Request for proposal for auditing Services – Somalia

Request for proposal for auditing Services

Date: 28^th Jan, 2020

To: Qualified Firms of Certified Accountants

From: FCA Somalia

Subject: Professional Auditing Service for MFA Finland funded project for the period of April 1, 2019 – March 31, 2020.

FCA is soliciting proposals from qualified firms of certified public accountants to conduct anaudit for one of it’s projects for April 1, 2019 – March 31, 2020. Note: audit conditions are listed below on this TOR.

BACKGROUND INFORMATION

FCA works to enable people to break the circle of poverty and violence. We are a rights-based actor, a Finnish organisation with 70 years of experience, with operations in 15 countries. FCA is Finland’s largest NGO in development cooperation and second largest provider of disaster relief. Our action is guided by international human rights standards and principles. We realize our mission and vision through development cooperation, humanitarian assistance and advocacy work. We contribute to positive change by supporting people in the most vulnerable situations within fragile and disaster-affected areas. We consider three thematic areas as central to sustainable change: the right to peace (R2P), livelihood (R2L) and quality education (R2QE).

In Somalia and Somaliland FCA has been working under a right to peace thematic areas since 2008 including governance and reconciliation projects and later has expanded in quality education (R2QE) thematic area.

SCOPE AND LOCATION OF AUDITING

The auditing shall be conducted at the location of the projects, in particular at the place where the projects’ bookkeeping are done, to be selected by the Auditors. FCA has three offices: In Baidoa, Mogadishu and Hargeisa. It’s up to the auditor to select the place for conducting the audit.The audit to be conducted is the project auditfor the period of April 1, 2019 – March 31, 2020 Total approximate expense for the project periodin Somalia is 250,000-300,000 US dollars.

PROPOSAL CONTENT

In order to simplify the evaluation process and obtain maximum comparability, FCA requires that all responses to the RFP be organized in the manner and format described below:

Minimum Requirements

• Evidence showing Min 2 years’ experience of INGO audit.
• Certificate of incorporation as Certified Public accountant (CPA)
• License to operate in Somalia.
• Evidence showing minimum one audit experience with International Standard on Related Services (ISRS) 4400 standard on related services – provide service completion report for the Agreed Upon Procedures (AUP) done in accordance with standard ISRS 4400
• Evidence showing minimum one audit experience in auditing project funded by International Institutional donors (such as but not limited to Finland MFA, ECHO, EU and UN Agencies).

1. Executive Summary

Describe your understanding of the work to be performed and your firm’s ability to perform the work within the time fame provided.

1. Professional Experience

Describe how and why your firm is different from other firms being considered. This should include an explanation of the firm’s philosophy, size, structure, and qualifications with serving not for profit organizations with a similar size and operations. Describe your firm’s resources devoted to not for profit organizations and provide copies of newsletters or other resource materials addressing issues relevant to not for profit organizations. Discuss the firm’s independence with respect to FCA.

1. Team Qualifications

Identify the specific partners, managers, and in-charge staff who will be assigned to this engagement if you are successful in your bid. Provide their bios specifying relevant experience to the type of services requested. Also discuss commitments you make to staff continuity, including your staff turnover experience in the last three years.

1. Audit Approach

Describe how your firm will approach the proposed services, including the use of affiliates or staff from other locations, areas that will receive primary emphasis, and the type of assistance that will be required from FCA’s staff. Also discuss the firm’s use of technology. Finally, discuss the communication process used by the firm to discuss issues with management.

1. Fees

Please provide a firm estimate of fees for the services to be provided

Any cost incurred for traveling to provinces must be bearded by audit firm. Additionally, transportation for auditors to FCA office must be provided by audit firm.

1. Client References

Include a list of the relevant non for profit clients the firm has served within the past three years and furnish the names and telephone numbers of any references whom we may contact.

AUDIT PROPOSAL INFORMATION                                        

The proposal must be valid for at least 60 Days. Audit period will be 01/04/2020 through 30/04/2020. (Project length) The final decision of the selection of the firm to conduct the audit will be made by the FCA procurement committee in coordination with FCAHO. All questions and correspondence regarding this RFP should be directed to procurement committee through email procurement.soco@kua.fi.The audit instructions for this specific project is at the bottom of this RFP.DELIVERABLES Prior to the submission of the completed audit report the audit firm will be required to deliver and review the draft and the proposed management letter with the FCA Somalia. Copies required A) Audited Financial Statements, 3 copies. B) Management letter, 3 copies. SUBMISSION GUIDELINE: The proposals must be submitted electronically at email: procurement.soco@kua.fi.The subject line must be: 12010 Audit evaluation,­­­Deadline: 12^th Feb, 2020 before 4:00 pm EAT.

