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Terms of reference for Annual Audit of Project/programme support

Project Name: WWF Finland partnership programme: Thriving environment – wellbeing of people

Introduction

World Wide Fund for Nature (WWF) is one of the leading International Organizations working on environment

in the world. In Greater Mekong sub-region, WWF has its offices and field activities in Cambodia, Laos,

Myanmar, Thailand and Vietnam under a program named WWF-Greater Mekong (WWF-GM).

I. Objectives and scope of the audit

Auditor is going to conduct the annual audit report of the Development Co-operation Project WWF Finland

partnership programme: Thriving environment – wellbeing of people. According to the Ministry for Foreign

Affairs of Finland's general conditions regarding support to non-governmental organizations and

municipalities, the receiving organization must observe principles related to good governance and anti-

corruption activities. State support shall be used only to cover expenses considered necessary and reasonable

in carrying out the project activities. The support-receiving organization shall in its accounting follow the

generally accepted national accounting principles (GAAP). The audit should be carried out in accordance with

the International Standards on Related Services 4400 applicable to agreed-upon procedures engagements

taking into account the conditions set out in the discretionary government transfer decision and in the

additional conditions for programme/project support and relevant national legislation and standards.

The nature of a Development Co-operation Programme/Project is as follows:

• A project is not a legal entity but an accounting subject

• It can include transactions in more than one legal entity (e.g. Partner or Subsidiary)

• It does not prepare statutory Financial Statements

• The statements under audit are the Financial Programme/Project Report and the List of Fixed Assets

• Fixed Assets are not capitalized but recorded as cost when purchased

• The Materiality Level in each audit finding is the equivalent of 200 Euros or 0,15 % of total reported

expenses, if it is higher than 200 Euros.

II. The Reporting

Templates of Engagement Letter and Auditor’s Report are attached to this Audit Instructions. We ask you to

further send the Auditor's Report to the co-operation partner in Finland by email or by regular mail. The

Agreed-upon Procedures are listed in the template of the Auditor’s Report. The report has to be in English (or

in another language exceptionally agreed with the Finnish partner organization) and include the findings of all

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of the agreed-upon procedures. ISRS 4400 report is not meant to be a standard report so each auditor should

in any case adjust the report to reflect the procedures carried out and the observations made during the

procedures.

III. Project information for auditing

1. Project Name

WWF Finland partnership programme: Thriving environment – wellbeing of people

2. Project Donor

Primary Donor: Ministry for Foreign Affairs of Finland (MFA) Network Donor: WWF Finland Primary Donor Funding Source Agreement Number: 89892264

3. Project Location

Vietnam, Laos, and Myanmar

4. Project Duration

01.03.2018 – 31.12.2021

5. Total expenditure

Country TOTAL (EUR) CY 2018 CY 2019 CY 2020 CY 2021

Regional 72,287 17,287 15,000 20,000 20,000

Laos 242,713 72,713 50,000 70,000 50,000

Myanmar 175,000 35,000 60,000 80,000

Total 490,000 90,000 100,000 150,000 150,000

6. Expected time for receiving audit proposal

15 December 2018 COB

7. Expected time needed for the audit (included audit field work)

Late January or early February 2019

8. Expected time to receive audit report

First draft: 01st Mar Final draft: 12th Mar Final report: No later than 17th March

9. Total Audit for” WWF Finland partnership programme: Thriving environment – wellbeing of people” project in Regional, Laos and Myanmar

4 times, annual audit for each Calendar Year (2018-03-01 to 2018-12-31, 2019-01-01 to 2019-12-31, 2020-01-01 to 2020-12-31, 2021-01-01 to 2021-12-31)

10. Audit Deliverables

Independent Auditor´s Report (audit certificate) Engagement Letter Templates of Engagement Letter and Auditor’s Report are attached to this Audit Instructions

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All audit deliverables shall be issued in physical copies and digital copies. The digital copies must be sent to WWF Finland by Audit firm.

