REQUEST FOR PROPOSAL & TOR FOR ANNUAL CONSORTIUM AUDIT

Date: November 27, 2024

Project Details

Project Name: SHAQO Consortium       

Project Locations: Mogadishu, Hargeisa and Garowe.                

Project Term: 1^st November 2023 – 31^st October 2024    

Contract Value:  1,492,942 USD

Donor: Embassy of the Kingdom of Netherlands

Consortium Lead Partner: Iftiin Foundation

Type of Audit: Annual Audit

Location of the documents to be audited: Mogadishu, Hargeisa and Garowe.

1. Background Summary

The Shaqo Consortium (Jobs Consortium) is a ground-breaking three-year initiative collaboratively implemented by the Iftiin Foundation, Puntland Development and Research Centre (PDRC), YEEL, and City University of Mogadishu. Building upon the successes of the 2020-2022 Nexus Skills and Jobs pilot projects, the Shaqo Consortium has embarked on its second phase with the generous support of the Embassy of the Kingdom of the Netherlands.

At the heart of the Shaqo Consortium’s mission is the imperative to create realistic, sustainable livelihood opportunities for the multitude of unemployed Somali youth aged 15 to 25. Recognizing that the empowerment of this demographic is crucial to the social and economic development of the country, the consortium is dedicated to cultivating a future where young people can thrive and contribute to the fabric of their communities.

With the Embassy of the Kingdom of the Netherlands as a key partner and advocate, the Shaqo Consortium is poised to make a transformative impact on the lives of Somali youth, unlocking a brighter future for individuals and the nation as a whole.

• Audit Objective 

The objective of the audit of the financial statements is to enable the auditor to express a professional opinion on the financial position of the project at the end of the reporting period and of the funds received and expenditures for the reporting period, as reported by the consortium members and in particular to confirm that the reported expenditure has, in all material respects, been used in conformity with the provisions of the Contribution Agreement, including any amendments thereto as contained in implementation letters, and any applicable guidelines in force and applicable to the audit scope, and with due attention to economy and efficiency.

To also confirm that the financial statements agree with the project accounts (books of account) which provide the basis for preparation of the financial statements and are established to reflect the financial transactions in respect of the project, as maintained by the Lead Partner and the consortium members.

• Scope of Work

The audit will be carried out in accordance with international standards of auditing. It will include such tests and controls as the auditor considers necessary including visits to project office and sites. Generally, the audit will focus on:

• Contractual compliance and practice:  To assess and confirm that the consortium members are compliant with the donor contractual obligations. It will also entail confirming that all consortium members’ management practices, including administrative, contractual, financial and legal are in line with best practices.
• Financial management and internal controls: To assess and confirm that financial management and control environment of the consortium members has been designed and implemented in line with best and generally accepted accounting standards.
• Expenditure and reporting verification: To verify and confirm, on a sample basis, that reported expenditure and other financial reports issued by the consortium members are accurate and a true reflection of the project’s financial activities.
• Contracting and procurement: To establish and confirm that transparent, accountable and appropriate procurement and contracting practices are established and are being followed.
• Regulatory and tax compliance: To assess the regulatory and tax obligations of the consortium members and confirm that all requirements have been met.

Specific focus will be:

1. To ascertain compliance of the laid down policies, financial norms, contribution agreement, relevant legislations, various guidelines, manuals, accountability requirements, procurement guidelines (of goods, works and/or services) as applicable under the project.
2. To test whether all the activities included in the work plan have been implemented as planned and the target outputs under each activity achieved. A minimum sample of 70% of total expenditure value should be tested.
3. Expenditure verification for the project expenditures, and reporting on allowability/eligibility, validity, accuracy and classification of costs into budget lines. It is imperative to confirm the validity of the investee assertions on activities undertaken and deliverables/results. This may include confirmation with beneficiaries, especially with regards to cash transfers to vulnerable community members.
4. Verification that the administrative (indirect) costs do not exceed the maximum allowed fraction of the total direct eligible costs of the project per the approved budget.
5. Physical verification of all capital assets purchased by the grant monies for their existence, conditions, location, and values – including reporting on the same.
6. Test and assess the extent of achievement of project milestones.
7. To ascertain and evaluate the adequacy and effectiveness of the financial management and internal control framework/ environment such as segregation of duties, approval of expenditure and cash & bank reconciliations.
8. To express an independent professional opinion regarding Value for Money (VfM), that is, efficiency, effectiveness and economy of the project’s operations.
9. Assess conformity of expenditure with the budget and analytical review – includes tests of authenticity/ authorisation of the initial budget, conformity with budget, test that all expenses were foreseen in the budget,  test that amendments to the approved budget comply with the conditions for such amendments, and that expenditure for a transaction or action has been classified under the correct heading and subheading of the approved budget.
10. To identifying areas for improvement and critical weaknesses, if any, i.e. identify areas of good practice and themes where lessons can be learned and communicate these to the lead partner.
11. Methodology

