TERMS OF REFERENCE (ToR)
FITRA (FORUM INDONESIA UNTUK TRANSPARANSI ANGGARAN)
Period: January 2013 – December 2013
FITRA or Indonesian Forum for Budget Transparency established at 20 Sept 2006, located at Mampang Prapatan IV, Jl. K No.37 Jakarta Selatan. It has a mission to build community development through education, analysis and community mentoring, to develop budget resource center in Indonesia area, to become reference of the community movement and other stakeholders in budget transparency, to develop and strengthen of state budget advocacy networking as a solid social movement.
In order to achieve that mission, Fitra has been conducting a various programs during 2013 from several donor, to ensure that all the usage of the fund was in accountable manner, Fitra is going to invite an eligible auditor firm to perform an audit of the Fitra’s financial report for the period January to December 2013
The ToR is intended to provide guidance and reference to FITRA in arranging project audit.
The objective is to conduct audit in accordance with auditing standard established by the Indonesian Institute of Public accountants in obtaining reasonable assurance whether the financial statement are free of material misstatement. The main objective is the review of the financial statements of a company or any other legal entity (including governments), resulting in the publication of an independent opinion on whether or not those financial statements are relevant, accurate, complete, and fairly presented.
IV. Audit Plan
The audit should take place in the middle of Feb 2014
By referring to the project agreement,FITRA takes the responsibility of project audit to ensure:
1. Financial report accountability,
2. Examine and review methods and system of control in financial and management included risk of analysis and management,
3. Ensure FITRA’s practices complying with all aspects of law and relevant regulations.
4. Verification of expenditure, whether they are accordance common practices.
5. Inspection of original support documentation and physical inspection of assets.
V. Audit Tasks
The tasks of the third party facilitating the audit of this project cover at least the following items:
1. Review and verify all vouchers, cash advances, cash liquidations, and all subsequent financial statements, in relation to standard finance manual as endorsed by FITRA’s management;
2. Review job descriptions and employment contracts of all staff to ensure sufficient segregation of duties;
3. Verification of sufficient internal control policies in the finance unit;
4. In cooperation with FITRA’s Finance & Accounting Officers, ensure that FITRA is able to provide all of required documents of financial transactions as the requirements states on agreed MoU below, with following attention to points mentioned below:
– A presentation of the accounts identical with the one in the budget forecast accepted by project donors and including all expenditures and all resources connected with the project, including the ones of other partners.
– A description and an explanation of the differences noted between the project execution and the description provided in the project financing request. With respect to the financial report, the explanation must bear on all headings marked by a difference of more than ten present (5%) of the original budget line.
– The description, if appropriate, of the consequences of the said differences for the later execution of the project (changes in the objectives, the activities or the schedule) as well as the revised budget forecast (expenditures and resources) for the financial year.)
5. In addition to the documents required in the MoU, the audit will pay a specific attention to the following points mentioned below:
– The balance of employee receivable to ensure that all the balance are true and outstanding and will be settled during next periods
– The balance of program receivable to ensure that all the balance are true and outstanding and will be settled during next periods
– The balance of program payable to ensure that all the balance are true and outstanding and will be settled during next periods
– All procurements above IDR 3,000,000 must be attached with at least 3 quotations from different suppliers;
– The payments for meetings with beneficiaries must be attached with attendance list, training topic, minutes of meeting, etc.;
– All voucher payments must be approved by the Sekjend;
6. In cooperation with FITRA, ensure that FITRA is able to provide good cooperation and assistance to the auditor in auditing process;
7. The audit will include also a management audit, in addition to standard financial audit, in providing comments and suggestions if necessary for assets, equipment, inventory arrangement, finance system and procedures, human resources, prior year audit recommendation action plan, etc.;
8. Audit report must include comments on the following items:
a. An opinion rendered by the auditor,
b. The audit findings
c. An analysis of disbursement, cash management, bank reconciliation, bank interest income, accounts payable, accounts receivable, list of asset, equipment and inventory management,
d. The cash count report,
e. The verification of all transactions and supporting documents for procurement process;
f. Any lack of quality rendered by particular condition (human error, lack of skilled labour, etc.),
VI. Expected Outputs
– The audit report in should be provided in both English and Bahasa Indonesia;
– The figures in audit report should be presented in Rupiah currencies;
– Comments on weaknesses and unsatisfactory project output as expected on MoU;
– Identify on any non-compliance of standard practices in terms of petty cash management, cash advances and liquidation, payments, procurement policies, etc.
– Recommendations to FITRA’s management of the applied system practices from Indonesian law and regulation aspect;
– Recommendations on how to ensure financial sustainability of FITRA
VII. Auditor Profile
- Public accounting firm, Registered by Ministry of Finance Republik of Indonesia
- Good knowledge and understanding of general accounting procedure,
- Minimum 5 years of experience in particularly auditing non profit organization is preferable,
VIII. Time Frame
7 –17 Jan ‘14
20-24 Jan ‘14
3–14 Feb ‘14
17 –21 Feb ‘14
28 Feb ‘14
Final Report submission
IX. Payment instalment
As elaborated in the time frame, it is necessary to clearly schedule the instalment payment for the services extended. It is proposed to have some period of payment where length of service completion as the basis.
- Contract signing by both parties,50% of the payment will be installed.
- The remaining payment will be installed after the final report submitted (50%).