Publish Date: Apr 08, 2017
Closing Date: Apr 30, 2017
Tender Document: Download Document
Date: 08 April 2017
ADB Grant No. 0134-AFG (SF)-MFF: Energy Sector Development Investment Program – Project 1
Sheberghan Gas Fields Rehabilitation Project
Contract No: 7 PMO/MOMP: Procurement of Services for Auditing Project Financial Statements for Fiscal Year 1395 (21 December 2015 to 20 December 2016).
Deadline for Proposal Submission: 30 April 2017, 2:00 PM Kabul time.
1. This Request for Proposal follows the Terms of Reference (TOR) (Please Refer to Appendix) for auditing this project that appeared in the MOMP website under the link of Tenders.
2. The Islamic Republic of Afghanistan has received a Grant from the Asian Development Bank (ADB) toward the cost of the Energy Sector Development Investment Program, Project 1 and has extended the proceeds of the Grant to (MOMP), the Executing Agency of the project.
PMO under MOMP invites eligible audit firms to submit their sealed proposal for estimated (16) transactions occurred during the last fiscal year. The value for these transactions is ($132,482.00). The audit firms must have qualified auditors as specified in the TOR. The audit firms should have sufficient knowledge/skill and experience of ADB’s procedures and license of operating as a business in Afghanistan.
3. The PMO, acting on behalf of MOMP, (“the Employer”), requests sealed proposal from eligible firms from member countries of ADB for completion of auditing services for the project. The scope of services is described in the TOR. The audit firm should provide and submit the audit report to PMO for review in 20 calendar days after start date of auditing which will be the contract signing date.
4. Competitive evaluation will be conducted in accordance with audit TOR for Procurement of Services and is open to all qualified audit firms from ADB member countries. For this procedure, audit firms submit the price proposal and the technical proposal in one envelope. These envelopes will be opened in public on the date and at the time designated in this document.
The proposals will be evaluated, and the contract will be awarded to the firm who submits the lowest evaluated substantially responsive proposal.
5. Firms’ qualifications will be assessed during the evaluation of technical proposals.
6. Interested eligible firms may obtain further information from PMO and inspect this document, free of charge, in English Language, between the office hours from 08:00 am to 4:00 pm from Saturday to Wednesday at the address given below:
Project Management Office (PMO)
Afghanistan Geological Survey (AGS), 5th Floor
Jalalabad Road, Near to Shahid Abdul Haq Square, Kabul, Afghanistan
Contact Person: Zemarai Arya
Email Address: email@example.com
Telephone: +93 (0) 772120327 or +93 79 927 8878
7. The Employer (MOMP) will not be responsible for any costs or expenses incurred by firms in connection with the preparation or delivery of proposals.
8. Proposals must be delivered by 2:00 PM on Sunday, 30 April 2017 at the following address:
Attention: Zemarai Arya, MIS Specialist
Project Management Office (PMO)
Afghanistan Geological Survey (AGS), 5th Floor
Jalalabad Road, Near to Shahid Abdul Haq Square, Kabul, Afghanistan
9. Both technical and financial proposals will be opened immediately thereafter in the presence of the firms' representatives who choose to attend at AGS, 5th Floor, PMO office Kabul, Afghanistan, on Sunday, 30 April 2017 at 2:00 PM Kabul time.
10. It is anticipated that the proposed contract will have the following schedule:
Release of request for proposal: 08 April, 2017
Deadline for proposal submission: 30 April, 2017 at 2:00 PM Kabul
Proposal opening date: 30 April, 2017 at 2:00 PM Kabul
Expected date of contract award: 07 May, 2017
Expected audit report date: 27 May, 2017
TERMS OF REFERENCE
ANNUAL PROJECT FINANCIAL STATEMENTS OF
GRANT 0134-AFG-ENERGY SECTOR DEVELOPMENT INVESTMENT PROGRAM – TRANCH 1
(SHEBERGHAN GAS FIELDS REHABILITATION PROJECT)
1. These Terms of Reference (TOR) relate to the audit of Annual Project Financial Statements (APFS) for the accounts of Grant 0134-AFG, Tranche 1 subprojects “Sheberghan Gas Fields Rehabilitation Project” for the financial year from 21 December 2015 to 20 December 2016.
