DRA JOINT RESPONSE AUDIT PROTOCAL 6 views0 applications 22 views



TERMS OF REFERENCE FOR AN EXTERNAL AUDIT- DRA JOINT RESPONSE-AUDIT PROTOCOL

1. Introduction

1.1 Goal and design of Joint Responses

The overall goal of the Joint Responses is to jointly provide timely, relevant, efficient and effective humanitarian assistance to people affected by crises.

For each Joint Response the consortium partners select the lead organization amongst them. The lead organization assumes overall responsibility for the proper planning and implementation of the Joint Response.

In this Audit Protocol, ‘lead party’ refers to the civil society organisation that is awarded a grant by decision of the Minister and ‘consortium partners’ refers to the lead party and

co-applicants.

1.2 Legal framework

The legal framework applicable to Joint Responses comprises:

· Decision on the award of the Joint Response specific grant

1.3 Purpose of the Audit Protocol

This Audit Protocol sets out the applicable audit principles and requirements and explains how the audit findings must be reported.

The auditor will be engaged by the lead party. The Minister may request that a review be conducted, in mutual consultation, to assess whether the house auditor has complied with the Audit Protocol.

1.4 Structure of this document

This Audit Protocol distinguishes between audit activities concerning the financial

statement of each consortium partner (chapter 2) and audit activities concerning the consolidated financial statement for the consortium as a whole drawn up by the lead party (chapter 3).

This means that the lead party must:

1. inform its auditor of the provisions of the Audit Protocol;

2. instruct its consortium partners to inform their auditors of the provisions of the Audit Protocol.

Chapter 3 only applies to the lead party’s auditor. The other chapters apply to the auditors of all consortium partners. The audit procedure is depicted in the diagram below.

1.5 Accountability

The grant within the context of the “Joint Response” is awarded to an organisation that acts as lead party for an alliance. Expenditure of the grant will be through the individual consortium members, including the lead party; the lead party is in this case also consortium member.

The reporting structure is as follows:

Step 1:

The individual consortium members, including the lead party, draw up a financial statement (Individual DRA-Joint Response financial report) with regard to the provided and spent means.

The audit must be carried out in accordance with generally accepted auditing standards

and in particular the auditing standards (Dutch- or International Standards on Auditing;

ISAs) of the International Auditing and Assurance Standards Board (IAASB), see chapter

2 of this protocol.

The auditor must establish that the financial statements meet the requirements laid down

in section 2 of this protocol. The auditor will ascertain that:

  1. expenditures and receipts are accurate and complete;
  2. expenditures and receipts relate to the activities referred to in section 1.1 of

this protocol;

  1. expenditures are legitimate and comply with the criteria laid down in points a)

to e). The auditor must establish that:

a. expenditures are corroborated by supporting documents;

b. the organisation keeps project records and documentation with

argumentation for linking (staff) costs to the project (such as

timesheets). The information in the project records and other

documentation agrees with the information in the financial

administration;

c. the procurement procedures comply with the Principles and

Procedures applicable to Procurement Contracts awarded within the

framework of Humanitarian Aid Actions financed by the European

Union, as laid down in Annex III of the Framework Partnership

Agreement (FPA) between the organisation and ECHO;

d. tax and social insurance remittances have been made in accordance

with the tax laws of the country where the organisation is

established and for the period to which the audit opinion relates;

e. invoices are settled on the basis of actual costs or lump sum

amounts set in accordance with the organisation’s internal policies.

The individual consortium partners, including the lead party, supply the following documents to the lead party:

· the financial report of the consortium partners (including the lead party for their part of the expenditure)

· the ISA 800/805 report for the financial report of the consortium partners

· an audit report (exemption report – in accordance with the text of annex A of this protocol)

Step 2:

The lead party consolidates the financial Joint Response reports in one financial report for the entire consortium.

For the consolidated financial report of the Joint Response, the auditor performs an ISRS 4400 assignment (see chapter 3 of this protocol).

