TERMS OF REFERENCE FOR PROJECT AUDIT OF THE EAST AFRICAN CENTRE FOR HUMAN RIGHTS’ (EACHRights)- SAVE THE CHILDREN IINTERNATIONAL PROJECT ACCOUNTS FOR THE YEAR 2017

DATE OF ISSUE: TUESDAY 30th JANUARY 2018

1. About EACHRights

“The East African Centre for Human Rights (also known as EACHRights) was established in May 2010 to undertake human rights work within a regional context. The organization is a non-partisan, regional Non-Governmental Organisation that seeks to initiate and undertake programmes that promote, protect, and enhance Economic, Social, and Cultural Rights (ECOSOC Rights) in Kenya, Uganda and Tanzania for vulnerable and marginalized groups. The organisation employs the Rights Based Approach in its interventions and specializes on the Right to Education; Child Protection and the Right to Health for children”.

2. General Background

In 2017, EACHRights was supported by Save the Children East African Regional Office (SC ESARO) towards implementation of the Project titled; Strengthening Child Rights Governance Systems in Eastern Africa. The goal of this program is “to contribute to the enhanced effectiveness of the Eastern Africa Child Rights Network (EACRN) in conducting child rights advocacy, monitoring and coordinating with other child rights actors in the East African region by 2021 through capacity building, activity support and enhance coordination structures”.

In 2017, EACHRights received a grant of USD 84,565 (Eighty-Four Thousand Five Hundred and Sixty-Five Dollars) from Save the Children East African Regional Office SC EARO to implement the 1 year project whose goal is stated above. The actual amount spent was US$ 75,191(Seventy-Five Thousand One Hundred and Ninety-One Dollars and the balance will be utilised in 2018.

EACHRights is looking for qualified auditors to review financial statements and submit an Audit report. The Save the Children funded projects runs for 5 years but the annual audited report should cover the period 1st January to 31st December of every year.

3. The Objectives of the Audit

The objective of the audit of the Project Financial Statements (PFSs) is to enable the auditor to express a professional opinion(s) on the financial position of the project at the end of each fiscal year, and on funds received and expenditures incurred for the relevant accounting period.

The project books of accounts provide the basis for preparation of the PFSs by the project implementing agency and are established to reflect the financial transactions in respect of the project. The implementing agency maintains adequate internal controls and supporting documentation for transactions.

Scope of the Audit

The selected Audit firm will audit the financial reports, transaction vouchers and any other relevant financial documents as per the professional audit guidelines in Kenya in the highest standards for the benefit of Save the Children International and its stake holders.

As stated above, the audit of the project will be carried out in accordance with International Standards on Auditing (ISA) promulgated by the International Federation of Accountants (IFAC), and will include such tests and auditing procedures as the auditor will consider necessary under the prevailing circumstances. Special attention should be paid by the auditor as to whether the:

  1. Funding has been used in accordance with the conditions of the relevant Grant agreement, with due attention to economy and efficiency, and only for the purposes for which the financing was provided
  2. Goods, works and services financed have been procured in accordance with the relevant financing agreements including specific provisions of the Procurement Policies.
  3. All necessary supporting documents, records, and accounts have been maintained in respect of all project activities, including expenditures reported using Statements of Expenditure (SOE) or Interim Unaudited Financial Statements (IFS) methods of reporting. The auditor is expected to verify that respective reports issued during the period were in agreement with the underlying books of account;
  4. National laws and regulations have been complied with, and that the financial and accounting procedures approved for the project (e.g. operational manual, financial procedures manual, etc.) were followed and used; statutory deductions remitted by the due dates to avoid unnecessary penalties.
  5. Financial performance of the project is satisfactory.
  6. Assets procured from project funds exist and there is verifiable ownership by the implementing agency or beneficiaries in line with the financing agreement.
  7. Ineligible expenditures included in withdrawal applications are identified and reimbursed to the Designated Accounts. These should be separately noted in the audit report.

In complying with International Standards on Auditing, the auditor is expected to pay particular attention to the following matters:

  1. Fraud and Corruption: Consider the risks of material misstatements in the financial statements due to fraud as required by ISA 240: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements. The auditor is required to identify and assess these risks (of material mis-statement of the Financial Statements) due to fraud, obtain sufficient appropriate audit evidence about the assessed risks; and respond appropriately to identified or suspected fraud;
  2. Laws and Regulations: In designing and performing audit procedures, evaluating and reporting the results, consider that non-compliance by the implementing agency with laws and regulations may materially affect the Financial Statements as required by ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements;
  3. Governance: Communicate audit matters of governance interest arising from the audit of financial statements with those charged with governance of EACHRights as required by International Standards on Auditing 260: Communication of Audit Matters with those Charged with Governance.
  4. Risks: In order to reduce audit risk to an acceptable low level, determine the overall responses to assessed risks at the Financial Statement level, and design and perform further audit procedures to respond to assessed risks at the assertion level as required by Internal Standard on Auditing 330: the Auditor’s Procedures in Response to Assessed Risks.

