Assignment: Project Audit/Expenditure Verification

Project: Enhancing climate resilience in the Biosphere Reserve "Prutul de Jos", 8360-00/2019

Impelementation period: December 2019 – November 2022

Donor: Austrian Development Agency

Working languages: Romanian, English

The Public Association „EcoContact” is implementing the project Enhancing climate resilience in the Biosphere Reserve "Prutul de Jos" financed by the Austrian Development Agency.

The intended Impact of the project: The Natural Protected Area Biosphere reserve “Prutul de Jos” is managed sustainably taking into account climate change impacts and delivers ecosystem services for local communities.

The project's expected outcome is: Climate resilience of the Natural Protected Area Biosphere reserve “Prutul de Jos” is enhanced and communities and local authorities have increased their capacities for climate change adaptation.

The project will be implemented in the Lower Prut area in the Southern part of the Republic of Moldova including the Prut River and the floodable lakes. A wetland stretches along the Prut River, covering a mosaic of water ecosystems, meadows, and forests. The territory (more than 14,771 ha) is a part of Cahul district, that consists of the town of Cahul as buffer region and the administrative-territorial boundaries of the communities Brînza, Cîşliţa-Prut, Colibaşi, Crihana Veche, Giurgiuleşti, Manta, Slobozia Mare, Vadul lui Isac and Văleni.

The Biosphere Reserve "Prutul de Jos" of Moldova has become the first protected area of Moldova, which has gained international status. With the recent adoption of several regulatory acts in Moldova including the Law on the foundation of the Biosphere Reserve "Prutul de Jos" in 2018, a solid base and incentives for further development and expansion of protected areas within the country were created. Based on a climate vulnerability assessment of the area the project strives to develop national and local stakeholders' capacities to enhance the foundations for an effective, while inclusive management of the protected area.

Public awareness raising about environmental issues, including the value of the protected area and its ecosystem services as well as climate change impacts, is an important element of the project's implementation strategy.

To ensure the financial transparency and accountability for the project and comply with the Terms and Conditions of the Grant Agreement EcoContact (Contractor) is launching the tender for selecting a qualified audit company (Auditor) to perform the project Expenditure Verification on an annual basis.

1. Objectives and goals of the Expenditure Verification

The Objective is to:

Carry out the annual Expenditure Verification of the project Enhancing climate resilience in the Biosphere Reserve "Prutul de Jos" financed by the Austrian Development Agency for the period of 01.12.2019 – 30.11.2022.  Expenditure Verification is understood as the work performed by the Auditor under the requirements set out in this document.

The overall project budget is 893,800.00 EUR for the above indicated period. The project is implemented by a lead partner, Public Association “EcoContact” and the local partner Public Association “Centrul de Consultanta Ecologica Cahul” acting based on the partnership agreement. The subject of verification will be expenditures done by both partners in the reporting period.

1. Requirements for the implementation of the assignment.

The Auditor should be a member of a national accounting or auditing body or institution which in turn is member of the International Federation of Accountants (IFAC) or alternatively the Auditor can be a member of a national accounting or auditing body or institution.

The Auditor should have sufficient knowledge of relevant laws, regulations and rules in the country concerned. This includes but is not limited to taxation, social security and labor regulations, accounting and reporting. These should be confirmed with CVs of the staff/experts involved in expenditure verification.

III. Auditing standards

The Auditor shall undertake this Engagement in accordance with:

• The International Standard on Related Services (‘ISRS’) 4400 Engagements to per- form Agreed-upon Procedures  regarding  Financial  Information  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, in- dependence, professional competence and  due  care,  confidentiality, professional behaviour and technical standards. Although ISRS 4400 provides that independence is not a requirement for Agreed-upon procedures engagements, the Contracting Authority requires that the Auditor is independent from the  Beneficiary and  complies with the  independence requirements of the  IFAC Code  of Ethics for Professional Accountants.
• National standard deemed relevant to the current assignment should be applied in the implementation of current assignment.

III. Procedure to be performed by the Auditor

Financial statement that is to be presented to the Auditor by the Contractor should follow the approved budget lines, show the least same level of detail and consists of summary and a detailed breakdown that includes budget vs. expenditure comparison and a detailed voucher list classified according to the relevant budget lines and  covers all project expenses and  funds received from 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. The Financial Statement will cover all project expenses and funds received from ADA, the Grant Recipient and all other donors.

The Expenditure Coverage Ratio (ECR) presents the total amount of expenditure to be verified expresses as a percentage of the total expenditure which has been the subject of this verification. 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 Contractor reserve the right to share the Expenditure Verification Report  and  its annexes with all donors.

