Protestant Agency for Diakonia and Development South Sudan
Jan 31, 2018Contract
Introduction Background The Protestant Agency for Diakonia and Development (PADD) is working with partners in South Sudan since the inception of the country in 2013. Prior to independence PADD has accompanied partners through its Sudan program for a number of years. As South Sudan is sliding deeper and deeper into political crisis its governing systems have become less and less reliable. The country is cash strapped and banks withhold funds belonging to organizations and individuals releasing limited amounts per day. Yet organizations operating projects are required to make procurement purchases, payroll and other financial transactions. As goods and services are no longer readily available in the market it is becoming more and more complicated to acquire them. Inflation is continuously rising with many vendors accepting payments in hard currency only. The purchase of fuel in the local markets can only be made without receipt. For project implementation PADD and its partners mutually agree to adhere to a set standard of narrative and financial documentation and verification (progress reports, audits). Especially financial management requires adherence to strict internal and external regulations. Responsibilities of the Parties to the Engagement ‘The Partner’ refers to the entity to be reviewed by the auditor. The Partner is responsible for providing sufficient and adequate information, both financial and non-financial, in support of the Minimal Work Program. The Partner accepts that the ability of the Auditor to perform the procedures required by this engagement effectively depends upon the Partner providing full and free access to Partner's staff and its accounts and records. ‘The Auditor’ is responsible for performing the agreed-upon procedures as specified in these ToR, and for submitting a report of factual findings to the Contractor. ‘ Auditor’ refers to the audit firm contracted for this engagement and in particular to the partner or other person in the audit firm who is responsible for the engagement and for the report that is issued on behalf of the firm, and who has the appropriate authority from a professional, legal or regulatory body. ‘The Contractor’ refers to the contracting entity of this exercise, which is the Horn of Africa Regional Office of the Protestant Agency for Diakonia and Development, hereafter called PADD. By agreeing these ToR the Auditor confirms that he/she meets at least one of the following conditions : The Auditor and/or the firm is a member of a national accounting or auditing body or institution which in turn is member of the International Federation of Accountants (IFAC). The Auditor and/or the firm is a member of a national accounting or auditing body or institution. Although this organisation is not member of the IFAC, the Auditor commits him/herself to undertake this engagement in accordance with the IFAC standards and ethics set out in these ToR. The Auditor and/or the firm is registered as a statutory auditor in the public register of a public oversight body in a third country and this register is subject to principles of public oversight as set out in the legislation of the country concerned (this applies to auditors and audit firms based in a third country). Audit Objective This agreed upon procedure exercise is an engagement of the Auditor to give a professional feedback to the Contractor about the financial management patterns of the Partner implementing projects funded by PADD in South Sudan. The Auditor will probe into the financial management of the Partner with regard to their Financial Reporting and adherence to their own internal policies and procedures as well as those mutually agreed upon with PADD. The objective of this agreed upon procedure is for the Auditor to highlight the internal control or weaknesses thereof of the implementing partners and to raise any specific issues in South Sudan which have been raised by the auditor appointed by the Partner, together with other potential issues which may not been highlighted in the audit reports and management letters of other auditors who have undertaken the partners’ audits. The Auditor will submit to the Contractor a report of factual findings with regard to the specific agreed upon procedures performed. By answering the questions listed under the Minimal Work Program under 3.1 the Auditor assesses whether the financial management of the Partner is solid and displays an accurate and proper handling of project funds provided by the Contractor. As this engagement is not an assurance engagement the Auditor does not provide an audit opinion and expresses no assurance. The Contractor assesses for itself the factual findings reported by the Auditor and draws its own conclusions from these factual findings on the Partner’s degree of compliance with the requirements, especially implicit in sections 2.2.4 to 2.2.18 of the Audit Agreement and sections 3.4 to 3.25 of the Cooperation Agreement in order to decide whether the cooperation with the Partner shall continue. Scope In order to function in an unstable situation partners are required have solid system of financial management in place that allows them not only to comply with donor regulations but to adhere to international standards of financial procedures with transparent transactions, checks and balances in place for the sake of their own monitoring as well as for their reporting to back donors. As the Partner utilizes German government funds the Contractor feels the obligation to verify that the Partner’s financial operations follow the required procedures and standards in order to remain grant worthy. In case of fraud or mismanagement the Contractor would be required by its back donor, the German Federal Ministry of Economic Cooperation and Development to pay back such amounts to the German government including interests. Although the work is carried out by an Auditor, it is not considered a regular audit. It rather falls under “agreed upon procedures” as per ISRS 4400 (the standards defining professional norms that auditors have to follow when not conducting a typical audit, but when conducting investigations/verifications defined by the client themselves). Minimal Work Program (agreed upon procedures as per ISRS 4400) The following questions