Myanmar: Audit Firm

TERMS OF REFERENCE

1. Introduction

Plan International –Myanmar Office (“the Organization”) has received a grant funds for the Building Resilience and Adaptation to Climate Extremes and Disasters (BRACED) Myanmar Alliance project from the UK Department for International development (DFID) under the International Climate Fund. These funds are being managed by KPMG, who act as a Fund Manager of the BRACED Programme.

DFID has awarded a three year grant to implement the BRACED programme in Myanmar to an alliance led by the Plan International UK. Under this programme, the BRACED Myanmar Alliance (including implementing partners; Action Aid, BBC Media Action, the Myanmar Environmental Institute, World Vision, UN Habitat, and Plan Myanmar) will support community resilience building in 155 target communities in 8 Townships.

Project period: 01 Jan 2015 to 31 December 2017

Total Grant Fund : GBP 4,999,974.22

Plan International Myanmar is expected to deliver the following results within the duration of the grant period:

1. Knowledge and Resources: Develop targeted communities’ knowledge, skills and increase access to resources to mitigate the risks of and recover from climate shocks and stresses

2. Governance: Support Institutions (gov’, non-gov’ and private sector) to be more coordinated and responsive, to manage climate and disaster risks

3. Learning and advocacy: Document and disseminate evidence on best practices of strengthening resilience that is used to inform international, national and local policies and practices.

An annual external audit is required in the agreement between Plan International UK and the Fund Manager of the Programme. Plan International UK therefore wishes to engage the services of an audit firm for the purpose of the auditing the project expenditure between 01 April 2016 to 31 March 2017 amounting approximately GBP 1,872,000.

The audit shall be carried out in accordance with International Standards on Auditing (ISA 800) and KPMG Grantee Guidelines (Annex1). The audit shall be carried out by an external, independent and qualified auditor (Certified Public Accountant/Authorized Public Accountant).

2. Objectives

This expenditure verification is an engagement to perform certain agreed-upon procedures with regard to the Record of Expenditure for the project expenditure.

The objective of this expenditure verification is for the Auditor to carry out the specific procedures listed in Annex 3A to these ToR and to submit to the Plan International UK/Fund manager KPMG a report of factual findings with regard to the specific verification procedures performed. Verification means that the Auditor examines the factual information in the Record of Expenditure of the above mentioned project and compares it with the terms and conditions of the contract;

■ To obtain and examine the last annual project financial statements submitted to the fund manager and to reconcile these statements to the accounting records held by the organisation;

■ To check that the incomes and expenditures (including in-kind contributions) have been duly and properly recorded in the financial statements (including verification of exchange rates used), that they are supported by proper evidence and wholly, exclusively and necessarily incurred for the activities of the BRACED project as per the approved budget;

■ To check that the contribution made by BRACED and the matching funds have been duly and properly recorded in the project financial statements and that they are supported by proper evidences;

■ To check that the Implementing Partner complies with the clauses in the BRACED Grant Agreement;

■ Any specific additional procedures requested directly by the BRACED Fund Manager (as per agreement);

■ Conclusion of whether the funds have been spent in accordance with the Grant Agreement; and

■ Any specific matters required to be included by the Fund Manager and/or DFID.

3. Scope of Audit

The financial report covers the period 01 April 2016 to 31 March 2017 and the activities entitled and it was signed for endorsement by the Plan International UK on 21^st January 2015.

The subject of this expenditure verification is:

The Record of Expenditure, the Record of Expenditure linked to a replenishment request and the final Record of Expenditure linked to the financial closure of the above mentioned financial report.

The period covered by the expenditure verification is <01 April 2016 to 31 March 2017>. The work of the Auditor involves performing the specific procedures listed in Annex 2A.

4. Verification Process and Methodology

Listing of Procedures, Documentation and Verification Evidence

The Auditor plans the work so that effective expenditure verification can be performed. The Auditor performs the procedures listed in Annex 2A of these ToR (‘Listing of specific procedures to be performed’) and applies the guidelines in Annex 2B ('Guidelines for specific procedures to be performed').

