Humanitarian Project Auditing at Jesuit Refugee Service (JRS)

The Jesuit Refugee Service

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Humanitarian Project Auditing
Humanitarian Project Auditing at Jesuit Refugee Service March, 2024

The Jesuit Refugee Service Tanzania, an international humanitarian organisation, is seeking a registered qualified audit firm, preferably with relevant non-profit sector expertise, to conduct external audit services for a humanitarian project funded by the Basque Agency for Development Cooperation (BADC) covering the period of 1^st September 2022 to 30^th November 2023. In addition to this, the Jesuit Refugee service wishes to conduct the general audit for all its accounts and projects from 1^st January 2022 to 31^st December 2022.

The audit shall be carried out in accordance with the International Standards on Auditing and carried out by an external, independent and qualified auditor. It shall take into consideration the specific requirements of the BADC, entity funding the project.

I would like to invite your firm to submit a proposal to us by Friday 15^th March 2024, for consideration. A description of our organization, the services needed, and other pertinent information follows:

Terms of Reference for the External Auditor

Table of Contents:

1. Background
2. Audit Scope
3. Audit Report and Management Letter
4. Responsibility for preparation of Financial Statements and reports to BADC donor
5. Auditor independence and qualification
6. Timeframe
7. Selection Criteria
8. Inquiries

1. Background

The Jesuit Refugee Service (JRS) is an international Catholic organisation with a mission to accompany, serve, and advocate on behalf of refugees and other forcibly displaced persons, that they may heal, learn, and determine their own future. Our work expresses the commitment of the Society of Jesus  (the Jesuits) to stand with refugees around the world.

The Jesuit Refugee Service Tanzania is a non-profit organisation and the period to be audited has an operating budget of approximately 1,120,000,000 TZS, we employ 14 people in 3 locations (Kibondo, Kasulu and Dar Es Salaam).

Our main programs are in Education in Emergencies and Mental Health and Psychosocial Support. Our main sources of revenues are from public donors, and the main project to be audited is funded by the BADC, a Spanish public donor. The 2022 financial accounts, including other projects from private donors, will also be audited.
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1. Audit Scope

The objectives of the audit are:

– the review of the final supporting account of a grant awarded by the BADC to the Jesuit Refugee Service Tanzania during the period of 1^st September 2022 to 30^th November 2023

– the expression of an independent professional opinion as to whether the financial statements for the period from 1^st January 2022 to 31^st December 2022 present fairly, in all material respects, the financial position of JRS Tanzania.

 Review of the project funded by the BADC (grant of 184 000 euros)

  The auditing company shall prepare an exhaustive report on the matter. Specifically, it must verify the result of the verification of the financial reports and its correspondence with the narrative reports and reflect it in the report, for which purpose it shall review the following documents:

1. Narrative reports: activities carried out (foreseen and unforeseen) and their corresponding verification sources.
2. Financial reports in Excel format with the following information:
   1. Transfers and exchange operations carried out
   2. Balance of financial execution (execution %)
   3. Summary of the grant status
   4. List of supporting receipts per budget item, ordered chronologically, issued in the currency in which the payment was made
   5. Amount of the overhead costs charged to the grant, although they do not need to be justified

• Bank receipts for the sending and reception of funds

1. Currency exchange receipts
2. Bank statements of the specific bank accounts opened by JRS Tanzania
3. Bank statements of the specific bank accounts opened by the local partner, if any

• Authenticity certificate and deposit of the original justifications of expenditure
• If applicable, memos of supply deliveries and transfers or goods and inscriptions in public registries

1. Three offers from suppliers (explanatory reports if the cheapest one is not chosen) for services and supplies from €15,000 and works from €40,000.
2. Completed accrediting justifications for the expenditure carried out under the responsibility of the grant
3. Certifications of financial income generated

• Certificate stating whether or not other grants have been received
• If applicable, accreditation that indirect taxes are not recoverable, or if they are, they have not been recovered
• Authorisation or notification of substantial and non-substantial amendments according to “Directives” (objectives, results, location, local partner, subject population, period, budget)

The auditing company shall check the following:

1. That the objectives, results, location, local partner (if any) and subject population of the narrative report coincide with the approved intervention. If there have been amendments, that they have authorisation from the BADC.
2. That the period covered by the report is the period between the starting date and the end of the intervention. If there have been delays which have affected the carrying out of the intervention (more than 3 months), it shall check that the BADC has approved the substantial modification. If there were delays of less than three months, it shall check that the BADC has been notified.

