EXPENDITURE VERIFICATION

of projects, co-financed by Austrian Development Agency under standard Grant Agreements

TERMS OF REFERENCE (ToR)

1. INTRODUCTION

Caritas Austria is an international NGO implementing activities in the fields of emergency relief and rehabilitation as well as development cooperation, in countries struck by conflicts or natural disasters. Caritas Austria has been supporting projects in South Sudan since its independence in 2011, especially in humanitarian aid, food security and education.

With the current programme POWERFUL – Protection Of Women in Emergencies & Relief, Food security, Urgent WASH & Livelihood activities

2. BACKGROUND OF THE PROJECT

  1. Back donor’s contract number and official project title: 2888-01/2023 – POWERFUL – Protection Of Women in Emergencies & Relief, Food security, Urgent WASH & Livelihood activities
  2. Caritas Austria’s project number and official project title: 2309133 – POWERFUL – Protection Of Women in Emergencies & Relief, Food security, Urgent WASH & Livelihood activities
  3. Project duration/implementing period: 01.12.2023 – 31.05.2025 (18 months)
    1. Reporting period: 01.12.2023 – 31.08.2024 (9 months)
    2. Reporting period: 01.09.2024 – 31.05.2025 (9 months)
  4. Official project budgets (with indication of donor’s contribution):
  • Total Project Budget: EUR 1.052.600,-
  • ADC Contribution: EUR 1.000.000,-
  • Caritas Austria Contribution: EUR 52.600,-
  1. Short project description:
  • Implementing partner organisation: Catholic Diocese of Malakal/ Caritas Malakal (CM), Catholic Church, Muderia, P.O. Box 27, Malakal, South Sudan
  • Austrian lead partner: Caritas Austria, Storchengasse 1/E1 05, 1150 Vienna, Austria

ACCESS TO TENDER DOCUMENTS via https://wolke.caritas.at/s/bP5rczSwnCepZdS (Password: C7zyW98xEa)

Impact: The overall objective of the project is to contribute to relief, recovery and resilience of vulnerable refugee, returned IDP and vulnerable host populations in Upper Nile State, South Sudan, through the provision of food security, WASH and protection services.

Programme outcomes:

  1. Returnee, returned IDP and most vulnerable host community HH, especially FHH, in Baliet and Manyo county have increased food security and diversified livelihoods to sustain their lives and strengthen their resilience;
  2. Returnee, returned IDP and most vulnerable host community HH, especially FHH, have improved hygiene and health through enhanced access to safe drinking water and WASH facilities
  3. Immediate protection risks, especially gender-specific risks, of returnee, returned IDP and vulnerable host communities are addressed and resilience of vulnerable groups, especially women and girls, are improved through the provision of protection services (contributing to SDG 1, 2, 5, 6; EU GAP III: 1, 2, 3, 4);

Expected results:

Output 1.1: 1.000 vulnerable HH have improved access to food through provision of emergency food packages to cover their basic needs

Output 1.2: 1.000 vulnerable HH have started to restore, (re)build and diversify their livelihoods via support of sustainable agriculture practices, fishing activities and promotion of income generating activities;

Output 2.1: 1.000 vulnerable HH have improved access to safe and sufficient water for drinking, cooking and personal hygiene;

Output 2.2: 1.000 vulnerable HH have enhanced access to dignified, safe and viable sanitation facilities and improved knowledge and practices in hygiene, including menstrual hygiene ;

Output 3.1: Increased awareness, knowledge and capacity to address protection issues, especially related to SGBV, among implementing partner organization as well as girls, boys, women and men in the targeted communities; Output 3.2: Vulnerable Women and girls affected by SGBV receive equitable, dignified, safe and accessible protection services through the provision of case management, referrals and psychosocial first aid;

Target group:

In total the project targets 6.000 unique beneficiaries (1.000HH), 3600 women and 2400 men, consisting of 60% returnees, 30% returning IDPs and 10% host community members in Wadakonga (350HH), Kaka (350HH) and Nyongrial payam (300HH).