The evidence to be used for performing the procedures in Annex 2B is all financial and non-financial information which makes it possible to examine the expenditure declared for the grants in the Record of Expenditure. The Auditor uses the evidence obtained from these procedures as the basis for the report of factual findings.

The Auditor documents matters which are important in providing evidence to support the report of factual findings, and evidence that the work was carried out in accordance with ISRS 4400 and these ToR.

Planning - Start of the verification

Plan International UK requires the verification of the financial report specified in Section 3 above (Scope) to commence as soon as possible but not later than within 7 calendar days after the signature of the Plan International UK’s order form/contract.

Reporting

The report on this expenditure verification should describe the purpose, the agreed-upon procedures and the factual findings of the engagement in sufficient detail in order to enable the Budget Management and the Contracting Authority to understand the nature and extent of the procedures performed by the Auditor and the factual findings reported by the Auditor.

It is recommended that the auditor submits, before issuing the final report, a draft report to the PE Management in order to validate the findings (i.e. to sort out potential misunderstandings, additional information/documents to be provided, etc).

The use of Annex 3 Illustration of Independent Auditor’s Report format is compulsory.

The Auditor should provide a report to the Contracting Authority within 35 working days after the day of signature of these ToR.

Audit site

The audit shall be conducted at Plan International – Myanmar Office and Partners organizations offices in Yangon City. Additionally, it will also have access to Plan International UK files, if the sample includes expenses incurred by Plan International UK.

How to apply

Interested consultants should submit via email a cover letter, a draft work plan, CV describing past experience with similar work and two references to: Myanmar.CO@plan-international.org

Subject Line: Audit Firm

Closing date: June 7, 2017. 5:00 PM

Reference & background checks will be performed for successful candidates. Only shortlisted candidates will be contacted. Plan International Myanmar is an equal opportunity employer committed to the well-being of children together with Gender Equality and does not tolerate child abuse and sexual harassment.

General Obligation

The consultancy fees is also subject to income tax of 2% or 2.5 % as per Income Taxation Law. Consultant must provide their full address, NRC or passport copy for individual consultant, and company registration for a firm/organization once been selected for taxation purposes.

Annex 1: Audit instruction for BRACED project within DFID Grantee Guidelines

Annex 2A Listing of Specific Procedures to be performed

1 General Procedures

1.1 Terms and Conditions of the grant agreement

The Auditor obtains an understanding of the terms and conditions of the grant agreement by reviewing the grant agreement and its annexes. Other relevant information includes the rules and procedures to be followed for this form of project or programme implementation and which are set out solely in the grant management guidelines.

The Auditor obtains a copy of the original grant agreement and the approved budget. The Auditor obtains and reviews the Record of Expenditure.

1.2 Record of Expenditure for the grant agreement

The Auditor verifies that the Record of Expenditure complies with the reporting requirements for the grant agreement including the requirements in Section 4.13 of the guarantee guidelines.

The Auditor verifies that the expenses reported in the Record of Expenditure comply with the relevant rules and regulations applicable to the grant agreement.

The Record of Expenditure should be drawn up in the language of English.

1.3 Rules for Accounting and Record keeping

The Auditor examines – when performing the procedures listed in this Annex - whether the grant agreement management has complied with the following main rules for accounting and record keeping in Section 4.4 of the grant management guidelines:

• The Implementing Partner shall maintain books, documents, and other evidence relating to the BRACED funded project activities.

• Accounting records that are supported by documentation will at a minimum show all costs incurred under the Grant Agreement, receipt and use of goods and services acquired under the Grant Agreement and the overall progress of the project.

• The Implementing Partner shall maintain financial records, supporting documents, statistical records, and all other records pertinent to the award in accordance with generally accepted accounting principles.

• Implementing Partners are required to establish accounting and financial control systems in accordance with good practice that enable the Implementing Partner to manage and account for all project expenditure

• Implementing Partners are required to retain documentary evidence of all project expenditure in accordance with good practice and, when requested, make this available to the BRACED Fund Managers for inspection at any time, given advance notice as provided for in the Grant Agreement. Such records shall be kept for at least six years after completion of the use of BRACED funds

1.4 Reconciling the Record of Expenditure to the Accounting System and Records for the expenditure report

The Auditor reconciles the information in the Record of Expenditure to the grants management's accounting system and records (e.g. trial balance, general ledger accounts, sub ledgers etc.).

