Country: Islamic Republic of Afghanistan
Assignment Title: AMA Annual External Audit for FY-2019
Duration of Assignment: 1 month
Implementing Agency: Afghanistan Microfinance Association (AMA)
Duty Station: Kabul, Afghanistan
Contract Type: Lump Sum
Reference No: AMA/AFP/CS-20
Issuance Date: July 02, 2020
Afghanistan Microfinance Association (AMA) is the national network of Development Finance Institutions (DFI) in Afghanistan. It was established in 2005 by the Microfinance Investment Support Facility for Afghanistan (MISFA), microfinance practitioners and other stakeholders. AMA was registered with the Ministry of Justice of Afghanistan in 2007.
AMA branded itself as an association that promotes the broader development finance sector in Afghanistan.
AMA has been one of the founders and member of the South Asian Micro-entrepreneur Network (SAMN) since 2009. AMA was elected as the Chairman of SAMN in March 2018. In 2012, AMA also became a member of the Small Enterprise Education and Promotion (SEEP) Network based in the USA.
AMA supports its members with a strong portfolio of demand-driven services under its four main functions; Lobbying & Advocacy, Knowledge Management, Coordination & Networking, and Capacity Building.
AMA wishes to engage the services of external auditors of international reputation for conducting the annual audit of its financial statements & all financial records in accordance with the statutory requirements, International Financial Reporting Standards (IFRSs) guidelines and International Standards on Auditing (ISA). AMA invites the Audit firms to submit technical and financial proposals for this purpose. The objective of the audit is to enable the auditors to express an opinion on the financial position and financial performance of AMA for the year ended December 31, 2019 and on donor financial reports which have been sent by AMA, and ensure compliance with the grant agreement with the WB, FM manual of WB for Afghanistan, and tax regulation.
- SCOPE OF AUDITS:
The audit will be conducted in accordance with ISAs as published by the International Auditing and Assurance Standards Board of the International Federation of Accountants (IFAC) as a whole besides. The audit will also be based on instructions for the program accounting and in compliance with AMA’s finance manual.
To ensure that audit objectives are met at organizational/program/units/geographical level, special attention should be paid to the following:
- Assessment of the adequacy of internal controls over funds received by AMA and subsequently utilized.
- Assess AMA’s compliance with the terms of grant funding from all sources, including MISFA.
- Assessment of the adequacy of the system of internal controls over procurement of supplies, equipment and services, hereunder verify whether AMA’s and National Procurement Authority (NPA) procedures and guidelines regarding procurement are followed.
- Verification of income and expenditure and the control of fixed assets management at all levels as specified hereunder (but not limited to):
- Check and/or verify the vouchers and other relevant documents.
- Evaluate the evidence i.e. vouchers and receipts, to determine their reliability and authenticity, and as a basis for the financial statements.
- Assess the usage of the assets by going through the various records.
- Evaluate the expenditure on foreign travel and assessing whether WB prior NoL was acquired and the reimbursed cost in accordance with FM manual of WB.
- Check and control that AMA complies with local laws and regulations, e.g. withholding of any applicable taxes on deliveries from suppliers and that any withheld amount is remitted to the relevant authorities on time
- Detect any expenditure variances by pegging the budget against the actual expenditure and extract explanation.
- During the year, physical count of assets should be carried out including cash checks/ count, confirmation and reconciliation of bank accounts, direct confirmation of selected accounts receivables and observation and verification of physical inventories and fixed assets where applicable. Examine the accounting records including detailed examination of vouchers will be part of the audit.
- Audit of AMA payroll system to ensure the recruitment has been done in compliance with NTA guidelines, salaries paid to employees are according to the NTA grade and step, as per the staff attendance, the payroll is tax complied and whether the relevant statutory deductions are made from the staff salaries and remitted to the relevant authorities on time.
- Questionable or Ineligible Expenditure: If the auditor identifies any expenditure that involves; i) purpose other than that of the project; ii) non-compliance with legal agreements; iii) non-compliance with applicable government regulations; and, iv) procurement in violation of applicable guidelines, it should be separately report as questionable or ineligible expenditure in the management letter.
- Project FM arrangements: The auditor shall review that project financial management arrangements are in line with those defined in the Project Appraisal Document (PAD) or Emergency Project Paper (EPP). (If applicable).
- Reconciliation with the Bank’s record: The auditor should verify that receipts from the Bank as shown in the financial statements correspond with the Bank’s disbursement record and the receipts include direct payment by the Bank.