The financial report sent by the lead party to the Ministry of Foreign Affairs contains:

· the consolidated financial report for the entire consortium

· the ISRS 4400-report on the consolidated report

2. Audit procedures concerning individual consortium partners

2.1 Introduction

This chapter describes the audit activities concerning the financial statement of each consortium partner to the Joint Response..

The activities described in section 2.3 result in an audit opinion on the financial

statement, drawn up in accordance with auditing ISA 800/805 and a report in accordance

with the text of annex A of this protocol.

2.2 Audit objective and scope

The auditor must establish that the transactions as accounted for in the financial

statement comply with the framework mentioned under paragraph 1.2. The audit must

be carried out in accordance with the requirements laid down in this Audit Protocol and

with the relevant auditing standards.

The audit subject is the consortium partners’ financial statement for the year under review including processes and administrations relevant for the Joint Response. .

2.3 Audit approach in respect of the financial statement (ISA 800/805)

The audit must be performed in accordance with the law of the country of statutory residence of the lead party and applicable audit standards.

The minimum reliability level for audit purposes is 95%. Materiality is determined as follows for the purpose of drawing up the audit opinion:

Type of audit opinion

Unqualified

Qualified

Disclaimer

Adverse

Accounting errors

See table below

≤ 6%

≥ 6%

Audit uncertainties

See table below

≤10%

≥ 10%

Grant amount in the year concerned

Permitted tolerance

Less than €1.5 million

3% of grant amount

Greater than or equal to €1.5 million and

less than €5 million

€50,000

Greater than or equal to €5 million

1% of grant amount

Materiality must be based on total expenditure of the financial statement.

As part of the audit, the auditor examines explicitly whether the financial report meets

the requirements mentioned in chapter 1.5 (step 1, bullet 3, a-e).

The audit opinion will be accompanied by a separate written report in accordance with

annex A of this audit protocol. This is an exemption report and findings reported do not

necessarily have consequences for the audit opinion, unless the auditor deems the

findings of material relevance for the financial Joint Response report.**

If the auditor has, in the scope of the audit, taken into account the set-up and**

functioning of the administrative organisation and internal control and more specifically:

a) authorisation of payments

b) attribution of direct and indirect programme costs

c) compliance with procurement procedures as laid down in the framework of

Humanitarian Aid Actions financed by the European Union, ECHO

d) adequate administrative processes to comply with the applicable legal

framework for reporting,

he/she will take up the findings in this separate written report.

The auditor must request a letter of representation (LoR) from the grant recipient’s

management stating that, to the best of their knowledge, the financial statement

encompasses all transactions and receipts, is accurate and complete in every respect and

that all grant conditions, including those beyond the scope of the audit, have been met.

In the letter of representation, management must specifically confirm that they have

complied with article 7h of the grant decision, which states: ‘*You may not offer to or*

accept from third parties anything of any kind whatsoever, if this could be interpreted as**

an illegal or corrupt practice. Such practices may provide grounds for the withdrawal of**

this decision or part thereof.’**

If the consortium partner’s management refuses to include this statement in the letter of representation and/or refuses to issue a letter of representation, the auditor will make a note to this effect in their report of findings according to article 2.1 in accordance with the text in annex A, in accordance with ISA 580.

2.4 Audit report on the financial statement of consortium partners

2.4.1 Audit opinion on the financial report Joint Response

(ISA 800/805)

The audit opinion must in any event include the aim and scope of the audit, the audit

criteria applied, where relevant, and the audit opinion.

An unqualified auditor’s report must be worded as follows or in accordance with a more

recent model text as published on the IAASB website:

Engagement**

We have audited the financial statement under the grant agreement Joint Response

dated XX-XX-20XX of [*name of entity*] at … [*registered office*] for the year …. .

Management responsibility**

The financial statement, drawn up in accordance with the conditions in the grant

agreement of XX-XX-20XX is the responsibility of the management of the entity (or other

applicable name eg the board of the foundation etc). The management is also responsible

for such internal control as it deems necessary for the financial statement to be drawn up

without material misstatement as a result of fraud or error.

