YEARLY EXTERNAL AUDIT – FISCAL YEAR 2016 (REVISION)

Deadline: 13 October 2016

TERMS OF REFERENCE

I. Introduction
The ASEAN Foundation is seeking a registered qualified audit firm,
preferably with relevant not-for-profit sector expertise, to conduct
audit services for the fiscal year 2016 covering the period of 1 January
to 31 December 2016. A yearly external audit is required as stipulated
in the organisation’s financial rules and regulation.
II. Background
The ASEAN Foundation (AF) was established in December 1997 by ASEAN
Foreign Ministers in fulfilment of the decision of the ASEAN Leaders. It
is a non-profit ASEAN body under the ASEAN Charter and is mandated to
promote greater awareness of ASEAN and greater interaction among the
peoples of ASEAN, as well as their wider participation in ASEAN
activities.
AF manages several funds, which are categorised as Endowment Fund, Operational Fund and Project Funds.
III. Objective
The overall objectives of the audit are:

• To determine if the organisation’s accounting system provides
  accurate and adequate details of its financial position and fiscal
  operations in accordance with generally accepted accounting principles
  and the approved organisation budget
• An assessment of whether internal controls are robust and are
  being adhered to, and a further description, in the form of fact finding
  statement, of any specific weaknesses or other issues in the
  organisation’s internal controls that may have been discovered during
  the course of auditing
• To determine if the organisation is managing and using its resources in an effective manner
• To determine if funds are being used according to the currently approved budget
• Whether or not the financial statements are free of material errors and present fairly financial position and transactions
• Whether or not payments have been approved in accordance with the organisation’s financial rules and regulations
• Whether or not the bank balance as of 31 December 2016 has been
  confirmed with the bank for each account and agrees with the accounting
  system
• Provide recommendations for improvement to management

IV. Audit Scope
The audit shall cover the adequacy of the accounting and financial
operations and reporting systems of the organisation. These include
budget control, cash management, certification and approving authority,
receipt of funds, disbursement of funds, recording of all financial
transactions in expenditure reports, records maintenance and control.
Human resources
The audit work shall cover the competitiveness, transparency and
effectiveness of the recruitment and hiring of personnel and include
performance appraisal, attendance control, calculation of salaries and
entitlement, payroll preparation and payment and management of personnel
records.
Procurement
The audit work shall cover the competitiveness, transparency and
effectiveness of the procurement activities of the organisation in order
to ensure the equipment and services purchased met the requirement of
the organisation’s financial rules and regulations.
Asset management
The audit work shall cover equipment (typically vehicles and office
equipment) purchased for the use of the organisation. The procedures for
receipts, storage, and disposal shall also be reviewed.
Cash management
The audit work shall cover all cash funds held by the organisation and review procedure safeguarding of cash.
General administration
The audit work shall cover travel activities, vehicle management, office premises, office management and records management.
Information system
The audit work shall cover the information and communication systems and the control and security of equipment and data.
V. Methodology
The audit must cover the financial operations, the use and control of
non-expendable equipment; as well as provide detailed observations and
comments on the management structure and the monitoring, evaluation and
reporting mechanisms. The following aspects are to be considered:

• The rate of delivery
• Financial accounting, monitoring and reporting
• Systems for recording and reporting on resources utilisation
• Equipment use and management
• Management structure, including the adequacy of internal control and record-keeping mechanisms
• List of asset bought

The scope of the audit services required should be sufficiently clear
to properly define what is expected of the auditor but not in any way
restricts the audit procedures or techniques the auditor may wish to use
to form an opinion. It should specify at least the following:

• That the audit will be carried out in accordance with generally accepted accounting standards
• That the period of activities to be audited is from 1 January 2016 to 31 December 2016.
• That the auditor will state in the audit report if the audit was
  not in conformity with any of the above and indicate the alternative
  standards or procedures followed
• That the auditor will provide an opinion as to the overall
  financial situation of the organisation for the period from 1 January
  2016 to 31 December 2016 and will certify:

• The Summary of Expenditure for the period from 1 January 2016 to 31 December 2016
• The cash position reported by the organisation as at 31 December 2016 and
• The status of assets and equipment held by the organisation as at 31 December 2016

VI. The Auditor Report and Management Letter
The expected contents of the audit report and management letter and
the topics/areas to be covered by the auditors should include the
following:
Audit Report
The audit report should clearly indicate the auditor’s opinion. This would include at least the following:

• That it is a standard purpose report and its intended use
• The audit standards that were applied
• The period covered by the opinion
• The scope limitation for those transactions
• Whether the Statement of Assets and Equipment is fairly and adequately presented as at 31 December 2016
• Whether the Statement of Cash Position reported by the organisation is fairly and adequately presented as 31 December 2016.

