TERMS OF REFERENCE FOR EXTERNAL AUDITOR

Background

Health Development Initiative, hereafter referred to as the “Cooperation partner” wishes to engage the services of an audit firm for the purpose of auditing its financial statements, as stipulated in the agreement between the Cooperation partner and its core funders. The audit shall be carried out in accordance with international audit standards (ISA) issued by IAASB. In addition, an assignment according to International Standards on Related Services (ISRS) 4400 (Revised) shall be carried out. The audit and the additional assignment shall be carried out by an external, independent and qualified auditor.

Objectives

The objective is to audit the financial reports for the period January 01, 2024 to December 31, 2024 and to express an audit opinion according to ISA, applying ISA 800/ISA 805, on whether the financial reports of the Cooperation Partner is in accordance with the accounting records and donor requirements for financial reporting as stipulated in the partnership agreements.

Additional assignment;

Reviewthe following areas,according to agreeupon procedures ISRS 4400 (Revised).

Mandatory procedures that must be included:

• Observe whether the financial report is structured in a way that allows for direct comparison with the latest approved budgets.
• Observe and inspect whether the financial report provides information regarding:
• Financial outcome per budget line (both incomes and costs) for the reporting period and columns for cumulative information regarding earlier periods under current agreement.
• When applicable, compare if the opening fund balance for the reporting period matches with what was stated as closing fund balance in the previous reporting period.
• A disclosure of exchange gains/losses. Inquire and confirm whether the disclosure includes theentire chain of currency exchange from donors’ disbursement to the handling of the project/programme within the organization in local currency/Rwf, if applicable.
• Explanatory notes (such as, accounting principles applied for the financial report).
• Inquire and inspect with what frequency salary costs during the reporting period are debited to the projects/programmes.

Choose a sample of three individuals for three different months and:

• Inquire and inspect whether there are supporting documentation for debited salary costs.
• Inquire and inspect whether actual time worked is documented and verified by a manager. Inquire and inspect within which frequency reconciliations between debited time and actual worked time is performed.
• Inspect whether the Cooperation partner comply with applicable tax legislation with regard to personal income taxes (PAYE) and social security fees.
• Inspect and confirm that the unspent fund balances (according to the financial report) at the end of the financial year is in line with information provided in the accounting system and/or bank accounts.

The reporting

• The reports shall be signed by the responsible auditor (not just the audit firm) and shall include the title of the responsible auditor.
• The reports from the auditor shall include an independent auditor’s report in accordance with the format in standard ISA 800/805 and the auditor’s opinion shall be clearly stated.
• The financial report that has been the subject of the audit shall be attached to the audit report.
• The reports shall also include a Management letter that discloses all audit findings, as well as weaknesses identified during the audit process.
• The auditor shall make recommendations to address the identified findings and weaknesses.
• The recommendations shall be presented in priority order and with a risk classification.

Measures taken by the Cooperation partner to address weaknesses identified in previous audits shall also be presented in the Management Letter. If the previous audit did not have any findings or weaknesses to be followed-up on, a clarification of this must be disclosed in the audit reporting.

If the auditor assesses that no findings or weaknesses have been identified during the audit that would result in a Management Letter, an explanation of this assessment must be disclosed in the audit reports.

Reporting from the ISRS 4400 (Revised) assignment. The additional assignment according to agreed upon procedures ISRS 4400 (Revised) under section III, shall be reported separately in an “Agreed-upon procedures report”.

Performed procedures should be described and the findings should be reported in accordance with the requirements in the International Standardon Related Services 4400 (Revised).

When applicable, the sample size shall be stated in the report.

Duration and timing of the audit

The audit work is planned to commence on 17 February 2025 and final signed project audit reports will be submitted by 24 March 2025.

Expression of interest should be sent on email: finance@hdirwanda.org, info@hdirwanda.org on or before 25, October 2024. For further clarification or enquiries contact the following 0788287714 or 0785227523.