1.5 Exchange Rates

Where applicable and appropriate the Auditor verifies that amounts stated in GBP or in a currency other than the GBP have been converted using each organisational policy of the implementing partner. Expenditure may be stated in local or foreign currency.

2 Procedures to verify conformity of Expenditure with the Budget and Analytical Review

2.1 Budget of the Grant Agreement

The Auditor carries out an analytical review of the expenditure headings in the Record of Expenditure for the grant agreement.

The Auditor verifies that the budget in the Record of Expenditure corresponds with the budget of the grant agreement (authenticity and authorisation of the initial budget) and that the expenditure incurred was indicated in the budget of the grant agreement.

2.2 Amendments to the Budget of the project

The Auditor verifies whether there have been amendments to the budget of the grant agreement and whether the provisions in Sections 4.5 of the Grant management Guidelines were applied.

3 Procedures to verify selected Expenditure

3.1 Allowable and Disallowable Expenditure

The Auditor verifies, for each expenditure item selected, the compliance and so the eligibility of the expenditure with the terms and conditions of the applicable grant agreement and Section4.6 of the Grant management Guidelines as follows:

“Implementing Partners will only incur expenses within the approved BRACED budget and will only charge actual incurred expenditure to BRACED. All actual expenditure charged to BRACED must be fully supported by expenditure documentation. Charges made to BRACED which are not based on actual expenditure will not be allowed. Cash should only be used for small expenditures. If cash is used for larger expenditures the rationale should be documented. Expenditure above £300 will be presumed disallowable without an appropriate documented rationale.

Implementing Partners will only incur expenses and charge BRACED in accordance with the approved budget. To be allowable, expenditure must:

■ Be reasonable, in nature and amount. A cost is considered reasonable if it would be incurred by a

prudent person in the conduct of similar types of activities;

■ Be necessary for the performance of the project activities;

■ Be allocable (of direct benefit to the project), directly or indirectly;

■ Be accorded consistent treatment;

■ Be determined in accordance with generally accepted accounting principles;

■ Not be included as a charge to other projects in the current or prior period (where there are co-financed costs, the allocation should be clearly documented);

■ Be adequately documented;

■ Be actually incurred expenditure and supported by original documents; and

■ Be a reasonable proportion of total costs, if the cost is a shared cost.

Implementing Partners will be expected to provide evidence of the above criteria on request.

Examples of costs that would be considered disallowable include:

■ Costs for the purchase of fixed assets unless expressly approved in the budget;

■ Advertising and public relations costs – these are costs of advertisement and public relations not related to this project e.g. costs incurred solely to promote the Implementing Partner;

■ Contributions – gifts and donations by Implementing Partners;

■ Entertainment – costs of amusement, social activities, ceremonies and costs relating to these activities such as meals, lodging, rentals and transportation;

■ Alcoholic beverages;

■ Fines and penalties – costs of fines and penalties resulting from violations of, or failure by the Implementing Partner to comply with, the laws;

■ The costs of idle facilities – idle facilities means completely unused facilities that are excess to the Implementing Partner’s current needs;

■ Costs of fundraising;

■ Interest on loans;

■ Pre-award costs – costs incurred before the agreed project start date (unless otherwise agreed);

■ Meeting/sitting allowances – allowances to staff and committee members for attending meetings;

■ Per diems which include overnight accommodation costs. Overnight accommodation should be charged as actual. (Per diems which relate only to small amounts of daily subsistence or other appropriate allowances will be allowable);

■ Taxi fares where good public transport networks are available or in the absence of an appropriate justification; and

■ Business class or first class flight tickets.

The list above is not exhaustive and judgement and prudence should be exercised. Value for Money (VfM) principles should also always be considered when making project expenditures.

Any disallowed expenditure will not be reimbursed and must be refunded to the Fund Manager by the Implementing Partner before subsequent disbursements will be made.

