Terms Of Reference For BMZ Project Financial Audit - Central African Republic

Introduction

Tearfund (TF) is a Christian charity which partners with churches in more than 50 of the world’s poorest countries. We tackle poverty and injustice through sustainable development, by responding to disasters and challenging injustice. We believe an end to extreme poverty is possible. Tearfund wishes to engage the services of an audit firm for the purpose of auditing the project: "Project to consolidate peace in Lobaye through resilience-building interventions in WASH, social cohesion and livelihoods", funded by the German Federal Ministry for Economic Co-operation and Development (BMZ): Structural transitional aid. The project-based audit shall be carried out in accordance with international audit standards issued by ISA. The audit shall be carried out by an external, independent, local, and qualified auditor.

2 . Project information

Project name: Project to consolidate peace in Lobaye through resilience-building interventions in WASH, social cohesion and livelihoods Project ref no. 2022.1807.1 / 502 E6050 CAF-0023/001 Project audit period: Year 1: 16.11.2022 – 31.12.2022 with spending period extended until 30.04.2023 Year 2: 01.01.2023 - 31.12.2023 Total expenditure(euro): 1,225,000 (one-million-two-hundred-twenty-five thousand Euro), Location of the audit: TF Central African Republic Country Office in Bangui

3. Scope of the audit

• The auditor would carry out the audit of the project in accordance with the International Standards on Auditing (ISA), the International Standard on Assurance Engagements (ISAE) 3000 and the International Standard on Quality Control (ISQC), all in their most recent version. The Auditor designs and carries out the audit in accordance with the objective and scope of this set of rules and the procedures. The Auditor may apply techniques such as inquiry and analysis, (re)computation, comparison, other clerical accuracy checks, observation, inspection of records and documents, inspection of assets, obtaining confirmations or any others deemed necessary in carrying out these procedures. The audit of the project(s) will include such tests and auditing procedures to the extent the auditor considers necessary under the circumstances. The auditor obtains sufficient appropriate verification evidence from these procedures to be able to draw up a report of factual findings. The auditors are to be obliged to draw up their audit report in accordance with the model provided by BMZ. Special attention should be paid by the auditor as to whether:
• all applicable relevant BMZ rules and regulations and contractual engagements have been adhered to:
• Cooperative agreement
• Administrative Procedures
• BMZ Standards for reporting
• Approved budget (cost Plan)
• funds have been provided and used in accordance with the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which they were provided; Project funds transferred to the project partner in the current budget year or during the project term; interest earned in the current budget year or during the project term from project funds transferred to the project partner
• goods, works and services financed have been procured in accordance with the relevant financing agreements, including specific provisions of Tearfund Central African Procurement Policies and Procedures
• all necessary supporting documents, records, and accounts have been maintained in respect of all project activities. Accounting records are correct and complete
• The auditor is also expected to verify that respective reports issued during the period were in agreement with the underlying books of account
• National laws and regulations have been complied with, and that the financial and accounting procedures approved for the project (e.g. financial procedures manual, etc.) were followed and used; this applies as well to personnel costs and social security contributions which are to be in line with local standards, legal in the respective project country and, above all, that they comply with contracts and that the contributions required by law are being withheld
• verifying that the cost plan is being adhered to by means of a comparison of objectives and effects
• assets procured from project funds exist, and there is verifiable ownership and appropriate use by the Tearfund office. In complying with International Standards on Auditing, the auditor is expected to pay particular attention to the following matters: i) Fraud and Corruption: Consider the risks of material misstatements in the financial statements due to fraud as required by ISA 240: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements. The auditor is required to identify and assess these risks (of material misstatement of the financial statements) due to fraud, obtain sufficient appropriate audit evidence about the assessed risks; and respond appropriately to identified or suspected fraud; ii) Laws and Regulations: In designing and performing audit procedures, evaluating and reporting the results, consider that noncompliance by the TF CAR Office abroad with laws and regulations may materially affect the financial statements as required by ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements; iii) Governance: Communicate audit matters of governance interest arising from the audit of financial statements with those charged with governance of an entity as required by International Standard on Auditing 260: Communication of Audit Matters with those Charged with Governance: iv) Risks: In order to reduce audit risk to an acceptable low level, determine the overall responses to assessed risks at the financial statement level, and design and perform further audit procedures to respond to assessed risks at the assertion level as required by Internal Standard on Auditing 330: the Auditor’s Procedures in Response to Assessed Risks. v) Advances: Travel advances and personal advances to local staff and expatriate staff