Target regions/locations: Wadakona and Kaka payams in Manyo County; Nyongrial payam in Baliet County, Upper Nile State, South Sudan

Activities related to OPs:

Activity Cluster Result 1.1. Protection

Act. 1.1.1. Emergency Food Distribution;

1.2.1. Distribution of seeds and tools; 1.2.2. Training of farmers in sustainable agriculture; 1.2.3. Provision of water pumps; 1.2.4. Provision of fishing kits; 1.2.5. Training of fishers; 1.2.6. Training and start-up support for women in IGA: 1.2.7. Establishing market access: 1.2.8. Establishment of VSLAs:

Act. 2.1.1. Drilling of boreholes; 2.1.2. Formation of Water User Committees (WUC): 2.1.3. Distribution of NFIs for improved hygiene: 2.2.1. Training of Community Hygiene Promotion Volunteers; 2.2.2. House-to house awareness raising for improved hygiene; 2.2.3. Promoting and supporting installation of HH latrines: 2.2.4. Distribution of dignity kits; 2.2.5. Construction of solid waste pits:

Act. 3.1.1. Establishment and Training of SGBV Action Teams in communities: 3.1.2. Awareness raising meetings on SGBV: 3.1.3. House-to-house visits for SGBV awareness: 3.1.4. SGBV training for different stakeholders: 3.1.5. Establishment of SGBV referral pathway: 3.2.1. Establishment of Women and Girl Friendly Space; 3.2.2. Provision of Psychological First Aid, Counselling, Case Management and Referrals; 3.2.3. Cash for Protection;

3. OBJECTIVES OF THE EXPENDITURE VERIFICATION

The objectives of the expenditure verification are:

  1. to provide a professional opinion on the quality of processes and accounting practices within the audited organisation and specifically as applied within the project at hand following point 5 (procedures to be performed by the Auditor)
  2. to independently verify that the project mentioned above has been implemented in compliance with the requirements of the following documents of reference:
  • Legislation: National legislation, with particular attention to:
    • Respective social and labour law (including staff and salary regulations).
    • Regulations on VAT and other taxes
    • National accounting policies
  • Project: Cooperation agreement relative to the project or to the partner organisation, Project Documents, Terms of Reference (TOR), Budgets, plans of project activities.
  • Accounting: Accounting documents subject to the expenditure verification, financial and operational reports concerning the project.
  1. to provide a professional opinion on the quality of the audited organisation’s financial reporting and its suitability for the requirements of the donors.

4. MINIMUM REQUIREMENTS FOR AUDITORS AND AUDIT STANDARDS

  • The Auditor is a member of a national accounting or auditing body or institution which in turn is a member of the International Federation of Accountants (IFAC).
  • The Auditor is a member of a national accounting or auditing body or institution. Although this organisation is not a member of the IFAC, the Auditor commits himself/herself to undertake this Engagement in accordance with the IFAC standards and ethics.
  • The Auditor is registered as a statutory auditor in the public register of a public oversight body in an EU member state in accordance with the principles of public oversight set out in Directive 2006/43/EC of the European Parliament and of the Council (this applies to auditors and audit firms based in an EU member state).
  • The Auditor is registered as a statutory auditor in the public register of a public oversight body in a third country and this register is subject to principles of public oversight as set out in the legislation of the country concerned (this applies to auditors and audit firms based in a third country).
  • The Auditor will employ staff with appropriate professional qualifications and suitable experience with IFAC standards and with experience in verifying financial information of projects comparable in size and complexity to the project subject to the expenditure verification.
  • The Auditor must have sufficient knowledge of relevant laws, regulations and rules in the countries concerned i.e. where the project is implemented. This includes but is not limited to the company law, taxation, social security and labour regulations, accounting and reporting.
  • The Auditor will provide the Grant Recipient with CVs of the staff/experts involved in the expenditure verification. The CVs will include appropriate details for the purpose of the evaluation of the offer on the relevant specific experience for this expenditure verification and the qualifying work carried out in the past.

