EoI for External Audit of books of accounts, Financial Management Systems and Practice for AWC Partners in India

 

Terms of Reference

External Audit of books of accounts, Financial Management Systems and Practice

1.    Background

1.1.  All We Can (AWC) is a UK-based charity working in partnership with small-scale, local organisations in Africa, Asia and Latin America. All We Can provides financial as well as technical support to its partners to further their vision and mission specially focused on poverty alleviation and ensuring justice. AWC is committed to supporting the development of its partner’s financial management capacity and commissions annual or biannual project audits/ financial reviews as part of the support.

 

1.2.  AWC and it’s partnership

 

1.2.1.    Rural Educational Activities for Development (READ)

Rural Education Activities for Development (READ) is a civil society organization has been working for the betterment of the Scheduled Tribes (Adivasi) and Scheduled Caste (Dalit) in Odisha since last 24 years. READ was formed by few like-minded individuals as an NGO registered under the Societies Registration Act 1860. It has been working to bridge link between development and the marginalized communities especially marginalised communities i.e. SC and ST. The organization is seen as a vehicle for realizing the dreams of the marginalised communities for a peaceful and just society with a focus on the bottom layer in the community who have are side-lined from main stream development for decades.

 

READ has been working with communities in the districts Rayagada, Ganjam and Gajapati with a focus on women, marginalized farmers and youth within the marginalised communities. READ has approximately 12 staff members within the organisation directly supported by All We Can. READ has an Executive Board which is responsible for developing policies and directions for the organisation and arrange annual audit of the organisation.

 

1.2.2.    All We Can’s partnership with READ

All We Can and READ has signed a 3 year agreement with the main goal of eradicating extreme poverty and improving living conditions in 50 villages in Ramanaguda block of Rayagada district. All We Can has supported READ as per the agreements. An amount of INR 4,253,816.00 has been disbursed to READ in the year 2017-18 which will be audited under the assignment for READ.

 

Contract	#1 (INR)     2017-18	#2 (INR)    2018-19
	4,083,753.00	3,705,910.00
Date of disbursement	Amount (INR)	Description
15.05.17	2,107,323.50	Tranche 1/ Yr 3
1.11.17	2,041,876.50	Tranche 2/ Yr 3
12.9.17	104,616.00	Reimbursement for the advocacy workshop
Total	4,253,816.00

 

1.2.3.    Srijan foundation

Srijan Foundation is a Civil Society Organization founded in 1995 and registered in February 2001 by a group of socially committed young professionals. Srijan Foundation is registered under the Indian Trust Act, 1882. Srijan foundation reflects a noble expression of their concern for the welfare of the disadvantaged and the underprivileged communities through a positive response to build capacity of the communities and the grass root organizations. SF has 158 full time employee out of which 12 staffs are directly supported by All We Can. SF has a Board of Governors which is responsible for developing policies and directions for the organisation and arrange annual auditing of the organisation.

Srijan Foundation is operating in the remote areas and serving to the needs of the most marginalized and vulnerable sections of the communities in project areas in districts like Hazaribag, Ramgarh, Ranchi, Gumla, West Singhbhum and Palamau. SF focuses its activities around the thematic areas like, Women Empowerment, Child Rights (Care & Development), Disability, Anti Trafficking, Health, Nutrition, Sanitation and Water and Livelihood Promotion.     

 

1.2.4.    All We Can’s partnership with Srijan Foundation

All We Can has been partnering with SF since last 8 years. AWC has signed a Partnership Agreement with SF with the main goal of supporting women leadership through sustainable livelihood. All We Can committed to support SF over three years towards the achievement of this goal. A total amount of INR 4,847,958.19/- has been disbursed.

