000,000 39,330,892.72 836,149,074,628

U Bomb clearance - - 3,283,638.79 71,921.142,810

Audit fee 17,597.89 400,000,000 86,497.58 1,884,622,150U Component 2(a)Project Management 12 306,153.82 6,958,876,286 1,073,757.86 23,467,805,070Loan interest commitment fee - IDA 1,391,534.48 31,083,555,359 2,244,012-61 49,801,186,778

Loan Interest, commitment fee - IBRD 124,239.12 2,774,913,874 1,342,424.36 28,155,858,594

85,348,568,48 1,939,377,896,690 160,047,632.25 3,560,626,077,318

Foreign exchange difference (6,034,415.61) - (6,034,415.61)

(Deficit)/Surplus (28,244,655,76) (530,344,398,613) 50,144,186.12 1,128,673,281,161

Hanoi, Vietnam

15 Junc 2017

Tran Van Tam Nguyen Hai AnhGeneral Director Deputy Finance and Accounting Department

T

S

£ The accompanying notes from page 111to page 19 are arn integral part of these statements

W

UU

Da Nang - Quang Ngal Expressway Development Project 8(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941 -VN andLoan Agreement No. 8049-VN)

Statement of Fund balanceU

U

Notes 31 December 2016 31 December 2015

USD VND USD VND

Fund balance, beginning of the year 78,388,841.88 1,659,017,679,775 67,763,809-72 1,424,530,878,163(Deficit)/Surplus (28,244,666.76) (530,344,398,613) 10,625,032.16 234,486,801,612

Fund balance, end of the year 0,144,186.12 1,128,673,281,162 78,388,641.88 1,659,017,679,775

Represented by:

Assets

Cash (Foreign currency - USD) 6 6,950,771.66 157,921,532,115 7,618,401,24 171,109,292,300Advances to land clearance

implementing units 4 7,370,008.28 187,520,288,286 16,607,560.17 373,005,801,286Advances to contractors 7 31,404,747.58 702,842,501,502 54,073,720.03 1,112,900,042,643VAT to be reclaimed 10,403,685.02 236,475,783,259 3,470,945.41 77,957,433,951

Other receivables 8 1,006,964.67 22,888,307,040 -

Liabilities 57,136,178.21 1,287,848,412,202 81,770,626,85 1,734,972,570,180

Payables to contractors 9 6,289,460.51 143,006,588,297 2,980,642-21 66,945,223,947

Payables to VEC - Project

management fee 702,531.58 15,968,542,743 401.142-76 9,009.666,458

6,991,992.09 158,975,131,040 3,381,784.97 75,954,890,405

50,144,186.12 1,128,673,281,162 78,388.841 88 1,659,017,679,775

Hanoi, Vietnam

15 June 2017

UZ

Tran Van Tam Nguyen Hai AnhGeneral Director Deputy Finance and accounting department

The accompanying notes from page 11 to page 19 are an integral part of these statements

Da Nang - Quang Ngal Expressway Development Project 9(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941 -VN andLoan Agreement No. 8049-VN)

Statement of Designated accountFor the period: For the year ended 31 December 2016Account number 011.0137.000230.2

Bank Maritime Commercial Joint Stock Bank

Address Building A, Sky Tower, No 88 Lang Ha, Dong Da, Ha Noi

Credit Agreement 4942-VN, 4941-VN and 8049-VN

Currency USD

Year ended

31 December 2016

USD

Part A- Account activity

Beginning balance as at 1 January 2016 7,618,401.24

Add

Advances from World Bank to designated accounts 64,560,873.05

Interests from designated accounts (deducted by Bank charge) (1,320.00)

Less

Amount withdrawn from Designated Account (65,227,182.63)

Ending balance as at 1 December 2016 6,960,771.66

Part B: Account reconciliation

Advances from World Bank as at 1 January 2016 10,000,000.00

g Add:

Additional advances during the year 20,600,000.00

Less:

Amount recovered by World Bank (12,600,00000)

Total advances to designated account as at 31 December 2016 18,000,00000

Balance of designated account as at 31 December 20146 6,950,771.66

Add:Amount withdrawn but not yet claimed (Note 10) 11,051,413.37

Less.

interests from designated accounts (deducted by Bank charge) (2,185.03)

Total advances to designated account as at 31 December 2016 18,000,00000

Hanoi, Vietnam

15 June 2017

Tran Van Tam Nguyen Hai AnhGeneral Director Deputy Finance and accounting department

T

3 The accompanying notes from page 11 to page 19 are an integral part of these statements

U

U

U

�

� ¢ ц+ � � � � , � а е � � � N м � Ф 4N О Ф т Фе Q С� 3

� � � Оу г7 � О бg Ci

� "� т � гQ8 е�д

` � � � � �п т

пм � svrncsr � � �

® rn оз [ з цr � м cv с°Lэ с�ч т °о rn � wаt� s � � м � �̀ г� a� i " °м м � � с� 'ч г �� zS Е СЛ О С3 ц3 �:1 ц7 ц7 ( � ° С*? м. г7 {4 ц:

41 Се � � N 4 r С71 р� г� W ьп С7 SU цч" tS� � = йt7 ц'? гf3 � S� Ff С� 'У � r 61 t�П 4 б С

л N � � М tЛ Nп 1Л Р оГ1 й*! г8ы й а цr

�г� ць. С 31 ц ? Cfl гD 44 �� ц i <А Ei1 [b SL7 Ц i цУ г0 fЯ

� °� � � д 6 4 С3 О Q С] С и [7 С 7 СЭ Ct� 1 гц гч с� cv гч с� cv л г м sч r;t rv