11. Supporting documents are available at

WWF-Laos: P.O. Box. 7871 House No.39, Unit 05, Saylom village, Chanthabouly district, Vietiane, Lao PDR; Tel: +856 21216 080; Fax: +856 21251 883

WWF – Greater Mekong: Number 6, Lane 18 Nguyen Co Thach Street, Nam Tu Liem District, Ha Noi, Vietnam Tel: +84 24 37193049; Fax: +84 24 37193049

WWF – Myanmar: 15/C Than Taman Rd, Yangon 11191, Myanmar (Burma)

IV. Audit proposal Guideline

Language of the Proposal: The Proposals prepared by the bidders and all correspondence and documents

relating to the Proposal exchanged by the bidders and WWF-GM shall be written in the English language. Any

printed literature furnished by the bidders may be written in another language so long as accompanied by an

English translation of its pertinent passages in which case, for purposes of interpretation of the Proposal, the

English translation shall govern.

Proposal Currencies: All prices shall be quoted in Vietnam dongs.

Period of Validity of Proposals: Proposals shall remain valid for 60 days after the date of Proposal submission

indicated in the table above.

Submission Deadline: 15 Dec 2018

Proposal: The proposal to be submitted shall include but not limited to the below information:

A - TECHNICAL PROPOSAL

- The audit firm is familiar with the International Standards on Related Services 4400 applicable to agreed-upon procedures engagements taking into account the conditions set out in the discretionary government transfer decision and in the additional conditions for programme/project support and relevant national legislation and standards.

- Experience in auditing ODA projects/Public funds

- Understanding of the audit requirements

- Understanding the deliverable of the requirements

- Approach and methodology to be used

- Initiatives (if any) for improving audit implementation plan

- Implementation plan (starting time and total time needed)

- Human resources arrangement: Team leader should be qualified independent auditors.

B - FINANCIAL PROPOSAL

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Financial proposal are prepared based on the technical proposal in accordance with the requirements and

provisions in the request for proposal, including summary of cost and out of pocket expenses.

Submission of Proposals

The proposals shall be submitted in sealed envelope, containing the Technical Proposal(s) and the Financial

Proposal(s). The outer envelope shall be clearly marked “Proposal for Audit of the WWF Finland partnership

programme: Thriving environment – wellbeing of people” in Vietnam, Cambodia, Laos, Thailand and

Myanmar - DO NOT OPEN BEFORE SUBMISSION DEADLINE”. The sealed envelope shall be addressed to

WWF-Greater Mekong at the following address: Number 6th, Lane 18 Nguyen Co Thach Street, Nam Tu Liem

District, Ha Noi

Alternatively, bidders are allowed to submit their proposal by email. Bidders who intend to submit electronic

proposals must follow the following submission instructions:

- Bidders can submit a proposal by email. The proposal shall be separated in two files: one for technical proposal and one for financial proposal.

- The file shall be in the form of MS word or MS excel (MS Office 2007 at least) or PDF version 7.

- Please send the electronic proposal to lien.caoquynh@wwfgreatermekong.org

- Please be aware that bids or proposals emailed to WWF-GM will be rejected if they are received after the deadline for bid submission. As an email may take some time to arrive after it is sent, especially if it contains a lot of information, we advise all bidders to send email submissions well before the deadline.

- Maximum size for electronic submission: The maximum size per email that WWF-GM can receive is 8MB. Bidders may need to split proposals into parts to fit this limit.

Please note that the proposal must be arrive in the aforementioned mailbox before the submission deadline

Criteria for Selection:

a) Evaluation of Technical Proposal: The evaluation panel will fully evaluate the Technical Proposals. The panel will determine which of the

Technical Proposals pass the minimum agreed technical score specified below.

After the evaluation of Technical Proposals has been completed, WWF-GM will notify those Consultants

whose proposals did not pass the minimum technical score or were considered to be non-responsive to

the TOR.

b) Evaluation of Financial Proposal: The financial evaluation shall be based on the lowest price of those bidding firms which submitted

responsive Technical Proposals. The formula for determining the financial scores is the following:

Sf = 100 x Fm / F, in which Sf is the financial score, Fm is the lowest price and F the price of the proposal

under consideration.