- Review of Interim Financial Reporting (IFR): The auditor shall review the process of preparation of project’s component IFRs, reconcile the quarterly IFRs submitted to the donors with the accounting records and review the supporting documentation underlying the IFRs. The figures reported in the IFRs shall reconcile with Annual Financial Statements (AFS) and accounting records.
The annual audit should begin ASAP after the contract is signed, Draft audit reports along with financial statements should be submitted to AMA for its review and comments within ten days of completion of the audit executions/detailed examination. Final audit reports along with the management letter shall be issued within 5 days after the receipt of comments from AMA. the final audit report should be submitted to AMA within one month of starting the audit.
The auditor’s report shall include a reference of financial reporting framework according to which the AMA/Project’s financial statements are prepared. The opinion will include reference of compliance with the terms of legal and financing agreements. The auditor opinion will include reference to the application of funds for the purpose intended in the financing agreement.
The head of field audit office will sign the auditor’s report that will comply with the requirements of ISSAI 1700 “The Independent Auditor’s Report on General Purpose Financial Statements”. The auditor’s report will include the following elements:
- A title
- An addressee
- An introductory paragraph that identifies the financial statements audited
- A description of the responsibility of management for the preparation of the financial statements
- A description of the auditor’s responsibility to express an opinion on the financial statements and the scope of the audit, that includes, a reference to International Standards on Auditing and the law or regulation and a description of an audit in accordance with those standards.
- An opinion paragraph containing an expression of opinion on the financial statements and a reference to the applicable financial reporting framework used to prepare the financial statements and application of funds for the purpose intended in the financing agreement
- The auditor’s signature
- The date of the auditor’s report
- The auditor’s address.
The auditor will issue a management letter that is a report on an organization’s internal controls and operating procedures and their effectiveness. It is based on the auditor’s reviews during the normal course of an audit. The management letter will include:
- summary of outstanding audit observations
- follow-up of previous years outstanding audit observations
- ineligible expenditure (if any)
- current year’s audit observations
- ABOUT AMA:
AMA employs 13 permanent Afghan National staff and 02 project-based staff.
- Financial System:
Following its finance manual, AMA runs a centralized accounting system in its office Kabul headed by a Finance Manager and supported by Executive Director. Finance department is responsible for the financial management of the organization including data entry and financial reporting to donors/management and providing financial information to different stake holders. AMA has been using Quick Books accounting software for its financial data record keeping and reporting since 2011.
- Closing Year:
The financial year for auditing purposes is twelve-month period from Jan 1stto Dec 31st2019.
Expenditure of AMA from Jan 1st to Dec 31st 2019 is AFN 14,033,732
The annual audit should begin within one week or ASAP after the contract is signed. The final audit report should be submitted to AMA within one month of starting the audit.
- PROVISION OF INFORMATION BY AMA:
AMA shall make available all necessary financial documents to the auditors for the purpose of audit.
The company will be responsible for the following deliverables:
- Methodology, including work plan outlining timeframe for completion of the assignment
- Share the audit findings with the AMA, with proper recommendations
- Draft audit report for review by AMA management
- Audit opinion on AMA’s overall financial statements of the year 2019
- Final Audit Report
- Management letter in which the auditor will;
- Give comments and observations on the accounting records, systems, and controls that were examined during the course of the audit;
- Give comments on Income and Expenditure recognition;
- Identify specific deficiencies and areas of weakness in systems and controls and make recommendation for their improvement;
- Report on the lack of compliance of each financial covenant in the relevant financing agreement;
- Communicate matters that have come to their attention during the audit which might have a significant impact on the operations of the organization; and
- Include management’s comments in the final management letter.
- LOCATION OF AUDIT
The audit will be carried at AMA office in Kabul Afghanistan.
- Short listing Criteria:
- Similar experience in External Auditing with International organization
- Having experience of Auditing service with financial Sector.
- Excellent technical capacities to ensure smooth and high-quality deliverables
- Local companies/firms must be registered with Afghanistan government
- Method of Selection
A firm will be selected through Selection Based on the Consultants’ Qualifications (CQS) method in accordance with the procurement guidelines for Selection and Employment of Consultants under world bank procedure.
- Submission of EOI
Expressions of interest must be send through e-mail ( email@example.com) . by July 12, 2020 at 14:00 Hours. (Kabul Local Time).
Further information in respect to this REOI can be obtained at the address below by email or in person during office hours [08:00-16:00 Hours].
Finance & Admin Manager
Afghanistan Microfinance Association (AMA)
House no 42, Street 3, Taimani Project, District 4, Kabul- Afghanistan
Phone Number: +93780 235 235
Web site: www.ama.org.af