Water.org Indonesia OfficeTerms
of Reference for Partner Financial Audit 1)     Purpose:These
Terms of Reference (TOR) have been prepared with the aim of engaging a third
party consultant or firm for the purposes of a financial audit of a Water.org
Indonesian microfinance organization partners. 2)     Scope:Water.org
plans to conduct a financial audit of one of its partners who receive financial
assistance for water and sanitation financing activities. The program period to
be audited varied from one to other partners and the audit should be
comprehensive covering the first 12 months of the program that runs. 3)     Rationale for the Engaging External
Consultant Firms:As
part of internal monitoring processes and requirements, and for transparent
reporting to our stakeholders, Water.org engages third party consultants to
review financial transactions of our partner organizations to confirm that
funds granted by Water.org are being spent according to the funding agreement

between Water.org and the partner organization. 4)     Background:About Water.orgWater.org
is a U.S.‐based non‐profit organization working to increase access to water and
sanitation through collaboration with a variety of local partners. Water.org’s
WaterCredit initiative leverages the existing relationships, infrastructure and
expertise of financial institutions to increase access to capital for water and
sanitation, and to educate and empower low‐income households to invest in water
and sanitation facilities. Water.org launched WaterCredit globally in 2003 to provide
financial institutions with targeted subsidies and technical assistance to
build their capacity to offer water and sanitation financial products to those
living at the base of the economic pyramid (BOP). WaterCredit supports a range
of financial institution activities related to the development of sustainable
water and sanitation loan portfolios, including:•      
Market research;•      
Water and sanitation financial product
development and marketing;•      
Community mobilization;•      
Water and sanitation education/training; and•      
Institutional capacity building. Under
WaterCredit, financial institutions have flexibility to use their existing
lending methodologies and develop products that finance locally appropriate
water and sanitation facilities. Loan product design is based on market
research analyzing key variables such as local needs and preferences, existing
water and sanitation infrastructure and services, and product affordability. By
program end, financial institutions should have sustainable water and
sanitation microfinance products integrated into their on‐going product
offerings. About
Microfinance Partner:Water.org
has been implementing the WaterCredit program in collaboration with 11
partners/MFIs. However, this financial audit will be conducted only for 3
partners below:1.      Koperasi
Karya Usaha Mandiri (KUM)  2.      Koperasi
Baytul Ikhtiar (BAIK)3.      PT.
BPRS Bhakti Sumekar  5)     Overview of Existing Financial
Monitoring Activities:Water.org
has a regular financial monitoring process for each partner that includes the
submission of a monthly financial expenditure report. This report and access to
Water.org staff, partner staff, and partner financial and accounting records
will be available to the 3^rd party consultant. Additional background
materials such as a project narrative summary will be made available to the
consultant if requested. 6)     Scope of Evaluation:a)      Audit
Time Period:The period of
evaluation should cover at least one-year program implementation for each
partner: Koperasi Karya Usaha Mandiri (December 2015-March 2017), Koperasi
Baytul Ikhtiar (March 2016-March 2017), and PT. BPRS Bhakti Sumekar (April
2016-March 2017). b)      Inclusion:
All Water.org funds spent should be accounted for by reviewing financial
records and confirming that actual spending aligns with the amounts reported to
Water.org in the most recent comprehensive financial expenditure report.  c)      Geography:
This project will be based in partners’ head offices: Bogor, West Java (BAIK
and KUM) and Sumenep, East Java (PT. BPRS Bhakti Sumekar). The auditor will not
need to visit the branch offices as part of the audit. d)      Work
Completion Time Period: The draft financial audit report should be
submitted to Water.org within 45 days from the start of the contract, and the
final report should be submitted within 10 days from receipt of feedback from
Water.org. 7)     Approach and Methodology:a.      Previous
Experience: Water.org will engage an auditor with previous experience
of working with retail financial institutions and preferably NGO‐funded grant
programs. b.      Code
of Conduct: Consultants will maintain independence and the highest
professional ethical standards in collecting and reviewing information and
presenting the assessment results. Consultants will not share audit findings
with the audited parties without the permission of Water.org. Consultants will
sign a non‐disclosure agreement committing to keep private all information
gathered during the audit process. c.      Methodological
Framework: The consultant will familiarize themselves with the current
Water.org partner grant budget including the main categories and line‐item
activities. Using a cash basis (non‐accrual), the consultant will compare funds
reported spent by the partner with actual accounting records within the partner

organization. Consultant will have access to the most recent financial
expenditure report, partner bank statements, accounting practices/guidelines,
staff timesheets, meeting attendance lists, partner general ledger, purchase
receipts, invoices and other sources as needed. d.      Data
Collection and Analysis: General points to be covered will include, but
are not limited to the following:                           
i.         
Audit 100% of partner expenses charged to
Water.org grant Identification  of  any 
discrepancies  in  actual 
expenses  charged  to 
Water.org  from financial report
sent to Water.org by partner.                         
ii.         
Calculation of total amount of new investments
into the financial institution by third parties (e.g. banks, concessionary
lenders, etc.) to fund the water and sanitation loan portfolio, if any.                        
iii.         
Review and assessment of partner program
financial procedures related to the program including, but not limited to
internal controls, asset control, record keeping, document signature
requirements, and financial reporting.                        
iv.         
Recommendations for improving partner program
internal controls, asset control, record keeping, document signature
requirements, and financial reporting. e.      Deliverables:
The consultant will develop an audit report which should include the items
mentioned under the Data Collection and Analysis section.A
draft version of the report should be submitted to Water.org. After which,
Water.org will have two weeks to provide feedback, at which point the
consultant will have an addition 10 days to submit a final version of the audit
report. All
the documents/reports pertaining to the audit will be kept confidential and
submitted to Water.org after the assignment is over. 8)     Fees and Other Expenses:The
consultant will be paid on fixed‐schedule basis and all indirect expenses such
as travel expenses should be included in the proposed budget. 9)     Proposal Contents and Deadline: Proposals
must include at a minimum the following sections:1)      Discussion
of tasks to be undertaken by auditor and proposed methodology for collecting
information2)      Project
staffing plan and brief staff bios3)      Firm
qualifications and relevant work experience4)      Budget
following the template below and estimated number of days (from start to
finish) to complete work 

Budget Template

  
Proposals
should be submitted to Ade Reno Sudiarno, WaterCredit Senior Program Manager [email protected] (cc: [email protected]) no later than March 24^th, 2017  with “Financial
Audit Services ” in the subject line. Proposals submitted after this date
will not be considered.