13^th July 2023, 

TERMS OF REFERENCE FOR NPA AUDIT FOR 2023 - 2024

1.     Background

Norwegian People’s Aid (NPA) is an international NGO, founded in Norway as the labour movement’s humanitarian solidarity organisation. NPA’s goal is centred on human worth and equal rights for all, and strives globally to promote the values of solidarity, unity, equality, human rights and democracy.

Norwegian People’s Aid in Rwanda supports civil society organisations and citizens to participate in and impact the formulation and implementation of national and local policy making, planning and governance.  While strengthening their own internal management systems including financial, monitoring systems and their advocacy capacities, NPA civil society partners support citizens to raise and express their opinions and interests with decision makers, to seek accountability and to advocate that local government planning and decision making is influenced by those citizen concerns. The same partners also support citizens access to justice and reporting of corruption.  Civil society partners work at national level too to use research, media engagement and advocacy to influence debates and generate dialogue between citizens, CSOs and decision makers. 

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2.     Intervention and implementation approach

NPA works in partnership with Rwandan civil society organisations. NPA is currently working with 14 partners in 2023 and the number is likely to decrease in 2024.  The annual budget per partner varies, ranging around $128,000 and $70,000. Each partner is responsible for their institutional audit, for reasons of efficiency and costs, an arrangement will be made in agreement with partners and the auditor can be mandated to audit the NPA financed project.

3.     Portfolio

NPA Rwanda is currently implementing the Public Policy Information, Monitoring and Advocacy Programme (PPIMA), a 5 years programme from 2020 - 2024, funded by Swedish International Development cooperation Agency (Sida), Norwegian Agency for Development cooperation (Norad) and Swiss Agency for Development and Cooperation (SDC).  The average annual budget is 3 million USD.

4.     Purpose of the audit

The auditors will be contracted to:

• Establish whether the Organizational accounts and reports have been prepared in accordance with Generally Accepted Accounting principles and give a true and fair view of the financial situation of the programme within the period of implementation.
• Establish whether NPA Rwanda funds have been used in accordance with the conditions of the relevant financing agreements and NPA internal policies and procedures, with due attention to economy, effectiveness and efficiency, and only for the purposes for which the financing was provided.
• Establish whether grant conditions and NPA policies are adhered to in relation to contracting and forwarding of funds to NPA partners.
• Produce complete and accurate financial statements of programme revenues and expenditure during the period under review as well as management letters as required by NPA audit instructions and donors grant conditions and Terms of reference on auditing programme funds.

5.     Audit approach

5.1. Scope

Auditors are required to audit the programme and the administrative office financial statements for NPA Rwanda activities in accordance with the guidelines set out by NPA Head Office through its auditors. The auditors will perform the audit according to international audit standards. This must be done in accordance with the specific requirements of the individual donors who are contributing to the programme, and in accordance with local government laws and regulations.  

Following their work, the auditors should be in a position to issue a long form audit report which:

• gives details of their findings and issues;
• gives a specific conclusion that:
• “the programme and administrative office financial statements submitted by NPA Rwanda to NPA Oslo and to donors give a true and fair view of the activities of the local NPA operations during the year”;
• “the programme and administrative office financial statements are being maintained, and the activities of NPA Rwanda operation are being conducted, in accordance with local finance and tax laws and regulations”
• “that there are adequate procedures showing that the local management exercises due consideration in its administration of funds”; and that
• “there are adequate internal controls over key transactions streams which have been operating effectively during the year”. 
• Shows NPA Rwanda is preparing project accounts for each separate project (in case of multiple projects). The local auditor should give a specific conclusion that project accounts are being maintained for each separate project, and; 

• Expenditure of programme funds managed by NPA partners have been disbursed and used in accordance with the relevant grand conditions and signed partnership contracts, with due attention to economy and efficiency, and only for the purposes for which the funds were provided. The auditors should confirm funds disbursed to partners, the expenditure and outstanding balances. 

• Report on tax health status by clearly highlighting areas of tax exposure that need particular attention

5.2. Minimum audit procedures

NPA Head Office Auditors will issue a recommended audit approach every year which sets out the minimum audit procedures for NPA Rwanda operations and the minimum information that should be included in your long form audit report and project audit report.  Additional procedures should be carried out to the extent that auditors consider necessary to enable issuance of a long form audit report on NPA Rwanda operations. 

Special consideration should also be given to Grant conditions and donors terms of reference on audit of programme.

Grant conditions together with NPA HO’s auditors’ instructions will be shared to the auditors every year in advance of the audit commencement for their strict consideration.         

5.3. Timing

NPA auditors should plan to perform their audits in two stages:

• An “interim” audit visit (if necessary) - this should focus on the following:
• A review and assessment of the internal controls of NPA Rwanda operations.  This should cover, as a minimum, a review of the internal control procedures, together with any additional control procedures that you consider to be applicable to the individual NPA operations;
• A review of the progress made by NPA Rwanda representatives in resolving the matters/issues raised as part of previous management letters;
• The identification and, where possible, the resolution of those matters that might have a material impact on the year-end audit.
• A year-end” audit visit should be conducted to follow up the interim audit, complete the remaining audit procedures set out in instructions sent by the HO Auditors, and submit the long form audit reports management letters and project reports by the deadlines (by the 15th March of following year).  The timing for this visit should be agreed with the NPA Rwanda representative in order to ensure that the local auditors are in a position to secure the necessary information.