APPENDIX 6. Instructions concerning audit of use of funds for humanitarian activities granted by the Ministry for Foreign Affairs

1. Organisation’s responsibility to audit the use of MFA’s funding for humanitarian activities

The objective of these instructions is to provide sufficient guidelines for authorized public accountants tasked with auditing Finnish NGOs’ use of funding for humanitarian activities granted by the MFA. This guideline must be followed unless otherwise agreed with a beneficiary.

The beneficiary is responsible for the use of funds in accordance with the conditions specified in the Ministry’s grant decision, guidelines given in Finland’s Humanitarian Policy and in this publication, and the provisions of the Act on Discretionary Government Transfers (valtionavustuslaki 688/2001).

According to the Guideline Concerning Humanitarian Assistance and the Use of Funding Granted by the Ministry for Foreign Affairs, the recipient organisation is to prepare a final report on the use of funds and a financial report within the period of time stated in the decision on discretionary government transfer. The financial report has to make explicit the incurred expenditure compared to the most recent budget. The agreement between the organisation and its partner of cooperation, possible correspondence relating to change of use of the funds, the auditor’s report and a synthesis report of the operation, including a summary of the auditor’s observations and recommendations, must be enclosed with the financial report.

If the bookkeeping of the local costs takes place in the country of operation, they must be audited in situ. A copy of a separate auditor’s report based on this procedure has to be attached to the final report for the Ministry. Instructions (Appendix B) concerning the auditor’s report in the country of operation are provided at the end of these instructions.

By means of the above-mentioned documents, the Ministry makes sure that the supported activities and use of funds are in line with the grant decision and plan of action accepted in connection with the application for funds, and that the provisions of the guideline concerning the use of funding have been observed.

2. Auditor’s general qualifications and the organisation’s responsibility to employ a fully authorized auditor

The auditor must be familiar with accounting, financial and legal matters, and auditing and have such experience as is required for the management of the tasks, taking into account the quality and extent of the activities of the party. Persons who are incompetent, in bankruptcy or barred from conducting business cannot act as auditors. The same applies to a natural person whose legal capacity has been restricted. (Accounting Act 459/2007, section 3)

If the value of the support granted to an operation exceeds EUR 10 000, one of the auditors must be an authorised public accountant (KHT-auditor approved by the Central Chamber of Commerce), a certified HTM-auditor, approved by the local Chamber of Commerce, or a chartered public finance auditor (JHTT-auditor) or a corresponding auditing association.

If the bookkeeping and auditing of local costs take place in the country of operation, the organisation must make sure that the auditor’s qualifications meet the requirements set by the authorities of the country. It is advisable to use the services of auditors who are authorized in the country of operation or who are members of a well-known international chain of auditors.

3, Content and target of audit

In their tasks, auditors must observe good accounting practice. The support receiving organisation need to make sure that proper arrangements for the audit of the operation have been made both in Finland and in the country of operation.

The receiving organisation must supply the following appendices:

• Auditor’s report on operation (Appendix A) and synthesis report concerning audit of costs in Finland. The synthesis report shall describe what has been done during the audit, the auditor’s findings and the recommendations to improve the activities.
• The audit report concerning audit of costs in the country of operation shall describe what has been done during the audit, the auditor’s findings, and the recommendations.

In addition to what good auditing practice involves, the auditor must check that the use of funds meets the terms and conditions set for the supported organisation in Ministry’s grant decision, guidelines given in Finland’s Humanitarian Policy and in this publication, and the provisions of the Act on Discretionary Government Transfers (valtionavustuslaki 688/2001).

It is also advisable that the quality of the internal monitoring and financial management processes of the receiving organisation and contracting party in the country of operation are audited.

The following matters need to be ascertained in the audit:

1. A written agreement of cooperation has been prepared by the support receiving organisation and those partners of cooperation to which a part of the support is transferred. The agreement takes sufficient account of the monitoring of the use of the support.
2. All expenses mentioned in the final report can be derived from organisation’s bookkeeping and they are based on due receipts and breakdown of costs, and are acceptable.

3_ The breakdown of costs presented in the final report corresponds to the Ministry’s grant decision and approved plan of operation. Should the budget contain considerable cost overruns and/or deficits, an appropriate clarification to them and reference to the Ministry’s approval of them are included in the report.

4. The actions presented in the final report correspond to the breakdown of costs,
5. The support receiving organisation’s self-financing or other donor financing has taken place as stated in the report and the costs can be derived from the organisation’s bookkeeping_
6. The administrative expenses presented in the operation’s final report meet the conditions set out in the guideline concerning humanitarian assistance and use of funding and the provisions under the Act on Discretionary Government Transfers,
7. Interest rate and currency exchange instalments and other possible income accruing from the support are reported as appropriate and used for the benefit of the operation.
8. Audits in the country of operation are arranged appropriately. The support receiving organisation observes the findings and recommendations of the audits.
9. Assessment of internal monitoring and risk management is organised appropriately.

10 The unspent share of withdrawn support during the support period is entered in the final report and the organisation’s books as appropriate.

11. The objectives have been reached and the funds have been used for effective activities.

In addition, operation audits can involve other measures.

