TERMS OF REFERENCE YEARLY EXTERNAL AUDIT OF THE ASEAN FOUNDATION

Deadline: 2016-01-10

I. Introduction

The ASEAN Foundation is seeking a registered qualified audit firm, preferably with relevant not-for-profit sector expertise, to conduct audit services for the fiscal year 2015 covering the period of 1 January to 31 December 2015. A yearly external audit is required as stipulated in the organisation’s financial rules and regulation.

II. Background

The ASEAN Foundation (AF) was established in December 1997 by ASEAN Foreign Ministers in fulfilment of the decision of the ASEAN Leaders. It is a non-profit ASEAN body under the ASEAN Charter and is mandated to promote greater awareness of ASEAN and greater interaction among the peoples of ASEAN, as well as their wider participation in ASEAN activities.

AF manages several funds, which are categorised as Endowment Fund, Operational Fund and Project Funds.

III. Objective

The overall objectives of the audit are:

  • To determine if the organisation’s accounting system provides accurate and adequate details of its financial position and fiscal operations in accordance with generally accepted accounting principles and the approved organisation budget
  • An assessment of whether internal controls are robust and are being adhered to, and a further description, in the form of fact finding statement, of any specific weaknesses or other issues in the organisation’s internal controls that may have been discovered during the course of auditing
  • To determine if the organisation is managing and using its resources in an effective manner
  • To determine if funds are being used according to the currently approved budget
  • Whether or not the financial statements are free of material errors and present fairly financial position and transactions
  • Whether or not payments have been approved in accordance with the organisation’s financial rules and regulations
  • Whether or not the bank balance as of 31 December 2015 has been confirmed with the bank for each account and agrees with the accounting system
  • Provide recommendations for improvement to management

IV. Audit Scope

The audit shall cover the adequacy of the accounting and financial operations and reporting systems of the organisation. These include budget control, cash management, certification and approving authority, receipt of funds, disbursement of funds, recording of all financial transactions in expenditure reports, records maintenance and control.

Human resources

The audit work shall cover the competitiveness, transparency and effectiveness of the recruitment and hiring of personnel and include performance appraisal, attendance control, calculation of salaries and entitlement, payroll preparation and payment and management of personnel records.

Procurement

The audit work shall cover the competitiveness, transparency and effectiveness of the procurement activities of the organisation in order to ensure the equipment and services purchased meet the requirement of the organisation’s financial rules and regulations.

Asset management

The audit work shall cover equipment (typically vehicles and office equipment) purchased for the use of the organisation. The procedures for receipts, storage, and disposal shall also be reviewed.

Cash management

The audit work shall cover all cash funds held by the organisation and review procedure safeguarding of cash.

General administration

The audit work shall cover travel activities, vehicle management, office premises, office management and records management.

Information system

The audit work shall cover the information and communication systems and the control and security of equipment and data.

V. Methodology

The audit must cover the financial operations, the use and control of non-expendable equipment; as well as provide detailed observations and comments on the management structure and the monitoring, evaluation and reporting mechanisms. The following aspects are to be considered:

  • The rate of delivery
  • Financial accounting, monitoring and reporting
  • Systems for recording and reporting on resources utilisation
  • Equipment use and management
  • Management structure, including the adequacy of internal control and record-keeping mechanisms
  • List of asset bought

The scope of the audit services required should be sufficiently clear to properly define what is expected of the auditor but not in any way restricts the audit procedures or techniques the auditor may wish to use to form an opinion. It should specify at least the following:

  • That the audit will be carried out in accordance with generally accepted accounting standards
  • That the period of activities to be audited is from 1 January 2015 to 31 December 2015
  • That the auditor will state in the audit report if the audit was not in conformity with any of the above and indicate the alternative standards or procedures followed
  • That the auditor will provide an opinion as to the overall financial situation of the organisation for the period from 1 January 2015 to 31 December 2015 and will certify:
  • The Summary of Expenditure for the period from 1 January 2015 to 31 December 2015
  • The cash position reported by the organisation as at 31 December 2015 and
  • The status of assets and equipment held by the organisation as at 31 December 2015

VI. The Auditor Report and Management Letter

The expected contents of the audit report and management letter and the topics/areas to be covered by the auditors should include the following:

Audit Report

The audit report should clearly indicate the auditor’s opinion. This would include at least the following:

  • That it is a standard purpose report and its intended use
  • The audit standards that were applied
  • The period covered by the opinion
  • The scope limitation for those transactions
  • Whether the Statement of Assets and Equipment is fairly and adequately presented as at 31 December 2015
  • Whether the Statement of Cash Position reported by the organisation is fairly and adequately presented as 31 December 2015

The English language shall be used for all reports and correspondence.

Management Letter

The management letter should cover the following topics/issues:

  • An assessment of the organisation’s internal control system with equal emphasis on (i) the effectiveness of the system in providing management with useful and timely information for the proper management of the organisation and (ii) the general effectiveness of the internal control system in protecting the assets and resources of the organisation.
  • A description of any specific internal control weaknesses noted in the financial management of the organisation and the audit procedures followed to address or compensate for the weaknesses. Recommendations to resolve/eliminate the internal control weaknesses noted should be included.