If in doubt, please contact the Fund Manager before making the expenditure.”

Annex 2B Guidelines for Specific Procedures to be performed

1 Verification Evidence

When performing the specific procedures listed in Annex 2A the Auditor may apply techniques such as inquiry and analysis, (re)computation, comparison, other clerical accuracy checks, observation, inspection of records and documents, inspection of assets and obtaining confirmations.

The Auditor obtains verification evidence from these procedures to draw up his report of factual findings. Verification evidence is all information used by the Auditor in arriving at the factual findings and it includes the information contained in the accounting records underlying the Record of Expenditure and other information (financial and non-financial).

The requirements that relate to verification evidence are:

· Expenditure should be identifiable, verifiable and recorded in the accounting records for the grants agreement and the grant management guidelines;

· Plan International UK and consortium partners will allow any external auditor to carry out verifications on the basis of supporting documents for the accounts, accounting documents and any other document relevant to the financing of the grant agreement. Plan International UK and consortium partners give access to all documents and databases concerning the technical and financial management of the grant agreement.

Moreover, for the purpose of the procedures listed in Annex 2A, evidence:

· Shall be available in the original form or in the form of copies, including in electronic form.

Guidance: records and accounting and supporting documents should be available in documentary form, whether paper, electronic or other medium (e.g. a written record of a meeting is more reliable than an oral presentation of the matters discussed). Electronic documents can be accepted only where:

• the documentation was first received or created (e.g. an order form or confirmation) by the Beneficiary(ies) in electronic form; or

• the Auditor is satisfied that the Beneficiary uses an electronic archiving system which meets established standards (e.g. a certified system which complies with national law).

· Should preferably be obtained from independent sources outside the entity (an original suppliers invoice or contract is more reliable than an internally approved receipt note);

· Which is generated internally is more reliable if it has been subject to control and approval;

· Obtained directly by the Auditor (e.g. inspection of assets) is more reliable than evidence obtained indirectly (e.g. inquiry about the asset).

If the Auditor finds that the above criteria for evidence are not sufficiently met, he/she should detail this in the factual findings.

2 Obtaining an understanding of the terms and conditions of the Grants Agreement (Annex 2A - procedure 1.1)

The grant agreement is a document laying down the activities to be carried out and the human and material resources required, the budget and the detailed technical and administrative implementing arrangements for decentralised execution of a project or programme over a specified period by direct labour and/or public procurement and/or the award of grants. The grant agreement includes a work programme, a budget and a financing plan and technical and administrative implementing arrangements. The Management structure which is applicable for the management and implementation of the grant agreement is described in the relevant sections of the grant agreement.

The Auditor obtains an understanding of the terms and conditions of the grant agreement and the other relevant information. If the Auditor finds that the terms and conditions to be verified are not sufficiently clear he should request clarification from Plan International UK, the Contracting Authority.

3 Selecting Expenditure for Verification (Annex 2A - procedures 3.1)

The expenditure in the Record of Expenditure should in principle be presented in conformity with section 4.7 of the Grant Management Guidelines (non exhaustive example of documents making up a Record of Expenditure).

Expenditure subheadings can be broken down into more subcategories and into individual expenditure items or classes of expenditure items with the same or similar characteristics. The form and nature of the supporting evidence (e.g. a payment, a contract, an invoice etc) and the way expenditure is recorded (i.e. journal entries) vary with the type and nature of the expenditure and the underlying actions or transactions. However, in all cases expenditure items should reflect the accounting (or financial) value of underlying actions or transactions no matter the type and nature of the activity or transaction concerned.

Value should be the principal factor used by the Auditor to select expenditure items or classes of expenditure items for verification. The Auditor selects high value expenditure items to ensure an appropriate coverage of expenditure.

4 Verification Coverage of Expenditure (Annex 2A - procedures 3.1)

The Auditor applies the principles and criteria set out below when planning and performing the specific verification procedures for selected expenditure in Annex 2A (procedures 3.1).

