Terms of Reference (TOR) for Annual Audit - 2023

Terms of Reference (TOR) for Annual Audit - 2023

BACKGROUND

iDE (International Development Enterprises) is a nonprofit organization dedicated to ending poverty. With over 40 years of experience, iDE is a pioneer in market-based development. Our work within agriculture, sanitation, climate change resilience, and gender equality, stands out because we don’t simply provide handouts. Instead, iDE believes in powering small-scale entrepreneurs and building robust market ecosystems that lay the groundwork for low income and marginalized people to prosper on their own terms. iDE has almost 1,300 global staff, and offices in 10 countries across Africa, Asia and Central America.

iDE has been working in Nepal since 1992 from irrigation and good-quality seeds to, more recently, rural collection centers where farmers can sell their produce, we provide simple innovations that help rural communities get out of poverty and adapt to climate change. iDE believes markets are the most powerful tool for creating prosperity, building resilience, and ultimately ending poverty. 

OBJECTIVE OF THE AUDIT

The objective of the audit is to enable the auditor to express an independent opinion on the financial position, system of internal controls, compliance with agreement terms, applicable laws and regulations of International Development Enterprises Nepal of the funds received and expenditures, as reported by the financial statement and the books of accounts maintained for iDE Nepal.

PERIOD OF PERFORMANCE

The period of performance for the audit shall be January 01, 2023 to December 31, 2023.

SCOPE OF WORK

The audit shall cover the overall aspect of IDE NEPAL inclusive of Finance, Procurement, Assets Management, Cash Management, Human Resources, and General operation and to identify issues and areas for improvement. The scope of audit is, but not limited to the following :

GENERAL

• Obtain and examination of all relevant documents /information of account, inventory, fixed assets, personnel and other information deemed required necessary for the auditing purpose.
• Verify that the expenditures of iDE (Country Office and Regional office Nepalgunj ) have been incurred and payments have been made after obtaining proper supporting documents and are within the budget and expenditures are reasonably incurred for the implementation of the program.
• Accomplish financial audit of grant received from iDE HQ and Donors. Test of the accounts as to their fairness and reliability.
• Ensure that financial and physical assets and resources are used in accordance with instructions or regulations and in the most effective and economic manner.
• An assessment of the compliance of the project agreement and evaluation of the project report.
• Establishing the completeness, accuracy and regularity of expenditure and income as accounted for in the project reports.
• An assessment of compliance with the Income Tax Act, 2058 and other local rules and regulations applicable for the organization.
• Verification of the budgeted expenditure and the actual expenditure in accordance with project agreement and the Detailed Implementation plan (DIP).
• An assessment of the state of VAT Refund procedure for the projects where applicable

FIXED ASSET MANAGEMENT SYSTEM

• Verification whether fixed assets have been procured after fulfilling all the criteria as prescribed in the financial policy.
• Review of the internal control system relating to procurement, use, and disposal of fixed assets.
• Conduct physical verification of the fixed assets and ensure existence of the asset as mentioned in the fixed asset register.
• Verification of the log book of the vehicle to ensure proper use and that the consumption of the fuel is in consonance with distance traveled and mileage.

HUMAN RESOURCE MANAGEMENT SYSTEM

• An assessment of the compliance of the HR policy for the recruitment process, Staff Appraisal and termination.
• Verification of the personnel files, timesheets /attendance records, record of leave balances and their encashments.

PARTNER AUDIT

• Obtain and review of the agreement with the partners and an assessment of the compliance with the agreement.
• Conduct tests of controls and substantive audit procedures to ensure trueness and fairness of the books of account.
• Review of the procurement procedures, recruitment procedures of the partners in line with their policy.
• Verify fixed asset register and conduct physical verification of the fixed asset and inventory.
• Verify that the expenditures have been incurred and payments have been made after obtaining proper supporting documents and are within the budget. And expenditures are reasonably incurred for the implementation of the program.

DELIVERABLES

The auditor shall provide:

• Auditors' opinion on the financial statement of iDE Nepal for the period.
• Audited Financial statement 
• Management Letter outlining the findings and observations, along with recommendations for improving the management system of iDE Nepal and implementing partners.

CRITERIA FOR AUDITOR SELECTION:

• The Audit firm/engagement partner must be a Chartered Accountant and registered member with the Institute of Chartered Accountant of Nepal (ICAN).
• Auditors should have 7 years of audit experience of donor funded projects specially in the development sector, with NGOs and INGOs and priority will be given to those having audit experience of USAID funded projects.
• Provide evidence of the required business licenses (VAT certificate, Tax clearance) to operate in the host country.
• Have a satisfactory past performance record.
• Have the necessary organization, experience, accounting and operational controls and technical skills.
• Be qualified and eligible to perform work under applicable laws and regulations.

EVALUATION FACTORS:

1. Technical approach (40 points)– understanding of the approach and proposed methodologies to carry out the assignment in line with the described activities and deliverables.
2. Professional experience of the team (20 points) – educational and professional credentials of the team to be engaged in the assignment.
3. Experience of the firm/organization (10 points) – proven experience of the firm/organization in carrying out similar assignments in the past, client’s satisfaction, and physical and human resources to ensure smooth delivery of the assignment.
4. Costing (30 points) – cost-effectiveness, relevancy, and alignment of the estimated cost with technical deliverables, as outlined in the EOI and in the proposal.

SUBMISSION OF PROPOSAL:

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 nepal@ideglobal.org by December 22, 2023, before 5:00 pm.