The management letter should also include the following:

  • The categorisation of audit findings by risk severity: High, Medium, or Low

Definition of these categories are given in Annex 1

  • The classification of possible causes of the audit findings
  • Comments as to whether recommendations made in the management letter for the previous audit were implemented or, if not, the implementation status
  • Management comments/response, as applicable

The audit report should be in English formatted in A4 size and the number of copies submitted are five (5) hard copies and one (1) electronic copy/pdf version.

VII. Qualifications of the auditor

  • The Auditors/Audit Team members should have a sound track record in conducting an audit review of international organizations or public entities with not for profit experience.
  • The Auditors/Audit Team members should have working knowledge in Indonesia language, as some vouchers, receipts/additional reports may not be available in English
  • The Auditor/Audit Team members must be completely impartial and independent from all aspects of management or financial interests in the entity being audited. The auditors/audit team members 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 senior participant in the management of the entity.
  • The Auditors/Audit Team members should be experienced in applying audit standards whichever is applicable for the audit. The auditor must employ adequate staff with appropriate professional qualifications and suitable experience with including experience in auditing the accounts of entities comparable in size and complexity to the entity being audited.
  • Curriculum vitae (CVs) should be provided by the principal of the firm of auditors who would be responsible for signing the opinion, together with the CVs of managers, supervisors and key personnel proposed as part of the audit team. CVs should include details on audits carried out by the applicable staff, including ongoing assignments indicating capability and capacity to undertake the audit.
  • The Audit Firm should state its legal nature, the total number of auditors who are owners and/or employees of the firm as well as auditing services provided by the firm and state whether the firm has any associations or affiliation with any other professional firm as auditors in the Indonesia or abroad.

VIII. PROPOSAL REQUIREMENTS

  • Firm Background and Experience: The proposal should describe your firm’s expertise and any relevant not-for-profit industry experience. Also, include the size of your firm, other areas, in which the firm specializes, and significant professional memberships and affiliations.
  • Identify Key Personnel in the Engagement Team: Please explain your approach to staffing and provide information on the professionals who will be engaged in the audit activities, including related experience of the primary contact.
  • Approach/Methodology to Conducting the Review: Please describe your firm’s auditing philosophy and methodology. Please detail the steps of the engagements, noting stages that would directly involve our personnel, including your overall expectations of client involvement.
  • References: Please list contact information for at least three organizations similar to the AF.

IX. Fees

Please outline your fee structure for the audit in Indonesia Rupiah (IDR). Please include an estimate of any expenses necessary to adequately perform the work required and related activities needed to maintain a quality client relationship.

The cost of preparing a proposal and conducting the pre-proposal survey or any meetings for verbal presentations shall be borne by your company, regardless of the conduct or outcome of the solicitation process. Proposals must offer services for the total requirements. All proposals must remain valid and open for acceptance for a period of 100 (one hundred) days after the date specified for receipt of proposals.

X. Proposal Scoring

Proposals will be evaluated in two parts. The technical proposal shall bear 60% of the total marks while the financial proposal shall bear 40% of the total marks.

Functionality evaluation criteria

No

Description

Weight

1

Experience, Skills and Ability of Service Provider

  • Past experience in similar work of this nature
  • Team member experience( accompanied by brief CV's)
  • Bidders 'track record
  • Ability of the bidder to fulfill the AF's requirements

30

2

Technical Approach and Execution Plan

  • Proposals must contain the details of the proposed approach to be adopted in order to deliver the service in accordance with the TOR

20

3

Project management

  • Bidder must allocate a project manager for this project
  • The proposal should contain a work plan, showing tasks, timelines
  • Did the bidder give, submit clear proposed project timelines for the project
  • Does the project plan cater for risk management associated with this project and mitigation strategy?
  • Project management and turn around management (Ability to Deliver on Time).

15

4

References

  • Did the bidder submit at least three relevant and contactable clients that were serviced in the past 12 months

10

5

Capacity

  • Proposals should clearly indicate whether or not bid participants have the capacity to meet the requirements of the TOR

25

Bidders are required to score a minimum of 65% points on functionality to qualify to be evaluated in the next level (price). Bidders who do not score the minimum of 65% points on functionality will be disqualified and not be evaluated on price.

XI Timing of the Audit

Activities

Date

Audit Field Work

20 January -14 February 2016

Draft Audit Report

14 March 2016

Final Audit Report

End of April - 1st week of May 2016

XII. Submission and Deadline of Offers

Submission:

The technical and fee should be in two (2) copies and with envelopes properly sealed and labelled, mentioning clearly “External Financial Audit”.

Deadline EXTENDED

Submission of offers is Sunday, 10 January 2016

Offers are to be submitted in hardcopy or electronically to

The Procurement Committee, ASEAN Foundation

Jl Sam Ratulangi No 2, Menteng, Jakarta

Phone: +62 21 3192 4833

Or email to: procurement@aseanfoundation.org

ANNEX 1: CATEGORISATION OF AUDIT FINDINGS BY RISK SEVERITY

High

Action that is considered imperative to ensure that the Foundation is not exposed to high risks (i.e. failure to take action could result in major consequences and issues).

Medium

Action that is considered necessary to avoid exposure to significant risks (i.e. failure to take action could result in significant consequences).

Low

Action that is considered desirable and should result in enhanced control or better value for money.

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