Vacancy: Call For An External Auditor
TERMS OF REFERENCE
AUDIT OF PROJECT FINANCIAL STATEMENTS
Mukuru Youth Initiative
1. Introduction
These Terms of References (ToR) cover the annual audit of the financial statements for the Sauti Za Mtaa Project in Kenya. The audit includes both the financial audit as well as the compliance and performance audit of the project.
The audit will cover the financial statements for the period 1st January 2023 to 31st December-2023 presented as per the financial statements template applicable to ForumCiv projects.
2. Background
Mukuru Youth Initiative a community art based organization that is committed to enhance the community engagement in decision making, development and service delivery within the community, through the Sauti za Mtaa project we amplify community voices through arts and also ensure duty bearers listen to the community needs for a greater and more developed and successful community
3. Objective
The primary goal of this audit is to offer an impartial assessment of the financial statements presented by Mukuru Youth Initiative for the Sauti Za Mtaa project. By delivering an opinion on the financial statements and presenting findings and observations, the auditing firm contributes to the organization upon which Mukuru Youth Initiative will evaluate adherence to applicable legislative and regulatory standards.
The financial audit aims to ascertain the following:
1. Verify the absence of significant misstatements in the financial statements related to funds received from ForumCiv.
2. Confirm that the grant funds were utilized for their designated purpose.
3. Ensure that the transactions outlined in the financial statements align with the granted appropriations, statutes, other regulations, agreements, and customary practices.
4. Evaluate whether the systems, processes, or transactions under scrutiny contribute to the effective implementation of prudent financial management in the administration of funds received through ForumCIV.
4. Accounting Standards
The financial statements will be crafted using the accrual basis of accounting, adhering to the guidelines outlined by the International Financial Reporting Standards, the International Auditing and Assurance Standards Board, or equivalent national accounting standards.
5. Deliverables
5.1 The Independent Audit Report
The conclusions drawn from the financial audit must be articulated through the independent auditor’s opinion, aligning with applicable International Standards on Auditing (ISA) and making specific reference to these Terms of Reference (ToR). The auditor’s opinion should encompass the following components:
- An expression of the auditor’s opinion regarding the financial statements, attesting to whether they have been prepared in all material respects in accordance with the applicable financial provisions.
- Identification of the audited financial statements, including details such as the title of the activity and the financial period under consideration.
- A mention of the accounting policies employed in the preparation of the financial statements.
- Explicit reference to these Terms of Reference as the basis for conducting the audit.
Any qualifications, if necessary, should be articulated clearly, using appropriate headings in conformity with the relevant International Standards on Auditing (ISAs).
5.2 The Management Letter
Findings or observations that, while not materially impacting the financial statements as a whole, are deemed relevant to either management or ForumCiv should be documented in a management letter. These findings or observations may encompass, but are not limited to:
- Weaknesses and issues identified in accounting and internal control systems, encompassing irregularities in the use of grant funds, eligibility concerns in expenditures, and deficiencies related to procurement.
- The auditor’s evaluation of the causes of the identified weaknesses and issues, accompanied by recommendations for improvement or rectification.
- The responses of Mukuru Youth Initiative to the identified weaknesses and issues, including explanations of their causes, proposed action plans to address concerns, and timelines for completion.
- The current status of weaknesses and issues previously identified and reported in earlier periods.
- Any persisting or recurring issues and weaknesses, along with actions taken in response.
- Matters that the auditor deems pertinent or significant in terms of their potential impact on implementation.
The management letter shall, for each finding or observation, include:
• A description of the finding or observation with indication of severity or risk level
• Description of the effect or risk derived from the finding or observation.
• Recommendations to address the finding or observation.
• Management’s comments on the effect or risk as well as the recommendations.
5.3 The Auditors Report
The conclusions derived from the compliance and performance audit must be outlined in the audit report, which should be crafted in accordance with the relevant International Audit and Assurance Standards Board (IAASB) and explicitly reference these Terms of Reference (ToR). The audit report should encompass the following key elements:
- Conclusions pertaining to specific audit questions or procedures.
- Identification of the audited financial statements, providing details such as the title of the activity and the financial period under consideration.
- A description of the audit scope, inclusive of any limitations, and an overview of the key procedures undertaken during the audit process. This should provide stakeholders with a clear understanding of the extent and focus of the audit activities.
6. Scope
The audit encompasses both financial and compliance and performance aspects. The financial audit must strictly adhere to the International Standards on Auditing (ISAs). While alternative auditing frameworks are acceptable, they should ensure an equivalent audit quality to that planned and executed in accordance with ISAs and the International Federation of Accountants (IFAC). To achieve this, the audit company is required to:
- Identify and assess the risks of material misstatements in the financial statements, arising from either fraud or error. Subsequently, the auditor must design and execute pertinent audit procedures to acquire adequate and appropriate evidence, forming the basis for the auditor’s opinion.
- Gain a comprehensive understanding of the internal controls relevant to the audit, not to express an opinion on their effectiveness but to design appropriate audit procedures. The focus here is on determining whether these controls are related to the project costs.
- Evaluate the appropriateness of the accounting policies employed in the financial statements, scrutinizing the reasonableness of estimates and associated disclosures. Particularly crucial in the context of funds granted through ForumCiv is the examination of accounting policies related to project costs.
7. Auditor’s Qualifications.
The auditor must fulfill the following minimum requirements:
- The auditor must be a legal entity operating in Kenya, possessing a valid business license issued by the appropriate authority.
- The auditor should be a member of a professional body affiliated with the International Federation of Accountants (IFAC) and the Institute of Certified Public Accountants of Kenya (ICPAK).
- The auditor, or their audit staff, must have adequate and relevant professional and educational qualifications. Alternatively, the auditor should have the ability to provide audit staff with the necessary qualifications, experience, and competence.
- The auditor must demonstrate technical competence and be capable of conducting audits in accordance with established auditing standards.
- The auditor must maintain objectivity and independence from the project, its staff, activities, and all aspects of the management or financial interests of Mukuru Youth Initiative.
- The auditor should have a proven track record in conducting financial audits of NGO projects, or audits of similar nature, type, and complexity, especially those related to donor-funded projects.
Application procedure
Interested candidates/institutions should submit a technical and financial proposal.
Applications should be submitted to info@mukuruyi.org with the subject line:PROJECT AUDIT on or before 12th January 2024.
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