The Auditor should verify following aspects on the basis of original documents:

• Costs declared in the Financial Statement are justified by the  relevant  supporting documents
• Costs meet eligibility criteria stipulated in the Grant Agreement and its annexes.
• Original vouchers are clearly associated with the project and the projects time frame.
• All invoices have been settled and paid for.
• Financial resources have been used efficiently, cost effectively and solely for the purpose for which they were provided.
• Generally Accepted Accounting Standards are met.
• Conversion of Currency has been calculated correctly.
• Accrued interest (if any) has been declared.
• Expenses have been correctly assigned to budget items.
• Over expenditure, if any, lies within the thresholds stipulated in the Grant Agreement.
• Usage of budget funds under “unforeseen” or “contingency reserve” has been approved by ADA.
• Indirect costs, if foreseen in the budget, have been calculated properly.
• Procurement regulations have been met (as stipulated in the Grant Agreement and EcoContact internal procedures).
• Other revenues originally not foreseen in the financial plan were registered or revenues foreseen in the financial plan were not realized.
• The contract, terms and conditions have been complied with.
• Applicable tax laws and regulations have been complied with.
• Applicable Social and Labour Laws have been complied with.
• An adequate, effective Internal Control System exists.
• All assets and equipment have been incorporated in the asset list.
• Assets and equipment have been used for the project purposes.
• Regulations on travel expenses have been followed.
• Sub-grants foreseen in the project document have been provided to third parties and have been properly accounted for on the basis of actual costs.
• Applicable visibility regulations have been adhered to.
• Recommendations from previous periods have been implemented (not applicable for the first year).

1. Period of Expenditure verification

The Audit will be carried out during three consecutive years, there will be three verification periods that are as follows: 01.12.2019 – 30.11.2020; 01.12.2020 – 30.11.2021; 01.12.2021 – 30.11.2022. Period for conducting the audit will be agreed with the selected company.

1. The Expenditure Verification Report

The Audit shall produce an Expenditure Verification Report that contains following aspects:

• Title
• Addressee
• Brief description of the project and partner(s)
• Period covered by the report
• Total amount of budgeted and actual incomes
• Complete list of project funds transferred, including donors’ names, dates and ex- change rates
• Total amount of actual expenditures verified
• Expenditure Coverage Ratio
• Description of the procedures performed
• Factual findings
• Recommendations, if applicable
• Follow up of previous recommendations, if applicable
• Other relevant matters
• Date of the report
• Auditor’s address and signature
• Annexes
  • Financial Statement
  • Bank account statements
  • List of payable invoices, if any
  • In case ineligible costs are detected, a list of respective vouchers
  • Asset list
  • If expenses contain Value Added Tax (VAT), the Auditor shall certify that Grant Recipient is not exempt from VAT and cannot reclaim it either

The Report have to include the Report of the independent auditor (1) according to the standard format ISA 800/805, IFAC and the Management Letter (2).  The Management Letter   will include the audit findings and the weak issues identified. The documents shall be provided in English and Romanian.

The Auditor will propose recommendations for the addressing the identified gaps, being presented in the priority order to be solved.

The Report it is signed by the auditor which carry out the audit (title) and the Audit Company.

The opinion and recommendations of the auditor have to be clearly presented in the Report and in the Management Letter. The Report and the Management Letter will be prepared in Romanian and English and will be presented, both on paper and electronic format (in pdf format and Word), not later than in 2 weeks from the date of the finalization of the audit.

1. Confidentiality

The Auditor which will carry out the audit (title) and the Audit Company will submit a Declaration of Confidentiality assuming the responsibility for keeping the data and information confidentiality, which they will examine during the audit process.

1. The Responsibilities of the Beneficiary

Contractor will ensure access to all documents requested by the auditor and will provide the necessary space for the conducting of the audit works.

Contractor will provide the auditor the Financial Statement as described in Section III.

Contractor will offer all necessary support to the auditor for the facilitation of the audit works.

Contractorwill offer a Management Response on the audit conclusions in Romanian and English.

1. Qualification requirements

Obligatory requirements

• Experience in the domain of minimum 5 years;
• Experience in conducting organizational audits for NGOs, financed by national and international organisations;
• Fluent knowledge of Romanian and English at the adequate level to analyse and present, as the Expenditure Verification Report and the Management Letter have to be presented in English and Romanian.

Structure of the offer:

• Description of the company and arguments for the opportunity of its selection;
• Name of the company, address, contact person and phone number;
• List of organizations for which the audit company carried out audits during the last 5 years;
• Copy of the licence for the audit activities;
• Description of the qualification of the members of the audit team;
• CV-s of the auditor or auditors who will carry out the audit with the list of organisations for which they carried out the audit and a list of 3 reference persons/companies;
• Financial offer.
• The offer has to be submitted in English.

Evaluation criteria:

• Presentation of the full set of documents indicated in the Structure of the offer, indicated above;
• Relevant experience in the requested audit, specific to non-governmental organisations in accordance with international standards issued by the International Federation of Accountants, IFAC or a national standard deemed equivalent;
• Qualification of the auditor/auditing team which will carry out the audit;
• The most advantage offer respecting the indicator quality/price.

The selection of the Auditor will be approved by the Coordination Office Chisinau of ADA

The Submission of the offers:

The deadline for the submission of the offers: October 15, 2020

The offers could be sent to the address: MD-2009, Chişinău, str. Vlaicu Părcalab 27/1,  or by e-mail to the address procurement@ecocontact.md  with the statement “Tender - Audit Company”.

Additional information could be obtained at the phone: 022 99 61 62