в � ' �S в° т '° � tS г.+ � � е ro � � а.й �1r � и'х � � c�,� i � Q � � � sо7 iy � q � ' й

�r- � - ,- zy сч r �у � м '"' �

ыач

� rnе� в� ' а° � й � rч гч с�п° су а�`а̀° �р�С гл � е��дь fy

� Q а] f*� 3 г�7 � � � � М С� } � С7 N п # е��с?F +дСЛ г3 4 ц7 ц7 ьа7 tD Г-- М С*k О +Я п г

2 �

t^- Cs f7i д

07 tv t� й? ц 7 О ц 7 � А р�С

N�� га й Оцr � ' л м � � +а>А ц47 СОЭ S] С3 Н

� а' ci г r з вч Г цa � ai Ci ць '' bAчг� � п у �аа � .

г3

?yj11� С

� r � г � � � i �� � � t rn rn й � г сц rn тм-, w � � j

Ф � Sq � а 3 [7 вf [� ц 7 [ Л 4р�С�л},, �� � М 1+. � �

ы и 477 О ц ё И СС7 W м

� м � г-. t п г а� е� п̂ ц+� '�'ф'' Ф ц7 цм'7 � М r 1[ У � г' � ' �

а �. � '" � �'s" � � J

�у _ V

J � � � '�� и!�бq �� � Е tай м�-+ �

� С � т � � , е , ,,, � А�0 +� v в гп с� сч er � � � '2' д � С С С 1� - г7 О СУ � " а.7 � �yj 3 � С h- cL� � � С +

4 С1У ^- � �г , ... � С 1С� � � � � � - � � � � � � .

_ �?'��� "', M1 . 00 Сб

�0

�

� r� р

� � �

� � , V1 � и i � � � ь i � i � �.� .

� у � С� �QiV � � N

�О tГ'7ь rG

� �� � i о i � � i i , �С � ` � , ( k 00 477� � Ф CS �

� у ГkГ̀� ��''/ 3 й � rn cw о о сз� ч �у ssр�С т хуи н ri �

� � � j [^7 м c�� i ц� 7 г г �Q а� � oi сл м� ' v а Sдс т

� � �� � ,�i � � � � � � о � � � � � и � � q� � 4 � �

� � � �[ � jj � _Ф t�7 х � �� 4 4 0 О �0. ki � ь/ ',� . � J � Q � Q � .,� � q7

� ь � � � � д ' t�L� ц� У О 4 t�D �_ '� 'С7£ � Q а # N CV.� R] GO � [7 а

кs т � ц а ш-° У' v л г п� :

� � � 1� � � � С] Ci СУ � С] С3 � G СЭ С1 С] С] С5 рр � f °' еа U7[ Л И G7 V} 4л [П V7U7 v7 И sЛ ег)

� л � � � i � � � � � � � � � � � � � �3 � � � С] 7 �

� � г'1 N о�

� п

I--1 �;; у п � д' tf ь ед еР rD � sD �g сгу п7 tD �t э сг7 � гq ` ti

� г т г �. п г п п г t^ г �Г° � п С

ш � � L. � ' б � й� N с°ц г°, � с°� ' °' г°, в � с°.� г°ч °м м с°ч °r°, � � �� { � ' '°ro с. � � й ix м̀ гz. � о � i t'r � �j.' 3 т � i� у, т� � ,¢ � - � � t � ¢ � а .zQg¢ а � � � ? r� о

у xs ,f..� °' г � � и Q ' � л сл ь. G� = С7 � Z с̂ми tч � ' r7 У r� j. t�ч "` � ��. � � б слС п{ /1 j }. � � j С Су . . .,

� q� _G_

� Ц '% � У �С� F

CS С 1 � �-r"г s� -� .. � .i`I. оуС7 � � ;� , � q � гц ,,.�у � j а q Cz� с �

` v 3 � э � �'

�'

�' С}

с � ' `r > М ,� Е� � а � Я v � _ - - � � , Q С� � гSэ и7 v М cV n г .- � Q С ' � _ � у �

z Е � ""' � s � г а � � � i � i° � ш с�� ш ш й� ш ш � о° а � , . � м а `°

� ес ° г � �= а � � м м "� �а о [7 ®® С7 С7 О � пэ � и� � �� � ' ° �м U �. ��� J G� � ¢ г е� г.� г� а с� � и с� и и и гп сп � r� � _.- � Н ' С7 �

�

�

�

�

Da Nang - Quang Ngal Expressway Development Project(Com pone nt I a nd 2A fu ndod by the Wo rid Ba nk - F1 na n On g Aq reements No. 4942-VN, No. 4941 -VN a n dLoan Agreement No. 8049414)

Notes to the financial statements

I The Project background

Da Nang - Quang Ngai Expressway Development Project operates under the following

agreements:" Loan Agreement No. VNIO-P8 dated 15 June 2011 signed between the Socialist Republic

of Vietnam and the Japan International Cooperation Agency GICA);" Financing Agreements No. 4942-VN and No. 4941 -NFN dated 12 January 2012 signed

between the Sod-alist Republic of Vietnam and the International Development AssociationgDA); -and

0 Loan Agreement No. 8049-VN dated 12 January 2012 signed between the Socialist

Republic ofVietnatn and the International Bank for Reconstruction and DevelopmentgBRD).