Objectives of the Audit
2. The objective of the audit is to enable the auditor to express an independent opinion on whether APFS of the grant projects listed below, for the financial year ending 20 December 2016 are prepared, in all material respects, in accordance with the cash bases of accounting.
Grant 0134-AFG, Tranche 1 subprojects “Sheberghan Gas Fields Rehabilitation Project”
3. A separate opinion on the eligibility of claims in Statements of Expenditure (SOE) and on the conduct of Imprest account is also required for the following accounts:
(i) Accounts of Grant 0134-AFG: Energy Sector Development Investment Program – Tranche 1 (SOE and Imprest Account)
4. To confirm compliance, or otherwise of specified financial covenants or assurances contained in the ADB Grant Documents.
• Schedules 3 and 6 of the Framework Financing Agreement dated 22 October 2008.
• Schedules 2 and 4 of the Grant Agreement dated 1 February 2009 (Grant 0134-AFG).
Description of Materials
5. The receipt and disbursement of project funds is carried out by the Ministry of Mines and Petroleum (MOMP). Financial statements and accounting records shall be provided to the Auditor by the Project Management Office (PMO).
6. The Annual Project Financial Statement (APFS) should comprise a Statement of Receipts and Payments (Cash Flow Statement). Other schedules of value or cumulative work-in progress, assets and inventories and a summarized reconciled bank statement are to be attached.
7. The APFS should include: (a) a summary of funds received showing ADB funds, any co-financing and counterpart funds separately; (b) a summary of expenditures shown under the main project components and by main categories of expenditures (as referenced in
loan and appraisal documentation) for the year of audit and cumulative expenditures on the Project to date; and (c) statement of fund balance as at the year end.
Delivery of Audit Report and Management Letter
8. The auditor should provide MOMP with the initial draft of the Management Letter to give MOMP the opportunity to review its contents and to comment accordingly before finalization. The auditor would then issue the final reports after all clarifications have been cleared.
9. The auditor should, on request, inform MOMP of the status of the audit as it progresses from time to time.
10. Delays caused by the MOMP and/or the PMO shall be communicated immediately, in writing, to the Minister of Mines and Petroleum, with a copy to ADB so that appropriate action can be taken.
11. The auditor shall provide the following final reports to MOMP, with copies to ADB, not later than 90 days after of commencement of the audit.
The Audit Report (incorporating the Audit Opinion on the project Financial Statement and confirmation of the compliance, or otherwise, of the specified covenants and assurances).
The Management Letter
12. All reports must be provided in the English language
13. The auditor will prepare audit report, which will be drafted using guidance and illustrative text provided in relevant account standards which are applicable for the circumstances of the Client, indicating whether:
1. APFS of the grant project listed below is prepared, in all material respects, in accordance with the basis of preparation defined in the respective grant agreements signed with ADB, Grant 0134-AFG, Tranche 1, Sheberghan Gas Fields Rehabilitation Project
14. The auditor’s Report shall also provide and opinion as to whether:
I. The proceeds of the ADB loan or grant have been utilized only for the Project in accordance with the loan/grant agreement;
II. The financial information contains data specifically agreed upon between the borrowers (Islamic Republic of Afghanistan) and ADB as being necessary for inclusion in the financial statements;
III. The maintenance of imprest account (S), use of imprest funds and SOE conform to ADB requirements;
IV. The financial information complies with relevant regulations and statutory requirements; and
V. Relevant financial covenants and assurances given by the borrower been complied with.
15. The auditor shall submit and Auditor’s Report for the respective projects. The report shall specify the auditing standards followed by the firm in conducting the audits.
16. The report should be addressed to the Minister of Mines & Petroleum with copies to ADB, and should provide opinion as to whether the APFS presents a true and fair view of the project in Conformity with the International Audit Standards, applied on a basis consistent with that of the preceding year.
17. The audit report shall also specifically include an opinion of the accuracy and propriety of expenditures withdrawn under SOE procedures, and the extent to which ADB can rely on those SOE’s as a basis for credit disbursement.