Auditor responsibility**

It is our responsibility to issue an opinion on the financial statement, based on our audit.

We conducted our audit in accordance with …. law and auditing standards, and with the

Joint Response Audit Protocol, specifically article 2.2 and 2.3. This requires that we

comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance about whether the consolidated financial statements are free from material

misstatement.

An audit involves performing procedures to obtain information on the amounts and

disclosures in the financial statement. The procedures selected depend on the auditor’s

judgment, including the assessment of the risks of material misstatement of the

consolidated financial statements, whether due to fraud or error. The activities depend on

the auditor’s approach, which includes assessing the risk of the financial statement

containing material misstatement as a result of fraud or error.

In making those risk assessments, the auditor considers internal control relevant to the

organisation’s preparation and fair presentation of the consolidated financial statements

in order to design audit procedures that are appropriate in the circumstances, but not for

the purpose of expressing an opinion on the effectiveness of the organisation’s internal

control. An audit also includes evaluating the appropriateness of accounting policies used

and the reasonableness of accounting estimates made by management, as well as

evaluating the overall presentation of the financial statements.

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

provide a basis for our audit opinion.

Opinion**

In our opinion, the Joint Response financial statement of (entity) over [*year*] has been

drawn up in all material aspects in accordance with the conditions of the grant agreement

for Joint Response xx of XX-XX-20XX

Restrictions on use and distribution**

The financial statement has been drawn up for [*name of lead party*] and the Ministry of

Foreign Affairs, so that [*name of entity and name of lead party*] can fulfil the reporting

obligations pertaining to their Joint Response grant. As a consequence, the financial

statement may not be suited to other purposes. Our audit opinion has been drawn up

solely for the use of [*name of entity and name of lead party*] and the Ministry of Foreign

Affairs and must not be distributed to or used by any other parties.

… [*place*], … [*date*]

… [*signature*]

… [*auditor’s name*]

… [*name of audit firm*]

3.1 Audit procedures concerning the consolidated financial report of the Joint Response

3.1 Introduction

This chapter describes the audit activities concerning the consolidated financial report of the Joint Response, to be provided by the lead party.

3.2 Consolidated financial report of the Joint Response (ISRS 4400)

The lead party’s auditor is responsible for drawing up a report of findings, in accordance with auditing ISRS 4400, on the consolidated financial report of the Joint Response.

Performing an ISRS 4400 assignment means the auditor will not give assurance but only reports the audit findings. This protocol describes the accents for the audit. The user of the report is responsible for the opinion and conclusion on the report. The auditor should carefully attune the nature, timeframe and the size of the agreed activities with the principal and express this in the report. It should be clear what activities where performed by the auditor and what the scope was. The auditor is not held to have an opinion on the adequacy and suitability of the performed activities in relation to the goal, nor for any other purpose.

The auditor will:

  • establish whether audit opinions, based on auditing ISA 800/805, have been issued for the financial information used as input for the consolidated financial statement (i.e. on each of the consortium partners’ financial statements);
  • establish the type of audit opinions issued. For those audit opinions that are not unqualified, the auditor will include the following information in their report of findings:

o the consortium partner’s name;

o the type of audit opinion issued;

o the literal content of the item or items (and the amounts involved if possible) that led the auditor concerned to withhold an unqualified audit opinion;

o if possible : the way in which this item/these items have been accounted for in the consolidated financial statement;

  • establish whether the lead party accurately and completely combined the financial statements of the individual consortium partners in the consolidated financial statement, and provided explanations for any discrepancies1 between the individual financial statements and the consolidated statement. The auditor will recommend improvements when they consider the consolidated financial statement or the lead party’s explanatory text to be incorrect or incomplete, or to give insufficient information as to the specific grant conditions. If the recommendations are not followed, the auditor will make a separate notion of this

1 Discrepancies :differences between the individual reports and the consolidated report eg as a consequence of numeral corrections in the current reporting period, numeral correction in former reporting periods, use of different cost categories etc.

in the report of findings, indicating the improvements or additions they consider necessary;

  • establish whether each consortium partner has issued an audit report (exemption report)

3.3 Audit report on the consolidated financial report of the Joint Response

3.3.1 Report of findings (ISRS 4400)

The report of findings must comprise all elements prescribed in auditing ISRS 4400 and describe the procedures and findings in accordance with section 3.2 of this Audit Protocol.