The loans fmm IDA and 1BRD are implemented through the World Bank C`WB").

In accordancewith mutual agreement between donors, the construction from Da Nang provinceto Tam Ky city in Quang Nam province is funded by JICA and the construction from Tam Ky cityto Quang Ngai province is funded by the World Bank.

The objectives of the Project are to construct an expressway that will enhance efficiency and safetyfor road users travelling between Da. Nang city and Quang Ngai province and build institutionalcapacity for expressway development in the Nfinistry of Transport.

According to Decision No. 220/QD-BGTVT issued by the Ministry of Transport dated 22

January 2010, Vietnam Expressway Corporation (VEC) is the Project Owner for Component Iand ?-A of the Da Nang - Quang Ngai Expressway Development Project. According to the

Decision No. 1903/QD-BGn'T dated 13 August 2012 -and the Aide Memoire of the World Bank

from 15 October 2012 to 13 November 2012, the Directorate for Roads of Vietnam is appointed

as the Project Owner and Project Management Unit I (PNW1) is appointed as Agency of

implementing and contract management for the Component 2B - "Building capacity and support

for expressway network planning and managemenC'.

For the Component I and 2A, according to Derision No. 3470/QD-BGn'T dated 2 December

2010 issued by the Ministry of Transport on the coordination mechanism in implementing the Da

Nang - Quang Ngai Expressway Development Project and Decision No. 3681 /QD -BGTVT

dated 29 December 2010 on sub-projects for land clearance and resettlement and -appointing local

authorides as sub-ptoject managements, VEC is the Project Owner and the implementing units of

the Project are as follows-.

0 Project ManagementUnit I ("I'MUl") is amanagemeat consultant for the components

funded by World Bank C`WB' under the management contract signed with the Project

owner -

Da Nang - Quang NgaI Expressway Development Project 12(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN andLoan Agreement No. 8049-VN)

* Provincial Implementing Units for Land Acquisition and Resettlement are as below:o Da Nang city: the People's Committee of Da Nang City authorised Da Nang Land

clearance and compensation Agency Unit No. 2 to implement activities of sub-project.o Quang Nam Province: the People's Committee of Quang Nam Province authorize

local agencies to implement the land acquisition and resettlement subprojects inQuang Nam province. Locally, District People's Committee authorised the local LandDevelopment Centers in Dien Ban district; Que Son district; Duy Xuyen district;Thang Binh district; Phu Ninh district; Nui Thanh district; and Tam Ky city to be theimplementing units.

o Quang Ngai Province: the People's Committee of Quang Ngai Province authorizeQuang Ngai Department of Transport and Quang Ngai Land clearance Sub-projectManagement Unit to be the implementing unit.

The Project consists of two components as follows:Component t: Da Nang -£uang Ngai Expessay

a) Construction of a four-lane expressway from National Highway 1A, to the south of DaNang province, to Quang Ngai province, including construction of a main carriageway,bridges, viaducts, and culverts, a tunnel, connection and service roads, and intersections,and related maintenance and rehabilitation of the local road network, in two parts: (i) fromDa Nang province to Tam Ky city in Quang Nam province; and (ii) from Tam Ky city toQuang Ngai province.

b) Construction of a two-lane highway, including bridges, from the southern end of suchexpressway to National Highway 1A, in Quang Ngai province.

c) Compensation, resettlement, and rehabilitation, including livelihood restoration, of ProjectAffected Persons,

d) Establishment of an integrated traffic management and toll collection facilities system, anddesign, installation, and commissioning of an intelligent transport system for theoperation, management, and maintenance of such expressway.

Component 2: Prjec Implementation Support and Instituiona/Strengthe1inga) Provision of technical assistance to the Vietnam Expressway Corporation (VEC) in

relation to (i) Project implementation, including: (A) construction supervision; (B)integrated review and monitoring; (C) financial auditing; and (D) implementation of theGovernance, Transparency, and Anti-Corruption Plan; and (ii) capacity building forfinancial management.

b) Capacity building of: (i) and provision of policy support to the Ministry of Transport inrelation to: (A) expressway planning and network management, including establishmentand operationalization of an expressway planning and network management entity; and (B)

operationalization of said Ministry's public-private partnerships cell; and (ii) theInspectorate Department in relation to its mandate of governance and anti-corruption.

The Project commenced on the effective date of the Agreements and is expected to be completedby 31 October 2018.

Under the Financing Agreements, total fund committed for the project is USD1,403.61 million, inwhich fund committed by the International Development Association is USD143.01 million andby the International Bank of Reconstruction and Development is USD470.49 million.

UU

U

UU

3 Da Nang - Quang Ngal Expressway Development Project 13(Component I and ZA funded by the World Bank - Financing Agreements No, 4942-VN, No. 4941-VN andLoan Agreement No. 8049-VN)

3The financing ratios by each donor are as follows:

Category JICA IDA & IBRD Counterpart fund

Component 1: Da Nang - Quang N4gal Expressway

(1) Civil Works: Da Nang -Tam Ky 99.7% 0.3%(2) Civil Works: Tam Ky - Quang Ngai 100%

(3) ITS and O&M Equipment 99.7% 0.3%(4) Land Acquisition and Resettlement 100%Component 2: Project Implementation Support and