 

Contract	#1 (INR)  2017[1]	#2 (INR)  2018[2]
	5,091,520	5,160,000.00
Date of disbursement	Amount (INR)	Description
11.09.17	2,713,421.00	Tranche 2/APA017
09.01.18	2,134,537.19	Tranche 1/APA017
Total *	4,847,958.19

 

2.    Objectives of the financial audit and scope of work

 

The objectives of the ToR is to conduct a rigorous audit of financial support including financial management system of both READ and Srijan Foundation, here after called as “partners” in rest of the document. From the assignment following objectives are expected to be met:

 

    (i)        To ascertain whether the financial statements accurately against our specific grant(s) fairly present the cash receipts and expenditure in all material respects and that the funds were used for the purposes defined by the proposals and partnership agreement(s)

   (ii)        To ascertain whether funds provided for the specified period have been spent in accordance with the reports received by All We Can. This may include paying a visit(s) to the project area(s), spending the funds for the programme planned in the operational plan

  (iii)        To ascertain whether the financial transactions are reflected in the statement of financial records (the formal record of the financial activities and position of the grant) are in accordance with standard financial procedures practiced in India and with the budgetary provisions outlined in the annual partnership agreement(s)

 (iv)        To review and assess the efficiency of the financial management systems, including the management and internal control mechanism and make specific recommendations on how they could be improved.

  (v)        To provide any other information and recommendations that would be helpful in encouraging good financial practice.

 

The external audit and financial review should include the following areas in specific within the ambit of financial management principles prevailing in India;

 

2.1.  Financial protocols and practice  

      I.        Check that the grant financial reports sent to All We Can at reporting periods matches with the books of accounts, cashbooks, ledger and other records.

    II.        Check that valid supporting documents exist for all expenditures alongwith authorised scrutinisation at approvals and disbursement

   III.        Review bank reconciliations for completeness, accuracy and approval.

  IV.        Review staff payrolls, including statutory deductions and check that salaries are received as recorded and as per standard practice of fund disbursement.

    V.        Review actual expenditure against the budget, identifying excess expenditures, unbudgeted expenditures and expenditures not related to the project and check that there is evidence that expenditure was incurred on the project and not on other work.

 

 

2.2.  Financial Systems

      I.        Verify the existence of an up to date Financial Manual duly approved by the governing board that is sufficiently detailed to provide clear guidance to staff, and assess whether staff are familiar with and follow it.

    II.        Check that the financial manual is consistent with All We Can Partners’ Financial Management Policy[3] which provides minimum requirements for financial management. 

   III.        Review systems and procedures for cash, cheque and bank transfer payments, including evidence of goods and services received, and the reconciliation of advances for expenditure

  IV.        Check the system for recording that goods and services have been received by the intended beneficiaries (e.g. distribution lists, training attendance lists)

    V.        Check whether adequate systems for regular monitoring of expenditure by the management and board are in place and are followed.

  VI.        Verify compliance of policies and procedures for procurement of goods and services in accordance with All We Can’s Partnership Agreement

 VII.        Check that the organisation produced an annual financial report and that the organisation’s annual accounts were audited in ‘good time’[4].

1. Review progress against recommendations made in the previous audit and All We Can visit reports (preferably present the progress in a tabular format).

 

 

 

 

3.    Audit period

 

The ToR asks for audit during the period starting from 1^st April 2017 to 31^st March 2018 for READ and June 2017 to July 2018[5] for Srijan Foundation. However, we anticipate that the auditor to review a complete financial year for both the partners.

4.    Methodology and protocols for the audit

 

All We Can expects the auditor to work alongside partner staff in a non-threatening manner, valuing their skills and knowledge. The auditor shall explain their role to the team at the start of the assignment and try to be flexible to the situation of the staff, while not compromising the effectiveness of the audit assignment. Information of a sensitive nature shall be treated with the utmost confidentiality.

After  a thorough review of all the documents relevant to the audit scope (these will be provided by All We Can and partners ), interviews should be conducted with the relevant personnel to assess the management controls and processes and identify any key risks associated with the delivery of the programme. While the auditors are expected to conduct the audit at the offices of partners, plans can be made to visit the project area(s) where it is deemed appropriate and necessary.  

 

Once the Terms of Reference for the audit have been agreed and a services contract is signed by the auditor and All We Can, the auditor will:

1. Contact partners to agree and confirm the dates of the audit and request any necessary additional information.
2. Undertake the audit and review of financial management systems and practice, including visits to main office and project offices/area(s), where applicable.
3. At the end of the audit, present a summary of the findings and recommendations to the Senior Management and Board members of partners and convene a meeting to solicit their verbal or written feedback.
4. Write a detailed draft report and send to All We Can (see suggested format below) for review and feedback
5. Once agreed by All We Can, send to partners to get the partner’s Management team and Board’s comments on the observations and recommendations
6. Finalise the report by incorporating feedback from partners and All We Can.

