TOR for the AUDIT of a PROJECT based in Jigjiga, Somalia State, Ethiopia.
To be reviewed/audited:
Bread for the World (BftW) has been providing funding to an international civil-society organisation formally registered in Ethiopia (hereafter “the Organisation”) for the implementation of a project based in the Somali regional state (hereafter “the Project”). The Organisation has been implementing projects and activities to empower girls and young women economically and through education. It has been working mainly in Jigjiga, Somalia State and has a local office there.
Project to be audited
Project number: A-ETH-2013-0268
Total project budget: 270,000 EUR
Grant approved by BftW: up to 270,000 EUR
Amount transferred until now: 251,700 EUR
Project period: 01.11.2013 to 31.10.2016
Project title: “Economic empowerment and educational attainment of adolescent girls in Jijiga”
Origination of the engagement
The Projects to be audited aim to empower young girls economically and support their educational attainment. They are implemented in different localities across the Somalia State. The Organisation has a local office in Jijiga, where the project is based and the accounting documentation is kept. BftW has been providing financial support to the Organisation for 3 years.
The Project’s implementation seemed to go smoothly, however, when we received the fifth audit report for the Project, it was a qualified report raising various issues that needed attention and close follow-up. Such as lack of using pre-numbered legal receipt, failure to collect proforma invoices to purchases of goods exceeding 400 EUR (a contractual obligation), late tax payment, keeping cash at the custody of staff and posting and coding errors.
Additionally we were informed by the Organisation that effective August 2016 various positions within the Organisation were replaced and filled anew. After further dialogue we were finally informed that this was following alleged fraud that people were replaced. This fraud case possibly touched on funds BftW had provided, but no further details were put forward. Our requests for more information about amounts possibly lost to fraud and the exact nature of the problem have remained unanswered.
Against this background, BftW has decided to conduct a new independent audit of the Project, as well as to commission a forensic investigation into some of the accusations of fraud and corruption formulated against the Organisation (see the separate Terms of References for that forensic investigation). The present ToRs articulate the expectations of BftW in regard to the audit of the project mentioned above.
BftW is accountable to our back donor - the Ministry of Economic Cooperation and Development of the Federal Republic of Germany (BMZ). BFTW receives and distributes German public funds in trust and is required to ensure that the grants are used for the specified purposes subject to certain restrictions and strict monitoring. These conditions, as they affect the Organisation are set out in various documents, including the:
Description of the EngagementObjectives
To conduct a full Audit of the Project according to the International Standard of Auditing (ISA 800). The extent of the work required for this review will depend on the auditor’s understanding and assessment of the engagement, the organisation, the audit risk and materiality (see section 3.1). This will, however, be subject to any individual areas that are specified in section B3.1(j) of these terms of reference as requiring a materiality level of zero, in which case a 100% check of relevant transactions, vouchers etc. will be expected for those areas. After an initial assessment the final scope of the work must be discussed and agreed with BftW.
The engagement should result in following outputs:
The Audit report of the consolidated financial statements of the project is intended to:
The audit firm shall plan and conduct the audit in compliance with the International Standards on Auditing (ISA) as applied in the country in which the Project Partner has its head office. Should the ISAs not be adopted in this country, the audit firm shall ensure that the audit team has been trained to perform the audit in compliance with the International Standards.
Nature and scope of the engagement
Sections B3.1 to B3.5 identify the minimum work that should be included in the engagement. However, if in the judgement of the auditor, this is not sufficient to provide all the evidence that will be required to support the conclusions of the report, or if the audit firm’s internal procedures impose further requirements, it should be supplemented by additional work. Exclusion of any particular steps should be explained and justified in the report.
Financial Records and Financial Statements:
Produce a draft Audit report for the project in accordance with section 2 above (for discussion with the management of the Organization and with BftW); and thereafter a final report including feedback received. The report should include:
The reports mentioned above shall be produced in English and three original copies should be made available (two for BftW and one for the Organisation) within 10 days after completion of the engagement.
Responsibilities and expectationsThe audit firm engaged shall carry out the review in line with sections 1, 2 and 3 above. The company will be supported by the Organisation, which will provide access to all documentation, minutes and reports as required by the auditor. BftW shall provide the documents listed in section A2 and shall be available to provide additional support and information for the auditor as required
The whole engagement is expected to be carried out within 24 work days from the date of commencement.
Estimated Time (in work days)
On site work
December 16-January 02
Presenting Draft Report
Submit Final Report
The engagement should be completed no later than 13 January 2017.
The engagement will be carried out in confidentiality. The auditor will not act in any way which might result in the impairment of independence, or which might lead outsiders to believe that independence and confidentiality has been impaired. The auditor will neither use, nor appear to use, information acquired during the course of this engagement for either personal advantage or the advantage of a third party. The auditor will immediately report to Bread for the World any potential conflict of interest it might face when conducting this engagement. The auditor will also immediately report to Bread for the World any potential threat or intimidation received during the execution of this assignment.
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