Institutional Strengthening

Component 2(a): Project Implementation Support for VEC(1) Construction Supervision: Da Nang - Tam Ky 100%(2) Construction Supervision: Tam Ky - Quang Ngal 100%(3) Integrated Project Review and Monitoring Services 100%(4) FinancIal Audit 100%(5) Financial Capacity Building forVEC 100%(6) Training, Workshops, and Implementation of GTAP 100%(7) Project Management 100%Component 2(b): InstitutIonal Strengthening for MoT 100%

2 Principal accounting policiesBasis of preparation of the financial statementsThe financial statements are prepared for the Project operations of Components 1 and 2A fundedby the World Bank under Financing Agreements No. 4942-VNI, No. 4941-VN and LoanAgreement No. 8049-VN, implemented by VEC, the Provincial Implementing Units includingProject Management Unit 1, Land Development Center in Tam Ky city, Land DevelopmentCenter in Nui Thanh district and Sub-project Management Unit for Land clearance andresettlement in Quang Ngai (hereinafter called "the Implementing Units"). Therefore they onlypresent income, expenditures, fund balance, loan withdrawals, the designated accounts for thesecomponents. The financial statements do not cover the components funded by Japan International

Cooperation Agency and implemented by other Project Management units of the Ministry ofTransport.

Basis of accounting

The financial statements are prepared in accordance with the World Bank's financial reportingrequirements, the requirements of the above mentioned Agreements and the following accounting

principles.

The financial statements are prepared under the historical cost convention and on a modified cashbasis of accounting. Accordingly, receipts are recognised when received rather than when the rightto receive them arises, and expenditures are recognised when incurred.

Reporting currenciesThe accounting records of the Project are maintained in Vietnamese Dong ("VND"). The financialstatements are prepared in Vietnamese Dong except for the statement of designated account andthe statement of loan withdrawals, which are prepared in the original currency of United StatesDollars ("USD") as required by the World Bank.

USD equivalents of the amounts on these statements are also presented for information andreconciliation purpose using the buying exchange rate of Maritime bank at 31 December 2016 of1USD = 22,730 VND (2015: 1USD =22,460VND). Exchange differences are presented in theSummary of sources and uses of funds.

UUUI

U Da Nang - Quang Ngal Expressway Development Project 14(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN andLoan Agreement No. 8049-VN)

UAccounting periodThe Project's accounting period is from 1 January to 31 December.

Compensation for land clearance and other related costsCompensation for land clearance and other related costs is recognised as expenses when the

payments are approved by the provincial State Treasury and paid to the impacted persons.

General administration expensesProject administration expenses are recognised based on the allocation among projectsimplemented by VEC as approved by the Board of Members of VEC.

Front-end fee of IBRD loanFront-end fee of 0.25% of funds received from IBRD which is USD470.49 million is recordedafter the signing date of the Loan Agreement at the receipt of the Bank' Notice.

Commitment charge of IDA loanMaximum commitment charge of IDA loan is equal to 0.5% per year on the undrawn fund balanceand is recognised annually at the receipt of the Bank's Notice.

Service charge of IDA loanService charge is calculated based on the rate of 0.75% on the drawn amounts and is recognisedannually at the receipt of the Bank's Notice.

InterestInterest of IBRD loan is calculated based on the loan balance and the reference rate plus a margindetermined by the Loan Agreement. Interest of IDA loan is calculated based on the drawdownbalance at the rate of 3.2% per year and is recognised at the receipt of the Bank's Notice.

U3 IDA/IBRD fund

For the year ended 31 December 2016 Accumulated to 31 December 2016

USO VND USD VND

IDA fund

Advanced to designated account 2,600,000.00 57,889,000,000 97.369,572.45 2.082,095,714,647

Loan Interests 1.391,534.48 31,083,555,359 2,244,012.61 49,801,186,778

3,991,534.48 88,972,555,359 99,613,585.06 2,131,896,901,425

IBRDfund

Advanced to designated account 81,960,873.05 1,384,074,004,309 61,960,873.05 1,384,074,004,309

Loan Interests 124,239,12 J 2,774,913,874 1,342,424.36 28,155,858,594

62,085,112.17 1,386,848,918.183 63,303,297.41 1,412,229,862,903

66,076,646.65 1,475,821,473,642 162,916,862.47 3,544,126,764,328

UUUUUU

S

UU

wmmmmsmammm mmmmsmsmasmmmmmm s

Da Nang - Quang Ngal Expressway Development Project 15(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN and Loan Agreement No. 8049-VN)

4 Counterpart fund

Details of the counterpart fund provided for the year ended 31 December 2016 are as follows:

31 December 2016

Balance of Advances Payment

Balance of advances Advances Payment advances as at accumulated to accumulated to 31

as at I January 2016 during the year during the year 31 December 2016 31 December 2016 December 2016

VND VND VND VND VND VND

Counterpart fund - VEC - - - - 78,057,757,079 78,057,757,079

Counterpart fund - Provincial Implementing Units

Land Fund Development Center In Nul Thanh 99,998,686,444 52,000,000,000 76,295,018,000 75,703,668,444 216,514,581,259 116,099,689,815

Land Fund Development Center in Tam Ky city 37,219,474,029 13,948.304,000 15,974,152,000 35,193,626,029 80,725,300,000 43,505,825,971

Subproject Management Unit for Land clearance and resettlement

in Quang Ngai 185,573,000,000 75,709,000,000 235,000,000,000 26,282,000,000 774,156,695,000 589,000,000,000

Land Fund Development Center In Quang Nam 18,090,792,855 21,082,182,000 34,000,000,000 5,172,974,655 38,264,299,655 20,173,607,000

