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| Provision of Independent Auditor for EQSI Project |
Provision of Independent Auditor for EQSI Project
Yayasan Kalla
1. Background
This project entitled “Economic, Quality, and Sustainability Improvement from Community Centered Cocoa Fermentation Stations, Diversified Agro-Forestry and agribusiness systems and social development programs” (abbreviated and further call EQSI Project) is being implemented as a consortium.
The consortium consists of three members who have signed a Cooperation Agreement MOU:
Foundation Kalla (Lead Partner), a foundation domiciled in Makassar.
PT, Kalla Kakao Industry, a national industry’s corporation located in Kendari, Southeast Sulawesi
Institute of economic welfare Society (Lembaga Ekonomi Masyarakat Sejahtera, an NGO of village farmer collectives coordinated under Dinas Perkebunan, Sulawesi Tenggara), known as LEMS.
Yayasan Kalla is in need an independent auditor to conduct audit works as detailed in this Term of Reference. An auditor should be a firm or company has legal audit license.
The Interested company, please send audit proposal, indicating work schedule, audit price, and the number of auditors to be deployed to Kendari, indicating in email subject: Audit Proposal_Name of Company_Yayasan Kalla. Proposal to be sent to Procurement Dept EQSI Project, Todi Heryanto – todiheryanto@eqsiyayasankalla.org or heryantodi@gmail.com and cc to yatiesaloh@gmail.com not later than August 4th, 2017.
2. Objective of the project:
- Reforesting 7000 ha of degraded lands and improving hydrologic conditions via community “greening programs” and air-seeding in difficult terrain.
- Training around 7000 farmers, farm workers, and community folks to improve agricultural practices.
- Promoting agro-ecologic, agroforestry intercropping on cocoa farms covering 10,000 hectares for income generation and equity within rural communities.
- Providing 3 community-based fermentation centers to improve farmers access to the market.
3. The objective of Audit:
Conduct independent third party audit on EQSI Project documents and administrative documents implemented by Yayasan Kalla, under partnership funding with MCA-Indonesia, representing Millennium Challange Corporation (MCC) support.
4. The scope of audit works:
The audit of the project will be carried out in accordance with Indonesia Accounting Standard and will include such tests and auditing procedures as the auditor will consider necessary under the circumstances. Special attention should be paid to the auditor as to whether the:
- MCA-Indonesia financing (and all external financing where the MCA-Indonesia is not the only financier) has been used in accordance with the conditions of the relevant financing agreement, with due attention to economy and efficiency, and only for the purposes for which the financing was provided.
- Proponent contribution funds have been provided and used in accordance with the relevant grant agreement and MCA-Indonesia Procurement Guideline.
- Goods, works, and services financed have been procured in accordance with the relevant grant agreement and MCA-Indonesia Procurement Guideline.
- All necessary supporting documents, records, and accounts have been maintained in respect of all project activities, including in financial reports. The auditor is expected to verify that respective reports issued during the period.
- Designated accounts (if used) have been maintained in accordance with the provisions of the relevant financing agreements and funds disbursed out of the accounts were used only for the purpose intended in the financing agreement;
- Ineligible expenditures included in withdrawal applications are identified and reimbursed to the Designated Accounts. These should be separately noted in the audit report.
In complying with International Standards on Auditing, the auditor is expected to pay particular attention to the following matters:
Fraud and corruption
Laws and regulations
Governance
Risks.
5. Project Financial Reports
The auditor should verify that the project MCA-Indonesia’s have been prepared in accordance with the agreed accounting standards and give a true and fair view of the financial position of the project at the relevant date and of resources and expenditure for the financial year ended on that date
The project financial reports that need to be verified should include the following components:
- Bank Activity (USD and IDR)
- Budget vs Actual
- Expenditure Detail
- Expenditure Proponent
- Financial Report
- Asset Management Plan
6. Designated Account (DA)
In conjunction with the audit of the Project MCA-Indonesia’s, the auditor is also required to review the activities of the Designated Account (DA) associated with the project.
The auditor should examine the eligibility of financial transactions during the period under examination and fund balances at the end of such a period, the operation and use of the Das in accordance with the relevant general conditions, relevant to MCA-Indonesia Financial Management Guideline, and the adequacy of internal controls for this type of disbursement mechanism.
The auditor should also examine eligibility and correctness of:
- Financial transactions during the period under review;
- Account balances at the end of such a period;
- The operation and use of the Designated Account in accordance with the financing agreement; and
- The adequacy of internal controls for the type of disbursement mechanism.
7. Audit Report
The auditor will issue an opinion on the project financial reports. The audit report of the project accounts should include a separate paragraph highlighting key internal control, compliance with the grant agreement, and proponent contribution commitment.
The financial reports should consist the following:
- A statement of financial position;
- A statement of financial performance (income and expenditure statement (IES) showing MCA-Indonesia funds received, any other grant related income received and MCA-Indonesia fund expenditures.
- Grant expenditures should be reported against the budget as defined in the grant agreement for the period of the audit.
- A listing of assets purchased with grant funds
- A statement of expenditure from proponent contribution.
8. Management Letter
In addition to the audit report, the auditor will prepare a management letter, in which the auditor will:
- Give comments and observations on the accounting records, systems and controls, and make recommendations for their improvement;
- Identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement.
- Report on the degree of compliance of each of the financial covenants in the financing agreement and give comments, if any, on internal and external matters affecting such compliance;
- Communicate matters that have come to his/her attention during the audit which might have a significant impact on the implementation of the project.
- Give comments on the extent to which outstanding issues/qualifications issues have been addressed.
- Give comments on previous audits’ recommendations that have not been satisfactorily implemented; and
- Bring to the grantee/implementer’s attention any other matters that the auditor considers pertinent, including ineligible expenditures.
The management letter should also include responses from the implementing agency to the issues highlighted by the auditor.
9. Time and Venue of the audit:
Kendari, 13 – 16 November 2017
10. Auditor Criterion
- Audit firm with relevant legal identity under Indonesian’s law.
- Have experience doing an audit for non-profit organization or project at least 5 years.
11. Audit Report
The audit report will be made according to the report requirements as detailed in section 7 and 8 of this terms of reference.