CONSULTANCY FOR A PROJECT AUDIT

TERMS OF REFERENCE FOR PROJECT AUDIT

NIRAS Finland have signed the contract with the Ministry for Foreign Affairs of Finland (MFA), contract reference number: 24821223, for implementation of the project “Strengthening Prevention and Response to Gender-Based Violence (GBV) in Kenya, Implementation Phase”, FY 2021-2024.

1. The Implementing Agency in Kenya is the State Department for Gender and Affirmative Action under the Ministry of Gender, Culture, and Sports, in partnership with the County Governments of Bungoma, Kilifi and Samburu.
2. Under the programme agreement and budget, the MFA contributes a maximum of EUR 5 million. while the Government of Kenya provides counterpart funding equivalent to EUR 1 million during the project period.
3. The program staff is integrated at the State Department for Gender and Affirmative Action, NIRAS Finland manages the implementation of the GBV Programme in cooperation with NIRAS Africa.
4. Under the implementation of the contract, NIRAS Finland is to request for an independent audit of the Implementation of the Project Costs occurred in Kenya in the MFA Budget line of the Programme.

Purpose:

The principal objective of the audit is to professionally assess the fairness of the financial statements of the Programme for the period by expressing an opinion on whether the underlying financial statements give a true and fair view of the financial position of the Programme for the periods then ended.

The Programme financial audit covers the period September 2021 to December 2023 for financial system and procedures; compliance with MFA standard rules and regulations, internal control systems; project revenues and costs.

Programme Area of Implementation: Bungoma, Kilifi, Samburu and National level.

Programme Audit Duration: 1 September 2021 to 31 December 2023.

Programme Size : EUR 1,743,614

Audit Scope:

1. Based on the review of the relevant legislation, MFA rules and regulations, the relevant agreements, the Steering Committee approved the work plan and budgets and the Programme Implementation Manual.
2. Complete review of 50 % sample of the supporting documentation for all transactions through appropriate receipts and vouchers for the MFA funded budget implemented in Kenya.
3. Review and confirm the applied exchange rate based on income received in the period subject (in EUR and KES).
4. Review of the internal control systems and their implementation to ascertain whether the services provided conform with international standards of accounting and reporting;
5. Review the procurement processes of the Programme and determine whether they are in line with relevant legislation and MFA rules and regulations and documented.
6. Ascertain whether the balances disclosed in the general ledger are supported by reconcilable sub-ledger and independent third-party information;
7. As a deliverable, to issue audited financial statements report and management letter wherein operational and other weaknesses found would be pointed out, their implications or business risks and our recommendations for improvement for the period;
8. To ascertain that all funds generated by the Programme have been fully reflected in the financial statements and properly accounted for;
9. Ascertain that the usage of donor funds was appropriately approved and is following the laid down conditions and as agreed between the Programme and the MFA;
10. Give a report of the documents used for the audit of proper use of funds and compliance with the terms of funding.
11. Confirm there is a list of fixed assets maintained up to date
12. Confirm social security expenses and pensions area recorded and paid
13. Review and confirm their reconciliation of financial figures, including official bank account statements and cash books

The auditors shall express an opinion on whether their audit was carried out on the basis of the following requirements pertaining to the use of funding and confirm that:

1. All income and expenditure have been properly documented by means of receipts or vouchers.
2. The expenditures documented have been made in accordance with the requirements of the terms of the application and the grant approval and are in accordance with the purpose outlined in the application and in the budgets. Any deviations from the budgets are explicitly explained.
3. The income documented, which is entered in the accounts as the contribution made by the donor, the target group and/or other entities in the country where the project is being implemented, is correctly rendered in the accounts, with the source being explained as required.
4. The donor’s conditions specified in the project agreement have (not) been met (with regard to the following aspects).
5. When the auditors have specific findings of the audit which fall outside the programme audit report, suggestions, notes, recommendations, or other comments should be provided in the separate Management letter.

Reporting Requirements

Timetable and reporting requirements

The Audit is expected to take place in April 2024. The duration of the audit is planned to be one month from the signing of the Audit Agreement. A detailed work plan with estimates of the time needed for the audit will be provided by the auditors before assignment of the contract.

At the conclusion of the audit, the audited financial statements shall be delivered complete with a professional independent opinion that they present true and fair the financial statements; income over expenditure, balance sheet, and cash flows and were prepared in accordance with International Accounting standards and incompliance with the legislation and various agreements. The financial statements shall include:

• The income and expenditures statement, identifying sources of fund and reflecting activities for the current period and cumulative since inception;
• The balance sheet, showing the assets and liabilities of the Programme
• Accounting policies adopted and their consistency;
• Notes to explain in detail the nature and composition of items in the income and expenditure statement and balance sheet;
• A schedule of field assets’ major categories that belong to the Programme and their condition.

Based on the information and findings of the audit, a report with detailed information about any material irregularities, missing documentation or other discrepancies that were discovered during the course of the audit will be prepared. The report will include detailed recommendations in ways in which project management and controls could be improved. The final report aims to give information on the financial situation and management of the Programme. The summary of findings, conclusions and recommendations by the field mission shall be presented to the Programme Management. The Board, through its management, will be given an opportunity to make comments on our observations. Report is discussed with management of the Programme prior to finalization.

The final report shall be delivered in the English language within 1 week after the auditors have received the written comments on the draft report in word or pdf format by e-mail. In addition, two (2) hard copies of the final report shall be submitted.

Auditor Experience and Qualification

The bidding firms should:

• Be registered with the Institute of Certified Public Accountants of Kenya (ICPAK) and its partners must hold current practicing certificates and in good standing. A Quality Assurance Review by ICPAK is added advantage
• The firm should demonstrate the capacity, capability and experience required to undertake the audit within 2 weeks.
• The firm must have a physical address and a valid business permit.
• The firm must have at least three referees who must be its clients.
• The firm must have at least two partners who must be full-time practitioners.
• The firm should hold a valid Tax compliance certificate.
• The firm should have been in practice for a period of not less than 10 years.
• The firm should have experience in auditing donor-funded projects.

Proposals Submission

Interested and qualified audit firms are invited to submit their technical and financial proposal(s) comprising of the following:

1. Confirmation of the Firm’s understanding of the Terms of Reference, proposed methodology and work plan
2. Methodology and work-plan for performing the assignment.
3. Team composition and tasks assignment
4. Organizational profile preferably demonstrating previous experience working with Not­ For-Profit donor funded entities showing relevant services undertaken
5. Registration and compliance with relevant statutory documents
6. Financial proposal detailing proposed fees and/or expenses including any reimbursables.

Please indicate the validity period of your proposal. Your proposals should remain valid for at least 3 months. Bidders will be informed of the outcome of the process once complete.

Evaluation Criteria: Proposals will be evaluated on:

• The technical expertise
• The organizational capacity
• Experience in similar work and references