I. Background
This Terms of Reference specifies the requirements for an External Audit for 3 projects in Mali: the Pneumonia project, the Climate Smart Livelihoods (CSL) and the Response Preparedness (RPII)
The vision of the Pneumonia project was to contribute to the reduction of acute respiratory infections (ARI) morbidity and mortality among children under the age of 5 in Koussané and the Logo Sabouciré districts of Kayes region. The project has been implemented over three years in partnership with Netherlands Red Cross (NLRC) and Mali Red Cross (MRC). The CSL project combines climate smart livelihood strategies (CSLS) with disaster risk reduction (DRR) approaches to increase, both considerably and sustainably, the resilience of communities. The RPII project supports the Mali Red Cross to enhance their emergency response capacity in selected regions.
The MRC leads the implementation of these 3 projects in partnership with the Netherlands Red Cross. The project activities implemented by MRC and the NLRC country delegation in Mali will be verified in accordance with the accountability requirements. The financial statements of both partners are required to be audited.
In the specific case of the Pneumonia project, an internal NLRC financial verification exercise was conducted in March 2021 and covered the activities of the project from 31/12/2016 to 31/03/2020. The aim was to verify if the project was carried out according to acceptable financial standards, to verify if all expenses reported were conducted according to the contractual agreement, and were well supported and qualified as eligible expenses. A considerable amount was found to be ineligible.
Final consolidated Audit report of the Pneumonia project should cover the initial eligible implementation period 31/12/2016 – 31/03/2020 (MoU). Additional eligible period was granted up to the 31/05/2020, although this end date is not indicated in the signed Memorandum of Understanding (MoU) between the NLRC and MRC. Final consolidated Audit report of CSL should cover the period 01/07/2019 - 01/07/2021. For the RPII project the eligible period covers the period of 01/05/2016 - 01/09/2021.
II. Audit objectives
The audits should be carried out in accordance with the International standards on auditing (ISA).
The audits should comprise as many observations as are considered necessary under the circumstances. And within the available time limits.
The opinion of the auditor about the underneath mentioned specific objectives of the audits needs to be reflected in the audit reports and are as follows:
3.1 To state an opinion on the financial statements of MRC and NLRC, in particular whether it gives a true and fair view of revenue and expenditure in accordance with the conditions laid down in the decision and with generally accepted accounting principles.
3.2 To evaluate the recipient’s internal control system of the MRC and the NLRC, estimate the audit risk and identify any matters worth mentioning, including any material weaknesses in internal control.
3.3 To make observations in order to determine whether the recipients have complied with all material aspects of the conditions laid down in the MoU. All material matters not meeting the aforementioned conditions and all indications of illegal acts have to be identified. Such observations shall also include the requirements relating to any contribution to be made by the grant recipient.
3.4 Check whether the reported activities and reported expenditures comply with the signed MoU (including budget) and approved budget revisions.
3.5 The auditor should check if the total amounts of the income received and expenditures incurred registered in the MRC accounting system TomPRO are corresponding to the NLRC field accounting package Winpaccs. Any differences have to be specified and reported.
3.6 Check whether all eligible costs are charged to and paid within the eligible period.
3.7 Check whether assets (buildings, stock or land) have been bought and charged to this programme.
3.8 Check whether reserves have been made with money of this programme. Only a reserve for severance (termination benefits, only is case of national law) is allowed.
3.9 Check whether the organisations comply with the following conditions:
a) The applicable rules, regulations and laws were applied to the reported amounts;
b) The quality of the process of internal control, validation of the expenditures, contracting and monitoring were performed well;
3.10 Evaluate whether the administration gives a good and complete understanding of:
a) The amounts received from the NLRC HQ;
b) Return payments to the NLRC HQ ;
c) The amounts justified by the MRC and NLRC Country Delegation
III. Scope of the audits
1) Preparation of the audits
The auditor should assess the follow-up to the findings and recommendations of other relevant audits. The verification exercise already done for the Pneumonia project is to be considered as desk research input and the ineligible cost indicated should be re-checked. A physical check next to the documentation check in Kayes is requested for the Pneumonia project if the security and context permit it. In addition to the expenditure in Mali, the auditor should remotely examine the costs registered at the NLRC Headquarters.
For CSL and RPII projects a documentation check at field level (Mali) will suffice.
2) Drafting the audit plan
The auditor should draw up an audit plan for each of the projects which should include an examination of the design and operation of the internal control system, analytical procedures and substantive tests.
The auditor is expected to complete the majority of the audit in Mali (Bamako and Kayes) and remotely for Netherlands Red Cross HQ expenditure.
The auditor should take into account the COVID-19 measures and restrictions within the audit plan. Due to the pandemic and security restrictions, a field visit to Kayes region to check programmatic aspects will only be possible if a security clearance is granted from the MRC, the NLRC and the ICRC (if applicable). If the field visit is organised, the latter will follow and be supported by the established security recommendations. Some key informant interviews with staff from Kayes may be scheduled to do due diligence on the programmatic aspects of the projects under the audit. The MRC (central level and branch level) will deliver additional cooperation to make this possible. For the Pneumonia project specific physical checks should take place on the investment budget lines (e.g. construction de forages) and incentives granted (live animals under livelihood component) in Kayes.
3) Implementation
3.1 The auditor should audit the financial statement on the basis of the audit plan in order to issue an auditor's report.
