TERM OF REFERENCE (TOR) FOR A consultancy Services for External Audit of PSF Financial Statements for 2023 

1. BACKGROUND 

1.1 The Private Sector Federation in Rwanda(PSF) is a professional organization dedicated to promoting and representing interests of Rwandan business community. 

It was established in 1999, replacing the former Rwanda chamber of Commerce and Industry. PSF has 30 branches across the country. 

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PSF is purely a private entity, governed by a Board of Directors elected from the business community at the grass root level to represent and advocate for members’ interests. 

The work of PSF is co-coordinated through a Secretariat which is headed by Chief Executive Officer. The Executive Officer has the responsibility to submit annual audited financial statements of the Secretariat to the Board of Directors. 

The financial statements of the PSF Secretariat are prepared in accordance with Generally Accepted Accounting Practice, the Financial Rules and Regulations of PSF. The source financing PSF activities come from the Membership contributions, Organization the Trade Fairs and the Donor Funds. 

The accounts are required to be audited by External Audit Firms registered with the relevant Accountancy Council of the country where the firms are based. 

PSF intends to engage an independent external auditor for 2023. 

2.0 OBJECTIVE OF THE EXTERNAL AUDIT

To express a professional audit opinion in accordance with International Standards on Auditing(ISAs).

To ensure that financial statements of PSF, in all material respects, are in conformity with the applicable Financial Rules and Regulations of PSF and Agreement Terms and Condition of the agreement; and

The financial statements of projects that require separate audit reports1, in all material respects, are in conformity with the applicable Financial Rules and Regulations of PSF and Agreement Terms and Conditions of the financing agreement. 

2.1 The Secretariat books of accounts provide the basis for preparation of those financials statements and are established to reflect the financial transactions in respect of the Secretariat and that it maintains adequate internal controls and supporting documentation for transactions. 

2.2 The external audit is carried out in accordance with International Standards on Auditing (ISA) and includes such tests and auditing procedures as the auditor considers necessary for the assignment. 

2.3 The responsibility for the preparation of Financial Statements lies with the PSF Secretariat and is also responsible for: 

3.0 AUDITING STANDARDS 

3.1 Responsibility for Preparation of Financial Statements

1. The selection and application of accounting policies. PSF Secretariat will prepare the Financial Statements in accordance with applicable accounting standards that comply with appropriate international standards in all material respects; and 
2. Implementing accounting, administrative and financial procedures documented in manuals. 

3.2 The auditors are responsible for the formulation of an opinion on the Financial Statements based on their audit conducted in accordance with ISAs (International Standards on Auditing) the auditors will request the PSF Secretariat for 

• The audit will be carried out in accordance with the standards specified in 3.2 above and will include such tests and verification procedures as the auditors consider necessary under the circumstances. In conducting the audit, special attention should be paid to the following: 

an Engagement/Confirmation Letter committing the PSF Secretariat management to the preparation of the Financial Statements and maintenance of proper internal control systems as well as acceptable documentation for all financial transactions. 

4.0 Scope of The Audit 

4.1 Carry out tests of transactions as are necessary, in order to obtain an understanding of the accounting system, to assess its adequacy as a basis for the preparation of the financial statements and to establish whether adequate records have been maintained as required by the PSF Financial Rules and Regulations, Financial Manual and applicable rules of the donors. 

4.2 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 PSF Financial Rules and Regulations; Financial Manual and the applicable rules of the concerned donors; 

4.3 Confirm that although responsibility for preventing irregularity and fraud remains with the Secretariat, the audit has been planned so as to have a reasonable expectation of detecting material misstatements in the financial statements; 

4.4 State the extent to which it has relied on the work of the Internal Audit; 

4.5 Confirm that funds have been used in accordance with the applicable rules of the concerned donors, Council decisions with due attention to economy and efficiency, and that they have only been used for the purposes for which they were intended for and in accordance with the conditions under which the funding was provided; 

4.6 Confirm that Goods and services financed have been procured in accordance with sound procurement procedures spelled out in the PSF Procurement Manuals; Financial Rules and Regulations and applicable rules of the donors; 

4.7 Confirm that all necessary supporting documents, records and accounts have been kept in respect of all activities. Clear linkages should exist between the books of accounts and the financial statements presented; 

4.8 Confirm that the Financial Statements have been prepared in accordance with acceptable accounting practice and give a true and fair view of the financial position of the Secretariat as at the end of the financial year; and 

4.9 The above-defined scope does not in any way restrict the audit procedures or the techniques that the auditor may wish to use in forming an opinion on the Financial Statements being audited.