18. Auditing Standards. The audit shall be carried out in accordance with generally accepted auditing standards, and will include such tests and procedure as the Auditor considers necessary under the circumstances. The audit shall include but not be limited to:
19. In conducting the audit, the following shall also be taken into consideration by the auditor but not limited to:
I. That all funds provided by the Asian Development Bank (ADB) and its co-financiers have been used in accordance with the conditions of the relevant loan agreements, with due attention to economy and efficiency , and only for the purpose for which the funds were provided;
II. That counterpart funds, if any, have been provided and used in accordance with the relevant agreements, with due attention to economy and efficiency, and only for the purpose for which they were provided.
III. That all necessary supporting documents, records, and accounts have been kept in respect of all project expenditures ( including expenditures reported using Statement of Expenditure or Imprest Fund procedures);
IV. That where Imprest Funds have been used, they have been operated in accordance with the provisions of the relevant loan/grant agreement;
20. Notwithstanding the above, the audit should include such tests and procedures, as the Auditor considers necessary under the circumstances.
21. Accounting Policies and Changes. The auditor should comment on accounting policies of PMO and the respective project, and confirm the extent to which the agreed project
accounting policies have been applied. In particular, the auditor should note the impact on the APFS arising from any material deviations from the agreed accounting standards. The auditor should also comment on any accounting policy changes, either during a financial year, or from one year to another.
22. Imprest Account. The Imprest Account reflects: (i) deposits and replenishment received from financiers; (ii) payments substantiated by withdrawal applications; and (iii) the remaining balance at financial year- end. The auditor will examine whether the Imprest Account has been maintained in accordance with the provisions of the relevant financing agreements.
23. The auditor must form an opinion on whether the Imprest Account was used in compliance with required procedures (e.g. those of ADB), and the fairness of the presentation of Imprest
Account activity and the year-end balance. The auditor should examine the eligibility and correctness of financial transactions during the period under review, account balances at the end of the period, the operation and use of the Imprest Account in accordance with the financing agreement, and the adequacy of internal control for this particular disbursement mechanism.
24. Statement of Expenditures (SOEs). The auditor will audit all SOEs used as the basis for the submission of credit withdrawal application to ADB. This expenditure should be compared for project eligibility with the relevant financing agreements (and with reference to the RRP and other project documents for guidance when considered necessary). Were ineligible expenditures are identified as having been included in withdrawal applications and reimbursed against, these should be separately noted by the auditor. The annual audit report should include a separate paragraph commenting on the accuracy and propriety of expenditures withdrawn under SOE procedures, and the extent to which ADB can rely on those SOEs as a basis for credit disbursement. Annexed to the APFS should be a schedule listing individual SOE withdrawal application by specific reference number and amount.
25. Compliance with Financial Covenants. The auditor will confirm compliance with each financial covenant contained in the project legal documents. Where present, the auditor should indicate the extent of any noncompliance by comparing required and actual performance measurements for each financial covenant for the financial year concerned.
26. The nature and extend of the audit procedures shall vary depending on the assessment of the existing policies and procedures. Generally, these would include the following procedures:
I. Review of the established system of internal control for the project;
II. Review of the accounting set-up;
III. Conducting interview or inquiry with management and employees, obtaining their responses to our observations, etc.;
IV. Examination of related documents processed and reports produced ; Circularization of third party confirmation, whenever deemed appropriate; and
V. Review of the degree of compliance with the project document, letter of understanding or general agreement, rules and regulations, etc.
27. Record Keeping. The Auditor shall pay particular attention to whether all necessary supporting documents, records, and accounts have been kept in respect of all the project activities with clear linkages between the accounting records and the project financial statement.
This will includes but not limited to:
I. Computation and recalculation, including checking the mathematical accuracy of estimates, accounts or records;
II. Reconciliation, including reconciling related accounts to each other, subsidiary records to primary records and internal records to external documents;
III. Physical observation, including inspecting or counting tangible assets, such as materials, inventory, land buildings, property or equipment;
IV. Confirmation including directly confirming balance or transactions with external third parties, such as cash balances , accounts receivable or accounts payable;
V. Sampling, including vouching or examining supporting documentation to determine if balances are properly stated; and
VI. Tracing including tracing journal postings, subsidiary ledger balances, and other details to corresponding general ledger accounts or trial balances.