6.     Reporting

6.1. Interim reporting

A preliminary interim report is required to address the status of the internal control issues that were reported as part of the previous year management letters, as a means to ensure that these deficiencies are being actively addressed and rectified.

The interim report should address any material issues which were reported as part of the long form audit report and which had not been reported in advance as a "notifiable event". 

6.2. Long form audit report

The long form audit report must be submitted by the local NPA auditors to NPA Head Office by the deadline.  This long form audit report should be e-mailed, with original to follow in the post, and should as a minimum include the following information:

• Details of findings and issues arising from the audit of the different projects or programme and the administrative office financial statements for NPA Rwanda activities. Additional procedures should be carried out to the extent that auditors consider necessary to enable issuance of a long form audit report on NPA Rwanda operations; 

• A specific conclusion that: 

• “the programme and administrative office financial statements submitted by NPA Rwanda office to NPA Oslo and to donors give a true and fair view of the activities of NPA Rwanda operations during the year”; 

• “the programme and administrative office financial statements are being maintained, and the activities of NPA Rwanda operation are being conducted, in accordance with local finance and tax laws and regulations”; and that 

• “there are adequate internal controls over key transactions streams which have been operating effectively during the year”.

• A copy of the year end NF01 Status project report in NOK, initiated by the local NPA auditor for identification purposes so that we can reconcile this to the accounting transaction data for current year which has been automatically transferred to NPA Oslo. 

6.3. Programme reporting

A Programme audit report, management letter and management response shall be produced according to requirements in grant conditions and to the Terms of reference for financial audit of project/programme

The reporting from the auditor shall include an independent auditor’s report in accordance with the format in standard ISA 800/805 and the auditor’s opinion shall be clearly stated.

The independent auditor’s report shall clearly stipulate that audit has been conducted in accordance with ISA 800/805.           

The additional assignment according to agreed upon procedures ISRS 4400 shall be reported separately in a’’ Report of factual findings’’. The size of the sample of the reviewed audit reporting shall be stated in the report. 

The auditor shall adequately plan the financial audit engagement well in advance of the work and ensure the execution of the financial audit of highest professional quality in an economical and efficient manner.

7.     Management letter

NPA requires the timely production of high-quality management letters or internal control/business operation letters.  Comments should show regard for the nature of the local operations and include recommendations that are both operationally helpful and realistic.  The letter should include details of the following:

• matters arising from the internal control systems' work performed as part of the normal audit procedures; and
• the issues raised in the previous year’s management letter where there has been no action in the course of current year. It is required that any deficiencies raised in previous management letters have been actively addressed and rectified by NPA Rwanda representatives in the course of the year, and all exceptions should be included in this report.
• issues arising from completion of the fraud assessment sheet.
• Management letter should disclose all audit findings (significant and other findings), as well as findings on weaknesses identified during the audit process. The auditor shall make recommendations to address identified findings and weaknesses. These recommendations shall be arranged in priority order.

If the auditor assess that no findings or weakness have been identified during the audit that would result in a Management letter, an explanation of this must be disclosed in the audit reporting. 

The management letter should be issued in English for all NPA Rwanda operations at the completion of the current year’s audit. 

Individual management letter points should be set out and explained under the following headings:

• Observation
• Risks and consequences relating to the observation, likelihood of appearance, and quantification of impact
• Recommendation being proposed and benefit to the NPA operations arising from the recommendation
• NPA Rwanda representative response to the recommendation
• Action plan for implementing the recommendation including deadlines 

On no account should the management letter be issued before the NPA Rwanda representative has had the opportunity to comment on the points raised and include his/her responses within the body of the management letter. 

The final reports should be printed on letter head paper, signed and a copy sent NPA HO’s Auditors.  Alternatively, if no management letter is to be issued, this should be confirmed to them and HO by the same auditors.

8.     Expertise required

The audit exercise will be executed by an independent audit firm fulfilling the following conditions;

• Be internationally or Nationally recognized as a professional auditing firm (supported certificate of practice license issued by ICPAR or by another authorized regulatory agency in Rwanda);
• Having proven experience in auditing NGOs work (supported by certificate of completion of work done in 4 last years, at least three certificates);
• Having in the team a person recognized by Rwanda Revenue Authority as Tax Advisor (supported by a copy of card of practice license issued by RRA and or Association of Tax Advisors of Rwanda).

9.     Offers

in response to the ToR, any applicant audit firm shall;

• Prepare a technical offer showing the interpretation of the ToRs and make comments on them,
• Send CVs of different staff designated to carry out the task, particular attention will be paid to the expertise and assigned personnel (copy of certificates or degrees)
• Elaborate the methodology to be used, and the calendar of activities
• Prepare a detailed financial offer with all taxes included.

Technical and financial offers (financial offer in RWF or USD) should be submitted to NPA Rwanda’s office no later than August 15^th, 2023 at 5:00pm; Bodifa Mercy House 2nd Floor Boulevard umuganda Kimihurura Area or via npa@npa-rwanda.org.   

10. Clarification

For further information, please contact the following address at least one day before the deadline: SenKah493@npaid.org (Country Director) or faumut514@npaid.org (Finance Manager).

Done in Kigali, July 13^th, 2023.

Senada Kahriman

Country Director

Norwegian People’s Aid - NPA