The English language shall be used for all reports and correspondence.
Management Letter
The management letter should cover the following topics/issues:

• An assessment of the organisation’s internal control system with
  equal emphasis on (i) the effectiveness of the system in providing
  management with useful and timely information for the proper management
  of the organisation and (ii) the general effectiveness of the internal
  control system in protecting the assets and resources of the
  organisation.
• A description of any specific internal control weaknesses noted
  in the financial management of the organisation and the audit procedures
  followed to address or compensate for the weaknesses. Recommendations
  to resolve/eliminate the internal control weaknesses noted should be
  included.

The management letter should also include the following:

• The categorisation of audit findings by risk severity: High, Medium, or Low

Definition of these categories are given in Annex 1

• The classification of possible causes of the audit findings
• Comments as to whether recommendations made in the management
  letter for the previous audit were implemented or, if not, the
  implementation status
• Management comments/response, as applicable

The audit report should be in English formatted in A4 size and the
number of copies submitted are five (5) hard copies and one (1)
electronic copy/pdf version.
VII. Qualifications of the auditor

• The Auditors/Audit Team members should have a sound track record
  in conducting an audit review of international organisations or public
  entities with not for profit experience.
• The Auditors/Audit Team members should have working knowledge in
  Indonesia language, as some vouchers, receipts/additional reports may
  not be available in English
• The Auditor/Audit Team members must be completely impartial and
  independent from all aspects of management or financial interests in the
  entity being audited. The auditors/audit team members should not,
  during the period covered by the audit nor during the undertaking of the
  audit, be employed by, serve as director for, or have any financial or
  close business relationships with any senior participant in the
  management of the entity.
• The Auditors/Audit Team members should be experienced in
  applying audit standards whichever is applicable for the audit. The
  auditor must employ adequate staff with appropriate professional
  qualifications and suitable experience with including experience in
  auditing the accounts of entities comparable in size and complexity to
  the entity being audited.
• Curriculum vitae (CVs) should be provided by the principal of
  the firm of auditors who would be responsible for signing the opinion,
  together with the CVs of managers, supervisors and key personnel
  proposed as part of the audit team. CVs should include details on audits
  carried out by the applicable staff, including ongoing assignments
  indicating capability and capacity to undertake the audit.
• The Audit Firm should state its legal nature, the total number
  of auditors who are owners and/or employees of the firm as well as
  auditing services provided by the firm and state whether the firm has
  any associations or affiliation with any other professional firm as
  auditors in the Indonesia or abroad.

VIII. PROPOSAL REQUIREMENTS

• Firm Background and Experience: The proposal should describe
  your firm’s expertise and any relevant not-for-profit industry
  experience. Also, include the size of your firm, other areas, in which
  the firm specializes, and significant professional memberships and
  affiliations.
• Identify Key Personnel in the Engagement Team: Please explain
  your approach to staffing and provide information on the professionals
  who will be engaged in the audit activities, including related
  experience of the primary contact.
• Approach/Methodology to Conducting the Review: Please describe
  your firm’s auditing philosophy and methodology. Please detail the
  steps of the engagements, noting stages that would directly involve our
  personnel, including your overall expectations of client involvement.
• References: Please list contact information for at least three organisations similar to the AF.

IX. Fees
Please outline your fee structure for the audit in United States
Dollar (USD) or if it is in Indonesia Rupiah (IDR), please convert it
into USD by mentioning the conversion rate.
The cost of preparing a proposal and conducting the pre-proposal
survey or any meetings for verbal presentations shall be borne by your
company, regardless of the conduct or outcome of the solicitation
process. Proposals must offer services for the total requirements. All
proposals must remain valid and open for acceptance for a period of 100
(one hundred) days after the date specified for receipt of proposals.
X. Proposal Scoring
Proposals will be evaluated in two parts. The technical proposal
shall bear 70% of the total marks while the financial proposal shall
bear 30% of the total marks.
Functionality evaluation criteria

Bidders are required to score a minimum of 65% points on
functionality to qualify to be evaluated in the next level (price).
Bidders who do not score the minimum of 65% points on functionality will
be disqualified and not be evaluated on price.
XI Timing of the Audit

XII. Deadline and Submission of Offers:
Please see our procurement notice at our website:  http://www.aseanfoundation.org/job/yearly-external-audit-fiscal-year-2016Deadline:
Submission of offers is Thursday, 13 October 2016
Submission:
Offers are to be submitted in hardcopy or electronically to
The Procurement Committee, ASEAN Foundation
Jl Sam Ratulangi No 2, Menteng, Jakarta
Phone: +62 21 3192 4833
Or email to: [email protected]

ANNEX 1: CATEGORISATION OF AUDIT FINDINGS BY RISK SEVERITY

Action that is considered desirable and should result in enhanced control or better value for money.