TERMS OF REFERENCE FOR EXTERNAL AUDIT SERVICES TO CARRY OUT THE AUDIT THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30th JUNE 2024.

1. Background

 The Institute of Policy Analysis and Research- Rwanda (IPAR-RWANDA) is a non profit independent policy research institute that seeks to enhance evidence based policy making and promote a culture of debate and dialogue on policy issues in Rwanda, by conducting timely, relevant, high quality, policy- oriented analysis and Research.

 The Institute seeks to strengthen the evidence based research available to government, private sector and development partners about social, economic issues facing Rwanda and the region to provide real time evidence solutions to the challenges.

The Institute wishes to acquire the services of an audit firm to audit IPAR- RWANDA’s financial statements.

2. Audit Objectives

 The objective of the financial statements audit is for the auditor to obtain reasonable assurances about whether the financial statements are free from material misstatements and to express an independent audit opinion thereof, on the institution’s financial statements for the year ended 30^th June 2024 as well as reporting on the soundness of the institution’s internal control systems’ functioning to achieve its objectives.

3. Audit standards

The Audit should be carried out in accordance with International Standards of Auditing (ISA) in all material respects and should include such tests and auditing procedures as the auditor considers necessary under circumstances.

4. Scope of assignment

The Auditor will: (a) Carry out tests of transactions as necessary, and will obtain an understanding of the entity’s accounting system, to assess its adequacy as abasis for the preparation of the financial statements, to establish whether adequate financial records have been maintained; (b) Confirm that appropriate internal control framework is in place to provide reasonable assurance on the operations of the institution, efficient use of resources and reliability of financial statements. (c) Confirm that although the responsibility for preventing errors, irregularities or fraud, remains with the institution, the audit is planned so as to have reasonable assurance that any material misstatements, irregularities and/or fraud in the entity financial statements is detected.

 Special attention should be paid by audit as to whether;

• Donor funds and internally generated income have been accounted for and used in accordance with the conditions of the Grant Agreements and approved Procedures manual.
• Goods and services have been procured in accordance with sound procurement practices mentioned in the operating manuals or procurement laws prevailing in the country.
• All necessary financial supporting documents, records and accounts have been kept in respect of institution’s activities, with clear leakages between the books of the account.
• The overall internal control framework as well as the risk management, and the existing practices and procedures are sound in line with institution’s procedures approved manuals.
• The Institution’s financial statements have been prepared in line with International Accounting Standards and of the Generally Accepted Accounting Principles and give a true and fair view of the financial position of the Institution as at end of the reporting period 30^th June 2021.

5. Specific Areas of attention

Internal controls systems

The auditor will conduct an in-depth and exhaustive review of the internal control systems to have sufficient knowledge of the procedures underpinning the systems, as contained in the various procedures manuals. In the process of reviewing the internal control system, the auditor needs also to examine areas like; governance, assets management, procurement of goods.

Institution’s Financial statements

The Institution’s financial statements shall include:

• A statement of financial position that shall reflect the assets, liabilities based on accrual modified of accounting
• A statement of income and expenditures which recognizes all receipts and expenses for the period under audit.
• The accounting policies adopted and explanatory notes. The explanatory notes shall be presented in systematic manner with items on both the statement of financial position and income statement aligned for cross referencing to any relates information in the notes.

6. Expected output/audit report

 The audit is expected to present two types of reports; an audit opinion on the financial statements and management letter.

The report on the financial statements will contain:

• An independent opinion on the financial statements.
• Accounting framework that have been applied indicating the effect of any deviations from the standards
• The relevant international auditing standards that were applied
• The period covered by the audit opinion
• Whether the audited financial statements and supporting schedules present fairly the receipts and disbursements for the institution and that the funds were utilized for the purpose defined.
• Management letter detailing the internal controls deficiencies, associated risks and related recommendation for management implementation.

The management letter will broadly cover findings and recommendations on any deficiency on governance, financial management, procurement and all the assets management.

