Alviol General Trading P.L.C: Terms of Reference for Financial Audit– IAP GRANTEES
TERMS OF REFERENCE FOR FINANCIAL AUDIT – IAP GRANTEES
The Innovations Against Poverty 2 (IAP 2) challenge fund was established by the Swedish International Development Cooperation Agency (Sida) in 2016 with the aim to stimulate the private sector (in the forms of entrepreneurs) to focus their efforts, innovative ability, and resources to develop and invest in products, systems, and services so they are able to bring about changes to improve the lives of people living in poverty. The Innovations Against Poverty 2 (IAP2) challenge fund is managed by SNV Netherlands Development Organization (SNV). The IAP 2 program runs from September 2016 to December 2023. SNV has entered into funding contracts with selected enterprises (hereinafter referred to as grantees) and provides grant support (disbursement of funds) based on the achievement of pre-set milestones.
As part of the contract requirements, annual audits are to be carried out on any grant funding disbursed to all IAP grantees. These Terms of References (ToR) provide an outline for the annual audit assignments to be carried out in each of the four IAP focal countries. This ToR applies to the annual audit assignment for Alviol General Trading P.L.C. based in Ethiopia.
Aim of the audit assignment
This assignment aims at assessing whether the IAP funds received by the grantees have been used in accordance with the work plan and budget as contained in the IAP funding contract and whether appropriate financial reporting and administrative systems and procedures have been adhered to in accordance with the operational manual annexed to the IAP funding contract.
The specific objective is to (a) audit all the milestone financial reports submitted by the grantee to SNV/IAP within the period 01 May 2021 up to 31st December 2022 at a total expenditure of EUR 71,914 disbursed by SNV/IAP and EUR 81,085 company contribution and (b) to express an audit opinion according to ISA 800/ISA 805 standards, on whether the financial reporting of the grantee is in accordance with their accounting records and SNV/IAP’s requirements for financial reporting as stipulated in the funding the contract including annexes between SNV/IAP and the grantee, and (c) to issue a management letter highlighting the material observations as the result of the audit.
This assignment will also specifically focus on an analysis of the grantees’ internal control systems in order to determine the reasonable assurance that internal control systems are robust and functioning
efficiently. The assignment includes a review in which routines and systems for operational and financial control are described and analyzed. The audit firm is expected to identify eventual weaknesses and provide recommendations on improvements to be addressed by each IAP 2 grantee. The recommendations will be useful as they will be incorporated and guide the future implementation of the program.
- Examine whether the financial reports include a comparison, for every budget item, between the actual costs/expenditures of activities and the budgeted costs/expenditures as approved by SNV/IAP for the period.
- Based on materiality and risk the auditor shall examine whether there is supporting documentation related to incurred costs. If costs without sufficient supporting documentation are found, these costs shall be quantified.
- A review of the outgoing balance for the previous period is the same as the incoming balance for the current period.
- The financial milestone reports for the funding received by each grantee shall be audited. The audit shall verify that the use of IAP funds received from SNV has been used exclusively for the IAP project and in line with the agreed work plan as mentioned in the milestone plans/budgets and that the IAP funds have been kept separate from any other activities.
- The financial reports for grantees’ own contribution (whether in-kind or in cash) shall be audited and shall verify that the own contribution provided by the grantee has been in line with the milestone plan and budget in terms of type and quantity.
- Follow up grantees’ compliance with the applicable tax legislation in regard to taxes (e.g. PAYE)1 and social security provisions.
- Follow up on whether grantees have adhered to the procurement guidelines annexed to the funding contract. Prepare a list of all procurements done by each grantee during the period from the start of the funding contract up to December 31st, 2022, and additionally scrutinize the single-sourced procurements.
- Verify that all relevant procurement documents are kept and archived according to the SNV procurement guidelines. Relevant documents are a tender invitation, tender, tender evaluation protocols, and decisions taken during the entire process, including documentation of deviations from the procurement regulation if applicable.
- Verify if the handling of payments for IAP-funded activities has been handled according to SNV’s financial regulations.
- Verify that a robust internal control system is in place that ensures;
- Assets are safeguarded
- Fraud is prevented and detected
- Segregation of duties is adopted and strictly followed
- Accounting records are complete; reliable and understandable
The audit firm is expected to submit the following deliverables: the audit report along with a signed management letter that includes the management responses from the grantee. In the management letter, the audit firm shall make recommendations to the grantee for addressing any weaknesses identified in the internal control areas mentioned above. The recommendations shall be presented in order of priority. The auditor shall regardless of materiality, quantify the amount for costs lacking sufficient supporting documentation.
The scope of the audit shall be stated in the report and the methodology used shall be presented. The report shall be signed by the responsible auditor (not just the audit firm) and title. The audit report format to be followed is standard ISA 800/805. The auditor’s opinion shall be clearly stated in the report. If the auditor assesses that no findings or weaknesses have been identified during the audit that would result in a management letter, an explanation of this assessment must be disclosed in the audit report.
Time schedule and reporting
The assignment will commence on 6th March 2023 and must be concluded by 21st March 2023. A start-up meeting at IAP between the responsible project manager and the auditors will take place prior to data collection. A draft report shall be submitted electronically by the audit firm to the grantee management no later than 29th March 2023. The final report shall be submitted electronically by the audit firm to grantee management no later than 6th April 2023.
The grantee will forward the final report and signed management letter to SNV IAP management. All electronic submissions will be addressed to the responsible IAP Country Project Manager with a copy to the overall IAP Programme Manager and the overall IAP Advisor Finance.
Qualification of Auditors
Each grantee will be responsible for procuring an audit firm. The ToR for the audit assignment, as well as the final selection of the audit firm, must be approved by SNV prior to contracting. The selected audit firm is expected to meet the following minimum criteria:
- Audit firms must have a valid legal company registration in the country of operation
- Audit firms must have a valid certification from the relevant national audit institute/association
- Audit firms must have completed at least 5 project audit assignments for firms and/or international NGOs
- Staff involved in the audit must be holding ACCA/CPA qualifications
Required document for submission
The selected audit firm is required to submit the following:
- Letter of interest that expresses of audit firm’s interest to conduct the audit, and
- A detailed audit proposal (technical and financial) containing the following:
- Company track record
- Proposed methodology for the assignment
- Timeline/work schedule
- Fee structure/total cost including tax
- Copies of valid company registration and certification
- CVs of staff to be involved in the audit with copies of qualifications
- Submit Technical and Financial proposal in front of Bole Medhanialem in the middle of Mafi Mall and Berhane Adere Mall Lion Bank S.C. 3rd floor
- Alviol General Trading.
- For more information call +251 91 099 0965
Alviol General Trading P.L.C
አልቪዮ አጠቃላይ ትሬዲንግ ፒ.ኤል.ሲ
|Address||in front of Bole Medhanialem in the middle of Mafi Mall and Berhane Adere Mall Lion Bank S.C. 3rd floor|
|Mobile||+251 91 099 0965|