Annual Financial audit for Zero Energy Cold Storages Project (ZECS) for the fiscal year of 2013,2014,2015,2016 and 2017 under reference number MAIL/SDF/ZECS/26122017-CQS

Publish Date: Dec 30, 2017

Closing Date: Jan 03, 2018

Tender Document: Download Document



Description:

TERMS OF REFERENCE (TOR) FOR AUDIT OF PROJECT FINANCIAL STATEMENTS AND ACCOMPANYING STATEMENT OF EXPENDITURES (SOE) AND SPECIAL ACCOUNT (SA)

COUNTRY:

Islamic Republic of Afghanistan.

NAME OF THE PROJECT:

Zero Energy Cold Storages Project (ZECS)

NAME OF ASSIGNMENT

Annual Financial audit for Zero Energy Cold Storages Project (ZECS) for the fiscal years from 15 Aug 2013,2014,2015,2016 and 2017

SELECTION METHOD:

CQS (Consultant Qualification Selection)

CONTRACT DURATION

One month

DUTY STATION:

Kabul, Afghanistan

CONTRACT REF No:

MAIL/SDF/ZECS/ 26122017 - CQS

FUNDING AGENCY

SAARC Development fund (SDF)

PROCUREMENT AND AWARD AUTHORITY

Ministry of Agriculture, Irrigation and Livestock (MAIL)

Total Expenditure in 2013

Approximately USD 0.00

Total Expenditure in 2014

Approximately USD 0.00

Total Expenditure in 2015

Approximately USD 500.00

Total Expenditure in 2016

Approximately USD 43,388

Total Expenditure in 2017

Approximately USD 101,236.60

Total Exp from 2014-2017

Approximately USD 145,124.60

Project Afg #

390712

Announcement date:

27, Dec, 2017

Deadline:

03, January, 2018

Final Audit report Submit ion

30, February, 2018

 

I- Project introduction

 The following information would be provided by the (ZECS) to the auditor before the start of the audit.

  • Project Grant Agreement
  • Annual Progress Report
  • Project Implementation Manual
  • Organizational charts along with names and titles of senior managers;
  • Names and qualifications of officers responsible for financial management, accounting and internal audit;
  • Description of information technology facilities and computer systems in use; and copies of the latest financial statements, Grant agreement, minutes of Grant negotiations, project appraisal document, and annual work programme and budget, if it is available.
  • Subsidiary Agreements or Service Provider contracts.
  • Program related documents if required

 

II. Scope and objectives of the audit

The objective of an audit is to determine whether the statements are presented in conformity with acceptable Government of Afghanistan and International Accounting Standards. This includes review of the financial management system at the beginning of project implementation and periodically thereafter. The auditor’s report should indicate the standards used, and the extent, if any, to which the examination did not conform to those standards.

 

The audit report should contain a clear expression of the auditor’s opinion regarding the financial statements. It should include a financial statements audit and a compliance audit, and should be accompanied by a management letter (inclusive of management’s replies to recommendations issued). It should also include a section on the project’s compliance with Grant covenants, particularly those dealing with financial matters.

 

The auditor will review the Special Account, project accounts, including annual financial statements, Statement of Expenditures (SOE)s and present an opinion covering the three elements.

 

In addition the audit report will address:

 

a) Project Financial statements: The audit will involve review of the Project Financial Statements (PFS) and expression of an opinion thereon. The PFS will include:

 

  • Yearly and cumulative statements of sources and application of funds, which should disclose separately (ZECS) funds, counterpart funds (government), and other donors funds if any.
  • The balance sheet, which should disclose bank and cash balances that agree with the statement of sources and application of funds, fixed assets and liabilities.
  • Yearly and cumulative SOEs by Withdrawal Application and category of expenditures; reconciliation of the Special Account; and consolidated financial statements, where a project consists of more than one entity.
  • Reconciliation between the amounts shown as received by the project and those shown as being disbursed by Indian cooperation should be attached as an annex to the PFS. As part of that reconciliation the auditor will indicate the procedure used for disbursement. SA funds, letters of credit special commitments, reimbursement or direct payment and indicate whether the expenditure is fully documented or uses the SOE format.
  • Notes accompanying the financial statements; special focus is required on the accounting principles used for financial statements preparation.