7. Management

 The auditor shall have the rights to access all the required documents, correspondences and any other information associated with the institution’s audit that may reasonably be deemed necessary to enable him/her undertake the audit. This should include, but not be limited to, copies of the previous audit reports, minutes of the governance meetings, procedures and guidelines.

8. Auditor’s qualifications and independence.

The TORs states that the auditor must be completely impartial and independent from all aspects of management of financial interests in the entity being audited or those of its implementing/ supervising agency or directly related entities. The auditor should not, during the period covered by the audit nor during undertaking of the audit, be employed by, serve as director for, or have any financial or close business relationships with any senior manager or participant in the management of the entity. It may be appropriate to remind an auditor of any existing statutory requirements relating to be fully independent of the audit client during the period of audit.

9. Terms of the audit

Interested firms should present a technical proposal detailing the following; brief outline of the audit firm, assessment of the audit client’s needs, the applicable methodology anticipated and the work time schedule, the key staff to the assignment and a detailed financial proposal.

The technical proposal shall include specifically:

• The comprehension of the terms of reference
• Brief outline of the audit firm
• Assessment of needs of the client
• The methodology to be implanted
• The work program/ schedule
• The description, with CVs, of the team composition

The financial proposals shall take into consideration and include all relevant taxes required in Rwanda.

10. Duration of the assignment

The audit firms should specify the duration they think is sufficient to this assignment, and should give their work time schedule.

11. Post qualification

Technically qualified bidders shall be subjected to post qualification evaluation based on following criteria:

• Trading license from RDB
• Valid RRA certificate of non-clearance
• Valid RSSB certificate of non-clearance
• Membership certificate of Institute of Certified Public Accounts of Rwanda (ICPAR)

The assessment of bids will be based on the technical proposals and financial offers.

Technical proposals will be assessed in accordance with the following points:

• The Auditor must be completely impartial and independent from all aspects of management of financial interests in the entity being audited or those of its implementing/ supervising agency or directly related entities
• The Auditor should be experienced in International Standards of Auditing (ISA) which is applicable for this audit. The Auditor must employ adequate staff with appropriate professional qualification and suitable experience with ISA including experience in auditing experience in auditing the accounts of entities comparable in size and complexity to the entity being audited.
• CVs of the key personnel

The engagement partner and audit manager who would be responsible for signing off the audit opinion. He/She should have the following:

• CPA, ACCA or any other equivalent professional’s qualification
• Relevant experience of not less than 5 years (i.e in auditing services and supervising audit assignments) and provide evidence of having conducted similar assignments
• Proven experience in conducting audit in non for profit organization
• Knowledge of English

The Senior Auditor/ Audit team leader should have the following profile

• Not less than 4 years of experience as an Audit Team leader
• Bachelor’s degree in Accounting, Finance, having professional qualification such as ACCA/CPA is an added advantage
• Proven experience in conducting audit in non for profit organizations
• Knowledge of English
• Provide evidence proving experience and qualification

The audit team members should have

• Bachelor’s degree in Accounting, Finance management majoring in Finance
• Relevant experience in 2 year in Audit services
• Knowledge of English
• Provide evidence proving experience and qualifications

CVs should include details on audit carried out by applicable staff, including ongoing assignments indicating their capacity to undertake the audit

The technical proposals shall include specifically:

• The comprehension of the TORs
• The methodology to be implemented
• The work programme/ schedule

12. Submission of the proposals

The deadline for submission of the proposals is fixed on 26/09/2024 at 11:00 a.m. The proposals shall be submitted at IPAR-RWANDA office located in KIMIHURURA in 2 separate envelopes (technical and financial proposals) and shall indicate:” PROPOSALS FOR IPAR-RWANDA FINANCIAL AUDIT 2023-2024” addressed to the Executive Director of the Institute of Policy Analysis and Research-Rwanda.

13. Procurement method

The selection method of the audit firm will be Quality and Cost Selection method.