3.2 The auditor should request a letter of representation from the grant recipient's management stating that, to the best of its knowledge, the financial statement encompasses all transactions and is accurate and complete in all respects.
3.3 The auditor should ensure that the audit working papers contain sufficient documents of an appropriate and relevant nature and should document the audit procedures used and the results obtained in the working papers.
3.4 The auditor should check that the contracts concluded between the grant recipients and other organisations involved in the activities referred to in the decision have been audited.
The steps listed in III. 1, 2 and 3 are not exhaustive or restrictive and may not impose any limitations on the auditor's professional judgement. Any restrictions on the scope of the audit should be mentioned in the auditor's report.
4) Reporting
The long-form report should include the following elements:
4.1 The aim and scope of the financial audits, the audit criteria applied, where relevant, and any restrictions imposed on the scope of the audit.
4.2 The financial statement with disclosures and the accounting principles applied.
4.3 Clear statement of the auditor's opinion of the financial statement. In the case of an unqualified auditor's report, the following text should be used:
"We have audited the financial statements of MRC at for the period from to . The financial statements are the responsibility of the entity's management. Our responsibility is to express an opinion on the financial statement based on our audit.”
4.4 For the financial section a report per applicable currency is required.
4.5 The financial section should include a budget vs. actual expenditure table.
4.6 A table of received transfers and exchanged amounts will be checked and confirmed by the auditor.
4.7 The following text needs to be incorporated in the auditor’s report:
“We conducted our audit in accordance with the International standards on auditing (ISA). Those standards require that we plan and perform our audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statement gives a true and fair view of the financial position of the entity as of 31/05/2020 ( Pneumonia), 01/07/2021 (CSL) and 01/09/2021 (RPII) and of the balance of operating income and expenses for the year then ended in accordance with generally accepted accounting principles. The obligations imposed by the grant decision have also been complied with."
IV. Review
The NLRC HQ reserves the right to review the audit. The auditor concerned should assist this review and should supply the reviewer with all relevant documents relating to the audit.
V. Audit working papers
The audit firm must keep orderly and accessible working papers. These should be kept for a period of ten years from the date of completion of the audit.
VI. Conditions of implementation
- The auditor will follow the financial guidelines of MRC and NLRC Field Financial Manual, however the auditor is expected to specifically consider and evaluate that:
a. No reserves can be charged to the funding
b. Any investments charged to the funding
c. Report on any other revenue such as interest
d. Costs are eligible when charged and paid in the period from 31/12/2016 - 31/05/2021 (), 01/07/2019 - 01/07/2021 (CSL) and 01/05/2016 - 01/09/2021 (RPII). Liabilities are not eligible after these periods.
e. The total of the reviewed expenses will be at least 85% of the total reported expenditures; 85% of each budget line and cost category (defined by the ledger of the accounting programme).
f. All expenses exceeding €500 or the equivalent in local currency will be reviewed by the auditor, plus a substantial share of those below €500.
VII. Deliverables:
The Auditors on completion of the audit work will submit 5 (five) original copies of the Audit Report appended to the Financial Statements along with the reports to the attention of the Red Cross (MRC and NLRC).
Management letter in accordance with the scope of work described here before.
VIII. Responsibilities and lines of communication:
The Auditor will be contracted and managed by the Netherlands Red Cross (NLRC) in Mali. The NLRC Finance and Administration Officer and the NLRC Project Delegate will be your focal point person and will coordinate the process in close collaboration with the MRC Accounting /Finance team and the NLRC Finance team.
IX. Qualification of the Audit Firm:
· Preference will be given to auditors based in the West Africa region, strong experience in the area and with international affiliation.
· Both French and English language skills are essential for the completion of this assignment.
X. Audit Time Lines:
· Bid submission deadline : 1st of September 2021
· Audit start and end date : 1st of October 2021 – 31st of October 2021
· Final report Submission of: 15th of November 2021
· Final reports submission of CSL and RPII: 30th of November 2021
XII. BID requirements and Analysis Criteria
Bidders are requested to submit both a financial proposal and technical proposal that best complies with the text laid out in this document. These proposals will be assessed separately and the contract awarded to the candidate with the highest combined score. Only proposals that score 65 points on the theoretical proposal will have their financial proposals reviewed. We also ask for the CVs of the proposed auditors to be sent to Mali.
Your bid should make clear the relevant skills, experience and capacity of the participant, in respect of this particular TOR. Your bid must contain the details of the proposed approach to be adopted in order to deliver the service in accordance with the TOR.
Key assessment criteria
1 Experience, Skills and Ability of Service Provider
Past experience in similar work of this nature
Team member experience( accompanied by brief CV's)
Bidders 'track record
Ability of the bidder to fulfill the NLRC’s requirements
2 Technical Approach and Execution Plan
- Bids must contain the details of the proposed approach to be adopted in order to deliver the service in accordance with the TOR
3 Audit management
Bidder must allocate a project manager for this project
The proposal should contain a work plan, showing tasks, timelines;
Did the bidder give, submit clear proposed audit timelines ;
Does the project plan cater for risk management associated with the audit
4 References
- Did the bidder submit at least three relevant and contactable clients that were serviced in the past 12months
5 Capacity
- Bids should clearly indicate whether or not bid participants have the capacity to meet the requirements of the TOR
How to apply:
Bidders are requested to submit their proposals to the following email address by 1st September 2021: LOGISTICS@REDCROSS.NL