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c) Final evaluation and negotiations: The final ranking of the proposals will be based on the quality of technical proposals and lowest cost. The

total score will be calculated as the weighted sum of the technical and financial scores, with the weights

given to the technical and financial scores being:

70/30 where the technical proposal = 70 and the financial proposal = 30.

With regard to contract negotiations WWF-GM reserves the right to invite the next-ranked firm to

negotiate, if negotiations with the first-ranked firm do not result in a contract.

Bidders who pass the minimum score, but are unsuccessful based on the calculation of the technical and

financial scores, will be notified after the contract with the winner has become effective.

Technical Evaluation Criteria:

Criteria Score

Technical 100

The auditor must be a chartered or registered public accountant. 15

Experience in auditing SIDA funded project 15

Experience in auditing ODA projects/public funds 10

Understanding of the audit requirements 10

Understanding the deliverable of the requirements 10

Approach and Methodology to be used 10

Implementation plan (starting time and total time needed) 10

HR arrangement; Team leader and team member hold CPA or ACCA, CFA or MBA qualification experience with audit of ODA funded projects 15

Initiatives (if any) for improving audit implementation plan 5

Note: The acceptable threshold for technical proposals is set at a minimum score of 70 points out of 100

points. Technical proposals which do not reach this minimum score will not be considered for financial

evaluation.

Attachments:

1. Auditor’s report

2. Engagement Letter

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[Päiväys]

Auditor’s Report on Agreed-upon Procedures

[To Recipient organization of the grant/local partner]

We have performed the procedures agreed with you and enumerated below, relat-

ing to the annual report on the [name of the programme/project, discretionary gov-

ernment transfer decision number]. The [programme/project] was implemented by

[the Finnish partner organization]. The annual report, totaling [total costs] [currency]

for the period of [dd.mm.20yy-dd.mm.20yy], was signed by [the contact person of

recipient organization of the grant] on [date].

Our engagement was undertaken in accordance with the International Standard on

Related Services 4400 applicable to agreed-upon procedures engagements taking

into account the conditions set out in the discretionary government transfer decision

for programme/project support. The following procedures were performed solely to

assist [the Finnish partner organization] and Ministry for Foreign Affairs of Finland in

evaluating whether the annual report has been drawn up, and the funds have been

used for intended purposes, in accordance with general conditions for the use of

discretionary government transfers and additional conditions for [programme/project

support].

1) We obtained a mutually signed valid agreement of cooperation with [the Finn-

ish partner organization] and [the local partner organization] in order to find out

whether

the parties have a valid agreement of cooperation,

the argreement of cooperation has been adhered to and

the financial programme/project report correspond with the agreement

of cooperation.

Additionally, we obtained the instructions issued by [the Finnish partner organ-

ization] including the reporting and procurement instructions and interviewed

[name and position] whether the instructions have been adhered to.

2) We obtained [the local partner organization’s] project accounting documents, a

description of how the project accounting is arranged and interviewed [name

and position] in order to find out

does the [the local partner organization] have an adequate double-

entry bookkeeping system in place, including journal and general

ledger, and

what bookkeeping software is used.

3) We obtained a documentation on working time recording and interviewed

[name and position] in order to find out how the employee’s working time re-

cording is arranged.

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4) We obtained the project’s budget and activity plan approved by [the Finnish

partner organization] and performed the following

compared the actual figures to the budgeted figures, and

checked whether the annual report includes explanations of budgetary

deviations over 15 %.

5) We reconciled the financial figures presented in the financial section of the an-

nual report with the project accounting in order to find out does the annual fi-

nancial figures in the annual report match up with the bookkeeping. The recon-

ciliation included matching

the opening balance of funds between the bookkeeping and the audi-

tor’s report of the previous year,

received funds between the bookkeeping and the annual report,

incurred costs between the bookkeeping and the annual report and

received but unused funds between liabilities in bookkeeping and end-

ing balance of the annual report.

Additionally, we reconciled the official bank account statements and cash

books relating to the [programme/project] with the bookkeeping as of [date /

end of reporting period] and calculated [the local partner organization’s] cash

and reconciled the amount with the bookkeeping as of [the date of performing

the agreed-upon procedures].

