PROJECT: MITIGATION AND ADAPTATION TO CLIMATE CHANGE IN THE AGRICULTURE AND FORESTRY SECTOR OF
THE NORTH-WESTERN, CONTINUATION
(PROJECT CODE: VM076)
Financing partner: Bread for the World (BftW)
Project-executing organization: Centre for Sustainable Rural Development (SRD)
1 Introduction
Centre for Sustainable Rural Development (SRD) is a science and technology organisation directly under Vietnamese Union of Science and Technology Association (VUSTA), established under Decision No. 281/QD-LHH dated 21 March 2006 by the Central Chairman Committee of Vietnamese Union of Science and Technology Association, Certificate No. A-498 dated 30 March 2006 issued by the Ministry of Science and Technology.
The principal activities of the Centre include:
- Science research in community development, agriculture, sustainable rural development, eliminating hunger and reducing poverty;
- Science and technology services: Implement projects, popularise knowledge, consultancy, transfer technology, organise conferences, trainings in above fields.
2 Nature and Scope of the Audit
2.1 Accreditation
The Audit Firm shall produce evidence to the Project Partner and the Financing Partner in appropriate form of its authorisation or registration as an audit firm.
2.2 Aim of the audit
2.2.1
The aim of the audit is the submission of audit opinions related to the financial report on the project, compliance with the cooperation agreement and the use of the project funds by the Project Partner. The format of the report must comply with the format prescribed by ISA 800 and defined in 2.2.4. Only with regard to confirmations under section 2.2.4 a and b is an audit opinion also admissible in accordance with ISAE 3000.
2.2.2
The audit report is to be addressed to the Project Partner and the Financing Partner.
2.2.3
The Audit Firm shall ensure that the financial report to which the audit report refers are clearly marked, and shall attach a copy of the financial report to the audit report.
2.2.4
The Audit Firm shall include all material exceptions as qualifications of the audit opinion. In particular, the audit report shall contain the opinion of the Audit Firm on the following:
a) Compliance with the cooperation agreement.
b) Use of the project funds exclusively for purposes of the project and in accordance with the cooperation agreement.
c) Whether the financial statements show a true and fair view [or, present fairly in all material respects] of the project’s income and expenditure for the reporting period ended and the financial position and the cash balance of the project at that date.
If the auditor has to qualify opinion c or identifies material exceptions to opinions a and b, full details shall be given in the audit report. In addition to the audit report, the Financing Partner requires the Audit Firm, unless it is stated otherwise, to complete annually the audit completion checklist (see enclosures) in which specific aspects of the audit activities are confirmed.
2.3 Scope of the audit
The tasks of the audit include:
- The independent auditor will review the project Financial Statements including aid funds from BftW and counterpart funds from the People's Committee of project location with Government state fund, specialized accounts at the SRD Center/Local Partner, Statements of Expenditure (SOE) and other accompanying documents of the Center and local partners with the following contents:
+ Compliance with the cooperation agreement of BftW, Decree No. 80/2020/ND-CP on the management and use of non-refundable aid not part of official development assistance provided by foreign agencies, organizations, and individuals for Vietnam dated 8 July 2020, State Budget Law concerning Counterpart Funds and other current regulations on management of projects having aids under the state budget revenues;
+ Use project funds exclusively for project purposes and in accordance with the cooperation agreement, Decree No. 80/2020/ND-CP on the management and use of non-refundable aid not part of official development assistance provided by foreign agencies, organizations, and individuals for Vietnam dated 8 July 2020, State Budget Law concerning Counterpart Funds and other current regulations on management of projects having aids under the state budget revenues;
+ Whether the financial statements honestly and fairly reflect the income, targets and financial situation of the project.
The Auditing Firm’s assignment details shall include the following:
2.3.1
The Audit Firm shall plan and conduct the audit in compliance with the International Standards on Auditing (ISA) as applied in Vietnam.
2.3.2
The audit shall be conducted at the SRD’s offices where the books of account related to the project are available and local partners implementing the project, including: People's Committee of Thuan Chau District, Department of Agriculture and Rural Development of Son La province. A pre-requisite is that all relevant accounting records and other documents are available to the auditor. The auditing company will audit non-refundable aid capital and counterpart capital from the state budget at the partners. Audit fee include related costs incurred during the audit team's work at the project fieldwork, such as travelling cost, accommodation, per diem, etc.
