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External Audit of Effective Business Associations for Dynamic and Inclusive Growth in Vietnam

Update: June, 20/2017 - 11:58

Terms of Reference
 

External Audit of Effective Business Associations for Dynamic and Inclusive Growth 

in Vietnam
 

BACKGROUND

The Asia Foundation will conclude the Effective Business Associations for Dynamic and Inclusive Growth in Vietnam with a total budget of AUD 1,500,000 funded by the Australian Department for Foreign Affairs and Trade. Effective Business Associations for Dynamic and Inclusive Growth in Vietnam to strengthen Vietnamese business and cooperative associations’ capacity to work effectively with their members to support improved policy making and equitable growth.  The program includes two components (i) enhance capacity of Vietnam Business Associations (VBAs) to support their members and contribute to evidence-based policy making; and (ii) improve the ability of cooperative associations for policy advocacy and support to cooperative for income generation. The duration of this project was 3.5 years from November 1, 2013 to May 31, 2017.
 

Activity

These terms of reference address the requirement for an external audit of the project accounts of Effective Business Associations for Dynamic and Inclusive Growth in Vietnam to strengthen Vietnamese project and of the funds received and expenditures for the accounting period starting November 1, 2013 and until May 31, 2017.

The external auditor must be completely impartial and independent from all aspects of the management or financial interests in The Asia Foundation.

 

Audit scope

The audit should be carried out in accordance with the International Standards of Auditing (ISAs).

The contractor will conduct the audit in accordance with International Standards on Auditing. Those Auditing Standards require the contractor to comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement.

Because of the inherent limitations of an audit, together with the inherent limitations of internal control, there is an unavoidable risk that some material misstatement may not be detected, even though the audit is properly planned and performed in accordance with International Standards on Auditing.

In making its risk assessments, the contractor considers internal control relevant to the entity’s preparation of the Statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. However, the contractor will communicate to The Asia Foundation in writing concerning any significant deficiencies in internal control relevant to the audit of the Statements that contractor have identified during the audit. 
 

Special attention should be paid by the auditor as to whether:

a) Donor funds have been used in accordance with the conditions of funding agreements and The Asia Foundation policy with due attention to efficiency and economy, and only for the purposes for which funding was provided.

b) Goods and services have been procured in accordance with the relevant procedures

c) All necessary supporting documents, records and accounts have been kept in respect of each project with clear linkages to the progress reports presented to the Donor.

d) The financial statements have been prepared in accordance with international accounting standards considering The Asia Foundation’s system of accounting which is accrual basis.

The audit should include a rigorous examination of the system of internal controls, including organization structure, authority levels, staff competence, accounting records and supporting documentation, separation of duties, and monitoring arrangements. Where certain controls are impracticable, appropriate compensating controls should exist.

The auditor should plan the audit so that there is a reasonable expectation of detecting material misstatements in the accounts resulting from fraud, error or non-compliance with laws and regulations as may be necessary. If the auditor’s suspicions are aroused, s/he must inquire into all the circumstances until satisfied. If material irregularities are discovered, they must be reported to The Asia Foundation’s management immediately.
 

Financial Statements

The financial statements must be prepared in The Asia Foundation’s own format from the accounting records, however, at a minimum this must include:

a)      A Receipts and Payments or an Income and Expenditure Statement (in The Asia Foundation’s currency of operation) showing separately all income received from the Donor. The accounts should include expenditure by budget line item, and comparative figures for the preceding year together with and any other information included in the format of the standard financial statements provided by Donor. 

b)      Balance sheet as at the year-end (in The Asia Foundation’s currency of operation).

c)      Notes to the financial statements presenting:

·        A brief explanation of the programme/ project objectives.

·        Accounting policies.

·        Any supplementary financial information or schedules in support of (a) and (b) above.

d) The financial statements should be signed by The Asia Foundation.
 

Access to Facilities and Documents

The auditor will have full and complete access at any time to all records and documents (including books of account, legal agreements, bank records, invoices and contracts etc.).

The auditor will have a right of access to banks and depositories, consultants, contractors and other persons or companies engaged by The Asia Foundation over the period under the audit review.
 