Auditing Standards

The Auditor shall undertake this Engagement in accordance with:

– the International Standard on Related Services (‘ISRS’) 4400 (Revised) “Agreed-upon Procedures Engagements” as promulgated by the IFAC;

– the IFAC Code of Ethics for Professional Accountants (developed and issued by IFAC’s International Ethics Standards Board for Accountants (IESBA), which establishes fundamental ethical principles for Auditors regarding integrity, objectivity, independence, professional competence and due care, confidentiality, professional behaviour and technical standards. Although ISRS 4400 (Revised) provides that independence is not a requirement for Agreed-upon procedures engagements, the ADA requires that the Auditor is independent from the Grant Recipient and complies with the independence requirements of the IFAC Code of Ethics for Professional Accountants.[1]

5. PROCEDURES to be performed by the AUDITOR

The auditor verifies based on original documents that

1. the project is implemented in accordance with the principles of economy, efficiency and expediency

2. proper book-keeping and sound financial management have been maintained by the Grant Recipient, the related expenditure practices are correct, Generally Accepted Accounting Standards have been met and an adequate, effective Internal control system exists

3. the project funds have been used in conformity with the Grant Agreement, in particular:

a. the project funds were spent exclusively for project related expenses and solely for the purpose intended;

b. costs have been incurred during the implementation period;

c. costs meet the eligibility criteria stipulated in the Grant Agreement and its annexes

4. the financial report presented by the Grant Recipient presents the actual expenditure incurred and the revenue received for the project for the respective reporting period accurately and in conformity with the Grant Agreement and annexes thereto

5. the project expenditures are allocated to the last approved (allocated) project budget

6. individual expenditures made from grant funds are clear evident from the project bookkeeping and are assigned to the correct budged items as specified in the approved Grant Application.

7. it is plausible that the expenditure for a selected item was necessary for the implementation of the project and that it had to be incurred for the contracted activities of the project by examining the nature of the expenditure with supporting documents

8. where expenditure was apportioned, the applied allocation key was based on sufficient, appropriate and verifiable underlying information

9. over expenditure, if any, lies within the thresholds stipulated in the Grant Agreement

10. the projects costs claimed are net cost and free of any VAT; if expenses contain Value Added Tax (VAT), the Auditor shall certify that the Grant Recipient is not exempt from VAT and cannot reclaim it either

11. costs declared in the Financial Report are justified by the relevant supporting documents in form of genuine and original invoices, receipts and vouchers bearing all necessary information; these original supporting documents are clearly associated with the project and the project’s time frame

12. all expenditures claimed under the financial report have been settled and paid for, no outstanding invoices or accrued costs have been included in the financial report

13. all necessary supporting documents for employees’ costs are available and these costs are reported correctly. Specifically, the auditor verifies

a. the existence of employment contracts in accordance with the relevant national legislation

b. that the reported employees’ costs are calculated correctly in accordance with the approved Project Budget and respective provisions of the General Terms and Conditions

c. that only actually paid employees’ costs have been claimed under the Financial Report and this has been evidenced by the respective supporting documents.

14. indirect costs[2], if foreseen in the budget, have been calculated properly

15. accrued interest has been declared[3]

16. conversion of currency has been calculated correctly, in particularly the conversion into EUR has been calculated in accordance with the General Terms and Conditions and is evidenced by currency exchange receipts and/or respective bank account statements

17. usage of budget funds under “unforeseen” or “contingency reserve” has been approved by ADA

18. revenues foreseen in the financial plan were not realized

19. other revenues originally not foreseen in the financial plan were registered

20. applicable procurement regulations of the General Terms and Conditions have been complied with

21. applicable provisions of social and labour laws in all countries where the project is being implemented have been complied with

22. applicable provisions of the company and tax laws and regulations have been complied with

23. regulations on travel expenses have been followed

24. all assets and equipment have been incorporated in the asset list

25. assets and equipment have been used for the project purposes

26. depreciation on investment goods that continue to be available to the Grant Recipient after the end of the term of the Agreement has been properly calculated, if applicable

27. equipment or services produced or provided by the Recipient itself have been charged at cost only (without any mark-up), if applicable

28. project vehicles, if any, have been used according to the standards set out in the General Terms and Conditions of the Grant Agreement