2.3.3
The audit is to be planned to provide the auditor with sufficient, appropriate evidence as a basis for the opinions required in section 2.2.4. The auditor shall ensure that the Audit Firm’s methodology for donor-funded project audits is extended as necessary to include the requirements of sections 2.3.4 to 2.3.8. The content of paragraphs 2.3.4 to 2.3.8 is not a complete audit programme. Those paragraphs identify areas where the Financing Partner expects the auditor to perform additional audit work except to the extent that the work already forms part of the auditor’s standard methodology for the audit of donor-funded projects.
2.3.4
When planning the audit there shall be a rebuttable presumption under ISA 240 that the following areas are high risk (any examples given for each of the areas are illustrative and are not complete lists):
a) False/fabricated supporting documentation.
b) Ghost activities.
c) Unreasonable application of cost sharing (including charging salaries unfairly to the project)
d) Double funding.
e) Undisclosed related party transactions (regarding procurement, employee recruitment/promotion, beneficiary selection etc.).
The audit methodology must be extended as necessary to include, in addition to all other risk assessments, documentation explaining the auditor’s risk assessment for each of these areas with justification if any high-risk presumptions have been rebutted and describing the responses to the final assessed risks.
2.3.5
For the purposes of opinion a, the auditor shall identify those elements of the Cooperation Agreement where compliance is not verified by work performed to support opinion the auditor shall assess the risk of non-compliance in these areas and design appropriate responses to those risks. In addition, the auditor shall also confirm the personal details recorded in the “project information sheet”, including physical verification of ID documents. Any errors in the project information sheet shall be reported under “Other matters” in the audit report. If the exception(s) is/are assessed as material, either individually or cumulatively, opinion a shall be qualified accordingly.
2.3.6
For the purposes of opinion b, and in addition to other work performed to support this opinion or opinion c, there shall be a rebuttable presumption that the auditor shall carry out a physical inspection of the project to confirm, by observation and enquiry, that the extent and nature of expenditure reported in the financial statements matches the extent and nature of activities that were implemented during the reporting period.
2.3.7
For the purposes of opinion b, fixed assets and/or items of inventory with acquisition costs of EUR 800 or more shall be subject to physical inspection to verify their use in accordance with the intended purpose. Exceptionally, a physical inspection can be omitted if the financial costs of that inspection would have no reasonable relationship to the value of the asset(s)/inventory concerned and if the auditor has justifiably assessed that there is a very low risk that those funds have been used for non-project purposes.
The project funds and assets have to be ensured to be efficiently, economically and exclusively used for project purposes, according to the binding agreed project objectives and the mutually agreed expenditure and income plan.
2.3.8
For the purposes of opinion c, the audit shall be planned to verify that the financial statements present a true and fair view of (or present fairly in all material respects), not only the financial records of the project but also the actual activities of the project during the reporting period. There shall be a rebuttable presumption that the auditor shall carry out a physical inspection of the project to confirm, by observation and enquiry, that the extent and nature of expenditure reported in the financial statements matches the extent and nature of activities that were implemented during the reporting period and the extent and nature of activities described in the narrative report.
2.3.9
to verify that a separate bank account is kept exclusively for the project as required by the Project Agreement, and. If there is no separate bank account for the project, the project partner shall explain in writing the means by which the project funds will be kept separately from other funds and it must be authorized by the Financing partner.
2.3.10
to examine whether the signatories on the bank account have been approved and authorized by a person/people within SRD with sufficient power to give that authority.
2.3.11
to examine whether there have been any changes regarding staff with authorisation to legally represent SRD.
2.3.12
to examine whether any interest were accrued on amounts transferred by the Financing Partner and in that case to examine whether the interest were properly declared and used for project purposes.
2.3.13
to examine whether the local and/or third-party contributions to be provided as part of the Project have actually been received, duly shown in the books, and properly used for the financing of Project expenditure; to verify information on income which was due but was actually received after the end of the period under review from local and third-party contributions, if any; as to local contributions, only those made in monetary terms should be shown. Non-monetary contributions (e.g. voluntary work, contributions in kind, use of fixed assets) have been separately planned and reported.