Audit Report

The audit report is intended for the information of Donor and The Asia Foundation. The audit report should be addressed to The Asia Foundation. The opinion expressed in the audit report will address whether:

a)      The financial statements present a true and fair view of the financial position of The Asia Foundation. In expressing this opinion, the auditor must consider whether proper accounting records have been maintained in each case, and whether the financial statements agree with these records.

b)      Funds provided for the project by Donor have been used in accordance with the relevant agreement and Donor requirement and The Asia Foundation regulation.

c)      The auditor shall make a statement confirming they have complied with these terms of reference in the introduction to the management letter.

On completion of Audit, the Audit Report will be issued in 3 sets along. The Audit Report will also be supported with the certificate from the Audit Firm that they have thoroughly checked the accounts as per terms of reference and their findings are based on the same
 

Management Letter

In addition to the audit report, the auditor will prepare a “Management Letter” addressed to The Asia Foundation, which will:

a) Give comments and observations on the accounting records, systems, and controls that were examined during the audit;

b) Identify specific deficiencies or areas of weakness in systems and controls, and make recommendations for their improvement;

c) Include management comments and observations relating to the recommendations in (b) above.

• Include management comments from The Asia Foundation’s program/project management.

• The auditors will bring matters to the attention of management as they arise and seek clarification and/or management’s comments during the audit.

d) Communicate matters that have come to the auditor’s attention that might have a significant impact on the implementation of the programme.

e) Refer to any other matters that the auditor considers relevant.

f) In all cases, a management letter MUST be issued. If no issues have arisen during the course of the audit, the auditors must issue a management letter stating that no issues have arisen.

g) Include a high, medium or low prioritization on all issues arising in the management letters. Ranks should be allocated according to the following criteria:

• A - a major weakness or a recurring issue that must be addressed soon

• B - an important matter that will significantly improve the control environment, the accounting system or the operations of the business but is not so serious or prevalent as to be considered a major weakness

• C - a minor (or isolated) weakness that should nevertheless be addressed to improve the control environment, the accounting system or the operations of the business.
 

Relationship of the parties

The external auditor will be appointed as an independent contractor by The Asia Foundation.

All necessary travel and logistics within Vietnam will be organized and funded by The Asia Foundation in consultation with the external auditor.
 

Timeline

The tentative timeline is as follows:

·        Send the proposal to The Asia Foundation by June 28, 2017

·        The Asia Foundation will notify the selected auditor by July 7, 2017

·        Appointment confirmed and contract process is completed by July 12, 2017

·        Conduct audit work during July 12, 2017 and August 7, 2017

·        Draft audit report submitted to The Asia Foundation by August 14, 2017

·        Final report to be sent to The Asia Foundation by August 18, 2017
 

Supervision: The Auditor will be supervised by the Finance Manager of The Asia Foundation.


Required qualifications and experience

The external auditor should be a qualified auditor, state-authorized, chartered or certified accountant, experienced in applying ISAs, whichever is applicable for the audit.

The auditor must employ adequate staff with appropriate professional qualifications and suitable experience with the relevant standards.

Curriculum vitae (CVs) should be provided to The Asia Foundation by the principal of the audit institution who would be responsible for signing the opinion, together with the CVs of key personnel proposed as part of the audit team.


Expression of interest

Expressions of interest must be submitted no later than June 28, 2017 containing the following information:

•         Outline of the audit approach and methodology to undertaking the assignment

•         Cover letter outlining the proposed audit team and prior relevant experience and contact details of two referees

•         CVs of the principal of the audit institution responsible for signing the opinion, and proposed key personnel

•         Copy of the audit institution’s current registration certificate

•         Financial proposal


Proposal Submission

The Asia Foundation invites “Expression of Interest” from reputable and experienced auditors to undertake assignment for the above project for the time from June 20 to June 28, 2017. 

Interested parties are invited to submit their applications via email to The Asia Foundation at nga.phan@asiafoundation.org (Ms. Phan Quynh Nga). The deadline for the application is June 28, 2017.

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