This audit will require the following general approach to be applied:

1. Review of Consortium Member’s internal control environment, expenditure and reports.

The audit will require a review, understanding and description of the consortium members’ internal control environment. This understanding will inform the auditor on why the consortium members’ uses particular source documentation, authorisation guidelines, processes and systems. Key items to be reviewed include:

• Accounting system controls;
• Cash movement controls;
• Advances and per diem control;
• Time and payroll controls;
• Authorisation controls;
• Procurement controls;
• Capitalisation and asset management controls;
• Reporting and financial performance controls; and
• Review of relevant expenditure documentation.

The audit will require a sample check and review of programme expenditure documentation to assess:

• Supporting documentation;
• Contractual compliance;
• Compliance to the contribution agreement;
• Allowable and disallowable costs;
• Questionable costs;
• Adherence to consortium members’ internal controls;
• Budget limits adherence; and
• Review of consortium members’ budget performance and report.

The audit will require a review of the consortium members spend against budget report to ascertain accuracy of reports submitted as well as fairness of forecasts submitted.

• Review of consortium members financial management and contractual compliance
• Review last consortium members’ reported expenditure against audited expenditure

The audit will require a review of the Implementing financial management practices, which will include:

• Tax management and administration;
• Application of general acceptable accounting standards;
• Management and application of set procedures and policies; and
• Application of relevant regulatory requirements.

• Interview management team, key individuals within the finance and procurement departments as well as project management team.

The audit will require an in-depth interview with management, key finance and procurement team members as well as documentation of key policies and procedure documents. Entry and exit meetings should be held with the Lead Partner’s management at the commencement and end of the audit process respectively.  This team will be required to respond to all recommendations and agree on a time-plan to implement the recommendations.

• Conduct visits to Consortium Members’ offices

Auditors must visit the main offices of the consortium members, and specifically the office, which holds highest volume of transactions. It is also required that the auditor will make site visits to assess locations where significant transactions have been deemed to happen.

• Recipient

Iftiin Foundation will be the sole recipient of the output of this process.

• Deliverables
• Five comprehensive audit reports for the four consortium partners and the Consortium Management Unit.
• Consortium Audit Financial Statements with a professional opinion for the year 1 November 2023 to 31 October 2024.
• An executive summary/draft of the audit reports for quick reference by Consortium management.
• A presentation of the audit findings to the Consortium Management Unit and member organizations.
• A management letter with Lead Partners’ comments, which should highlight observed weaknesses in the system of internal control and the recommendations for managing the identified issues over the life of the project.
• A statement of compliance with donor terms and conditions as contained in the Accountable Grant Agreement.
• A verification report on the capital assets purchased by the grant funds under the project.

• Reporting

All reports will be delivered to the following entities:

• Iftiin Foundation Governance/Management Team

• Instructions on Proposal Submission
• Closing Submission Date: Proposals must be submitted no later than 5:00 p.m. on 07^th December 2024
• Inquiries: Inquiries concerning this RFP should be directed to Iftiin Foundation Procurement email procurement@iftiinfoundation.com
• Conditions of Proposal: All costs incurred in the preparation of a proposal responding to this RFP will be the responsibility of the Offeror and will not be reimbursed by Iftiin Foundation.
• Electronic or Physical Submissions: Proposals can either be submitted electronically to the following e-mail address: procurement@iftiinfoundation.com or delivered to the Iftiin Foundation Offices in Mogadishu, Somalia by the closing submission date noted above.