 

b) Statement of expenditure (SoE): In addition to the audit of the PFS, the audit will include a review of SOEs used as the basis for submitting withdrawal applications. The auditor will carry out tests and reviews as necessary and relevant to the circumstances. SOE expenditures will be carefully compared for eligibility with relevant financial agreements, and the disbursement letter, and with reference to the project appraisal report for guidance when necessary. Where ineligible expenditures are identified as having been included in withdrawal applications and reimbursed, auditors will note these separately. A schedule listing individual SOEs withdrawal applications by reference number and amount should be attached to the PFS. The total withdrawals under the SOE procedure should be part of the overall reconciliation of (SAARC) disbursements described above.

 

The auditor’s opinion should deal with the adequacy of the procedures used by the project for preparing SOEs and should include a statement that amounts withdrawn from the Grant account on the basis of such SOEs were used for the purposes intended under the Grant agreement.

 

c) Special account (SA): The auditor is also required to audit the activities of the SA(s) associated with the project including the Authorized Allocation or Initial Deposit, replenishments, interest that may accrue on the outstanding balances, and the year-end balances. The auditor must form an opinion as to the degree of compliance with Italian cooperation procedures and the balance(s) of the SA(s) at year end. The audit should examine: (i) the eligibility of withdrawals from the SA during the period under review; (ii) the operation of the SA in accordance with the relevant financing agreement(s); (iii) the adequacy of internal controls within the project appropriate for this disbursement mechanism; and (iv) the use of correct exchange rate(s) to convert local currency expenditures to United States dollars.

 

d) Service Providers’ Annual Statements: The auditor will examine the audited financial statements on operations, resources and expenditures of each Service Provider relating to programme activities. Shall be able to access to audit (ZECS) financed activities. At such, the auditor shall not audit the books and accounts of such Service Providers but only validate adequate input in (ZECS) ledger of transactions between the project and the service providers, to ensure proper recording and exposition in the project’s financial statements..

 

d) Audit opinion: The auditor shall express specific and unambiguous opinions on the following:

  • On Project Financial Statements
  • On Special Account
  • On Withdrawal Application statement / Statement of Expenditures
  • Whether the PFS are drawn up in conformity with International Accounting Standards as applicable to Afghanistan.
  • Whether the PFS are accurate and are drawn up from the books of accounts maintained by the Project.
  • Whether the provisions of the Project Grant Agreement are adhered to.
  • Whether all the books of accounts required under Government of Afghanistan Law are maintained accurately by the (ZECS).
  • Whether Procurement by (ZECS) has been undertaken in accordance with Schedule 4 of the   Procurement Guidelines and the relevant provisions of Government of Afghanistan Law.
  • Whether the Special Account is properly maintained and operated in accordance with Italian cooperation procedure.
  • Undertake a physical verification of assets purchased by the (ZECS) in comparison with the project's asset inventory records and confirm their existence and use for project purposes. The Auditor will also verify the movement of assets. (Details to be disclosed in the management letter)
  • Whether the project has an effective system of financial supervision or internal audit at all levels.
  • Whether any kind of taxes or duties are included in Withdrawal Applications and claimed from (SAARC).
  • Whether the expenditure claimed through SoEs are properly approved, classified and supported by adequate documentation.
  • The adequacy of accounting and internal controls, including the internal audit mechanism, for monitoring expenditures and other financial transactions and ensuring safe custody of project assets;
  • The adequacy of documentation maintained by the (ZECS) for all transactions.
  • To verify that the Services Provider agreements have been complied to by the relevant Service Providers in accordance with their contractual obligations, and that the expenditures reported by the Service Providers and disbursements to the Service Providers are included in the PFS.
  • The auditors’ opinion on the outstanding advances or accounts receivable and the risk associated with such advances. The auditors should also provide an assessment with regards to the turn around time for the advances.

