Terms of Reference – Expenditure Verification for the Proposed Project “European Union Project” to be Implemented in West Nile in Uganda

Background

horizont3000, an Austrian non-governmental organization dedicated to sustainable development cooperation, operates from its headquarters in Vienna with regional offices in East Africa, Central America, Senegal, and Mozambique. We support partner organizations and locally-led initiatives through co-financing, grant schemes, advisory services, and knowledge management. Our projects and programs focus on Human Rights & Civil Society and Sustainable Livelihoods, with an emphasis on Gender Equality, Climate Action, and Policy Dialogue. In East Africa, the Regional Office (ROEA) in Kampala manages programs and projects in Kenya, Uganda, and Tanzania, working primarily with marginalized communities, including smallholder farmers, disadvantaged women, children and youth, human rights groups, and indigenous people.

horizont3000 Regional Office East Africa will be developing a proposal for the “European Union Project,” intended for implementation in West Nile. To ensure a comprehensive and transparent proposal, it is essential to have an auditor already earmarked during the proposal development phase. This Terms of Reference (ToR) outlines the scope and requirements for the future expenditure verification.

Objectives of the Expenditure Verification

The primary objective of the expenditure verification will be to ensure that project funds will be allocated and used appropriately, in line with the project’s objectives and compliance requirements. This will support the preparation of a robust and transparent proposal.

Scope of the Expenditure Verification and Related Procedures

The expenditure verification will include, but will not necessarily be limited to:

1. Accounting System and Reporting
   • Verification that the accounting system will support reporting in Euros, following FIFO principles for currency conversion.
   • Reconciliation of project expenditures with the proposed budget.
   • Confirmation that all funds received from the EUROPEAN COMMISSION via horizont3000 will be correctly recorded.
2. Expenditure Verification
   • Examination of a representative sample of expenditures for validity, authenticity, and support, including:
     • Accuracy of vouchers, accounts, and cost centres.
     • Verification of time sheets and compliance with budgeted work ratios.
     • Ensuring vouchers align with project descriptions and budget positions.
     • Checking receipts, invoices, and supporting documents for appropriateness, timeliness, accuracy, and validity.
3. Internal Controls and Compliance
   • Review of the internal accounting and administrative control systems to confirm their adequacy and effectiveness.
   • Assessment of compliance with national laws and regulations, including tax obligations and NGO status.
   • Evaluation of adherence to EUROPEAN COMMISSION & horizont3000’s rules for handling and administration of project funds, including:
     • Proper recording of expenditure vouchers and cash advances.
     • Adherence to procurement rules.
4. Documentation and Physical Checks
   • Review of the filing system for original documentary evidence.
   • Physical spot checks of project activities and assets.
   • Verification that project vehicles are used appropriately and fuel costs are justified.
   • Confirmation of adherence to donor visibility regulations.
5. Financial Policies and Recommendations
   • Review of financial policies and recommendations for improvements.

Audit Report Requirements

The expenditure verification report will include:

1. Expenditure Verification Report
   • Audit opinion.
   • Overview of financial statements for the audit period, signed by the project partner’s representative.
   • Detailed comparison of expenditures against the approved budget.
   • Bank statements, reconciliation statements, and cash book details.
   • Analysis of fixed assets using horizont3000’s format.
   • Explanations of receivables and payables.
   • Overview of accounting policies.
2. Comments and Recommendations
   • Comments on internal controls and recommendations for improvement.
   • Assessment of implementation of recommendations from previous audits.
   • Comments on compliance with national laws and horizont3000’s regulations.
3. Expenditure Details and Management
   • Detailed list of expenditures, classified by sub-budget lines.
   • Identification and explanation of ineligible expenditures.
   • Original management letter.
4. Additional Requirements
   • The audit report will need to be printed on the auditor’s letterhead.
   • Each page of the report will need to be stamped or signed by the auditor.
   • Signature of the project partner for approval of findings and management letter.
   • Validation of all receipts by the auditor