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TERMS OF REFERENCE FOR INSTITUTIONAL AUDIT – Somalia

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  • Post date:12 Feb 2020
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Job Description

TERMS OF REFERENCE FOR INSTITUTIONAL AUDIT

1.0 Introduction

Diakonie Katastrophenhilfe is the humanitarian assistance agency of the Protestant Churches in Germany with headquarters in Berlin. Through its partner organizations, Diakonie Katastrophenhilfe provides humanitarian aid worldwide. It supports people who have fallen victim to natural disasters, war and displacement and who are not able to cope on their own in the emergency they find themselves in.

In Somalia, Diakonie Katastrophenhilfe has been running intensive relief programs for more than twenty years. In close cooperation with its local partner organizations, Diakonie Katastrophenhilfe works across a number of sectors including WASH, education in emergency, food security, livelihoods and Vocational training. DKH Somalia has implemented projects for donors such as Ministry of Economic Cooperation and Development (BMZ), German Federal Foreign Office (AA), UNOCHA, ACT Alliance among others.

Diakonie Katastrophenhilfe Somalia Crisis Programme is looking for an audit firm to perform an institutional audit of its financial statements for the years 2018 and 2019 which includes detailed operational incomes and cost for projects implemented by the office.

2.0 Key tasks and Responsibilities

The auditors express an opinion whether the financial statements, including

  • The balance sheet
  • income and expenditure account (if relevant in the given context of the project)
  • receipt and payment account / cash flow statement of the project including opening and closing balances of earmarked funds and a comparison with the approved budget

gives a true and fair view of all essential matters and whether it has been properly prepared in accordance with the above mentioned requirements. In arriving at their opinion, they are required to consider the following matters and to report on them accordingly:

  1. Whether proper accounting records have been kept by the project holder
  2. Whether the project holder’s financial statement is in agreement with the accounting records and returns
  3. Whether funds from DKH HQ were utilized in compliance with the purpose of the earmarking of funds.
  4. Whether the auditors have obtained all the information and explanations, which they consider necessary for the purpose of their audit.
  5. Whether all the articles in the grant agreement were complied.

3.0 Scope of the audit

The audit will be conducted in accordance with the International Standards on Auditing. The format of the audit must comply with the format prescribed by ISA 800. The auditors shall obtain an understanding of the accounting and internal control systems in order to assess their adequacy as a basis for the preparation of the financial reports and to establish whether the project holder has maintained proper accounting records. Special attention shall be given to the fact that income through funds from DKH and other aid agencies are earmarked funds. This earmarking is based on the objectives/goals and measures defined in the project as well as on the approved expenditure budget and financing plan. The balances of earmarked funds (project balances) shall be shown as liabilities at the end of the accounting period. In addition, the auditors shall analyse the economical and sparing use of funds in accordance with the established local price structures and the contracting practices for placing orders/procurements

The audit is not designed to identify all significant weaknesses in the project’s systems but, if such significant weaknesses come to the auditors’ notice during the course of the audit, the auditors shall report on it in their report, or in their Management Letter as appropriate.

4.0 Audit Report

The following documents should be provided by the auditors upon completion:

  • Auditor’s report/opinion including a compliance statement in respect of the earmarking of DKH funds. The audit report shall contain the opinion of the audit firm on whether project funds were exclusively used for the purpose of the project and in accordance with the cooperation agreement.
  • Audited financial statement(s) of the project(s) under consideration

(balance sheet, income and expenditure account of the project holder, if relevant in the given context of the project)

(receipt and payment account / cash flow statement of the project including opening and closing balances of earmarked funds and a plan-actual comparison / variance report with the approved budget

  • Management Letter.
  • Notes to the accounts reporting on.
    1. List of income/receipts according to origin/source
    2. Foreign currency transactions (incl. examination of exchange transactions)
    3. List of all bank accounts in the country and abroad.
  1. List and explanations of debts / accounts receivable related to debtors, amount, reason and time of emergence.
  2. List and explanation of liabilities related to creditors, amount, reason and time of emergence, incl. the balance of earmarked funds according to origin/purpose.
  3. Statement on assets, in particular evidence of new acquisitions and the compliance with DKH approval, if applicable (e.g. buildings, vehicles)
  4. Legal claims of staff to severance pay and retirement pensions

5.0 Tender Submission Guidelines

The applicant will submit a financial and technical proposal together with the following documents.

  • Proof of company registration in Kenya and/or Somalia.
  • Proof of registration with ICPAK (Institute of Certified Public Accountants of Kenya) and partners’ practicing certificates.
  • Constitution and statutes of the firm.
  • Recent Valid tax payment/compliance certificate.
  • Certificate of good standing with ICPAK issued not sooner than August 2019.
  • Proof of other relevant national and international memberships
  • Confirmation that the firm and/or its partners and key staff are not aware of any conflict of interest which may exist with respect to the organization.
  • Proof of previous experience with organizations of a similar working nature to Diakonie Katastrophenhilfe Somalia. The applicant should have experience working in Somalia and should possess sufficient knowledge of the region including government fiscal and other financial regulations especially those affecting NGOs.

The technical proposal of the proposing firm should adhere to the following conditions.

  • Indicate the methodology that will be used to fulfill its mandate, clearly indicating in a schedule the different stages of the execution, the distribution of the sequence time of activities and key personnel to be assigned.
  • Clearly describe the audit approach, including an identification of the areas that will be primarily focused.
  • Include proof of experience of the key personnel in the knowledge of the financial verification standards of donor funded projects. This experience must be demonstrated in the CV’s of each of the personnel to be involved in the execution of this audit in the technical proposal. A technical proposal that does not contain detailed information about key personnel will not be evaluated.
  • The proposal should contain a work plan which clearly shows the duration of the different tasks proposed.
  • The firm must describe the key strengths and a statement of why you believe your company’s services can add unique value to our organization.
  • Include an explanation as to whether and how, your company informs its clients about emerging accounting and regulatory issues especially in Somalia.

The financial proposal should contain:

  • The details of all the expenses planned for carrying out the audit.
  • The professional fees according to the charges proposed in the technical proposal (rate per level of auditor and time proposed)

The audit is scheduled to take place in Nairobi.

Bids should be sent via E-mail to contact.som@diakonie-katastrophenhilfe.org on or before 26th February 2020. For any additional question(s) please send an E-Mail to the above mentioned E-Mail-address.

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