TERMS OF REFERENCE FOR INTERIM AUDIT OF PLAN CO ZAMBIA BUILDING CLIMATE RESILIENT RURAL COMMUNITIES IN ZAMBIA FUNDED BY GERMANY NATIONAL OFFICE

Tender no.: ZMB100201

Use and adapt these Terms of Reference to engage an audit firm when there are no donor-specified audit procedures.

1. Brief introduction of Plan International Zambia and Funds Background

Organization Background

Plan International is an independent development and humanitarian non-governmental organization that advances children’s rights and equality for girls.

We believe in the power and potential of every child. But this is often suppressed by poverty, violence, exclusion and discrimination. And its girls who are most affected. Working together with children, young people, our supporters and partners, we strive for a just world, tackling the root causes of the challenges facing girls and all vulnerable children.  We have been building powerful partnerships for children for 80 years, and are now active in more than 70 countries. Child protection is key in all that we do.

Working in Zambia since 1996, Plan International Zambia’s development and capacity building programmes focus primarily on Education, Health, Water and Sanitation, Economic Security and Youth Empowerment, including Child Protection and Participation. Plan International Zambia has programme areas (PAs) in; Central, Luapula, and Eastern Provinces including in Lusaka, where the Country Office is located

Plan International Zambia that has been implementing the Building Climate Resilient Rural Communities in Zambia. The funder is Germany National Office; The project budget is €1,892,000 location areas are Chisamba District and Central Province of Zambia and period for which the audited statements of accounts will be from 1st August 2021 to 31st July, 2022. The auditor will carry out the audit of such statements of account in accordance with the following Terms of References.

The audit shall be reported in the following two documents in appendix 1 and 2, which includes an audit opinion in the submitted Auditor’s report and an attached Management letter describing the scope of the audit and factual findings.

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2. Audit Objectives

The objective of the audit is to enable the auditor 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 donor requirements;

2.2 Whether the funds have been used in conformity with the provisions of the donor contract, including the approved budget and workplan 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; and

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

3. Responsibility for Preparing the Financial Report

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

The selection of the audit company lies with Plan Zambia but should be executed by an external audit company with international affiliation.

4. Financial Statements

The financial statements should include the following components:

4.1. In the currency of the donor contract, an Income and Expenditure Statement showing funds received and all expenditures.  Expenditures should be reported against the budget as defined in the donor contract for the period with the actual expenditure allocated to the same budget categories;

4.2. A statement of financial position

4.3. A statement of changes in net assets

4.4. Any other footnotes applicable.

4.5. Supplemental statements on advances and fixed assets, including: (a) a statement or annex showing partner advances and reconciliation of total amount advanced by Plan to sub-grant partners with recorded expenditure and cash balances including verification of actual expenditure via Partner financial reports at the end of the reporting period, (b) a listing of all fixed assets purchased with grant funds.

4.6. Relevant information about incidents during the project implementation, e.g. fraud cases and safeguarding incidents.

5. Audit Scope of Work

5.1. The Audit shall confirm:

• The identity of the project concerned.
• In which way the audit has been carried out.

5.2. The audit should offer an opinion on the following areas:

• Does the Financial Project Report correspond with the agreement?
• Are the recorded expenses in the Financial Project Report in line with the approved original budget and activity plan?
• Is the approved Financial Project Report free of material misstatement?
• Have the funds been utilised in accordance with the last approved budget and planned activities?
• The organisation has kept registers of the Petty Cash and the Bank Accounts. In the absence of the project bank account, there are sufficient internal controls to monitor the project funds.
• Based on a representative selection, the expenditures are supported by original bills, duly cancelled, stamped and signed. Appropriate and approved internal procedures for authorising disbursements have been adhered to.

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.  See example and format for a Management letter attached to the Auditor’s report, appendix 2.

8. Reporting

Plan International Zambia will forward the Auditor’s Report and Management Letter to the NO/Donor in Germany through both email and regular mail or courier.  The report should be in English.

9. Audit Report

The required number of copies of the signed report will be submitted by Plan both in hard copy and PDF soft copy.

Appendix 1

Example format for the Auditor’s Report

AUDITOR’S REPORT (IN ACCORDANCE WITH ISA 800/805) TO THE DONORS OF PLAN INTERNATIONAL ZAMBIA – BUILDING CLIMATE RESILIENT RURAL COMMUNITES IN ZAMBIA GRANT# 8517

We have examined the financial statements for the Building Climate Resilient Rural Communities in Zambia 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 Building Climate Resilient Rural Communities Project 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 Germany National Office and Plan International Zambia.  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.

Basis of opinion

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

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 Germany National Office and Plan International Zambia Office.

[Date and place]

[Name and title of auditor]

[Address]

Appendix 2

Example format for the Management Letter/Report of Factual Findings

———————

REPORT OF FACTUAL FINDINGS

To Germany National Office

Management

Scope of audit

We have performed the procedures agreed with you and enumerated below with respect to the financial project report as at [date] of [organisation]’s Building Climate Resilient Rural Communities in Zambia Project, for the time period 01/08/2021 to 31/07/2022 showing total expenditure of Euro [amount].

Our engagement was undertaken in accordance with [standards and regulations].  The procedures were performed solely to assist you your commitment to Plan International regarding the validity of the financial project report, and the following most important procedures were undertaken during the audit:

1. [Risk analysis according to ISA 315, describe the most significant standpoints in the planning of the audit]

2. [Review process of fraud and corruption according to ISA 240]

3.  ……

4.  ……

Outcome and significant observations

We report our findings below:

a)  ….

b)  ….

c)

Our report is solely for the purpose set forth above and for your information and is not to be used for any other purpose or to be distributed to any other parties than Plan International and Germany National Office.

[Date and place]

[Name and title of auditor]

[Address]

Submission Procedure

Please send your applications to Plan International planzamtenders@plan-international.org cc Nyambe.Maboshe@plan-international.org by <15.11.2022>by 5:00pm. local time and any bids received after this time and date will not be accepted. referencing “Climate Change Project”