I. Audit report

• The auditor will issue an opinion on the project financial statements (PFSs). The annual audit report of the project accounts should include a separate paragraph highlighting key internal control weaknesses and non-compliance with the financing agreement terms. The addressee of the audit report is the authorised representative of the project holder as well as the country representative. The audit report should be a comprehensive assessment of the adequacy and effectiveness of the accounting and overall internal control system to monitor expenditures and other financial transactions. The report of the external audit must include the following:
• Presentation of the audit assignment and scope with extensive comments on the audit findings. The auditor must also state which documents were used for the audit of appropriate use of funds and compliance within the project term
• Recommendations in case of complaints
• Comment on how audit observations from previous years were followed up on, if required
• Deviations of actual expenditure from the planned expenditure in the most recent budget that exceed 30% of individual budget items, must be explained and reasoned
• Deviations of actual expenditure from the planned expenditure in the current budget that exceed 30% of individual budget sub-categories, and reasons must be given
• The final audit opinion in the audit certificate must state the following (minimum requirement), which is to be worded clearly by the external auditor and adapted if appropriate:
• Provide specific statements on the following questions:
• To what extent has all income and expenditure been properly documented by means of receipts?
• To what extent has documented expenditure complied with its application and project approval and to what extent is it in keeping with the appointed purpose and the most recent budget? Have any deviations from the most recent budget been explained separately?
• To what extent has documented income, that is accounted for as contributions made by the local project partner, the target group and/or other agencies in the project country, been specified correctly and its origin explained in accordance with specifications?
• To what extent were the donor’s conditions that were specified in the project agreement met? What response was there to these conditions? Which of these conditions were not adhered to, and what reasons were given for this?
• Which special aspects – positive or negative – should be mentioned with regard to this project? The audit certificate should draw a clear conclusion regarding adherence to the binding arrangements made in the project agreement. If there are no findings, this must also be explicitly mentioned in the report. Audit certificates can be submitted in German, English, French and Spanish. If the audit certificate is not provided in either English or German, the key findings (especially audit findings, including complaints and recommendations) and the final audit opinion must be translated into German. This translation can be included in the narrative report on the fund utilisation report together with the required evaluation of the audit certificate. Any audit certificate in a language other than the aforementioned must be translated in its entirety into German or English

II. Management Letter

In addition to the audit report, the auditor will prepare, a management letter, in which the auditor will: a) Give comments and observations on the accounting records, systems and controls that were examined during the course of the audit; b) Identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement; c) Report on the degree of compliance in the financing agreement and give comments, if any, on internal and external matters affecting such compliance; d) Communicate matters that have come to his/her attention during the audit which might have a significant impact on the implementation of the project; e) Give comments on the extent to which outstanding issues/qualifications issues have been addressed; f) Give comments on previous audits’ recommendations that have not been satisfactorily implemented; and g) Bring to the recipient’s attention any other matters that the auditor considers pertinent. h) Express an opinion as to the reasonableness of the financial statements in all material respects. k) Verifying the cost-effectiveness of expenditure with regard to financial resources

Time frame

• The auditing process shall be completed within 4 weeks. It should start on the 12th October 2026 and end by the 10th November 2026
• Two copies of the audited financial statements, including the audit report, management letter, and management response, should be received by the audited Tearfund office no later than one week after completion of the audit, on 17th November 2026

III. Closing meeting

After the completion of the financial audit engagement, but before leaving the project ,the auditor shall hold a closing meeting with the persons responsible for the project/program (directors) and the staff responsible for accounting and reporting. The meeting shall address the results of the audit, discuss major weaknesses in the project, administrative and financial management (including the deficiencies of individual staff members) and propose recommendations to improve the project management, the accounting procedures and the internal control system (ICS).

Requirements for the External Audit Firm

• The firm should be approved by the country’s accounting regulatory body
• The firm must have at least two partners
• The partners should be in good standing with the accountant’s professional body
• The firm should have been in practice for a period of not less than 5 years
• The partners must be full-time practitioners
• The firm must have a physical address and valid practising licences
• The firm must have five years’ experience in audit of Not-for-Profit organisations (local and international)
• The firm must demonstrate sufficient quality control measures
• The firm must have at least three referees who must be its clients
• A detailed company profile showing the list of clients

Evaluation Criteria

• Bidder’s proposals will be evaluated against the nine categories listed below\\:\\
• Years of experience
• Previous experience in a in fragile context
• Experience of the lead and technical staff
• Experience with NGO working in a consortium or other similar arrangements
• Experience with similar assignments with INGOs
• Quality of the technical proposal
• Turnaround period (Audit timeline)
• Experience monitoring BMZ-funded projects
• Price point

Mandatory requirements

• Provide a certified copy of a certificate of business registration, Certificate of incorporation, business licence or similar document
• Provide a certified copy of tax registration, tax clearance certificates or similar documents
• Provide information on ownership structure (Name of directors of the company / Owner)
• Provide references from previous clients for similar works

Financial requirements

• The audit fees will be fixed through a competitive bidding process. The Financial Proposal should include the following
• Assignment cost in Euro
• Payment terms

Application process

All interested bidders/consultants are requested to submit their Technical Proposals and Financial Proposals in separate documents as attachments to car.procurement@tearfund.org, copying samuel.lugo@tearfund.org on or before 24 September 2026. The submitted documents should be in English.

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