29. sub-grants foreseen in the project document have been provided to third parties and have been properly accounted for based on actual costs

30. applicable visibility regulations have been adhered to

31. requests and recommendations from the previous expenditure verifications regarding any project relevant matters have been considered and implemented

Additionally

  • the auditor provides information on the treatment of taxes (especially VAT) in the financial reports[4].
  • examines whether the persons enjoying power of disposal over the bank account are the same or among those officially authorised to represent the Legal Holder of the project
  • In case of education and training courses, to examine the relevant invoices, bills, receipts (Fees, food, accommodation, transport, etc.) and also the lists of participants

6. AUDITOR’S REPORT

6.1. The auditor shall invalidate the original receipts and produce a draft and a final Expenditure Verification Report based on the official project budget and exactly reflecting its budget line structure. The expenditure verification report should describe the purpose, the agreed-upon procedures and the findings in enough details.

The expenditure verification reports must be written in English and contain at least[5]:

  • Title
  • Addressee
  • Contracting Organisation (Caritas Austria) and donor
  • Project number and name
  • Implementing organisations’ names and contact details
  • Brief description of the project and partner(s)
  • Period covered by the report and currency
  • Exchange rates used in the financial report (to Euro or to the official project currency, as indicated in the project budget), with detailed explanation of their calculation
  • Total amount of budgeted and actual expenditures, with differentiation between direct and indirect costs, as indicated in the official project budget
  • Complete list of reported expenditures classified according to the relevant budget lines;
  • Total amount of budgeted and actual incomes
  • Complete list of project funds transferred, including donors’ names, dates and exchange rates
  • Indication on treatment of taxes and especially VAT
  • Total amount of actual expenditures verified
  • Expenditure Coverage Ratio
  • Objectives, Scope and Description of the procedures performed
  • Findings from the expenditure verification
  • Recommendations, if applicable
  • Follow up of previous recommendations, if applicable
  • Other relevant matters
  • Reference to contact persons/sources of information from implementing partner organisation during execution of the expenditure verification
  • Auditor’s name, position, address, phone, fax and e-mail
  • Date of the report, auditor’s signature

6.2. The Report shall also comprise the following annexes:

– Financial Report overall calculation with comparison of actual expenditures vs. approved budget certified by the company’s formal signature (stamp and signature) and by the formal signature (stamp and signature) of the auditor.

– Statement of the project cash flows

– A detailed voucher list classified according to the relevant budget lines

– Bank account statements

– List of payable invoices, if any

– In case exceptions are detected, a list of respective vouchers including a description of exception

– Asset list of all goods/equipment financed with project funds with a value of over Euro 400,-

– List of procurement contracts awarded during the reporting period

– List of grant contracts awarded during the reporting periods, if applicable

6.3. Signed original versions of the expenditure verification reports must be submitted in hardcopy to:

Nr. 02 copies to Caritas Austria

Nr. 01 copies to Implementing partner

7. MANAGEMENT SUPPORT / Grant Recipient’s duties

7.1. Caritas Austria and its implementing partner organisation will provide the external auditor with all necessary information to perform his/her work. Relevant documents must be specified in the Terms of Reference which are annexed to the contract or Engagement Letter.

The following underlying documents are required as a minimum:

  • Grant Agreement between Caritas Austria and back donors (if applicable) with all annexes, including contracts or agreements between the Grant Recipient and his/her partners
  • Amendments to the Grant Agreement, if any
  • ToR for the external expenditure verification
  • Official project budget
  • Financial Report, including complete list of reported expenditures
  • Original vouchers/receipts
  • Access to the used bookkeeping system
  • Access to information related to bank and cash statements
  • Any other documents required by the auditor for the performance of his/her tasks

The Financial Report (consisting of a summary and a detailed breakdown) must include a comparison of actual vs budgeted expenditure and a detailed voucher list classified according to the relevant budget lines. The Financial Report must in all aspects adhere to the last approved budget and show at least the same level of detail.

The Financial Report must cover all project expenses and all project funds whether received from the ADA, the Grant Recipient, other project partners or other donors.