Ky Ha Chu Lal Quang Nam Development and Investment One

Member Company Limited 32,123,848,158 11,044,171,000 18,000,000,000 25,168,019,158 99,494,000,000 67,370,151,842

373,005,801,286 173,783.657,000 379,269,170,000 167,520,288,286 1,209,154,875,914 836,149,074,626

373,005,801,286 173,783,657,000 379.269,170,000 167,520,288,286 1,287,212,832,993 914,206,831,707

*Seammemmmmmmmmmmmsmemmsmmmm

Da Hang - Quang Ngai Expressway Development Project 16(Component I and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941-VN and Loan Agreement No. 8049-VN

5 Expenditure by activities and by sources of fund for the year ended 31 December 2016For the year ended 31 December 2016 Accumulated to 31 December 2016

Category IDA IBRD Counterpart fund Total IDA IBRD Counterpart fund Total

VND VND VND VND VND VND VND VND

Component 1 60,660,799,772 1,723,254,951,166 114,644,800,233 1,898,560,551,171 796,115,948,739 1,723,254,951,186 939,830,326,971 3,459,201,226,876

Constructions 60,660,799,772 1,636,000,705,304 - 1,696,661,505,076 682.680,966,169 1.636,000,705,304 - 2,318,681,671,473

Consultants - 87,254,245,862 - 87,254,245,862 111,950,360,420 87,254,245,862 1,115,309,300 200,319,915,582

Relocation of power lines - 30,244,800,233 30,244,800,233 - 74,805,104,043 74o805,104,043

Land Clearance and Resetlement ~ - 84,000,000,000 84,000,000,000 - 836o149,074,625 836,149,074,628

Bomb clearance - - - - - 27,360,839,000 27o360,839,000

Audit fee - 400,000,000 400,000,000 1,484,622,150 - 400,000,000 1,884,622,150

Component 2(a) - 6,968,876,286 6,958,876,286 - 23,467,805,070 23,467,805,070

Project Management - 6,958,876.286 6,958,876,286 - 23,467,805,070 23,467,805,070

Front-end fees, commitment

and service charges 31,083.555,359 2,774,913,874 - 33,868,469,233 49,801,186o778 28,1 55,858o594 - 77,957,045,372

91,744,355,131 1,726,029,865,040 121,603,676,519 1,939,377,896,690 845,917,135,517 1,751,410,809,760 963,298,132,041 3,560,626,077,318

For the year ended 31 December 2016 Accumulated to 31 December 2016

Category IDA IBRD Counterpart fund Total IDA lBRD Counterpart fund Total

USO USD USD USO USD USD USD USO

Component 1 2,868,754.94 75,814,120.16 5.043,766.96 83,628,641.06 35,580,918.74 75,814,120.16 44,012,398.62 156,387,437.42

Constructions 2,668,754.94 71,975,393.99 - 74,644,148.93 30,396o720.15 71,975,393.99 - 102,372,114.14

Consultants - 3,836,726.17 - 3,838,726.17 5,095,298.90 3,838,726.17 49,657.58 8,983,682.65

Relocation of power lines - 1330,611.54 1,330,611.54 - 3,314,596.57 3,314,596.57

Land Clearance and Resettlement - - 3,695,556.53 3,695,556.53 - 39,330,892.72 39,330,892.72

Bomb clearance - - - - - 1,299,653.76 1,299,653.76

Audit fee - 17,597.89 17,597.89 68,899.69 - 17,597.89 86,497.58

Component 2(a) - 306,153.82 306,153.82 - 1,073,757.86 1,073,757.86

Project Management - 306,153.82 306,153.82 - 1,073o757.86 1,073,757.86Front-end fees, commitment

and service charges 1,391,534.48 124,239.12 - 1,515,773.60 2,244o012.61 1,342,424.36 - 3,586,436.97

4,060.289.42 75,938,359.28 5,349,919.78 85,348,568.48 37,804,931.35 77,156,544.52 45,086,166.38 160,047,632.25

wmsmmsmsmmmmWBmmmm.mmsmmsmmmm.W

Da Nang - Quang Ngai Expressway Development Project 17(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941 -VN and Loan Agreement No. 8049-VN

6 Cash at bank31 December 2016 31 December 2015

USD Equivalent VND USD Equivalent VND

Designated account 6,950,771.66 157,921,532,115 7,614,898.19 171,035,712,324

interest of designated account - 3.505,05 73,579.976

6,950,771.66 157,921,532,115 7,618,401.24 171,109,292,300

7 Advances to contractors31 December 2016 31 December 2015

USD VND VND Equivalent USD VND VND Equivalent

CDM Smith INC 19,000,923,633 19,000,923,633 - 40,034,248,437 40,034,248,437

DOHWA Engineering - 5,977,601,367 5,977,601,367 - 2,767,467,700 2,767,467,700

LOTTE E&C - 61,528,968,617 61,528,968,517 1,109,690.74 132,590,388,945 155,931,409,399

POSCO Engineering and Construction Co Ltd 1,402,901.66 81,038,847,772 106,876,334,696 2,882,213.36 167,461,069,446 228,696,574,493

Shandong Luqiao Group Co Ltd 2,853,19402 114,721,568,025 174,972,250,80 3,111,684.73 199,161,924,734 265,272,778,508Jiangsu Provincial Transportation Engineering - 126,176,019,492 128,176,019,492 - 201,797,962,353 201,797,962,353