28. Internal Control Systems. The auditor will also assess the adequacy of the project financial management systems, including internal controls to assess whether;
I. Proper authorizations are obtained and documented before transactions are entered into;
II. Accuracy and consistency are achieved in recording, classifying, summarizing, and reporting transactions;
III. Reconciliations with internal and external evidence are performed on timely bases by the appropriate level of management;
IV. Balances are confirmed with external parties;
V. Adequate documentation and an audit trail is retained to support transactions;
VI. Transactions are allowable under the loan or agreements governing the project;
VII. Errors and omissions are detected and corrected by the project personnel in the normal course of their duties, and management is informed of recurring problems or weaknesses;
VIII. Management does not override the normal procedures and the internal control structure; and
IX. Assets are properly accounted for, safeguarded and can be physically inspected.
29. On conclusion of the audit, a management letter shall be prepared for each of the audited projects, detailing but not limited to:
I. Any material weaknesses in the accounting and internal control systems that were identified during the audit;
II. Recommendations to rectify identified weaknesses;
III. The status of significant matters raised in previous management letters;
IV. Practical recommendations on the steps that could be taken to become materially compliant with the agreed project accounting policies, together with a time frame for making these changes;
V. The degree of compliance with each of the financial covenants in the Loan Agreement and recommendations for improvement;
VI. Matters that have come to the Auditor’s attention during the course of the audit which have a significant impact on project implementation;
VII. Any other matters that the Auditor considers should be brought to the attention of the project’s management; and ADB.
Statement of Access
30. The auditor will have full and complete access, at all reasonable times, to all records and documents including books of account, legal agreements, bank records, invoices and any other information associated with the project and deemed necessary by the auditor.
31. The auditor will be provided with full cooperation by all employees of MOMP and PMO whose activities involve, or may be reflected in, the annual financial statements. The auditor will be assured rights of access to banks and depositories, consultants, contractors and other persons or firms hired by MOMP. The auditor should be given access to all legal documents, correspondence, and any other information associated with the project and deemed necessary by the audit. The audit field works shall be conducted at the premises of the PMO in Kabul or elsewhere in Kabul as needed.
32. The auditor will be impartial and independent from any aspects of management or financial interest in the entity under audit. In particular, the auditor should be independent of the control of the entity. The auditor should not, during the period covered by the audit, be employed by, or serve as director for, or have any financial or close business relationship with the entity. The auditor should not have any close personal relationships with any senior or participant in the management of the entity. The auditor must disclose any issues or relationships that might compromise their independence.
Auditor and Audit Staff Competence
33. The auditor must be authorized to practice in the country and be capable of applying the agreed auditing standards. The auditor should have adequate staff, with appropriate professional qualifications and suitable experience, including experience in auditing the accounts of entities comparable in nature, size and complexity to the entity whose audit they are to undertake.
34. To this end, the auditor is required to provide curriculum vitae (CV) of the auditors who will provide the opinions and reports, together with the CVs of managers, supervisors and key personnel likely to be involved in the audit work. These CVs should include details of audits carried out by these staff, including ongoing assignments.
35. The auditor must refer to ADB guidelines which explain the ADB’s financial reporting and auditing requirements, including ADB’s Financial Management and Analysis of Projects (2006): http://www.adb.org/sites/default/files/pub/2006/borrowers_financial.pdf.
36. The work plan should address, among other things:
I. The extent (if any) that you would not conform to the agreed auditing standards and indicate any alternative standards to which you may (be required to conform;
II. whether the audit would be conducted as a completed audit (i. e., will the auditors carry out their audit after financial year-end, when the books of account are, or are being, closed);
III. Whether an audit carried out after financial year-end would be supplemented by one or more interim audits during a financial year. The principal purpose is to test ongoing systems and internal controls, and to relieve pressure on the staff of the entity and on the auditor at year-end,
IV. The manner in which the auditor proposes to address any statutory requirements relating to audit (e.g., certifications relating to shareholders’ equity required under the companies’ act) or to which they may be implicitly bound by contractual obligations of the employer (e.g., ADB auditing requirements, statements of Expenditure, Imprest Accounts);
V. Procedural requirements for certain verification procedures (e.g., checking of stocks, inventories, assets, etc.);
VI. Specific actions required on the part of the employer (e.g., access to computer systems and records, disclosures);
VII. Discussions before signing the opinion and reports on any matters arising from the audit, and with whom these discussions would be held; and
VIII. The timetable for provision of opinions and reports.