External Audit of Financial Statements for Non-Government Organisation funding to Support Good Public Policy in Public Administration and Public Financial Management in Timor-Leste Project
The Commonwealth of Australia represented by the Department of Foreign Affairs and Trade (DFAT) entered into a Grant Agreement Deed with The Asia Foundation (TAF) for the activity: Support Good Public Policy in Public Administration and Public Financial Management in Timor-Leste. A total budget of AUD6,463,004 was committed to the project over the course of the grant agreement (15 March 2012 – 30 June 2017). The SGPP Program aims to support the development of the policy making processes and environment in Timor-Leste and increase the likelihood that sound and responsive policy will be introduced to Timor-Leste. The program is focused on supporting local policy reforms on issues of critical importance to Timor-Leste.
As per clause 14.2 of the Grant Agreement, “Within sixty (60) days of completion of the Activity, the organization must submit to DFAT” … “b) a final Acquittal Statement.”
As per clause 14.3: “The final Acquittal Statement must:
a) Include details of any interest earned on the Grant
b) Be prepared in accordance with the internal and external auditing procedures laid down in the
rules and regulations applicable to the Organisation
c) Be Independently Audited and certified …
d) Be signed by the senior financial officer of the head of the Organisation, indicating that the Grant has been spent in accordance with the terms of this Agreement.”
These terms of reference address the requirement for an external audit of the project accounts of the Activity: Non-Government Organisation funding to Support Good Public Policy in Public Administration and Public Financial Management in Timor-Leste and of the funds received and expenditures for the accounting period starting 15 March 2012 and until March 2017. The TORs also require a specific review of expenditures in financial years 2014/15 and 2015/16 to ensure revised financial reports reflect allowable project expenses as per TAF’s reporting to DFAT in program narrative reports and activity plans under the terms of the Agreement.
The external auditor must be completely impartial and independent from all aspects of the management or financial interests in TAF.
The audit should be carried out in accordance with the International Standards of Auditing (ISAs).
The contractor will conduct the audit in accordance with International Standards on Auditing. Those Auditing Standards require the contractor to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.
Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatement may not be detected, even though the audit is properly planned and performed in accordance with International Standards on Auditing.
In making its risk assessments, the contractor considers internal control relevant to the entity’s preparation of the Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, the contractor will communicate to TAF in writing concerning any significant deficiencies in internal control relevant to the audit of the Statements that contractor have identified during the audit.
The audit will be conducted on the basis that TAF management acknowledge and understand that they have the responsibility:
a) for the preparation of the Financial Statement of the project in accordance with the modified cash basis of accounting;
b) for such internal control as TAF management determine is necessary to enable the preparation of the Financial Statement that is free from material misstatement, whether due to fraud or error; and to provide the contractor with:
(i) access to all information of which TAF management are aware that is relevant to the preparation of the Financial Statement such as records, documentation and other matters;
(ii) additional information that the contractor may request from TAF management for the purpose of the audit; and unrestricted access to persons within the entity from whom the contractor determines it necessary to obtain evidence.
As part of the audit process, the contractor will request from management, written confirmation concerning representations made to the contractor in connection with the audit.
We request that where any document containing the Financial Statement indicates that the report has been audited, the auditor’s report will also be included in the document.
Access to Facilities and Documents
The auditor will have full and complete access at any time to all records and documents (including books of account, legal agreements, bank records, invoices and contracts etc.).
The auditor will have a right of access to banks and depositories, consultants, contractors and other persons or companies engaged by TAF over the period under the audit review.
Relationship of the parties
The external auditor will be appointed as an independent contractor by the Asia Foundation.
All necessary travel and logistics within Timor-Leste will be organized and funded by TAF in consultation with the external auditor.
Following preliminary meetings with TAF and DFAT, the selected auditor will deliver to DFAT and TAF:
- Comprehensive and separate financial audit report and management letter for the project accounts, including accuracy of six-monthly and annual progress reports to DFAT which include the program’s financial status. The audit report and management letter must be prepared in English.
- Comprehensive review of revised Year 2 financial report (covering the period between July 2014 and June 2015) to ensure revised financial statements detailing AUD $232,977 in previously unreported expenses were accurately billed to the project as per the project agreement.
- Detail any interest earned on the grant tranches paid by DFAT to TAF. According to clause 4.4 of the Agreement: “the Grant and any interest earned or exchange rate gains must be used diligently and for the sole purpose of the Activity…Any interest earned or exchange rate gains made on the Grant must only be expended on the Activity”.
- Review the Register of Activity Assets referred to in clause 6.4 of the Agreement.
- A draft audit report should be submitted by 12 June 2017 and a final signed audit report with certified statements and a management letter by 27 June 2017.
- The management letter should describe any weaknesses in the internal controls and operations, together with proposed remedies. The external auditor should gather sufficient audit evidence to substantiate in all material respects the accuracy of financial statements, and clearly indicate the auditor’s opinion.
Supervision: The Auditor will be supervised by the Finance Manager of The Asia Foundation.
Required qualifications and experience
The external auditor should be a qualified auditor, state-authorized, chartered or certified accountant, experienced in applying ISAs, whichever is applicable for the audit.
The auditor must employ adequate staff with appropriate professional qualifications and suitable experience with the relevant standards.
Curriculum vitae (CVs) should be provided to The Asia Foundation by the principal of the audit institution who would be responsible for signing the opinion, together with the CVs of key personnel proposed as part of the audit team.
Expression of interest
Expressions of interest must be submitted no later than 19 May 2017 at 5PM containing the following information:
• Cover letter outlining the proposed audit team and prior relevant experience and contact details of two referees
• CVs of the principal of the audit institution responsible for signing the opinion, and proposed key personnel
• Copy of the audit institution’s current registration certificate
• Financial proposal
Applications should be submitted to Dian Wahyu Saputri, via email dian.saputri@asiafoundation.