6) When the Finnish partner organization is a special foundation and the local

partner organization has locally acquired self-financing, we ensured that the

self-financing in the annual report is based on bookkeeping or adequate speci-

fications.

7) With regard to the information in the cost statement, the following procedures

were carried out. The procedures covered at least 30 % of the wages and sala-

ries reported for the project and at least 15 % of the payment of wages and

salaries reported for the project.

We tested that at least 30 % of total wages and salaries are based on

properly signed contracts and an adequate working time recording.

We tested that at least 15 % of total wages and salaries have been

paid.

We tested social security expenses including pensions and taxes have

been recorded and paid to relevant authorities in accordance with the

national legislation.

8) With regard to the information in the cost statement, the following procedures

were carried out. The procedures covered at least 30 % of the costs (other

than personnel-related costs) reported for the project and at least 15 % of the

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payments of the costs (other than personnel-related costs) reported for the

project.

We tested that the recorded costs are based on supporting documen-

tation,

We agreed the audit trail from general ledger to the project financial

reporting,

We assessed the eligibility of costs against the funding agreement and

project budget.

We tested that the costs were approved according to the [local partner

organization’s] [approval guidance].

With regard to the costs inspected, we assessed whether the pro-

curement instructions issued by [the Finnish partner organization] have

been adhered to.

With regard to taxes (other than personnel-related) we assessed

whether they have been appropriately recorded and timely paid out to

relevant authorities.

9) We obtained a list of fixed assets and performed the following procedures:

We assessed if the list was maintained up-to-date.

We reconciled the list and the changes in the list with the bookkeeping.

Additionally, we checked that at the termination of projects adequate docu-

ments of the transfer of the fixed assets have been prepared and signed.

10) We interviewed [name and position] in order to find out the following:

How [the local partner organization] ensures that the funds has not

been, even temporarily, used for any other than project purposes.

What kind of procedures does [the local partner organization] have

with the original documents of all valid essential contracts (e.g. agree-

ments with authorities, rental, lease, service agreements).

Has there been any indication of fraud, corruption, money laundering

or terrorism in any form.

11) Based on information we received during performing the agreed-upon proce-

dures, we assessed whether any internal control deficiencies have come to

light, which are significant in terms of project funding. If during performing the

agreed-upon procedures we see a conflict between the financial section of the

annual report and the other sections of the annual report, we report our obser-

vations.

We report our findings below:

1) In Item 1 we observed that

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the parties have [not] a valid agreement of cooperation [that was signed

[date]],

based on our observations during this engagement the agreement has

[not] been adhered to

the financial [programme/project] report [does not] correspond[s] with

the agreement of cooperation.

Additionally, we obtained [the instructions issued by [the Finnish part-

ner organization] including the reporting and procurement instructions.

Based on the interview with [name and position], the instructions have

[not] been adhered to [if not, please specify]].

2) In Item 2 we observed that [the local partner organization’s] project accounting

is arranged [describe how the project accounting is arranged and comment

does the [the local partner organization] have an adequate double-entry

bookkeeping system in place, including journal and general ledger, and what

bookkeeping software they are using.]

3) In Item 3 we observed that [the local partner organization’s] working time re-

cording is arranged [describe how the working time recording is arranged.]

4) In Item 4 we obtained the project’s budged approved by [the Finnish partner or-

ganization] on [date] totaling [total budgeted costs] [currency]. We also [tested

that]

the actual figures in annual report is [not] in line with the budget and

the annual report [does not] include[s] explanations of budgetary devia-

tions over 15 %.

5) In Item 5 we reconciled the project accounting with the financial section of the

annual report:

the opening balance of funds [amount, currency] [does not] match[es]

between the bookkeeping and the auditor’s report of the previous year

[in case of not matching please specify],

received funds[does not] match[es] between the bookkeeping and the

annual report [in case of not matching please specify],

incurred costs [does not] match[es] between the bookkeeping and the

annual report [in case of not matching please specify] and

received but unused funds [amount, currency] [does not] match[es] be-

tween liabilities in bookkeeping and ending balance of the annual re-

port. [in case of not matching please specify]

Additionally, we reconciled the official bank account statements and cash

books relating to the [programme/project] with the bookkeeping as of [date /

end of reporting period] with [no differencies / difference of [amount of differ-

ence] and calculated [the local partner organization’s] cash [amount, currency]

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and reconciled the amount with the bookkeeping as of [the date of performing

the agreed-upon procedures].