Audit instructions (Appendix A) / Audit report

Audit report to AAA (NGO)

I have audited the costs arising from a humanitarian operation (Name of Operation) carried out by (Name of Organisation) during the period from X—X. The reported costs amount to EUR XX XXX.

(Mr/Ms Name), who is in charge of the operation in question, has prepared the final report and produced the appended breakdown of costs.

The audit has been performed in accordance with the audit instructions concerning humanitarian support granted by the Ministry for Foreign Affairs and, as appropriate, following the international audit standards. According to recommendations, audits are planned and performed in order to obtain sufficient certainty of whether the audited final report and its breakdown of costs include essential mistakes or defects. Auditing involves reviewing of materials that form the basis of the figures and other data presented in the final report and breakdown of costs. The grounds for and graphic and other ways of presentation of the final report and breakdown of costs are also assessed.

The following observations were made during the audit: Recommendations.

Findings: Place and date

Detected weaknesses: Auditor’s signature

Printed name and authorisation

Project audit instructions (Appendix B)

Auditing instructions for auditors in the country of operation

The instructions have been prepared in English in order to simplify working with partners of cooperation, The scope and content of the audit in the country of operation must cover at least the measures that are mentioned in this instruction.

Audit instructions for a humanitarian operation whose financial support is channelled through a non-governmental organisation in Finland

SCOPE

We ask you to conduct a Special Purpose Audit concerning the Humanitarian Operation (Name of Operation) of (Organisation)

According to the Ministry for Foreign Affairs of Finland’s financial guidelines regarding humanitarian support to non-governmental organisations, the receiving organisation must observe principles related to good governance and anti-corruption activities. State support shall be used only to cover expenses considered to be necessary and reasonable in carrying out the operation activities. The support receiving organisation shall in its accounting follow the generally accepted national accounting principles (GAAP). The audit should be carried out in accordance with International Standards on Auditing as applicable and relevant national legislation and standards.

The nature of a humanitarian operation is as follows:

• A operation is not a legal entity but an accounting subject
• It can include transactions in more than one legal entity (e.g. partner or subsidiary)
• It does not prepare statutory Financial Statements
• The statements under audit are the Financial Report and the List of Fixed Assets
• Fixed Assets are not capitalized but recorded as cost when purchased
• The Materiality Level in each audit finding is the equivalent of 200 Euros.

REPORTING

We ask you to further send the Auditor’s Report to the co-operation partner in Finland both by email and by regular mail

The report has to be in English and include the following items:

• Operation’s identification (number, name, etc.)
• Implementing organisation
• Date of the grant decision
• Reporting period and currency
• Exchange rate used in the Financial Report
• Total amount of budgeted income and expenditures
• Total amount of actual income and expenditures
• Closing balance (including cash, bank and other assets like advance payments and outstanding checks)
• Auditor’s name, position, address, phone, fax and e-mail
• Date, auditor’s signature and authorization
• Opinion on the issues below

OPINION

The Auditor’s Report offers an opinion on the following areas:

• Does the Financial Report match with the Bookkeeping?
• Does the Financial Report correspond with the grant decision?
• Do the received funds match with the Bookkeeping?
• Does the Bookkeeping match with the Vouchers?
• Are the expenses acceptable?
• Are there proper Vouchers far the transactions?
• Is there an adequate Bookkeeping, including Journal and General. Ledger?
• Do the changes in the List of Fixed Assets match with the Vouchers?
• Does the Bookkeeping match with the Official Bank Account Statements and Cash Book?
• Does the opening balance of funds correspond with the audit report of previous year?
• Is the approved Financial Report free of material misstatement?
• Are the received, unused funds properly recorded as a liability in the balance sheet and included in the ending balance of the Financial Report?
•  Are the recorded expenses in the Financial Report in line with the approved original budget and activity plan?
• The report should contain explanations of deviations larger than 15 percent
• Is the internal control system of the organisation in place?
• Are there any material weaknesses that the organisation should improve?
• Close assessment of the risk management?
• Do the salaries of the project personnel match with existing properly signed employment contracts and does working time recording exist?
• Has social security expenses including pensions and taxes been recorded and paid to relevant authorities in accordance with the national legislation?
• Does the organisation have copies of all valid essential contracts (government, trading, rental, lease, service agreement)?

In conclusion, estimate how the objectives have been reached?

Reporting

Templates of Engagement Letter and Auditor’s Report are attached to this Audit Instructions. We ask you to further send the Auditor’s Report to the co-operation partner in Finland by email and submit the original to the Country Office. The Agreed-upon Procedures are listed in the template of the Auditor’s Report. The report has to be in English (or in another language exceptionally agreed with the Finnish partner organization) and include the findings of all of the agreed-upon procedures. ISRS 4400 report is not meant to be a standard report so each auditor should in any case adjust the report to reflect the procedures carried out and the observations made during the procedures.