4. Expected Outputs/ Deliverables

The qualified auditor shall issue an audit certificate in respect of reviewing the implementation of the agreement. The purpose of the audit certificate is to verify and recommend approval of the financial report. The audit certificate shall contain the following:

  • an opinion according to ISA 805 whether the submitted financial report is in accordance with the accounting records and compliant with the sub award agreement.
  • a reference to the reports that the audit certificate refers to (copies of which is to be included in deliverables)
  • a statement that the audit has been performed in accordance with International Standards on Auditing (ISA) and in accordance with these special instructions
  • a statement whether the report has been drawn up in accordance with the agreement
  • a statement on whether the auditor proposes that the report be approved or not

The qualified auditor shall issue a management letter/audit memorandum. The purpose of the management letter/audit memorandum is to review the internal control. The management letter/audit memorandum shall contain the following:

  • the content and scope of the audit.
  • significant observations on the activity covered by the report.
  • measures taken as a result of previous audits and whether the measures have been adequate to deal with the reported shortcomings.

Requirements for the audited organisation

The organisation shall produce a management response including an action plan to be submitted to the Save the Children International.

  • Preparation of the Annual Financial Statements.

    The auditor should verify that the Project FSs have been prepared in accordance with the agreed accounting standards and give a true and fair view of the financial position of the project at the relevant date and of resources and expenditures for the financial year ended on that date.

    The Project Financial Statements (PFSs) should include:

    1. A statement of funds received, showing funds from the SCI, and of expenditures incurred;
    2. A Balance Sheet (if deemed necessary);
    3. A Summary of the principal accounting policies that have been adopted, and other explanatory notes;
    4. A list of material assets acquired or procured to date with project funds

    As an Annex to the PFSs, the auditor should prepare a reconciliation of the amounts as “received by the Project from the SCI”, with those shown as being disbursed by the Bank.

  • Generate the Statement of expenditures/unaudited interim financial reports

    In addition to the audit of the PFSs, the auditor is required to verify all SOEs or IFRs used as a basis of accounting in EACHRights. The auditor will apply such tests and auditing procedures as considered necessary under the circumstances. Annexed to the PFSs should be a schedule listing individual SOE or IFR withdrawal applications by specific reference number and amount.

    The total withdrawals under the SOE or IFR procedures should be part of the overall reconciliation of Bank disbursements described in paragraph 5 above.

  • Generate an Audit report

    The auditor will issue an opinion on the Project Financial Statements (PFSs). The annual audit report of the project accounts should include a separate paragraph highlighting key internal control weaknesses and non-compliance with the financing agreement terms.

  • Generate a Management letter

    In addition to the audit report, the auditor will prepare a management letter, in which the auditor will:

    1. Give comments and observations on the accounting records, systems and controls that were examined during the course of the audit;
    2. Identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement;
    3. Report on the degree of compliance of each of the financial covenants in the financing agreement and give comments, if any, on internal and external matters affecting such compliance;
    4. Communicate matters that have come to his/her attention during the audit which might have a significant impact on the implementation of the project;
    5. Give comments on the extent to which outstanding issues/qualifications issues have been addressed;
    6. Give comments on previous audits’ recommendations that have not been satisfactorily implemented; and
    7. Bring to the recipient’s attention any other matters that the auditor considers pertinent, including ineligible expenditures.

Ideally, the management letter should also include responses from the implementing agency to the issues highlighted by the auditor.

5. Anticipated Audit timelines

The timelines will be outlined after quotations have been received and Audit firm identified. However, the partners audit must be completed by 28th February 2018.

The Audit exercise shall be for a period of 2 weeks.

6. Qualifications and competencies

  • CPAK
  • Accounting/Finance degree.
  • Current ICPAK Practicing certificate.

7. Submission of Interest

Interested companies/firms should submit an expression of interest that will include-

  • Company profile including Practising certificate.
  • A proposal (expressing interest in undertaking the audit)
  • A quotation

The expression of interest should be submitted to procurement@eachrights.or.ke with a copy to martin@eachrights.or.ke subject of the expression of interest should be marked “Expression of interest to offer Auditing Services”. Deadline for submission shall be Thursday 10th February, 2018 at midnight. Note that only shortlisted Audit firms will be contacted.

Cover letter should be addressed to-

Chief Executive Officer

The East African Centre for Human Rights

Suite No. 9, Wanandege Flats Kirichwa Road, Kilimani

P.O. Box 19494-00100 NAIROBI, KENYA

Tel: +254-701-670090, +254-735-670090, +254-20-266708

E-mail : procurement@eachrights.or.ke,

Website: www.eachrights.or.ke