6) In Item 6 we noted that [the Finnish partner organization] is [not] a special foun-

dation and [the local partner organization] have [not] locally acquired self-

financing. [When self-financing has been acquired, we ensured that the report-

ed self-financing [amount, currency] has been received from [the Finnish part-

ner organization].

7) In Item 7 we tested that:

[%] of total wages and salaries is based on properly signed contracts

and an adequate working time recording,

[%] of total wages and salaries have been paid and

social security expenses including pensions and taxes have been rec-

orded and paid to relevant authorities in accordance with the national

legislation.

8) In Item 8 we observed that the costs tested:

Were [not] based on supporting documentation [in case of inadequacy,

please specify].

The audit trail from general ledger to the project financial reporting was

[not] [adequate and complete].

We did [not] recognize [any] suggestions that the costs examined

would not have been eligible according to the funding agreement and

project budget [please specify].

The costs were [not] approved according to the [local partner organiza-

tion’s] [approval guidance] [please specify].

The procurement instructions issued by [the Finnish partner organiza-

tion] have [not] been adhered to [please specify].

The taxes (other than personnel-related) have [not] been appropriately

recorded and timely paid out to relevant authorities.[if not, please speci-

fy].

9) In Item 9 we observed that:

The list has [not] been maintained up-to-date by the [local partner or-

ganization.]

The list and the changes in the list [does not] reconcile[s] with the

bookkeeping [in case of deviations, please specify].

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Additionally, we ensured that at the termination of projects, adequate docu-

ments of the transfer of the fixed assets have [not] been prepared and signed.

[please specify].

10) In Item 10 we inquired [name and position] to find out the following:

[describe how [the local partner organization] ensures that the funds

has not been, even temporarily, used for any other than project pur-

poses.]

[describe what kind of procedures [the local partner organization] have

with the original documents of all valid essential contracts (e.g. agree-

ments with authorities, rental, lease, service agreements)]

[if there has been any indication of fraud, corruption, money laundering

or terrorism in any form, describe specifically].

11) In Item 11 we point out that based on the information we received during per-

forming the agreed-upon procedures, we have [not] detected any internal con-

trol deficiencies which are significant in terms of project funding [specify if inter-

nal control deficiencies have been detected]. We have [not] detected a conflict

between the financial section of the annual report and the other sections of the

annual report [specify if conflicts have been noted].

Because the above procedures do 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 of the abovementioned is-

sues.

Had we performed additional procedures or had we performed an audit or review of

the financial statements in accordance with International Standards on Auditing or

International Standards on Review Engagements, other matters might have come

to our attention that would have been reported to you.

Our report is solely for the purpose set forth in the second paragraph of this report

and is not to be used for any other purpose. The report or part of it may not be cop-

ied, otherwise duplicated or be given to a third party. [According to the Finnish Act

on the Openness of Government Activities (621/1999), the report is a public docu-

ment, with the exception of business and professional secrets that the recipient has

clearly labeled as commercial and professional secrets, ie. confidential information,

in accordance with Section 24 para. 20 of the Act on the Openness of Government

Activities. The obligation of professional secrecy does not apply to information that

the Ministry for Foreign Affairs of Finland declares or gives to a third party on the

basis of an authority or a law.] Our Report only applies to the annual report detailed

above; it does not apply to the recipient’s complete financial statements.

[Location and date]

7 (7)

[Auditing firm]

[The person responsible for the engagement]

[Authorised Public Accountant/Certified Auditor]

[Where the text is in brackets [ ] it should be edited or removed.]

Engagement Letter

[Contact person

Grant beneficiary

Address]

[Date]

[Funds for Local Cooperation: Agreed-upon Procedures for programme/project report]

1 Objectives and Background

[Recipient organization of the grant/local partner] has prepared an annual report on the

[programme/project] to [the Finnish partner organization] dated [date] for the period of [1.1.-

31.12.20xx].