4.10 The Financial Statements to be audited, among others, include:

5.0 Financial Statements 

1. A Statement of Income and Expenditure;
2. A Statement of Financial Position;
3. A Statement of Changes in Accumulated Funds;
4. A Statement of Cash Flow; 

5.1 The auditor is expected to present two types of reports: An opinion on the Financial Statements prepared by the Secretariat and a Management Letter. 

6.1 The opinion on the Financial Statements shall contain: 

1. A professional opinion on the financial statements and supporting schedules as regard to their true and fair view; 
2. Accounting standards and PSF Financial Rules and Regulations that have been applied indicating the effect of any deviations from them; 
3. The International Audit standards that were applied;

6.2 The Management Letter, among others, shall contain:

1. Comments and observations on the accounting records, systems and controls that were examined during the course of the audit;
2. Specific deficiencies and areas of weakness in systems and controls and make recommendations for improvement; 
3. Report on the implementation status of recommendations pertaining to previous period audit reports; 
4. Areas of risk that need to be flagged out to management; 
5. Any other matters that the auditors consider pertinent to be brought to the attention of the Secretariat.
6. Ideally, the Management Letter will include reactions/comments from PSF Secretariat on the weaknesses noted by the auditors.

 Audit of Projects 

1. That the External Auditors have obtained an understanding of the terms and conditions governing the grant agreement. The external Auditors should comply with the General Procedures of the Agreement and its annexes;
2. That the funds received have been used in accordance with the cooperation agreement. For example, the auditor will have to perform specific procedures required by the donors.
3. That the accounts kept by PSF are accurate and up to date;
4. That the accounts and expenditure relating to the grant/cooperation agreement are easily identifiable and verifiable;
5. That it is possible to reconcile the information in the Financial Report to PSF accounting system and records;
6. That the correct exchange rates have been applied;
7. That any identified bank interests have been properly reflected in the books of accounts;
8. That the Secretariat has maintained the necessary supporting documents, records and accounts in respect of the project activities; and
9. That the internal control systems of the organization are comprehensive, sufficient and adequate.

7.0 The financial records maintained for projects are usually the following:

7.1 The audit report (on the consolidated PSF accounts and separate project reports) including the financial statements, the management letter including the PSF

1. Financial ledgers;
2. Bank Reconciliation Statements;
3. Payments vouchers substantiated by support documentation; 

8.0 General Information   

8.1 The auditors shall be given access to all legal documents, correspondence and any other information associated with the Financial Statements to be audited and deemed necessary by them. 

9.0 Auditor’s Qualification and Experience

1. The auditor must be completely impartial and independent from all aspects of management or financial interests of the organization;
2. The auditor shall not, during the period covered by the audit nor during the undertaking of the audit, be employed by, serve as advisers or mentors for, or have any financial or business relationships with the organization; and
3. The auditor shall be registered with the Accountancy Council and must demonstrate that he employs adequate staff with appropriate professional qualifications and suitable experience in accounting and auditing the accounts of entities comparable in size and complexity to the entity being audited. 

• Demonstrate sufficient knowledge of relevant laws, regulations and rules in the country concerned. This includes but is not limited to taxation, social security and labour regulations, accounting and reporting, and
• Fluency in English
• An audit partner, or another person in a position similar to that of a partner, is the person of the audit firm who is responsible for the audit and its performance, and for the report that is issued on behalf of the firm. He/she has the appropriate authority from a professional, legal or regulatory body and is authorized to certify accounts by the laws of the country in which the audit firm is registered.
• An audit manager must be a qualified expert with a relevant university or professional qualification. He/she must have at least 10 years’ experience as a professional auditor or accountant in public audit practice including relevant managerial experience of leading audit teams. 

10.0 The selected firm will provide the PSF Secretariat with CVs of the partner or other person in the audit firm who is responsible for the audit and for signing the report together with the CVs of the audit manager, supervisor and staff proposed as part of the audit team. CVs will include appropriate details on the type of audits carried out by the staff indicating capability and capacity to undertake the audit as well as details on relevant specific experience. 

10.1 PSF Secretariat will examine the CVs before it signs a contract for the engagement and will reject them if they are not considered suitable for the requirements of the engagement.

10.2 A formal letter of engagement specifying the scope of audit shall be prepared and signed between the Secretariat and the auditor prior to the beginning of the assignment. The letter of engagement shall also clearly spell out the responsibilities of the two parties.

Curricula Vitae (' CVs') 

11.0 Letter of Engagement

Interested external audit firms with both local and international recognition should submit their proposals, clearly indicating Expression of Interest (EOI) for A Consultancy Services for External Audit of PSF Financial Statements for 2023 on or before Friday, 22^nd December 2023 to the following address: 

11.1 Procurement Unit 

Address: procurement@psf.org.rw