YEARLY EXTERNAL AUDIT 2018

Deadline: 2019-01-17

TERMS OF REFERENCE
YEARLY EXTERNAL AUDIT OF THE ASEAN FOUNDATION

I. Background

The ASEAN Foundation (AF) is an organisation from and for the people of ASEAN. As one of the ASEAN’s bodies, we are mandated to support ASEAN mainly in promoting awareness, identity, interaction and development of the people of ASEAN. Our vision is to build a cohesive and prosperous ASEAN Community. Our mission is to commit to promoting ASEAN awareness through people-to-people interaction and collaboration with ASEAN stakeholders to build a caring, cohesive and equitable ASEAN Community.

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

II. Objective

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 2018 covering the period of 1 January to 31 December 2018. A yearly external audit is required as stipulated in the organisation’s financial rules and regulation.

The objective of the audit is to enable the external auditors to express an independent professional financial position of the ASEAN Foundation and to ensure that the funds utilised for ASEAN Foundation’s activities have been used for their intended purposes.

The books of account of the ASEAN Foundation provide the basis for preparation of the financial statements. Proper books of accounts as required by law have been maintained by the ASEAN Foundation also maintain adequate internal controls and supporting documents for the transactions.

III. Audit Scope

The audit will be carried out in accordance with the International Auditing Standards and will include tests and verification procedures as the auditors deem necessary.

The auditors will:

  1. Verify all funds have been used in accordance with established rules and regulations of the ASEAN Foundation and only for the purposes for which the funds were provided
  2. Undertake a detailed financial audit, specifically in the areas of
  • Procurement of goods, services (hotel bookings, ticketing, consultancy, computers etc.) and works (including renovation/construction)
  • Human resource management, including recruitment, payroll management, leave management, performance appraisal, calculation of salaries and entitlement and management of personnel records
  • Recording of assets, goods and inventories as well as procedures for receipts, storage and disposal
  • Conduct of workshop/trainings/events, etc.
  • Travel related expenditure
  • Recognition & recording of income
  • Recording of expenses with valid supporting documents
  • Any other area identified important to include during the audit.

  1. Verify supporting documents, records and books of accounts relating to all activities have been kept and that clear linkages should exist between the books of accounts and the financial statements presented to.

  1. Verify whether financial statements have been prepared by the ASEAN Foundation management in accordance with applicable accounting standards and give a true and fair view of the financial position of the ASEAN Foundation and of its receipts and expenditures for the period ended on that date.

  1. Assess comprehensive assessment of the adequacy and effectiveness of the accounting and overall internal control system to monitor expenditures and other financial transactions.

  1. Express an opinion as to reasonableness of the financial statements in all material respects

  1. Identify instances and quantum of

✓ material mis-statements, if any, in the financial reports (both statutory and project)

✓ material financial mismanagement/ misappropriation/ fraud, if any.

  1. Recommend actions/ corrective steps to be undertaken

  1. Conduct entry and exit meeting with the Executive Director

IV. 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 2018 to 31 December 2018.
  • 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 2018 to 31 December 2018 and will certify:
  • The Summary of Expenditure for the period from 1 January 2018 to 31 December 2018
  • The cash position reported by the organisation as at 31 December 2018 and
  • The status of assets and equipment held by the organisation as at 31 December 2018

V. 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:

  • The purpose of the report and its intended use
  • Which/whose generally accepted accounting standards have been applied and indicate the effect of any deviations from these standards
  • The audit was conducted in accordance with International and Indonesian standards on Audit
  • The audit opinion will cover the current period
  • Information on whether or not the financial statements present fairly in accordance with the adopted accounting policies for the organisation

Management Letter

The management letter should cover the following topics/issues:

  • Give comments and observations on the accounting records, procedures, systems and controls that were examined during the course of the audit.
  • Identify specific deficiencies and areas of weakness in the systems and controls and make recommendations for improvement
  • Report on the implementation status of recommendations pertaining to previous audit reports
  • Communicate matters that have come to the auditors’ attention during the audit which might have a significant impact on the sustainability of the organisation
  • Bring to the attention of the Executive Director’s attention on any other matters that auditors consider pertinent
  • 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
  • Management comments/response, as applicable

The audit report should be in English formatted in A4 size and the number of copies submitted are four (4) hard copies and one (1) electronic copy/pdf version.

VI. Deliverables

  1. The Auditors on completion of the audit work will submit four (4) original copies of the audit report in English formatted in A4 size and one (1) electronic copy/pdf version
  2. Management letter in accordance with the scope of the work described.

VII. Qualifications of the auditor

  • The Auditors/Audit Team members should have a sound track record in conducting an audit review of international organisations 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 organisations similar to the AF.

IX. Fees

Please outline your fee structure for the audit in United States Dollar (USD) or if it is in Indonesia Rupiah (IDR), please convert it into USD by mentioning the conversion rate.

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 70% of the total marks while the financial proposal shall bear 30% 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

15 February – 08 March 2019

Draft Audit Report

08 April 2019

Final Audit Report

08 May – 15 May 2019

XII. Deadline and Submission of Offers:

Deadline:

Submission of offers is Thursday, 17 January 2018

Submission:

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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