TERMS OF REFERENCE

For Audit of Plan International Zambia, Building Climate Resilient Rural Communities in Zambia, ZMB100201 General Donations BP#24

1.     Funds Background

Plan International Zambia is implementing the Building Climate Resilient Rural Communities Project in Zambia project funded by Germany National Office, with a total budget of € 1,995,740.00. The audit will cover the period from 1st August 2020 to 31st July 2024. The auditor will carry out the audit of such statements of account in accordance with the following Terms of References.

2.     Audit Objectives and Scope

The Audit shall confirm the identity of the project concerned and in which way the audit has been carried out. The objective of the audit is to express an independent professional opinion on:

2.1           Whether the financial position of the funded project, funds received and expenditures for the reporting period are presented fairly in all material respects in the financial report and in accordance with the FAD requirements.

2.2           Whether the funds have been used in conformity with the provisions of the FAD, including approved budget and work plan and any amendments.

2.3           Whether the financial report agrees with the financial accounts which provide the basis for preparation of the financial report and reflect the financial transactions of the project.

2.4           Whether the financial report agrees or reconciles with other information reported to the donor such as narrative reports.

2.5           Based on a representative selection, the expenditures are supported by original bills, duly cancelled, stamped, and signed. Appropriate and approved internal procedures for authorizing payments and disbursements have been adhered to.

2.6           Procurement guidelines as set out in the procurement policy have been followed and any derogations were properly authorized.

2.7           Whether the personnel costs and social security contributions are in line with local standards, legal in the respective project country and the contributions required by law are being withheld.

2.8           Whether the project assets have been used appropriately for the purpose of carrying out the project objectives and activities; and

2.9          Whether the funds have been used effectively (cost effectiveness of the expenditure) in delivering the project objectives.

3.     Audit Process and Methodology

3.1 Preparation of the Verification

The Audit Firm shall contact the country office representative well in advance from the start of the field work, to plan for the verification and to agree on the timing for carrying out the expenditure verification, notably about fieldwork (if any). The Auditors will also confirm the key audit team that will be assigned to conduct the audit work. During the meeting (s), the auditor may request additional information and documents that he/she considers necessary or useful for the planning and fieldwork of the audit.

3.2 Engagement Context, Materiality, Risk Analysis, Sampling

The Auditor’s procedures should include:

Obtaining a sufficient understanding of the engagement context including the contractual conditions, the Country Office and the applicable laws and regulations. The auditors should pay specific attention to the contractual provisions relevant for the following aspects:

• Documentation, and record keeping for expenditure and income.
• Eligibility of expenditure.
• Procurement regulations insofar these regulations are relevant to determine the eligibility of expenditure.
• Asset management (management and control of fixed assets, e.g., equipment).
• Cash and bank management.
• Payroll and time management.
• Accounting (including the use of exchange rates) and financial reporting of          expenditure and income.
• Internal controls and notably financial internal controls; and
• Shared cost allocations.

The understanding should be sufficient to identify and assess the risks of material errors or misstatements in the expenditure and revenue stated in the financial report to determine the size and structure of the expenditure sample to be tested, whether caused by error or fraud, and sufficient to design and perform further verification procedures.

Risks analysis must be performed, and the outcome should be clearly described in the management letter. The materiality level, sample size and the expenditure coverage ratio should be included in the management letter. The link between the risk analysis and the size and composition of the sample, as well as the sampling method (statistical/non-statistical/underlying calculations/professional judgment applied) must be clearly described in the management letter. See Appendix 4 for format to be followed for this section and possible risks areas to be analyzed.

3.2 Audit planning report.

Before the start of the fieldwork, the auditor shall provide the audit plan directly to the GNO controlling and compliance specialist and the Country Office audit focal point. The audit management team shall ensure that the unpredictable nature of the audit is not compromised.

3.2 Fieldwork/Desk Review

The field work or desk review shall commence on the agreed timelines as per the audit planning report. The auditor shall ensure that there is effective two-way communication between the audit team and the audit management team, and these meetings shall be documented in the management letter.