Construction Corporation 1 - Ministry of Construction - 157,359,909,564 157,359,90,564 - 213,793,944,822 213,793,944,822

Design Survey and Construction Joint Stock Company - - - 264,483,264 264,483,264

Da Nang Acceptance Council - 400,000,000 400,000,000 - 400,000,000 400,000,000

Yen Lac Co Ltd - - - 1.327,413,059 1,327,413,059

National Power Transmission No 2 Corporation - 294,545,945 294,545,945 - 294,545,945 294,545,945

Power Construction Nol JSC - - - 2,319,214,663 2,319,214,663

Joint venture between Viet Huong JSC and VietnamConstruction Import and Export - 22,423,608,087 22,423,608,087 - -

Song Da No 11 JSC: 3,724,365,448 3,488,827,383 -

Song Da 11- Thang Long JSC - 9,611,601,006 9,512,507,409 -

Vietnam Joint Stock Construction Electricity Corporation - 2,377,703,797 2,377,703,797 -Power Engineering Joint Stock Company - 9,241,817,727 9,241,817,727 - -

PricewaterhouseCoopers Vietnam Company - 3,211,477,225 3,211,477,225 - -

4,256,095.68 617,088,857,605 702,842,501,502 7.103,588.83 962,212,663,368 1,112,900,042,643

SSsSmmefos0,100mawmsommmaammmsmsa smssmmou

Da Nang - Quang Ngal Expressway Development ProJect is

(Component I and 2.4 funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941l-VN and Loan Agreement No. 8049-VN

8 Other receivablesOther receivables presented the va-lue added tax has not been dedaxe&-

9 Payabies to contractors31 December 2016 31 December 2015

USD VND VND Equivalent VHND USD VND) EquivalentLOTTE E&C 40,6"441 23,759,792,919 24,684,610,911 32,115.50 40,276,612,769 41,000,720,948POSCO Engineering and Construction Co Ltd 478,657.15 36337,895,184 47,256,064,776 15,674.25 1,270,103.084 1,623.510,399Shandong Luqiae Group Co Ltd 70,184.18 22,116,559,143 23,716,460,289 - - 5,419,868,494JiaNgsu Provincial Transportation Engineering - 16,650,222,975 16,650,=2,975 6,364,752,450 6.364,752.450Construction Corporation 1 - Ministry of Construction S ,625,2N9,D96 6,525,299,096 - 885,196,055 885.196,055PMUI 131,702,472 131,702,472 - 131,702,472 131.702,472Huiu Nglil Ham Lao Co Ltd- 555,942,8M0 655,942,800 - 555,942,800 555,942,800Company of Economic Cooperation- Military Region 4 - 1,638,950,700 1,638,950,700 - 1,638.950,700 1,038,950,700319 One Member Company Limited - 44%,378,000 448,378,000 - 448,378,000 448,378,000Mine action and Environment Centre- 5 Area - 526,462,300 -526,462,300 - -526,462.300 U26,462,300Investment and Construction No 36 Co Ltd - 486,243,100 46,243,100 - 465,243,100 465,243,100Song Da No 11 JSC --- - 1.550,674,640 1,550,674,640Power Engineering Joint Stock Company ---- 294,951,630 294,951,630Vietnam Joint Stock Construction Eiectricity Corporation ---- 1,717,468,449 1.717,468,449Song Da 11 -Thang LorngJSC G - - 3.383,372,448 3,363,372,446Electronic Construction No 4 Co Ltd - 227,855,767 227,855,767 - 928,467,912 928,467,912Power EngineeriN Consulting No 1 JSC -9,561,150 9,561,150 -9,561,150 9,561.150Joint venture between Viet Hu ong JS C and Vietn am Con structionImport and Export - 9,937,140,937 9,937,14O,97 - - -

Yen Lac Co Ltd - 2,958,528,817 2,958,528.817 ---

Power Construction Nol JSC - 5,796,476,147 5,796,476,147 ---

Geophysical JSC - 1,477,688,060 1,477,688,060 --

Design Survey and Construction Joint Stock Campany - - ---

689,386.74 129,562,699,567 143,008,588,297 47,789.75 60,447,839,959 66,94,223,1947

I Da Nang - Quang Ngai Expressway Development Project 19(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No, 4941-VN andLoan Agreement No. 8049-VN

10 Interest of designated account31 December 2016

USD Equivalent VNDOpening balance 3,505.03 73,579,976Bank charge during the year (1,320.00) (29,575,700)Closing balance 2,185.03 44,004,276

811 Amount withdrawn but not yet claimed

Date of loan 31 December 2016withdrawal USD

17" Payment for package Al under contract No 47/HOXD- VEC2014 Not yet prepared 121,703.6219 payment for package A4 under contract No 40/HDXD-VEC/2013 Not yet prepared 934,696.77SOE 18 23-Jan-2017 9,995,012.98

11,051,413.37

12 Statement of Sources and Use of funds from CounterpartThe Statement of Sources and Use of funds from Counterpart for the year ended 31 December

2016 are as the below:Expressway from Expressway from

Tam Ky to Quang Ngal- Da Nang to Tam Ky -

funded by WB funded by JICA Total

BVND VND VNDSources of funds

Counterpart- Land Clearance 84,000,000,000 551,000,000,000 635,000,000,000Counterpart- VEC () (153,663,336,056) 51,382,176,944 (102,281,159,112)

(69,663,336,056) 602,382,176,944 532,718,840,888

Uses of funds

Component 1

Relocation of power lines 30,244,800,233 30,244,800,233 60,489,600,466

Land clearance and Resettlement 84,000,000,000 363,328,279,343 447,328,279,343

Component 2(a)

Project management 2,774,913,874 2,774,913,874 5,549,827,748

117,019,714,107 396,347,993,450 613,367,707,557

Income over expenses (186,683,050,163) 208,034,183,494 19,351,133,331

I(*) Counterpart fund - VEC incurred in the current year relating to Expressway from Tarn Ky to

Quang Ngai- funded by WB is net amount between the amount advanced by VLC to landclearance sub-project management units and contractors for relocation of power lines and the

amount refunded by land clearance sub-project management units.

