Organisational and project background
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.
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 would be 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 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 as regards the audit of the project mentioned above.Subject of the engagement
The following various suspicions have arisen in relation to the financial management of the Organisation and BftW decided to commission a forensic investigation into those matters. The following issues constitute the basic concerns of BftW that would have to be looked into as part of the forensic investigation:
Additionally, the audit of the two project implemented by the Organisation and financed by BftW might raise further issues of corruption or fraud, these should also be investigated and included in the report of the present assignment.Description of the Engagement
Where relevant, documents should be copied and the copies retained as a permanent record of the evidence supporting the auditor’s report and conclusions.
This section sets out the minimum level of work that is expected to be required for the engagement. Further work should be added according to the auditor’s internal standards, the particular circumstances of the engagement and according to the evidence that is discovered during the engagement.
If the auditor discovers evidence that indicates that the areas of concern might extend beyond those set out in the subject of the engagement (A2), the auditor should communicate with BftW to discuss and agree expansion of that subject.
The whole engagement is expected to be carried out within 24 man-days from the date of commencement. Commencement should be no later than within a week of concluding the Audit of the project of the Organisation financed by BftW.
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.Reporting
The Consultants compile a report (incl. all required attachments) about the engagement in English and make three hard copies available (two for the organisation consulted and one to the organization reviewed) within 10 weekdays after completion of the engagement. The report shall be made according to ISRS 4400 provision and as “agreed upon procedures” report.
As a minimum the report shall consist of:
In any case, each focal point described in chapter B2 of these terms must be taken into consideration in the report.
A list of contact persons at the Organisation will be provided upon signing of the contract/letter of engagement for this assignment.
The costs of the assignment will be borne by Bread for the World
Confidentiality and Risk Management
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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