• That the financial report coincides with the approved budget. If there have been deviations between categories that have affected the carrying out of the intervention (deviations in excess of 10% with regard to the budget and that are more that €15,000) it shall check that the BADC has approved the substantial amendment.

1. That the financial report covers the total expenditure that has been incurred.
2. That the proofs of expenditure presented are from the execution period, that they are in the currency in which the expenditure was made, and they are processed. The checking shall be done in accordance with the standard practices for auditing these materials. With regard to the proofs of staff expenditure, it shall check that they have contracts, payrolls, proof of social payments and taxes. If applicable, that it has been a part-time devotion.
3. That the expenditure charged corresponds to the activities reported in the narrative report and the corresponding sources of verification (photographic material; if applicable, the educational material produced, reproduced and disseminated with the intervention funds; if applicable, the attendance lists of people participating in workshops, meetings or other events organised with the grant funds; if applicable, evaluation).

• That the participation of the entities of the grouping in the execution of the expenditure is appropriate to that indicated in the standard form.
• That if interest has been generated, it has been added to the justified grant.

1. That subcontracting, if it has taken place, is in keeping with that established.
2. If the justified expenditure does not reach the total of the grant, that there are proofs of deposit in favour of the BADC without prejudice to that established in the closure resolution of the file.
3. Expenditure executed by the local partners, if any, shall not be required to be reflected in the accountancy registers of the entity that gained the subsidies.

• There is no requirement for the existence of expert valuation certification for the value of the goods inscribed in public registers, with the deed being sufficient to accredit the value.

The checking of different documentation for individual expenditure justification, which could be made on a spot-check basis, shall be exhaustive.

2. Audit of 2022 financial accounts

The audit must be conducted in accordance with International Standards on Auditing (ISA) issued by the International Federation of Accountants (IFAC).

The audit will give rise to all the verifications and controls that the auditor deems necessary in the circumstances. The examination will include all tests, confirmations, observations and verifications deemed necessary by the auditor.

During the audit, special attention must be paid to the following points:

1. Acquisitions of goods, works and services financed have been carried out in accordance with the provisions of the agreements and JRS’s administrative and financial procedures manual and have been correctly recorded in the books. Audits of procurement will include the tender documents, financial and technical offers for works or goods and supplies.
2. Appropriate supporting documents and accounting records relating to Project activities are kept. In this respect, the financial statements must reflect the contents of the accounting books;

• The adequacy and effectiveness of the accounting system and the internal control system as a whole have been assessed with a view to ensuring the proper execution of expenditure and financial transactions, the safeguarding of project assets and their use for project purposes and the absence of double-funding of project/programme expenditure;

1. Fraud and Corruption: the auditor shall identify and assess fraud risks, obtain or provide sufficient audit evidence of analysis of such risks and deal appropriately with identified or suspected fraud.

1. Audit Report and Management Letter

 Audit report and management letter will be emitted on financial statements for year 2022 and audit report and management letter for the project funded by BADC from 1^st September 2022 to 30^th November 2023 will also be produced.

1. Audit report: 2 audit reports will be produced. The final one for the BADC main project to be audited shall be drawn up in accordance with the Spanish order EHA/1434/2007, of 17 May, which approves the regulations of action for auditors in carrying out work on the auditing of grant supporting in the state public sector, particularly for BADC subsidies. The audit reports:
   1. Shall contain details of the method and scope of audit and assurance that the audit was performed in accordance with International Standards of Auditing and by a qualified auditor;
   2. Shall contain the audited annual Financial Statement;

• Shall be signed by the auditor responsible stating the title;

1. Shall be written in English;
2. Shall be issued in soft copy for circulation to JRS Directors and 02 signed hard copies will be produced and delivered to JRS Tanzania for approval, signing and filing.