13 Approval for issuance of the financial statementsThe financial statements were approved by Vietnam Expressway Corporation to issue on 15 June

I '2017.

Tran Van Tam Nguyen Hai AnhGeneral Director Deputy Finance and Accounting Department

g

SSS8

a De Nang - Quang Ngal Expressway Development Project 20(Component 1 and 2A funded by the World Bank - Financing Agreements No. 4942-VN, No. 4941 -VN and3 Loan Agreement No. 8049-VN)

UI8

U5I8

U

a Part II: Auditors' Report on the* Internal Control£5UU

8

8

£3U3U3U

S

8

a21

* GrantThornton

u Auditors' reporton the Internal Control over financial reporting

the Da Nang - Quang Ngai Expressway Development Project

(Component 1 and 2A funded by World Bank -Financing Agreements No. 4942-VN, No. 4941-VN and

Loan Agreement No.8049-VN) Grant Thomtan etnam) Limitedfor the year ended 31 December 2016 18th Foor, Hoa Binh Intemaionol oce BEilding

106 Hoang Qutc Viet StreetCauGiayDistfictHanad, Vietnam

T 44 (24) 3850 1686

No- 03/HDTY- YEC/2017 wwgraM 1hm8nm.vn

To: Vietnam Expressway Corporation

International Development Association

International Bank for Reconstruction and Development

OpinionWe have audited the accompanying financial statements of the Da Nang - Quang Ngai

Expressway Development Project (Component I and 2A funded by World Bank - Financing

Agreements No. 4942-VN, No. 4941-VN and Loan Agreement No. 8049-VN) ("the Project") for

the year ended 31 December 2016, prepared on 15 June 2017, including the Statement of Fund

balance as at 31 December 2016, the Summary of Sources and Uses of funds, the Statement of

Designated account, the Statement of Loan withdrawals for the year then ended, and a summary of

significant accounting policies and other explanatory notes, and have issued our report thercon

dated 15 June 2017. We conducted our audit in accordance with International Standards on

Auditing. As part of the audit of Financial Statements per the Terms of reference, we are required

to examine and express opinion on the design and operation of 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-

In our opinion, except for the matter as descried in the section 'Basisforqualidedauditors'opinion'" in

all material respects, the Project's internal controls over compliance with requirements that could

have a direct and material financial effect on the financial statements as well as over financial

reporting were suitably designed throughout the year ended 31 December 2016 and the controls

tested, which were those necessary to provide reasonable assurance that the control objectives

were achieved, operated effctively throughout the year ended 31 December 2016.

B This report is intended for the information of the Project Owner of the Project and the World

Bank.

UBasis of qualified opinion

In accordance with the cooperation mechanism between VEC and land clearance units, land

clearance units act as sub-project management units for land clearance under Danang - Quang

Ngai Expressway Development Project. This cooperation mechanism does not clearly state the

responsibility of the land clearance units to provide VEC with provincial state treasury's

reconciliation documents as a basis to recognise the actual land clearance costs incurred by the land

clearance units. As a result, the figures of advances and actual payments relating to land clearance

and resettlement activities were not recognised and reported on a timely basis. For the purpose of

financial audit, we have performed necessary reconciliation and proposed adjustments to ensure

that the receipts and disbursements in relation to land clearance activities are fully reflected in the

audited financial statements.

Grant Thornton (Vietnam) LimitedA member of Grant Thornton Intemational Ltd (GTIL). GTIL and the member firms are riot a worldw de partnership Services are de!veredindependently by the member firms.

* GrantThornton 22

I

The Project Owner's responsibilityThe Projeet Managememi is responsible for desiging and maintaining effective internal control

over coipliance witi requireieis thait could have a direct and material fnancial effect on the

fiancal st atements as wl] as over financial reporting for the pirposte of properly preparing and

presenting the financial statemenis so as to miinimise errors and frauds; and take responsiHility for

its assertions as to the effectiveness of skich internal control.

Auditors' responsibilityOur responsihilty is to express an opinlion on the Projecls Finlancial Stateiet,s and on tie design

and opera;ion of controls over firancial reporting, based on our procedures. \Ve conducted oulr

engagement in accordance with the Itilernational Statidards on Assurance Etgagement 3000,

\ssurace Etigagenents other tihan ;\kdits or Reviews of I istorical Financial Intformiation"

issued lb the Internat ional \uditing and Assurance Standards Board. That standard requires that

we comiply with ethical requiremnetits and plan and perform our procedures to obtajn reasonable

tssurace aboir whether, in all material respects, te Project's I Riancial Statenents are faily

preseted and tie coil rols are suitaibly desigtaed and operataing effectively.