2.3.14
to identify whether any provisions and reserve funds have been created from amounts disbursed to SRD by the Financing Partner and if so, whether the consent of the Financing Partner to do so has been obtained; to confirm that on completion of the project any existing provisions and reserve funds have been dissolved and duly used for project purposes.
2.3.15
to verify, in cases where the Financial Statement has been prepared on modified cash basis, debtors, creditors and other adjusting items shall be analysed across the same expenditure items as in the agreed overview of the planned expenditure and income plan;
Within the limitations imposed by the modified cash basis of accounting, the financial report shall show a true and fair view of the income and expenditure of the project during the reporting period and cumulatively over the project duration, and the funds and cash status at the end of the reporting period.
2.3.16
to verify that no depreciation, imputed or notional costs are charged to the Project.
2.3.17
to examine the payroll of the project staff and lists of experts’ and advisory fees paid and to verify that deductions of income tax, social security, insurance and welfare scheme and any other amounts from staff pay have been properly calculated and duly remitted to the local government or other authority/body/organization in accordance with applicable legislation.
2.3.18
to verify that relevant local/national laws and regulations have been complied with.
2.3.19
to verify that proper procedures of competitive tenders and quotations have been followed for the purchase of goods or services (including the value of building contracts) according to the value limits set out in the project agreement.
3 Requirements
The auditing firm must be on the mandatory list of Bread for the World (BftW) to carry out the external audit of the approved project. The selection will be carried out by bidding among the different audit firms mentioned in this list that have audited projects with non-refundable funding by BftW with a total budget greater than EUR 700,000 for projects in the fields of agriculture and forestry; improving people's livelihoods as well as adapting to climate change. Only after knowing the different proposals, the Partner Organization will choose the most convenient.
The Contract(s) will be communicated with chosen audit firm and the Project partner, the audit firm and the Financing partner will sign the tripartite agreement.
The Audited financial report and if applicable, the manager letter shall be addressed to SRD and the Financing Partner within three months after the end of each reporting period.
The audited financial report shall be prepared every six months in accordance with the specifications of the Financing partner, as following:
|
Report |
Reporting period from - to |
To be submitted by |
|
Audited financial report and activity report 2nd half year |
07/2024-12/2024 |
31/03/2025 |
|
Audited financial report and activity report 3rd half year |
01/2025-06/2025 |
30/09/2025 |
|
Audited financial report and activity report 4th half year |
07/2025-12/2025 |
31/03/2026 |
|
Audited financial report and activity report 5th half year |
01/2026-06/2026 |
30/09/2026 |
|
Audited financial report and activity report 6th half year |
07/2026-12/2026 |
31/03/2027 |
The Audit Firm will communicate to the management of the Project Partner its observations concerning the accounting system and internal controls together with a detailed list of any significant weaknesses that come to the Audit Firm’s attention during the course of the audit, as well as the risks associated therewith. The management letter must contain recommendations as to how these weaknesses can be eliminated and controls and records improved. The recommendations should be discussed and agreed with the management.
The manager letters shall be submitted annually, respectively with the first, third and fifth audit report of the project.
Centre for Sustainable Rural Development (SRD) invites auditing firms to express their interest and submit a quotation to us. Interested auditing firms may obtain further detailed information at the address below during office hours (from 09:00 AM to 05:00 PM) from Monday to Friday.
Expression of Interest documents from consulting firms should be sent to the address below in written form (either delivered in person, by post, or via email) before 5:00 PM on September 17, 2024.
Centre for Sustainable Rural Development (SRD)
No. 31, Alley 19, Kim Dong Street, Hoang Mai District, Hanoi
Mrs. Hoang Thi Minh Thu – Project Accountant
Phone: 024 3943 6678/ (+84)35 339 3868
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.
Trung tâm Phát triển Nông thôn Bền vững (SRD)
Số 31, ngõ 19 Kim Đồng, quận Hoàng Mai, Hà Nội
Tel: +84 24 3943 6676/78 | Fax: +84 24 3943 6449
