Date:13th April 2020
Project Name:Program for Economic Development & Livelihoods.
Project Locations:Beledweyne District, Somalia.
Project Term:1st July 2018-31stMay 2020
Contract Value: 1,071,211 USD
Donor: Somalia Stability Fund- SSF
Implementing Partner:Sustainable Development & Peace Building Initiative (SYPD) Somalia
Type of Audit: Close-out Audit
Location of the documents to be audited:Mogadishu.
- Background Summary
Sustainable Development and Peace Building Initiatives (SYPD) is a humanitarian organization that has been working in Somalia since 2004. We are focused solely in providing sustainable and pragmatic mechanisms of interventions to help the disadvantaged communities in Somalia.
SYPD Somalia with the support of The Somalia Stability Fund (SSF) isimplementing 23-month economic development project in Beledweyne District. The project is designed to support vulnerable farming communities along the river Shabelle with the comprehensive agricultural support package that include; land preparation, provision of quality seeds, construction/rehabilitation of agricultural infrastructures and installation of solar powered irrigation system. This further coupled with good agronomical skills training to enhance the capacity of the farmers in region.
SYPD is one of the SSF’s Implementing Partners and is seeking an external audit firm to carry out a comprehensive close out audit of the SSF funded project.
- Audit Objective
The objective of the audit of the financial statements is to enable the auditor to express a professional opinion on the financial position of the project at the end of the reporting period and ofthe funds received and expenditures for the reporting period, as reported by the Implementing Partner and in particular to confirm that the reported expenditure has, in all material respects, been used in conformity with the provisions of the Accountable Grant Agreement, including any amendments thereto as contained in implementation letters, and any applicable guidelines in force and applicable to the audit scope, and with due attention to economy and efficiency.
To also confirm that the financial statements agree with the project accounts (books of account) which provide the basis for preparation of the financial statements and are established to reflect the financial transactions in respect of the project, as maintained by the Implementing Partner and the sub-grantees.
- Scope of Work
The audit will be carried out in accordance with international standards of auditing.It will include such tests and controls as the auditor considers necessary including visits to project office and sites.Generally, the audit will focus on:
- Contractual compliance and practice: To assess and confirm that the Implementing Partner is compliant with DFID/SSF contractual obligations. It will also entail confirming that all Implementing Partner’s management practices, including administrative, contractual, financial and legal are in line with best practices.
- Financial management and internal controls: To assess and confirm that financial management and control environment of the Implementing Partner has been designed and implemented in line with best and generally accepted accounting standards.
- Expenditure and reporting verification: To verify and confirm, on a sample basis, that reported expenditure and other financial reports issued by the Implementing Partner are accurate and a true reflection of the project’s financial activities.
- Contracting and procurement:To establish and confirm that transparent, accountable and appropriate procurement and contracting practices are established and are being followed.
- Regulatory and tax compliance: To assess the regulatory and tax obligations of the Implementing Partner and confirm that all requirements have been met.
Specific focus will be:
- To ascertain compliance of the laid down policies, SSF financial norms, accountable grant agreement, relevant legislations, various guidelines, manuals, accountability requirements, procurement guidelines (of goods, works and/or services)as applicable under the project.
- To test whether all the activities included in the work plan have been implemented as planned and the target outputs under each activity achieved. A minimum sample of 70% of total expenditure value should be tested.
- Expenditure verification for the project expenditures, and reporting on allowability/eligibility, validity, accuracy and classification of costs into budget lines. It is imperative to confirm the validity of the investee assertions on activities undertaken and deliverables/results. This may include confirmation with beneficiaries, especially with regards to cash transfers to vulnerable community members.
- Verification that the correct exchange rates have been applied for currency conversions where applicable and in accordance with the conditions of the Accountable Grant Agreement (AGA).
- Verification that the administrative (indirect) costs do not exceed the maximum allowed fraction of the total direct eligible costs of the project per the approved budget.
- Physical verification of all capital assets purchased by the grantmonies for their existence,conditions, location, and values – including reporting on the same.
- Test and assess the extent of achievement of project milestones.
