Term of Reference for Annual Audit FY 081/082

Term of Reference for Annual Audit FY 081/082

1. Background:

Panchtara Yuwa Samrakshak Manch (PTYSM) is a non-governmental, non-profit humanitarian and development organization established in 1997. It is registered with the District Administration Office, Jajarkot and affiliated with the Social Welfare Council of Nepal. PTYSM is led by a committed team of development professionals and social workers with extensive experience in rural development. The organization primarily operates in Karnali Province and focuses on improving food security, nutrition, sustainable livelihoods, education, disaster risk reduction (DRR), humanitarian response, protection, and disability inclusion among marginalized communities. PTYSM is guided by its core values of equity, inclusion, and resilience, with a strong emphasis on ensuring meaningful participation and benefit for women, disadvantaged groups, and persons with disabilities.

PTYSM hereby invites proposals from eligible and qualified Chartered Accountancy firms to conduct its Annual Statutory Audit for the fiscal year 2081/82 (corresponding to 2024/25).

2. Objective of the Audit

The objective of the audit is to obtain an independent auditor’s opinion on the financial statements of PTYSM for the fiscal year 2081/82, assess the effectiveness of the internal control system, and verify compliance with applicable laws, donor agreements, and the organization’s internal policies and procedures.

3. Performance Period and financial figure for Audit.

The audit will cover the financial period from 1 Shrawan 2081 to 31 Ashad 2082 (17 July 2024 – 15 July 2025). The total figure for audit is approximately 195000000.

4. Scope of Work

The audit will encompass the overall financial and operational management systems of PTYSM’s central and field office. Key areas include Finance, Procurement, Asset Management, Cash Handling, Human Resources, and General Administration. The scope of the audit shall include, but not be limited to, the following:

General

• Obtain and examine all relevant documentation, including accounting records, inventory lists, fixed asset registers, personnel files, and any other materials deemed necessary for the audit.
• Verify that expenditures at both central and field levels were incurred with proper supporting documentation, are within approved budgets, and were used reasonably for program implementation.
• Conduct a financial audit of grants received from funding partners, including the fairness and reliability of financial reporting.
• Ensure that financial and physical resources have been utilized in accordance with applicable rules, donor guidelines, and in a cost-effective and efficient manner.
• Assess compliance with project agreements and verify the accuracy and completeness of financial reporting.
• Evaluate compliance with the Income Tax Act, 2058, and other applicable laws and regulations.
• Compare budgeted vs. actual expenditures as per project agreements and Detailed Implementation Plans (DIP).
• Assess the status of VAT refund claims for relevant projects, if applicable.
• Review the internal audit reports and analyze their recommendations and follow-up actions.
• Prepare a comprehensive Management Letter highlighting:
  • Observations on the systems, procedures, and internal controls.
  • Identified weaknesses and actionable recommendations for improvement.
  • Implementation status of previous audit recommendations.
  • Potential risks affecting organizational sustainability.
  • Any other critical matters requiring the attention of management.

Fixed Asset Management System

• Verify that the procurement of fixed assets complies with PTYSM’s financial and procurement policies.
• Review internal control systems related to procurement, usage, and disposal of fixed assets.
• Physically verify the existence of fixed assets as listed in the asset register.
• Review vehicle logbooks and fuel consumption records to ensure proper utilization aligned with mileage and distance covered.

Human Resource Management System

• Assess the organization's compliance with HR policies, specifically in the areas of recruitment, performance appraisal, and termination.
• Verify personnel records, attendance sheets, timesheets, leave balances, and leave encashment details for accuracy and completeness.

5. Deliverables

The selected audit firm shall provide the following deliverables:

• Independent Auditor’s Opinion on PTYSM’s financial statements for FY 2081/82.
• Audited Financial Statements including relevant schedules and disclosures.
• A Management Letter summarizing findings, issues identified, and recommendations for improvement.
• Conduct an Exit Meeting with PTYSM management to present key findings and clarify queries or concerns.

6. Duration of Audit: The audit work shall be completed within two weeks from the date of commencement of the audit.

7. Qualification and Experience of Audit Firm

Interested audit firms must meet the following criteria:

• Be a registered Chartered Accountancy firm with the Institute of Chartered Accountants of Nepal (ICAN).
• The engagement partner must be a qualified Chartered Accountant.
• Possess a minimum of five years of experience in auditing donor-funded projects, especially those implemented by NGOs, INGOs, or development agencies.
• Provide copies of valid business licenses, including VAT and firm registration certificates.
• Submit the latest tax clearance certificate.
• Demonstrate a proven track record of satisfactory performance with relevant references.
• Have adequate organizational capacity, internal systems, and technical expertise to carry out the assignment efficiently.
• Be eligible under Nepalese laws and committed to compliance with PTYSM’s safeguarding policies.

8. Evaluation Criteria

• Technical Approach (30 points)- Clarity and depth in the proposed methodology and understanding of the assignment, demonstrating alignment with the scope of work and expected deliverables outlined in the ToR.
• Professional Experience of the Team (10 points)- Academic qualifications and professional expertise of the proposed team members relevant to the assignment, including their roles and responsibilities.
• Experience of the Firm/Organization (10 points)- Demonstrated experience in conducting similar audits, client satisfaction, and the availability of adequate human and physical resources to ensure successful and timely delivery.
• Costing (50 points)- Value for money, relevance of the cost in relation to the technical proposal, and justification of budget estimates as per the terms of reference and scope of work.

9. Proposal Submission Checklist:

Interested firms are required to submit their financial and technical proposal separately including the following documents:

A technical proposal including:

• Description of how your skills and experience match the TOR requirements.
• Proposed methodology
• CV of key personnel proposed as part of the audit team
• Profile of the firm
• Firm Registration Certificate with renewal
• Latest Tax clearance certificate
• Financial proposal: Including a detailed budget sheet with breakdowns.

The proposals must be submitted at ptysm.procurement@gmail.com by 15 Shrawan 2082 (30 July 2025). For any queries or clarifications regarding this ToR or the proposal process, please contact: PTYSM Office: 089-594068 or 9846084149.