Terms of Reference for Internal Audit of Project

The auditor would be conducting a financial assessment of one of the Lebanon  on a project funded by the AFD (Agence Francaise de Développement). 

The purpose of Audit check the entire financial operations of a Lebanese  organization in Beirut, Lebanon and to identify any breakdown or lapses in financial system that could expose the delegation to major risks and to draft a roadmap proposal that will improve the quality and accountability of their departments ( Finance and Logistics mainly).

The objective of the audit of the Financial Statements is stated below:

• 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 local organisation and the sub-contractors and in particular to confirm that the reported expenditure has, in all material aspects, been used in conformity with the provisions of the Head Contract, including all amendments thereto as contained in implementation activities, and any applicable guidelines in force and applicable to the audit scope.
• To confirm that the Financial Statements agree with the Project accounts (book 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 organization and the sub-contractors.
• To confirm that the Financial Statements agree or reconcile with any other information reported to AFD.
• Certify that our   is following the financial and log processes as per our AFD contract.
• Certify that our  is abiding by the procurement plan drafted at the beginning of the project cycle.
• Certify that our  is using abiding by the agreed budget i.e. salaries and office supplies.
• Certify that the approval procedures for all expenses is followed and documented.

The scope of the external audit encompasses, but is not limited to, the examination and evaluation of the adequacy and effectiveness of the organization’s governance, risk management, financial statements, procurement procedures, service and salary contracts and internal processes as well as the quality of performance in carrying out assigned responsibilities to achieve the organization’s stated goals and objectives. This scope generally includes the following:

• Evaluating the reliability and integrity of information and the means used to identify, measure, classify, and report such information.
• Evaluating the systems established to ensure compliance with those policies, plans, procedures, laws and regulations which could have a significant impact on the organization.
• Evaluating the means of safeguarding the assets and, as appropriate, verifying the existence of such assets.
• Evaluating the effectiveness and efficiency with which resources are employed.
• Review the reliability and integrity of operating and financial information and how it is identified, measured, classified, and reported.
• Determine if the systems designed to comply with these policies, plans, procedures, laws, and regulations are being followed.
• To establish that the funds have been recorded and funds have been expended in accordance with the terms and conditions of the contract.
• Necessary supporting documents, records, and accounts have been kept in respect of programme expenditure.
• Whether the funds in the  account were deposited, transferred and expensed properly in compliance with AFD guidelines and other relevant financial policies and procedures as stipulated under the ship agreement.

The main audience of this audit will be the Tdh Lebanon management team and Tdh HQ. This report will be for internal use and to be shared with AFD.

At the end of the assessment, the delegation will have:

• A report on the state (strength, weakness and risks) of the Finance Department
• A draft of an action plan to improve the delegation financial management
• Formulations of recommendations to support the management team with decision making regarding the structure and the staffing

Phase I: Preparation and analysis of documentation and briefings: 3 days à preliminary report

Phase II: Field work : 3 days à presentation and debriefing

Phase III: Analysis & report writing: 4 days – including the time needed for revision and feedback by Tdh.

The duration of this financial assessment mission will take place in the period of ten days and should start around early to mid - September 2018. The auditing company will share the results by the end of September 2018.

Main tasks:

• Before departure, prepare and send the list of documents, procedure requested to facilitate the mission
• To introduce the mission methodology to the Senior Management Team and all Admin staff of the delegation
• To perform an evaluation of all the financial procedures and their follow-up in compliance with Tdh requirements
  • To check the commitment of expenditures and the link with approved  budget
  • To check the accuracy of allocating financial figures as expenditure with the right budget code.
  • To randomly check books, registers and vouchers (including their supporting documents) related to 2017 projects, their record keeping.
  • To check the accounting procedure and control
  • To check that the cash and banking procedures are properly maintained
  • To review the archiving procedure in place and provide recommendations to facilitate future audits
• To review how internal Budget is done and monitor (BFU) methodology
• To evaluate the donor contract process (from proposal to signature)
• To evaluate the methodology and the quality of the external financial reporting (review of the 3 last reports)
• To submit a report elaborating observations, findings, suggestions and recommendations in the form of a roadmap

• Analyze the financial and administrative capacities (staff, governance, policies, procedures,
• systems, tax requirements) of potential s and give recommendations for capacity
• building (pre-assessments)
• Analyze the funding and revenue sources as well as business plans of s and give recommendations
• for strengthening financial sustainability and increasing revenues
• Strengthen s' skills in financial management (general and individual training workshops
• for s, hands-on coaching for individual staff and/or organizations)
• Evaluate and monitor s’ overall organizational budgets and financial statements
• Evaluate and monitor s’ annual external audit reports
• Evaluate and monitor s' project budgets and financial reports and their compliance
• with funding agreements and external audit reports

In addition to the following:

• Bank reconciliations
• Receipts for currency exchange and for recording transactions in the general ledger
• Financial transaction payment for telephone bill funded under AFD project
• Financial transactions including procurement bids funded under AFD project
• Delivery/receipt of services included with documentation related to procurement bids
• Service contract for a specific month funded under AFD project
• 10 Salary payment for staff funded under AFD project including payment voucher signed by authorized personnel, proof of payment salary, employment contract on file, job description, timesheet including name and position, time period, total hours worked, daily hours charged and required employee and supervisor signature. (Check whether timesheet reflects after-the-fact reporting of actual time worked and if fringe benefits paid in accordance with employee handbook or contract, In addition to taxes withheld in accordance with laws of Lebanon, are taxes calculated correctly (if necessary), are taxes paid to appropriate authorities in a timely manner, is there documentation reflecting the employees balance of paid leave (sick, vacation, other)
• Consultant fees (consultant agreement, payment reflect terms per agreement, work product on file, work product approved by an authorized personnel)
• Fixed Assets (if any) Check for acquisition cost of item, acquisition date, manufacturer, serial number, location and condition, date of last update of inventory.
• Travel and Vehicle Management, Select payment for domestic travel and check for local per diem policy, receipts available based on expense report, travel expense report form on file. For vehicle fuel check for log book/sheet recording travel purpose and mileage, documentation to verify that mileage was cross-checked for reasonability.
• Office materials, check for payment voucher, purchase request, signatory of authorized personnel, percentage allocation per project, office materials invoice, verify whether these items are used for project funded under AFD.

Roles and Responsibilities of Tdh:

• Provide funding towards the execution of the financial assessment mission
• Ensure proper and timely communication between TdhL’s Head Office, the auditing firm, and the .
• Assist the auditor to develop and conduct the financial assessment in a timely manner
• TdhL will provide additional support if deemed necessary
• Give overall guidance, oversight, technical assistance support, and leadership for the implementation of the project