- To ascertain and evaluate the adequacy and effectiveness of the financial management and internal control framework/ environment such as segregation of duties, approval of expenditure and cash & bank reconciliations.
- To express an independent professional opinion regarding Value for Money (VfM), that is, efficiency, effectiveness and economy of the project’s operations.
- Assess conformity of expenditure with the budget and analytical review -includes tests of authenticity/authorisation of the initial budget, conformity with budget, test that all expenses were foreseen in the budget, testthat amendments to the approved budget comply with the conditions for such amendments, and that expenditure for a transaction or action has been classified under the correct heading and subheading of the approved budget.
- To identifying areas for improvement and critical weaknesses, if any, i.e. identify areas of good practice and themes where lessons can be learnedand communicate these to the SSF team.
This audit will require the following general approach to be applied:
- Review of Implementing Partner’s internal control environment, expenditure and reports.
The audit will require a review, understanding and description of Implementing Partner’s internal control environment. This understanding will inform the auditor on why the Implementing Partner uses particular source documentation, authorisation guidelines, processes and systems. Key items to be reviewed include:
- Accounting system controls;
- Cash movement controls;
- Advances and per diemcontrol;
- Time and payroll controls;
- Authorisation controls;
- Procurement controls;
- Capitalisation and asset management controls;
- Reporting and financial performance controls; and
- Review of relevant expenditure documentation.
The audit will require a sample check and review of programme expenditure documentation to assess:
- Supporting documentation;
- Contractual compliance;
- Compliance to the SSF accounting instructions;
- Allowable and disallowable costs;
- Questionable costs;
- Adherence to Implementing Partner’s internal controls;
- Budget limits adherence; and
- Review of Implementing Partner’s budget performance and report.
The audit will require a review of the IP’s spend against budget report to ascertain accuracy of reports submitted as well as fairness of forecasts submitted.
- Review of IPs financial management and contractual compliance
- Review last IPs reported expenditure against audited expenditure
The audit will require a review of the Implementing Partner’s financial management practices, which will include:
- Tax management and administration;
- Application of general acceptable accounting standards;
- Management and application of set procedures and policies; and
- Application of relevant regulatory requirements.
- Interview management team, key individuals within the finance and procurement departments as well as project management team.
The audit will require an in-depth interview with management, key finance and procurement team members as well asdocumentation of key policies and procedure documents. Entry and exit meetings should be held with the Implementing Partner’s management at the commencement and end of the audit process respectively. This team will be required to respond to all recommendations and agree on a time-plan to implement the recommendations.
- Verify implementation of recommendations of previous audits and Due Diligence Capacity Assessment (DDCA) findings.
The audit will require a follow up of implementation of previous recommendations of similar audits, financial audits and DDCAs.
- Conduct visits to Implementing Partners’ offices
Auditors must visit the main offices of the Implementing Partner, and specifically the office, which holds highest volume of transactions.It is also required that the auditor will make site visits to assess locations where significant transactions have been deemed to happen.
Adam Smith International – Somali Stability Fund will be the sole recipient of the output of this process.
- A Close out Audit Financial Report with a professional opinion
- A management letter with Implementing Partner management’s comments, which should highlight observed weaknesses in the system of internal control and the recommendations for managing the identified issues over the life of the project.
- A statement of compliance with DFID/SSF terms and conditions as contained in the Accountable Grant Agreement.
- A verification report on the capital assets purchased by the grant funds under the project.
All reports will be delivered to the following entities:
- SYPD Governance/Management Team
- Somalia Stability Fund (the Donor), addressed to the following:
- SSF Risk and Assurance Manager
- ASI Africa Head of Finance
- Instructions on Proposal Submission
- Closing Submission Date: Proposals must be submitted no later than 4:00 p.m. on 22th April 2020
- Inquiries: Inquiries concerning this RFP should be directed to SYPD PROCUREMENT OFFICE on email firstname.lastname@example.org
- Conditions of Proposal: All costs incurred in the preparation of a proposal responding to this RFP will be the responsibility of the Offeror and will not be reimbursed by SYPD Somalia.
- Electronic Submissions: Proposals must be submitted electronically to the following e-mail address: email@example.com; by the closing submission date indicated above.