\n assance eigagemient ito repr on i the descipTttion, design antd operainMg eectivetiess of

5 controls at 1a projeciietilees pertoriitg procedures to obtitn eliece about ithe d isclosures inthe ptoWcl's description of its system and design and operating effectivetiess o tf controls. Tle

proedures selected depend oi teI aUditor's judgmet, ineluding the assessenett o,f risks ihat the

Project's 1 inancial Statetent s is not fairly presenited, and that conirols are nt suitably designed or

operaitig effectively. Our irocedies incided tesilng the operating effectiveness of ithose entitols

that we consider niecessary to provide reasonable assuraTce that the control objectes Were

achieved.

\\e believe thm tlie evidetve we have otiained is stfficient and appropriate to provide i basis for

GRANT THORNTON (VI ETNAM) LIMITED

I

Nguyen Hong Ila Bisi Tran Phuong Mini

\uodtuor <i raing Cerlntcate \uditors Practising Cert icate

No 1710-2(l14-68-1 No. 2595-201-068-1

Depmty Getieral Director ;\uditor

I hmoi, Viettn

1.51 Jtne 2017

I

u

N Da Nang - Quang Ngal Expressway Development Project 23(Component 1 and 2A funded by World Bank - Financing Agreements No. 49424VN, No. 4941 AVN and Loan

ifAreetN.84-NU

U1

U

U

5U5

* Part III: Auditors' Report on the

. Compliance

UUUU

UU

IAU

U

24

GrantThornton

Auditors' reporton the Compliancethe Da Nang - Quang Ngai Expressway Development Project

(Component 1 and 2A funded by World Bank -

Financing Agreements No. 4942-VN, No. 4941-VN and

Loan Agreement No. 8049-VN) Grant Thornton (Vietnam) Limitedfor the year ended 31 December 2016 8th Floor. Hoan t ntematonal Off-a Buiding t

1(16 Hoang QMoC Viat StreetCat Gay DistrictHanol, Vietnam

T +62 (24) 3850 1686

To: Vietnam Expressway Corporation m 4 (24) 38501688mnwgfan!tmWot.tnm,ainternational Development Association

International Bank for Reconstruction and Development

OpinionWe have audited the accompanying financial statements of the Da Nang - Quang Ngai

E-xpressway Development Project (Component 1 and 2A funded by World Bank - Financing

Agreements No. 4942-VN, No. 4941-AN and Loan Agreement No. 8049-VN) ("the Project") for

the year ended 31 December 2016, prepared on 15June 2017, including the Statement of Fund

balance as at 31 December 2016, the Summaty of Sources and Uses of funds, the Statement of

Designated account, the Statement of Loan withdrawals for the year then ended, and a summary of

significant accounting policies and other explanatory notes, and have issued our report thereon

dated 15 June 2017. We conducted our audit in accordance with International Standards on

Auditing. As part of the audit of Financial Statements per the Terms of reference, we are required

to cxamine and express opinion on the Project's compliance with Applicable Laws, Regulations

and the Procurement Procedures and other Provisions of the Grant Agreement and other

Guidance from World Bank.

In our opinion, the Project was, in all material respects, in compliance with Applicable Laws,

Regulations and the Procurement Procedures and other Provisions of the funding agreements,

Financing Agreements No. 4942-VN, No. 4941-VN and Loan Agreement No. 8049-VN, and other

Guidances from the World Bank that could have a direct and material financial effect on the

Project's Financial Statements for the year ended 31 December 2016.

1This report is intended for the information of the Project Owner of the Project and the World

Bank.

The Project Owner's responsibility

The Procect Owner is responsible for complying with Applicable Laws, Regulations and the

Procurement Procedures and other Provisions of the Grant Agreement and other Guidances from

World Bank.

Auditors' responsibilityOur responsibihity is to express an opinion on the Project's compliance with the requirements,

based on our procedures. We conducted our engagement in accordance with the International

Standards on Assurance Engagement 3000, "Assurance Engagements other than Audits or

Reviews of Historical Financial Information", issued by the International Auditing and Assurance

Standards Board. That standards 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.

Grant Thornton (Vietnam) LimitedA member of Grant Thornton International Ltd (,GTIL') GTIL and the member fIrms are not a wirdwide partnership. Services are deliveredindependently by the member firms.

* 0 GrantThornton 25

An assurance engagent to reptn on the compliae witih regultorv and contraCtual

requireits at a Jroject invovEs perforning procedures to btain evlence aboti whether tie

project's activities are free of tmlaterial non compLaice wt h the requirements. The procedures

selected depend on ihe auditolr's jugment, inctluding tlie assessmcnt of risks ilhat the 1roject does

not comiply with tie reqirt an-iii whther suh non-eomp]iance coutld have a direct and

mnateritl effect on Ie ProectI t ntiil Sttements. (iur procedures included iesting the

complince with ie requiremints[thatwe consider necessary lo provide reasonable assuraiec tIa

tbe requiremnts are coniplied y tlle Project.

We blieeve that the evidence we have obtained is sapient and appropriate to provide a basis for

Our oini(tloni

GRANT THORNTON (VIETNAM) LIMITED

I

Nguyen Hong Ila Bui Tran Phuong MinhAudrEPruenUsine t ificate Afuditors Praetisitg icare

:u 'iflj E016ls1 No 2595-2014-068-1

)eput General Director AudItor

SHanoi, Viet nam

15 Juned2017

i

-.

!.

�

-

.

� �&}.

.

.

,

,

.

�

.

.

.

.

.

.

�

.

�

.

.

,

,

�

.

.

.

.

�

.