serve as guideline to be answered by the Auditor while carrying out the work through inquiries, walk through of procedures and understanding. Is the project partner using a single accounting software for the recording of all projects’ expenditures? Does a proper financial documentation exist for their spending? Are allocation and splitting of costs done in a way that double charging of project costs between donors can be excluded? Is there a systematic written methodology in allocating shared costs and salaries (timesheets) across grants? Do financial expenses match the verifiable program activities? Are there any external evaluation reports? Are expenditures charged to the proper budget lines in accordance with the approved budget? In cases of variations, are these within the prescribed donor limit? Do costs other than agreed upon in the mutual binding document occur in the project? If yes, why do they occur? How are such costs outside the ones mutually agreed upon recorded in the project account? Has the partner sought prior approval from PADD for including those costs into the project? What type of documentation has the partner at hand for the exchange of project currency from Euro to USD and into SSP or other currencies (i.e. KES, UGX)? Do they transact in the commercial banks (through internal bank transfer), in the forex bureaus, or in the open market, private individuals, suppliers? For rates other than through the commercial banks, are the rates reasonable? By assessing these documentation does the partner record an exchange rate gain or loss? What rates had been used in the financial reports submitted to PADD? Consider risk or impact of currency devaluation since December 2015. If so, how does the partner report such gains/losses to PADD? Based on latest financial report agree/review Partners’ reconciliation to underlying accounting records. What are the partner’s internal financial control mechanisms and regulations? Who carries them out and in which timely intervals? How does the partner assure the prevention of possible mismanagement? Also inquire on any history of fraud cases within the organisation. What shall the partner employ in the future to strengthen its financial management system? Are procurements in line with the partner’s internal policies? If yes, are these in line with PADD’s expectations and procedures? Does the partner comply with the local tax legislations and social insurance requirements? How are the salaries contracted, in SSP or in USD? If in SSP, are they paid in USD equivalent? Are the salaries taxed according to the applicable monthly exchange rates? Has the Partner and the Partner’s Auditor complied with PADD’s sections 2.2.4 to 2.2.18 of the Audit Agreement (based amongst other procedures, on checklist to be provided to the auditor for their response on procedures undertaken) and sections 3.4 to 3.25 of the Cooperation Agreement? 3.2 Audit reports and management letters The appointed auditor will review the previous audit reports and management letters of the projects under review of the implementing partners. Any issues not highlighted in these reports will be reported to PADD considering the points highlighted in section 3.1 above. Feedback Loop In the event that the Auditor notices any issues or problems she/he shall contact the Contractor saying: “While checking things at partner XYZ, I noticed they might have problems with such or such issue. This is not part of the minimal work programme, but I think it is worth checking further. Please allow for x more days of work at this partner”. Therefore, the contract shall be made in a way to allow for such additional work to be carried out. Any additional procedures to be carried out will be subject to a separate scope and fees. Beyond the “Minimal Work Program” This section shall be made flexible to accommodate additional work to be carried out should the need arise. The Auditor will specify the nature of such work during the feedback loop to the Contractor. Time schedule The whole engagement is expected to be carried out within 20 days from the date of commencement. Activity Estimated Time (in man-days) Preparation phase 3 On site work, including field work 12 Report writing, including feedback loop 5 TOTAL 20 The engagement, including reporting should be completed no later than 13 April 2018. Reporting The Auditor shall compile a report (incl. all required attachments) in English and make three original copies available (two for the Contractor and one for the Partner) within 15 days after completion of the engagement. As a minimum the report shall consist of: Executive summary Description of the processes/procedures (including the work undertaken, methods applied, persons concerned, significant variations from planning) Description of the factors that facilitated and those that hampered accomplishment of the engagement Specific findings in respect of the questions (minimal work program and Annex) Explanation and justification of the exclusion of any of the work set out in section 3.1 Recommendations The Organization’s statement responding to the report and recommendations. Confidentiality 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 the he/she might face when conducting this engagement. Please, submit a tender in English of no more than 20 pages by email by 15 February 2018. The tender should include at least: Your full contact information, core competencies (description of expertise including language/regional experience and CV of proposed consultants), Proposed methodology, standards, time schedule and approach to this assignment, Proposed fees (please include applicable local taxes in the offer), providing a full breakdown of hours per member of staff, Estimate travel costs and any additional charges, List of past similar assignments and/or experience conducting audits for civil society in South Sudan by the proposed team. If you have never worked for BftW before, please also attach a scan of your national audit accreditation certificate (or equivalent) to the tender. A conference call will be held shortly after selection of the Auditor for this assignment to assess provided material and suspicion, as well as to discuss planning of the work (including field work). Please send your submission by E-Mail to: Ms. Zemen Tadesse at: firstname.lastname@example.org , email@example.com .