Audit - CLDH

1. BACKGROUND

CLDH - Lebanese Center for Human rights, is a non-profit organization established in 2007 and registered with the Ministry of Interior under Number 23220 by virtue of the Association law stated under legislative decree No.14953.

The financial statements comprise the accounts of Nassim Association, together, a non-for-profit organization established in 2015 and registered with Ministry of Interior under Number 1090 by virtue of Association law stated under legislative decree No.3119464.

The Association activities are funded by membership fees, governmental and institutions grants and private donations. Its main objectives are to protect human rights, fight against enforced disappearances, arbitrary detention, impunity and helping victims of torture.

2. OBJECTIVE OF THE AUDIT

The objective of the audit of the Financial Statements is to enable the auditor to express a professional, independent opinion in accordance with International Standards on Auditing (ISAs) on the financial position of the organization and the statement of cash flows, and notes to the financial statements, including a summary of significant accounting policies at the end of each fiscal year in accordance with International Financial Reporting Standards (IFRS).

The Auditor should be independent of the organization in accordance with International Ethics Standards Boards for Accounts’ Code of Ethics for Professional Accountants (IESBA Code) and the ethical responsibilities that are relevant to the audit of the FS in Lebanon.

3. PREPARATION OF ANNUAL FINANCIAL STATEMENTS

The Financial statement shall be audited in accordance with international Financial Reporting Standards, International Accounting Standards and

Interpretation (collectively IFRSs) issued by the International Accounting Standards Board (ISAB).

5. 4. RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE FINANCIAL STATEMENTS

MManagement is responsible for the preparation and fair presentation of the financial statements in accordance with IFRSs, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, management is responsible for assessing the Association’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Association, or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Association’s financial reporting process.

     6. AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS

The objective of the auditor is to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes an opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

As part of an audit in accordance with ISAs, the auditor exercises professional judgment and maintains professional skepticism throughout the audit. The auditor also:

• Identifies and assesses the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for the opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtains an understanding of internal control relevant to the audit 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 Association’s internal control.
•  Evaluates the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• Evaluates the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

The auditor communicates with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that the auditor identifies during the audit.

The auditor provides those charged with governance with a statement that they have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on their independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, the auditor determines those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. The auditor describes these matters in the auditor’s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, the auditor determines that a matter should not be communicated in the report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

7. General

• The auditor will provide an opinion as to the overall financial situation for the period 1 January to 31 December 2021 and will certify:
  • The Statement of Expenditure for the period from 1 January to 31 December 2021;
  • The Statement of cash position reported as at 31 December 2021.
  • The Statement of assets and equipment as at 31 December 2021.
• The auditor/audit firm will submit a draft audit report by 30.04.2022 and a final signed audit report with certified statements by 15.05.2022.
• In addition, the auditor/ audit firm shall prepare and submit a summary report of the key trends and common weaknesses identified during all the audits carried out for the year.
• In addition to the audit of the Financial Statements, there will be some specific project audits that need to be covered also as part of this agreement.

In complying with International Standards on Auditing, the auditor is expected to pay particular attention to the following matters:

1. Fraud and Corruption: Consider the risks of material misstatements in the financial statements due to fraud as required by ISA 240: The Auditor’s Responsibility to Consider Fraud in an Audit of Financial Statements. The auditor is required to identify and assess these risks (of material misstatement of the financial statements) due to fraud, obtain sufficient appropriate audit evidence about the assessed risks; and respond appropriately to identified or suspected fraud;                                                                                                                                                           
2. Laws and Regulations: In designing and performing audit procedures, evaluating and reporting the results, consider that noncompliance by the implementing agency with laws and regulations may materially affect the financial statements as required by ISA 250: Consideration of Laws and Regulations in an Audit of Financial Statements;                                                                                                                 
3. Governance: Communicate audit matters of governance interest arising from the audit of financial statements with those charged with governance of an entity as required by International Standards on Auditing 260: Communication of Audit Matters with those Charged with Governance.

4. Risks: In order to reduce audit risk to an acceptable low level, determine the overall responses to assessed risks at the financial statement level, and design and perform further audit procedures to respond to assessed risks at the assertion level as required by Internal Standard on Auditing 330: The Auditor’s Procedures in Response to Assessed Risks.