Verification by the Auditor and verification coverage of expenditure items does not necessarily mean a complete and exhaustive verification of all the expenditure items that are included in a specific expenditure heading or subheading. The Auditor should ensure a systematic and representative verification. Depending on certain conditions (see further below) the Auditor may obtain sufficient verification results for an expenditure heading or subheading by looking at a limited number of selected expenditure items.

The Auditor may apply statistical sampling techniques for the verification of one or more expenditure headings or subheadings of the Record of Expenditure. The Auditor examines whether ‘populations’ (i.e. expenditure subheadings or classes of expenditure items within expenditure subheadings) are suitable and sufficiently large (i.e. are made up of large numbers of items) for effective statistical sampling.

If applicable the Auditor should explain in the report of factual findings for which headings or subheadings of the Record of Expenditure sampling has been applied, the method used, the results obtained and whether the sample is representative.

The Expenditure Coverage Ratio (‘ECR’) represents the total amount of expenditure verified by the Auditor expressed as a percentage of the total amount of expenditure reported for the grant agreement in the Record of Expenditure.

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 Record of Expenditure is at least 10%.

5 Procedures to verify selected Expenditure (Annex 2A - procedures 3.1)

The Auditor verifies the selected expenditure items by carrying out procedures 3.1 listed in Annex 2A and reports all the factual findings and exceptions resulting from these procedures. Verification exceptions are all verification deviations found when performing the procedures set out in Annex 2A.

The Auditor quantifies the amount of the verification exception found and the potential impact on the DFID grants, should the KPMG declare the expenditure item(s) concerned ineligible. The Auditor reports all exceptions found including the ones of which he cannot quantify the amount of the verification exception found and the potential impact on DFID grants.

The Auditor should verify whether the expenditure for a selected item was incurred in accordance with the applicable procurement, nationality and origin rules by examining the underlying documents of the procurement and purchase process. Such documents relate to the opening of tenders, the assessment of the eligibility of tenderers and conformity of tenders, the evaluation of the offers and the decisions with regard to the awarding of the contract. When examining these procurement documents the Auditor takes into account the risk indicators listed at the end of this Annex and he reports, if applicable, which of these indicators were identified.

Annex 3

REPORT OF FACTUAL FINDINGS

To Plan International UK

Dear

In accordance with the terms of reference dated that you agreed with us, we provide our Report of Factual Findings (“the Report”), with respect to the accompanying Record of Expenditure for the period covering (Annex 1 of this Report). You requested certain procedures to be carried out in connection with the Record of Expenditure and the DFID financed Financial Statement Building Resilience and Adaptation to Climate Extremes and Disasters (BRACED), the approved budget.

Objective

Our engagement was an expenditure verification which is an engagement to perform certain agreed-upon procedures with regard to the Record of Expenditure for the above mentioned Project. The objective of this expenditure verification is for us to carry out certain procedures to which we have agreed and to submit to you a report of factual findings with regard to the procedures performed.

Standards and Ethics

Our engagement was undertaken in accordance with:

• International Standard on Related Services (‘ISRS’) 4400 Engagements to perform Agreed-upon Procedures regarding Financial Information as promulgated by the International Federation of Accountants (‘IFAC);

• the Code of Ethics for Professional Accountants issued by the IFAC. Although ISRS 4400 provides that independence is not a requirement for agreed-upon procedures engagements, the Contracting Authority requires that the auditor also complies with the independence requirements of the Code of Ethics for Professional Accountants;

Procedures performed

As requested, we have only performed the procedures listed in Annex 2A of the terms of reference for this engagement.

These procedures were performed solely to assist the KPMG in evaluating whether the expenditure claimed for the financial report in the accompanying Record of Expenditure is eligible in accordance with the terms and conditions of the contracts and guarantees’ guidelines.

Because the procedures performed by us did not constitute either an audit or a review made in accordance with International Standards on Auditing or International Standards on Review Engagements, we do not express any assurance on the accompanying Record of Expenditure.

Had we performed additional procedures or had we performed an audit or review of the Record of Expenditure for the project in accordance with International Standards on Auditing, other matters might have come to our attention that would have been reported to you.

Sources of Information

The Report sets out information provided to us by you in response to specific questions or as obtained and extracted from your accounts and records

Factual Findings

The total expenditure which is the subject of this expenditure verification amounts to £.