 

All We Can will provide a copy of the following documents prior to the engagement:

1. The Memorandum of Understanding between All We Can and partners
2. The annual partnership agreement(s)
3. Any  current proposals and budgets
4. The most recent project reports (financial and narrative)
5. A copy  of All We Can’s most recent visit reports
6. A copy of the previous audit commissioned by All We Can (where applicable)

 

5.    Timeframe

All We Can anticipates the audit for partners to take place during the month of July-August 2018. However, the final report must be submitted by 24^th of August 2018.

 

6.    Deliverable

 

All We Can anticipate a comprehensive report from the audit exercise narrating about on all the key point that were mentioned in sub-sec 2.1 and 2.2. The report should try to present the audit finding as per the objective of this assignment as mentioned in Sec-2. The report should include the following sections[6];

 

Section 1    Executive summary

Section 2    Outline of audit process followed

Section 3   The auditor’s opinion on whether the funds provided for the period have been spent in accordance with the reports received by All We Can and as per the approved financial manual.

 Section 4 Detailed observations and recommendations. (The format should correspond to and cover all the points listed in Section 2 ‘Scope of Work’ above).

Section 5    An assessment and report of action taken by partners, the recommendations from the previous audit and/or recommendations made in All We Can’s last visit report (please use a tabular format)

AWC expect that the auditor at the completion of the audit, the auditor is expected to submit a letter to the management team of the partner organisation providing an assessment of the efficiency of the financial administration, management and internal control systems, including description of any specific internal control weaknesses noted in the financial management and recommendations on how these could be resolved.

In addition, the auditor is expected to report anything that looks improper or needs attention or attracting confidential sharing between the external auditor and AWC.

 

7.    Qualifications, requirements and experience and auditor/team

 

• The consultant should be a statutory audit firm and empanelled by CAG (Comptroller and Auditor General of India) as an audit firm (for Indian audit firms). Auditors with certified expertise in Forensic Accounting & Fraud Detection, Valuation, etc. will be given preference.
• The auditor must have at least 5 years or more experience as a statutory audit firm
• The Auditor/firm should be a member of a recognised national accounting/auditing body or institution
• Experience with audits of development NGOs and projects funded by national and/or international agencies is a must.
• Well-versed with relevant laws, regulations and rules in India. This includes, but is not limited to taxation, social security and labour regulations, accounting and reporting including legal compliances mandatory in India.

8.    Contact person

 

Mr. Prakash Nayak, India Coordinator for All We Can will be the contact person for the assignment including day to day support, guidance and communication. Please direct your questions on the ToR or any other aspect of the audit to Mr. Nayak (email: expressprakash@gmail.com )

 

9.    Expression of Interest

 

All We Can is pleased to invite audit firms with above pre-requisite qualifications and experience to submit their proposal and a detailed budget. The expression of interest (EoI) must contain a brief cover note with evidence of past experience in undertaking similar assignments in similar context, a firm portfolio alongwith curriculum vitae of the principal auditor and a technical proposal outlining proposed methodology, time frame and a detailed budget. Please submit your Expression of Interest by email to  expresprakash@gmail.com  by 8^th July 2018, 6 PM IST. Please note that the subject line should read as “Proposal for External Audit of AWC partners in India”. Late proposals will not be accepted.

 

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[1] The present audit will cover half of grant disbursed in the year 2017. But we expect that the audit may look at either the full year or refer back to the last external audit report.

[2] The present audit will cover half of grant disbursed in the year 2018 until the date of audit or the date that the auditor may feel fit to be audited

[3] All We Can’s financial manual will be shared with the consultant at contract signing

[4] Definition of ‘good time’ is the subjective judgement of the external auditor

[5] For Srijan Foundation our partnership year is January-December

[6] The section plan for the report is indicative. The auditor may want to add further sections to make the report clear and easy to follow