Background and Organisational Setting

Hoffnungszeichen | Sign of Hope e.V. is a Christian-motivated organization for Human Rights, Humanitarian Assistance, and Development Cooperation. Based in Constance, Germany, Sign of Hope is dedicated to helping those in distress and exploited people worldwide.

An audit is commissioned under the German Federal Ministry of Economic Cooperation and Development (BMZ) funding guidelines for development projects run by private German executing agencies.

Hoffnungszeichen | Sign of Hope e.V. is the private German executing agency and the contracting party. At the same time, Development Aid from People to People in Zambia (DAPP Zambia)will be the local implementing agency.

The focus of the project is to improve the health and drinking water supply for people in the North-Western Province of Zambia through sustainable access to safe water, sanitation, and hygiene and capacity building at the community and district levels.

Audit Objectives

The purpose of the in-depth audit is to provide Hoffnungszeichen | Sign of Hope e.V. with a sound basis for its accountability, transparency, and accuracy in the financial disclosure towards the funding agency BMZ.

This in-depth audit will verify the compliance with the standards of the funding agency BMZ, Hoffnungszeichen | Sign of Hope e.V., national regulations, and international accounting standards.

The auditor will review the project’s financial documents, receipts lists, records of transactions, all vouchers and receipts disbursed, and relevant project documents to come up with a professional, independent opinion on the financial accounting of the project “Improving Water and Sanitation for Local Communities in Northwestern Zambia” for all funds received and expended by DAPP Zambia from 01.01.2023 to 31.12.2023.

Additionally, the audit shall give recommendations on strengths, weaknesses, and required improvement in the project-related financial and human resources management systems of DAPP Zambia.

The audit will support the project quality assurance measures implemented by Hoffnungszeichen | Sign of Hope e.V. and contribute to the decision-making process about the project management and monitoring of finances by Hoffnungszeichen | Sign of Hope e.V. and DAPP Zambia.

Expected Deliverables

The auditor is expected to produce an audit report, an audit certificate, and a management letter, which will comprise the following:

1. Presentation of the scope and mandate of the audit, as well as the list of documents that formed the evidence for the audit,
2. An opinion on whether financial statements (statement of accounts) are issued by the financial reporting framework of the project, BMZ requirements, and an internationally recognized accounting standard,
3. Recommendations on identified shortcomings, and, if applicable, comments on the follow-up of audit observations and recommendations from previous years.
4. A checked, signed, and stamped list of all project cost receipts, sorted by BMZ budget lines (the local implementing partner can provide a list),

Audit documents can be issued in English or German.

Scope of the Audit

The audit should focus on the following:

• The correctness and completeness of the accounting records,
• The financial report, showing all project-related income and expenditure structured by budget lines,
• Deviations of expenditure by budget lines. The expenditure, that exceeds or falls below the budget appropriations by more than 30 %, shall be explained separately if the approval of the BMZ has not previously been obtained,
• That receipts and relevant supporting documents are available for all project-related income and expenditures,
• The management of the funds made available, which includes the transfer of project funds, all interest earned from the project funds during the reporting period, and further income generated by the project,
• Reviewing the appropriate use of funds according to the project objectives,
• Evaluation of the efficiency and cost-effectiveness of the usage of funds,
• Budget adherence through the comparison between budgeted and actual costs in the currency in which the expenditure was incurred. The audit report will not convert the examined amounts into the Euro amounts,
• Reviewing if personnel costs and social security contributions conform to the regulations in the project country and are locally comparable,
• The economical use of the project equipment and assets,
• The inventory and the use of capital items, their whereabouts, and their purposive usage,
• Compliance with the legal framework of the project (project agreements and annexes, contracts, etc.) and the donor requirements,
• Compliance with the policies of the local implementing partner regarding procurement, financial administration, human resources management, and travel,
• Compliance with policies such as anti-corruption and anti-fraud,
• Reviewing the transparency of the finances towards donors of the local implementing partner.

Procedures and Communication

The auditor will be given access to all necessary documents in the project offices through the local implementing partner DAPP Zambia as well as relevant donor documents through Hoffnungszeichen | Sign of Hope e.V.

The auditor will be responsible for setting up a schedule in agreement with the local implementing partner DAPP Zambia. Any expenses for field trips, postal, and translation services, and other expenses shall be included in the auditor’s proposed budget. DAPP Zambia will support the auditor with logistics and arrangements, however, all payments of the contract will be made directly by Hoffnungszeichen | Sign of Hope e.V.

Qualifications and Experience

• Necessary qualification to serve as a recognized independent auditing authority,
• Minimum of five (5) years of experience conducting external independent audits of projects funded by international institutional donors in Zambia.