The Expenditure Coverage Ratio is . This ratio represents the total amount of expenditure verified by us expressed as a percentage of the total expenditure which has been subject of this expenditure verification.

We report the details of our factual findings which result from the procedures that we performed in Chapter 2 of this Report.

Use of this Report

This Report is solely for the purpose set forth in the above objective.

This report is prepared solely for the use of the KPMG. This report may not be relied upon by you for any other purpose, nor may it be distributed to any other parties.

The Contracting Authority may only disclose this Report to others who have regulatory rights of access to it in particular DFID.

This Report relates only to the Record(s) of Expenditure specified above as well as on Point 6 of the terms of reference.

We look forward to discussing our Report with you and would be pleased to provide any further information or assistance which may be required.

Yours sincerely

<*dd Month yyyy*>,

Information about the Project proposal

<***Chapter 1 should include a brief description of the contract and the implementation plan, the management structure which is responsible for the management and implementation of the project and key financial/budget information (maximum 1 page)**>*

Procedures performed and Factual Findings

We have performed the specific procedures listed in Annex 2A of the terms of reference for the expenditure verification of the Project Proposal ('ToR'). These procedures cover:

1 General Procedures

2 Procedures to verify conformity of Expenditure with the Budget and Analytical Review

3 Procedures to verify selected Expenditure

We have applied the rules for selection of expenditure and the principles and criteria for verification coverage as set out in Annex 2B (sections 3 and 4) of the ToR.

<*Explain here difficulties or problems encountered if any>*

The total expenditure verified by us amounts to £ and is summarised in the table below. The overall Expenditure Coverage Ratio is .

**

We have verified the selected expenditure as shown in the above summary table and we have carried out, for each expenditure item selected, the verification procedures specified at point 3.1 of Annex 2A of the ToR for this expenditure verification.

We report our factual findings resulting from these procedures below

1. General Procedures

1.1 Terms and Conditions of the contract

We have obtained an understanding of the terms and conditions of this grants agreement in accordance with the guidelines in Annex 2B (section 1) of the ToR.

1.2 Record of Expenditure for Financial report

1.3 Rules for Accounting and Record keeping

1.4 Reconciling the Record of Expenditure to the Accounting System and Records for the financial report

1.5 Exchange Rates

2. Procedures to verify conformity of Expenditure with the Budget and Analytical Review

2.1 Budget of the contract

2.2 Amendments to the Budget of the contract

3. Procedures to verify selected Expenditure

We have reported further below all the exceptions resulting from the verification procedures specified at point 3.1 of Annex 2A of the ToR insofar these procedures did apply to the selected expenditure item.

We have quantified the amount of the verification exceptions found and the potential impact on the DFID contribution, should KPMG declare the expenditure item(s) concerned ineligible (where applicable taking into account the percentage of funding of the Commission and the impact on expenditure). We have reported all exceptions found including the ones of which we cannot quantify the amount of the verification exception found and the potential impact on the DFID contribution.

3.1 Eligibility of Expenditure

We have verified, for each expenditure item selected, the eligibility criteria set out at procedure 3.1 in Annex 2A of the ToR for this expenditure verification.

this part should be presented under the form of a table

3.2 Non-eligible costs

Annex 1 Record of Expenditure for the financial report

<*Annex 1 should include the Record of Expenditure for the Financial Report which has been the subject of the verification. It should be dated and indicate the period covered.>*

Annex 2 Terms of Reference Expenditure Verification

<*Annex 2 should include a signed and dated copy of the terms of reference for the expenditure verification including Annex 1and Annex 2A*

Interested consultants should submit via email a cover letter, a draft work plan, CV describing past experience with similar work and two references to: Myanmar.CO@plan-international.org

Subject Line: Audit Firm

Closing date: June 7, 2017. 5:00 PM

Reference & background checks will be performed for successful candidates. Only shortlisted candidates will be contacted. Plan International Myanmar is an equal opportunity employer committed to the well-being of children together with Gender Equality and does not tolerate child abuse and sexual harassment.