Revenues including accrued interest, if any, and calculations of conversions to the contract currency (generally Euro) are to be attested as well.

Contributions in kind are generally not part of the Project Budget and are thus not reflected in the Financial Report.

If, in excetional cases, the project budget includes expenses which cannot be verified by the Auditor, these expenses must be declared in the Terms of Reference (ToR) and in the Financial Report.

The ADA reserves the right to reject the Expenditure Verification Report if it does not comply with the required standards. The ADA may at any time require the submission of the original vouchers. The original vouchers must be available for in situ inspection by the ADA at any time for a period of ten years starting from the end of the year during which the last instalment has been disbursed by the ADA. The ADA shall be allowed to inspect in detail the financial management of the Project at any time.

8. EXPENDITURE COVERAGE RATIO (ECR)[6]

The Expenditure Coverage Ratio (ECR) is defined in the Terms of Reference (ToR). The Auditor ensures that the overall ECR is at least 65%. If he finds an exception rate of less than 10% of the total amount of expenditure verified (i.e. 6,5 %) the Auditor finalises the verification procedures and continues with reporting. If the exception rate found is higher than 10% the Auditor extends verification procedures until the ECR is at least 85%. The Auditor then finalises verification procedures and continues with reporting regardless of the total exception rate found. The Auditor ensures that the ECR for each expenditure heading and subheading in the Financial Report is at least 10%. The Grant Recipient must reserve the right to share the Expenditure Verification Report and its annexes with all donors.

9. WORK PLAN

Please refer to Work Plan in Tender Documents

10. LETTER OF INTEREST, SELECTION PROCESS AND CONTRACTING

10.1. Interested auditors are requested to send a signed “Letter of Interest” no later than 28/07/2024 to Nicolai Rosier, Caritas Austria, nicolai.rosier@caritas-austria.at

It should include:

  • Description of planned implementation of expenditure verification
  • Schedule of activities
  • Auditor’s fees
  • Auditor’s CV and/or company profile
  • Confirmation that the auditor will carry out the expenditure verification in accordance with the Terms of Reference

10.2. Selection of best offer

In accordance with Caritas Austria’s procurement rules a selection committee with qualified members will select the best offer regarding price and quality. Price and quality will be weighted with 70% (price) and 30% (quality). The successful bidder will be informed within 15 working days after the deadline for submission of offers.

10.3. Contract/ Letter of Engagement

Before carrying out the expenditure verification, a written contract or engagement letter (based on the ToR for the external expenditure verification) has to be signed between Caritas Austria and the respective auditor or auditing firm.

The expenditure verification contract shall be drafted by the auditor and shall:

  • Be written in English
  • Include these ToR as an annex and integral part of the contract
  • Contain a confirmation that the auditor has read ADA’s general conditions and acknowledge ADC’s rules (if applicable – for ADA funded projects)
  • Contain a time schedule for the auditing process (See also 9. Workplan)

11. CONTACTS

11.1. Caritas Austria

Office:Caritas Österreich, Storchengasse 1/E1 05, 1150 Vienna, Austria

Contact person: Nicolai Rosier, Institutional Partnership and Project Support, nicolai.rosier@caritas-austria.at

11.2. Implementing partner organisation

Office: Catholic Diocese of Malakal/ Caritas Malakal, Catholic Church, Muderia, P.O. Box 27, Malakal, South Sudan

Contact person: Abraham Daniel, Logistics, logabraham.cdom@gmail.com

How to apply

Interested auditors are requested to send a signed “Letter of Interest” no later than 28/07/2024 to Nicolai Rosier, Caritas Austria, nicolai.rosier@caritas-austria.at

It should include:

  • Description of planned implementation of expenditure verification
  • Schedule of activities
  • Auditor’s fees
  • Auditor’s CV and/or company profile
  • Confirmation that the auditor will carry out the expenditure verification in accordance with the Terms of Reference

ACCESS TO TENDER DOCUMENTS via https://wolke.caritas.at/s/bP5rczSwnCepZdS (Password: C7zyW98xEa)



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