TERMS OF REFERENCE
External Audit on Accounting and Financial Management
Habitat for Humanity Tajikistan
1.OVERALL PURPOSE OF THE ASSIGNMENT
The overall purpose of the external audit is to review the effectiveness of the operations of Habitat for Humanity Tajikistan and of the accounting process of the institution, as well as the correct use of funds received from donors and the transparency of the disclosed accounting and financial information.
2.REQUIREMENTS FOR THE AUDIT COMPANY
- The audit must be performed by a reputable national or international accounting firm.
- The accounting firm should be experienced in applying either US GAAP or IFRS standards, whichever is applicable for the audit. The accounting firm must employ adequate staff with appropriate professional qualifications and suitable experience with US GAAP or IFRS standards, including experience in auditing the accounts of entities comparable in size and complexity to HFH Tajikistan.
- The accounting firm must be completely impartial and independent from all aspects of management or financial interests in the entity being audited. The accounting firm cannot be the same firm that provides consulting services, advisory services, internal audits or forensic (fraud) audits.
- The staff of the accounting firm should not, during the period covered by the audit nor during the undertaking of the audit, be employed by, serve as director for, or have any financial or close business relationships with any individual in the management of HFH Tajikistan. The auditor should disclose any relationship that might possibly compromise his/her independence.
3.ANNUAL AUDIT REPORT
- An annual audit must be performed in accordance with either US GAAP and US GAAS (preferred) or IFRS.
- Comprehensive audit report will consist of:
- Audited Financial Statements of LLC “BTC” and Consolidate Audited Financial Statements of Public Foundation “Habitat for Humanity Tajikistan” accompanied with an auditor’s opinion.
- Management Letter from the external auditors noting any internal control weakness, recurring observations, or other observations. The auditor’s management letter must include the institution’s management’s response to the listed findings and to the recommendations.
- The audited statutory financial statements and the auditors’ management letter must be submitted in English and Russian.
4.SCOPE OF THE ASSIGNMENT
a. Audited Financial Statements based on the US GAAP or IFRS.
• US GAAP financial statements must include:
1. Statement of Financial Position (Balance Sheet),
2. Statement of Activities and Changes in Net Assets (Income Statement),
3. Statement of Cash Flows,
4. Statement of Functional Expenses, and
5. Comprehensive footnote disclosures.
• IFRS financial statements must include:
1. Balance Sheet,
2. Income Statement,
3. Statement of Cash Flows
4. Statement of Changes in Equity, and
5. Comprehensive footnote disclosures.
b. Perform the substantive tests of the balances and amounts included in the audited financial statements.
c. Review the internal control documentation over the significant accounting processes and over the automated systems to record transactions. After those reviews, the external auditors will determine if they plan to rely on those controls and test those controls.
d. Verification that loan documents are legally binding within Tajikistan.
e. Review and report whether the mortgage agreements reconcile against loan balances entered in the financial statements. This will also include verifying whether all home owner payments are shown in the financial statements.
f. Review mortgage discount calculation.
g. Analyze mortgage portfolio based on repayment rates and suggest provisions for uncollectable mortgages.
h. Determine whether adequate follow-up procedure exist for delinquent mortgages. Include any suggestions for improvement in the report to management. Comment on any written off mortgages.
i. Determine that Sales and Cost of homes have been accounted for correctly by the legal accounting records.
j. Review and report on on-going construction and all other expenditure purchasing and authorization process, including how Habitat for Humanity Tajikistan control and monitor construction material and all other expenditure purchases & authorization and manages inventory to ensure that materials are not diverted for non-Habitat purposes.
k. Review and report on all cash handling processes.
l. Assure that cash advances to employees have been recorded at moment granted. Assess that cash advances are properly documented: signed by person responsible, employee has duly accepted and signed, detail of advance, date, amount, and form of payment. Analyze the practice and recovery of cash advances. Please include your comments.
m. Probe that balance per the legal books of account for vehicles, equipment and other property represents a complete and valid recording of assets purchased, constructed or received by donation. Determine whether any assets were disposed or sold during the current year and, if so, that the disposal and sale was properly recorded in the books of account.
n. Inventory of all completed properties (new construction, rehab and repair properties) to substantiate the accuracy of current Habitat for Humanity Tajikistan records (legal documents and financial statements).
o. Document whether the funds transferred from Habitat for Humanity International and from other donors have been accounted for properly by the bank and legal accounting records.
p. Validate mapping between local and management (to Habitat for Humanity International) reporting.
q. Validate whether the organization has proper systems & procedure in place to maintain separate accounting and reporting for different projects or grants.
1. The external audit is expected to be carried out in August-September 2018.
2. The comprehensive audit report must be submitted to the National Director of Habitat for Humanity Tajikistan latest by September 20, 2018.
The proposals must include a description of the scope of work, timing of the assignment, as well as detailed composition of the team, breakdown of the fees and charges.
Please send full proposals (technical and financial offers) before COB July 16, 2018 in a sealed envelope to our office address: 38/1 Tursunzoda Street, apartment 21, Dushanbe, Tajikistan.
Contact person: Mumin Mallaev // 93-575-15-71