It must also contain a summary of the ISRS 4400-compliant audit reports of each of the consortium partners.

A sample text can be found on the (Dutch) NBA or IAASB website.

4.0 Evaluation Criteria

4.1 Mandatory documents

a) Provide a certified copy of a certificate of business registration (Companies/ Organizations)

b) Provide a certified copy of tax registration

c) Provide information on ownership structure (Name of directors of the company / Owner) (Companies/Organization)

d) Provide professional references from previous clients for similar works (minimum of three, with complete contact information)

e) Successful bidder will be required to sign World Vision Supplier Code of Conduct form.

4.2 Technical

a) Previous experience in fragile context

b) Experience with similar assignments with INGOs/ other organizations-Provide prove of engagement,LPO or contract

c) Experience of the lead and technical staff-Attach CVs

d) Quality of the technical proposal

e) Assignment Timelines

4.3 Financial Evaluation Requirements

a) A financial proposal budget with a detailed breakdown of costs quoted in USD. **

b) Applicable tax amount must be clearly stipulated and separated from the base costs.**

c) Payment Terms

d) Credit Period

Application process

All interested bidders are requested to submit their Technical proposals (Mandatory Requirements +Technical evaluation Requirements) and financial Proposals in separate documents as PDF attachments (Bidders who will combine both technical and financial proposals shall be disqualified) All interested bidders are requested to submit their proposal via email [email protected] on or before 10th December 2021.

Email title should be: – DRA JOINT RESPONSE AUDIT PROTOCAL

Bids received after deadline shall not be considered. Only the final selected candidate will be contacted.

World Vision is not bound to accept any proposal, nor award a contract, nor be responsible for any costs associated with a Service provider’s preparation, regardless of the outcome of the selection process.

Annex A template separate written report

Separate written report for Joint Response report of [name consortium partner] for [name of program] with [name of lead party] in accordance with Joint Response audit protocol paragraph 2.3

Period audited report: [start date] – [end date]

The auditor is responsible for performing the audit in accordance with the law of the country of statutory residence of the lead party, applicable audit standards and the audit protocol Joint Responses.

  1. In case the opinion is not unqualified, the auditor will give an explanation here.
  2. If the auditor has, within the review, given attention to the administrative organisation and internal control, and in particular the following aspects, he states his findings on these aspects. If no attention was given to the administrative organisation and internal control, the auditor states “not applicable”.

If, as a result of the audit, other findings occur, which the auditor orally or in writing reports to the governance organ of the consortium partners, he will make note of that here.

3 The consortium partners must declare to the auditor in the LoR the compliance with article 7h of the grant decision.

“*You may not offer to or accept from third parties anything of any kind whatsoever, if this could be interpreted as an illegal or corrupt practice. Such practices may provide grounds for the withdrawal of this decision or part thereof* “

The auditor states whether the declaration is in the LoR

How to apply

All interested bidders are requested to submit their Technical proposals (Mandatory Requirements +Technical evaluation Requirements) and financial Proposals in separate documents as PDF attachments (Bidders who will combine both technical and financial proposals shall be disqualified) All interested bidders are requested to submit their proposal via email [email protected] on or before 10th December 2021.

Email title should be: – DRA JOINT RESPONSE AUDIT PROTOCAL

Bids received after deadline shall not be considered. Only the final selected candidate will be contacted.

World Vision is not bound to accept any proposal, nor award a contract, nor be responsible for any costs associated with a Service provider’s preparation, regardless of the outcome of the selection process.

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