 

e) Management Letter: The auditor will provide a management letter which will identify deficiencies in the project accounting records, procedures, systems and internal controls and make appropriate recommendations for improvement. The management letter will also include any other significant matters that come to the auditor’s attention and might have material impact on project implementation.

The management letter should include the auditors’ verifications on actions taken with regards to the previous audit observations recorded in the audit log. The Auditor should verify the outstanding issues, pending resolution.

The management letter should also contain Project’s management response to audit recommendations

III. Auditor’s responsibilities:

 

The auditor should be expected to:

  • Submit a proposal including the audit fees, depending on the audit assignment, for the audit of financial statements of the (ZECS), including SOEs and SAs.
  • Provide an opinion based on the scope the audit and detailed Terms of Reference.
  • Provide a separate opinion on the operations of the Special Account (including Project Account & Sub-Project Accounts) and proper utilization of the Special Account (including Project Account).
  • Provide a management letter describing any weaknesses identified in the project accounting and internal control systems, including any internal audit function, and recommend improvements.
  • Comment on other activities on which an auditor may consider it appropriate to report.

            Provide reports in English.

Evaluation Criteria of EOI.

EOI submissions will be evaluated on a systematic and transparent scoring method against the points given for each criteria as below.

 

A: Qualification Criteria:

1. Experience of the firm proposed personnel in using procedures and methods that conform to ISAs or INTOSAI auditing standards (20 points).

 

2. Experience of the firm in auditing the accounts of projects comparable in nature, size, and complexity to the assignment they are to undertake. More specifically, experience in auditing international donor projects, especially those of multi-lateral donor organizations (Government funded projects, World Bank and ADB) in Afghanistan (40 points).

 

3. Professional and technical training and experience of the firm’s proposed personnel who will be assigned to the audit. More specifically, experience of the proposed personnel in completing audits of international donor projects, particularly those audits of World Bank, ADB and Government funded projects, program in Afghanistan (40 points).

: Eligibility Criteria:

  1. The firm has be to a registered with government entity (AISA, Ministry of Economy etc).

 

  1. The firm must provide a written certification statingthe firm represented by its board of directors etc and its employee’s certification do not have any conflict of interest in the consultancy. The firm must provide a written certification stating that the firm represented by its board of directors etc and its employees are not blacklisted by any government and other relevant organizations.
  2. The organization must provide a certification that it's not insolvent, in receivership, bankrupt or being wound up, its business activities have not been suspended, and it is not the subject of legal proceedings for any of the foregoing.
  3. 4. The organization must provide a certification that it has not been, within a period of three years prior to the participation in the procurement proceedings, convicted relating to business or professional misconduct, or that involved false statements as to its qualifications to enter into a procurement contract.

 

 

Expression of Interest

 

Audit firm will be shortlisted in accordance with the Government of Islamic Republic of Afghanistan’s “Rules and Procedure of Public Procurement.

Expression of interest (EOI) must be delivered on or before the 14.00 hours Kabul local time, 03, January 2018 to the address given below. The EOI submissions shall be made as: One “Original” plus two “Copies”

 

Note: The RFPs will be issued for the audit firm who will get the highest score in REOI evaluation stage.

Address: -

To:             Name: Mr. Hamid Shafiq

Position: Head of Agricultural Economic Regeneration program/MAIL

                        Email: hamid.shafiq@mail.gov.af

CC:            SNaPP2 Procurement Unit;

Senior Procurement Specialist CLAP/SNaPP2

Email: Ayaz.momand@mail.gov.af

Address: Ministry of Agriculture Irrigation & Livestock Compound, Jamal Mina, Kart- e-Sakhi,    Kabul, Afghanistan