3.4 Debriefing Memo and Closing Meeting

At the end of the fieldwork or desk review, the auditors should prepare a debriefing memo, organize a closing meeting with the Country Office to discuss the findings, obtain its initial written comments and agree on additional information to be provided later. The GNO Controlling and Compliance Specialist must attend this meeting.

3.5 Complementary Letter

The auditors may at any time during the audit draw up a complementary letter to inform the audit committee about facts and issues that are considered of particular interest and importance. The auditors will notify the audit committee of any attempts by operational staff to restrict the scope of the audit, or any lack of co-operation. Suspicions of fraud or irregularity should be reported to the audit committee immediately without waiting for the issuance of the audit report.

4.     Responsibility for Preparing the Financial Report

The responsibility for the preparation of the consolidated financial report for each implementing organization covered by the audit, if applicable, lies with Plan International.

The financial report should be submitted to Plan Germany for approval before submission to the auditors.

5.     Financial Statements

The auditor’s certificate shall be structured according to the quantitative documentary proof of the statement of application of funds (appendix 2). The financial statements should furthermore include the following components:

5.1.   In the local currency, an Income and Expenditure Statement showing funds received and all expenditures. Expenditures should be reported against the budget in local currency [1] as defined in the approved budget for the period with the actual expenditure allocated to the same budget categories.

5.2.   A statement of financial position

5.3.   A statement of changes in net assets

5.4.   Expenditure which exceeds the budget appropriations by more than 20% shall be explained separately if the approval of the GNO/donor has not previously been obtained.

5.5.   Supplemental statements on assets purchased with grant funds.

5.6.   Any other footnotes applicable.

6.     Auditor’s report

The audit shall be conducted in accordance with International Standards on Auditing (ISA) 800 “The Independent Auditor’s Report on Special Purpose Audit Engagements and as promulgated by the International Federation of Accountants and that standards used for the preparation of the financial statements are in accordance with the International Financial Reporting Standards.”

The Auditor’s report shall include an audit opinion.  See example and format for an Auditor’s report, Appendix 1.

7.     Management Letter

The auditor shall also, attached to the Auditor’s Report, submit a Management letter which needs to describe the purpose and the agreed upon procedures of the engagement in sufficient detail to enable the reader to understand the nature and the extent of the work performed. The Management letter shall also include factual findings and the results of risks analysis as highlighted.

8.     Reporting

Plan International Zambia will forward two copies of Auditor’s Report and Management Letter to Plan International German (GNO) through both email and regular mail or courier. The report should be in English.

9.     Submission of the audit report

[1] to be converted using exchange rate applicable to the project as stated in the proposal. Should the information not be available, the correct exchange rate shall be requested from the German National Office.

The required number of copies of the signed report will be submitted by Plan in PDF soft copy. Furthermore, the auditor shall submit his/her audit certificate of registration.

10.  Timetable

The audit firm will complete and submit the audit report for the following deadline:

Description

Due date

1.Inception/preparatory meeting    2nd September 2024
2.Field Work   16th September 2024
3.Closing meeting   18th September 2024
4.Draft Audit Report   24th September 2024
5.Final Audit Report   30th September 2024

11.  Requirements for the Audit Firm.

11.1 General Principles

By agreeing these ToR, the audit firm confirms meeting at least one of the following conditions:

• The Audit Firm is a member of a national accounting or auditing body or institution which in turn is a member of the International Federation of Accountants (IFAC).
• The Audit Firm is a member of a national accounting or auditing body or institution. Although this organisation is not member of the IFAC, the audit firm commits to undertake this expenditure verification in accordance with the IFAC standards and ethics.

