External Auditor - BMZ Project (Beirut)

Mada is a non- partisan, non-sectarian Lebanese NGO that aims at reinforcing the relationship between local communities and their natural environment. It was established in Lebanon in 2000 and registered under the decree #4336-AD 242 from the Ministry of Interior in October 2000.

Mada is implementing the BMZ funded project “Food System Change – An Alternative, Solidarity-Based Model towards Food Security in Lebanon”, which started on June 1,2024 and will end on August 31, 2025. The project is implemented in partnership of Helvetas Germany.

The purpose of this project as well the obligations of the three parties are detailed in Annex 1- the Contract between Helvetas Germany and Mada Association.

Mada is seeking for an audit firm to conduct a financial audit for the abovementioned project and to submit at the end of the project a financial statement report and a management letter pursuant to the general requirements of the donor.

Objective of the Audit:

1. Providing a financial statement to enable the audit firm to express an independent professional opinion on the financial position of Mada and to ensure that the funds utilized for the project’s activities have been used for their intended purposes.

2. Proper books of accounts as required by the Lebanese law have been maintained by Mada and also an adequate internal control and supporting documentation for the transactions.

Scope of the Audit

The external audit should include the following auditing and control measures.

• Verifying accounting records for correctness and completeness.
• Verifying the financial report in which all project-related revenues and expenditure must be shown and for which it must be confirmed that receipts are provided for all revenues and expenditure.
• Verifying how the provided project funds have been managed. This includes:
  • Project funds transferred to the project partner in the current budget year or during the project term
  • Interest earned in the current budget year or during the project term from project funds transferred to the project partner
  • Other revenues from the project activity.
• Verifying to what extent the funds have been used appropriately for the purpose of carrying out the planned project objectives and activities.
• Verifying the cost-effectiveness of expenditure with regard to financial resources (to be used economically and as effectively as possible).
• Verifying the personnel costs and social security contributions to ensure that they are in line with local standards, legal in the respective project country and, above all, that they comply with contracts and that the contributions required by law are being withheld.
• Verifying that the cost plan is being adhered to by means of a comparison of objectives and effects (based on the most recent valid budget).
• Verifying the economic use of project equipment.
• Verifying the procured inventory, where it is being held and whether it has been/is being used appropriately for the purpose of carrying out the planned project objectives and activities. 
• Verifying and confirming that project-relevant documentation is complete and correct.
• Verifying that all agreements fundamental to the project are being adhered to (contracts, German private executing agency guidelines, BMZ funding requirements, BNBest-P/private executing agencies and BMZ contract award guidelines).

Deliverables:

Following this, the audit should provide specific statements on the following questions:

1. To what extent has all income and expenditure been properly documented by means of receipts?
2. To what extent has documented expenditure complied with its application and project approval and to what extent is it in keeping with the appointed purpose and the most recent budget? Have any deviations from the most recent budget been explained separately?
3. To what extent has documented income, that is accounted for as contributions made by the local project partner, the target group and/or other agencies in the project country been specified correctly and its origin explained in accordance with specifications?
4. To what extent were the donor’s conditions that were specified in the project agreement met? What response was there to these conditions? Which of these conditions were not adhered to and were reasons given for this?
5. Which special aspects – positive or negative – should be mentioned with regard to this project?
   • The audit certificate should draw a clear conclusion regarding adherence to the binding arrangements made in the project agreement.

The report of the external audit must include the following:

• Presentation of the audit assignment and scope with extensive comments on the audit findings. The auditor must also state which documents were used for the audit of appropriate use of funds and compliance within the project term.
• Recommendations in case of complaints.
• Comment on how audit observations from previous years were followed up on, if required
• Budget (most recent version), with the structure used for the financial report, provided for the final report and presented like the attached template to this guide (see page 7-8). The comparison of planned and actual expenditure is shown in the currency in which the expenditure was incurred. The audit will not convert these amounts to Euros.
• Deviations of actual expenditure from the planned expenditure in the most recent budget that exceed 30% of individual budget items, (main items in the budget), must be explained and reasoned.
• Deviations of actual expenditure from the planned expenditure in the current budget that exceed 30% of individual budget sub-categories, reasons must be given.
• Quantitative documentary proof).
• Statement of application of funds (Annex 1 – attached)
• The final audit option in the audit certificate must state the following (minimum requirement), which is to be worded clearly by the external auditor and adapted if appropriate:

“We hereby certify that we have audited the statement of accounts of [name of project partner in developing country] regarding the financing of the project [name]. Our audit was carried out on the basis of the following requirements pertaining to the use of funding: [List of relevant contracts and documents]. To this end, we have inspected the books and receipts. Based on our audit, we confirm that”

Audit Duration:

The audit work shall be completed within one month from its start date.

Qualification of the Audit Firm:

• • The audit firm must be based in Lebanon. The external auditor must be independent (especially independent from the local project partner and the German private executing agency). They should work to an internationally recognised standard.
  • If an independent audit is to be carried out for the project, the auditor is to be chosen by the German private executing agency and the local project partner together.
  • The auditor’s valid qualification (at the time at which the audit certificate is issued) as a recognized, independent auditor must be confirmed by the German embassy or a relevant, recognized institution in the partner country (e.g. a chamber of commerce or national association of auditors). The embassy’s confirmation, a qualification certificate or a print-out of the registry entry must be submitted with the audit certificate.
  • Having affiliation/membership with an internationally reputed audit firm will be an asset.