2. Management letter: The Auditors should submit a management letter after the completion of the

audit in which auditors will:

1. Identify specific deficiencies or areas of weakness in systems and controls and make recommendations for their improvement.
2. Examine on test basis the appropriateness of supporting documents, records and books of accounts relating to all project activities. In this context the auditor shall ensure a verification coverage of:

100% of donations by value

70% of expenditure by value and between 1-1.5% of the rest by volume selected at random

100% of cash and bank balances by value;

• Include management responses to audit findings and recommendations;

1. Examine, assess and report on compliance with the terms and conditions of the agreement between funding partners and JRS Tanzania and applicable laws and regulations within accounting and taxes;
2. The auditor shall report the identified amount in case there are any missing supporting documents;
3. Any matters that come to the auditor’s attention during the audit that might have a significant impact on the Organisation;

1. Responsibility for preparation of Financial Statements and reports to BADC donor

The responsibility for preparation of the annual financial statements and the reports to BADC donor lies with the JRS Tanzania directors and management.

1. Management is responsible for implementation of accounting, administrative and financial procedures documented in the JRS Tanzania manuals and for preparing the reports to BADC and the annual financial statements in accordance with JRS policies.
2. Directors are responsible for overseeing the financial reporting processes undertaken by management and for the approval of financial statements.

• The JRS Tanzania financial year begins on 1 January and ends on 31 December. JRS Tanzania project to be audited runs from 1^st September 2022 to 30^th November 2023.

1. Auditor independence and qualification

• The auditor must be completely impartial and independent from all aspects of management or financial interests in the entity being audited. The auditor should not, during the period covered by the audit nor during the undertaking of the audit, be employed by, serve in a position for, or have any financial or close business relationships with any senior participant in the management of JRS Tanzania. The auditor should disclose any relationship that might possibly compromise his/her independence.
• The auditor must employ adequate staff with appropriate professional qualifications and suitable experience, including experience in auditing the accounts of entities comparable in size and complexity to JRS Tanzania.
• The audit firm must have at least five years’ experience of carrying out external audit.
• The audit firm must be registered in Tanzania and adhere to all legal requirements to operate in Tanzania.
• The audit firm must be registered by the relevant regulating accounting/Auditing body registered in Tanzania.
• The audit Team members should have working knowledge in Kiswahili languages, as some vouchers, receipts/additional reports and documents may not be available in English.
• Curriculum vitae (CVs) should be provided to JRS Tanzania by the principal of the audit institution who would be responsible for signing the opinion, together with the CVs of managers, supervisors and key personnel proposed as part of the audit team. CVs should include details on audits carried out by the applicable staff, including ongoing assignments indicating capability and capacity to undertake the audit and experience in auditing not-for-profit organisations.

Other key documents to be submitted along with Proposal are as follows:

• Company profile, structure, staff strength
• Past Audit experiences – list of NGOs/ organizations of external audit carried out.

1. Timeframe

Tentative timeframe for required service:

Activity	Duration	Date:
Planning, document requesting and open meeting	03 working/days	8-12 April 2024
Fieldwork	10 working /days	15-26 April 2024
Closing meeting and Report Compiling	05 working /days	29th April- 10th May 2024

1. Selection Criteria

JRS Tanzania will do the adjudication after the proposal submission deadline. In addition to the above

mandatory documents, the selection criteria will include the following:

1. Experience of your firm in relation to the scope of audits for not-for-profit organisation
2. A list of similar not-for-profit organisations served by your firm

• Your staff assignments and availability to complete the audit on a timely basis

1. Participation of senior audit personnel assigned to the engagement
2. Depth of Technical Resources (CV of the assigned team leader)
3. Availability of staff to respond to questions within the scope of the engagement and the hourly charge, if any, for services outside the scope of the audit

• Audit firm staff stability history – what assurances can you provide regarding the assignment of your permanent personnel to the engagement
• Proposed detailed methodology to deliver required services

1. Proposed fee for the engagement including a schedule for additional services that may be necessary beyond the scope of the audit engagement.
2. Detailed audit plan/methodology including your approach to risk and fraud detection
3. Estimated number of hours to complete the audit by classification of your employees, i.e. partners, senior, junior

• Detail of expenses expected to be incurred, i.e. mileage, per diem, telephone, etc.
• Time Requirements.

1. Proposal Submission

Proposal should be sent to JRS Tanzania by March 15^th 2024, 17:00 PM Tanzania Time through email at bdi-tz.hr@jrs.net

1. Inquiries

For any enquiry, please email to steve.shema@jrs.net by copying bdi-tz.hr@jrs.net not later than 14 March 2024 before 17:00 PM.

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