11.2 Qualifications and Experience.

The Audit Firm will employ staff with appropriate professional qualifications and suitable experience with IFAC standards and with experience in verifying financial information of entities comparable in size and complexity to the Country Office. In addition, the verification team as whole should have:

• Experience with programmes and projects funded by national and/or international donors and institutions. It is desirable that the team leader and, where applicable, the fieldwork team, i.e., either the audit manager (category 2) or the senior auditor (category 3) has experience with audits of privately funded projects
• Experience with audits/verifications in Zambia
• Experience with audits/verifications of international Non-Governmental Organizations
• Sufficient knowledge of relevant laws, regulations and rules in the country concerned. This includes but is not limited to taxation, social security and labor regulations, accounting, and reporting.
• Fluency in English
• A good knowledge of NGO operation environment

11.3 Team Composition

The team of auditors required for this engagement will be composed of a category 1 auditor who has the ultimate responsibility for the expenditure verification and a team which is composed of an appropriate mix of category 2 – 4 auditors.

Categories of staff/experts
Category 1 – (Audit Partner)
A Category 1 expert (audit partner) should be a partner or another person in a position like that of a partner and be a highly qualified expert with relevant professional qualifications who assumes or has assumed senior and managerial responsibilities in public audit practice.

He/she should be a member of a national or international accounting or auditing body or institution. He/she must have at least 12 years of professional experience as a professional auditor or accountant in public audit practice. Experience with audit related services in beneficiary countries will particularly be considered for the evaluation at the level of specific contracts.

The audit partner will be the person who will be responsible for the specific contract and its performance as well as for the report that is issued on behalf of the firm. He/she has the appropriate authority from a professional, legal, or regulatory body and is authorized to certify accounts by the laws of the country in which the audit firm is registered.

Category 2 – (Audit Manager)
Audit managers should be qualified experts with a relevant university degree or professional qualification. They should have at least 6 years of experience as a professional auditor or accountant in public audit practice including relevant managerial experience of leading audit teams.

He/she should be a member of a national or international accounting or auditing body or institution.

Category 3 – (Senior Auditor)
Senior auditors should be qualified experts with a relevant university degree or professional qualification and at least 3 years professional experience as a professional auditor or accountant in public audit practice.

Category 4 – (Assistant Auditor)
Assistant auditors should have a relevant university degree or professional qualification and at least 6 months professional experience as a professional auditor or accountant in public audit practice.

Curricula Vitae (CVs)
The Audit Firm will provide the Country Office with CVs of the staff/experts involved in the expenditure verification. The CVs will include appropriate details for the purpose of the evaluation of the offer on the relevant specific experience for this expenditure verification and the qualifying work carried out in the past.

Appendix 1

Example format for the Auditor’s Report

———————

AUDITOR’S REPORT (IN ACCORDANCE WITH ISA 800/805) TO THE DONORS OF PLAN INTERNATIONAL

We have examined the financial statements for the [Project name] set out on pages…. The management is responsible for preparing the financial project report. Our responsibility is to report to you our opinion on the consistency of the financial report within the [Project name] and its compliance with agreement and regulations. We also read other information contained in the financial project report and consider the implications for our report if we become aware of any apparent misstatements or material inconsistencies with the summary financial statements whether due to fraud or error.

We conducted our audit in accordance with International Standards on Auditing (ISA 800/805), and the applicable parts of the agreement between GNO and [Plan Office].  Those standards require that we plan and perform the audit to obtain reasonable assurance that the financial statement within the financial project report is free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial report.  An audit also includes assessing the accounting principles used and their application by the management and significant estimates made by the management when preparing the financial statement as well as evaluating the overall presentation of information in the financial statement. We believe that our audit provides a reasonable basis for our opinion set out below.

Opinion

In our opinion, the financial report for the project is consistent with the accounting system, complies with the agreement and regulations and has been prepared in accordance with the agreement between [Donor name] and [Plan Office].

Basis of opinion

We conducted our work in accordance with ISA 800/805 “The Independent Auditor’s Report on Special Purpose Audit Engagements”.

[Date and place]

[Name and title of auditor]

[Address]

How to Apply

Please send your bid applications to Planzamtenders@plan-international.org and for queries only cc malama.bwembya@plan-international.org, By 17:00hrs, 8th July 2024 local time and any bids received after this time and date will not be accepted.

NB: All successful applicants will receive notifications within 07 days from closure of Tender.