[Recipient organization of the grant/local partner] has asked [audit company / authorized auditor] to

perform agreed-upon procedures with regards to the annual report on the [programme/project] as a

whole, its implementation and the use of funds. The purpose of our audit procedures is solely to assist

[the Finnish partner organization] and Ministry for Foreign Affairs of Finland] in evaluating whether the

annual report has been drawn up, and the funds has been used for intended purposes, in accordance

with general conditions for the use of discretionary government transfers and additional conditions for

programme/project support].

This letter is to confirm our understanding of the terms and objectives of our engagement and the

nature and limitations of the services that we will provide.

This Engagement Letter sets out the Services that we have agreed to provide and the terms of our

engagement.

2 Services to Be Provided

Our engagement will be conducted in accordance with the International Standard on Related Services

4400 applicable to agreed-upon procedures engagements taking into account the conditions set out in

the discretionary government transfer decision and in the additional conditions for programme/project

support and we will indicate so in our Report.

We have agreed to perform the procedures described in appendix 1 and report to you the factual

findings resulting from our work.

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The procedures that we will perform will not constitute an audit or a review made in accordance with

International Standards on Auditing or International Standards on Review Engagements and,

consequently, no assurance will be expressed.

In connection with the engagement, we will prepare a report where we will bring our observations

based on the audit procedures performed.

The procedures that we will perform are intended solely for the purpose set forth in the Engagement Letter’s first paragraph and the report may not be used for any other purpose. The report or part of it may not be copied, otherwise duplicated or be given to a third party. [According to the Finnish Act on the Openness of Government Activities (621/1999) the report is a public document, with the exception of business and professional secrets that the recipient has clearly labeled as commercial and professional secrets, ie. confidential information, in accordance with Section 24 para. 20 of the Act on the Openness of Government Activities. The obligation of professional secrecy does not apply to information that the Ministry for Foreign Affairs of Finland declares or gives to a third party on the basis of an authority or a law.] Our Report only applies to the annual report detailed above; it does not apply to the recipient’s complete financial statements.

3 Timetable

We will be able to commence our work on [date] and we expect our Report to be completed by [date].

4 Resources

[Auditor’s name] will be responsible for the engagement. [Other members of the team are NN, YY and

ZZ.]

5 Your Responsibilities

[Recipient organization of the grant/local partner] is responsible for documentation and preparation of

the annual report in accordance with the discretionary government transfer decision, general

conditions for the use of discretionary government transfers and additional conditions for

programme/project support. In addition, [Recipient organization of the grant/local partner] is

responsible for providing all the necessary documentation and assistance needed for us to perform all

the agreed-upon procedures.

6 Estimated Time Needed and Fees

[We estimate that the time needed for providing the Services will be [xx hours/xx days/xx weeks]. We

estimate that our fee for this engagement is about [€ x.000.000,00] (excluding VAT). Our out-of-pocket

expenses relating to the Engagements will be added to our fees.]

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7 [Terms of Business]

[This Engagement Letter should be read in conjunction with the enclosed Terms of Business.]

8 Acknowledgement and Acceptance

This Engagement Letter (including its appendices) [and the enclosed Terms of Business together]

form the Contract between us.

Please record your agreement to the terms of this Contract by signing the enclosed copy of this letter

in the space provided and returning it to us.

Yours sincerely,

[Auditing Firm]

[The person responsible for the engagement]

[Authorised Public Accountant/Certified Auditor]

Appendix

1 Template of the Auditor’s Report

[2 Terms of Business]

4 of 4

Confirmation of the Contract

I have read and accepted the Contract terms set out in the Engagement Letter (including its

appendices) [and the Terms of Business]. I accept those Contract terms on behalf of [Recipient

organization of the grant/local partner] and represent that I am authorised by [Recipient organization of

the grant/local partner] to do so.

Date ………………………………….

On behalf of [Recipient organization of the grant/local partner]

Signed ……………………………

[Name and position]

……………………………………………

[Where the text is in brackets [ ] it should be edited or removed.]