Job Description

Mercy Corps Audit Services Consultancy 2019 

Mercy Corps Audit Services Consultancy

Scope of Work: Audit of DFID Resources Managed by Mercy Corps

Terms of Reference for financial audit of the DFID resources managed by the Mercy Corps under BRACED X Grantee Reference No. B16 for the Period 1 January 2018 through 30 June 2019 (18 months) in line with International Standards on Auditing.

I. Title

Independent Project Audit for Building Resilience and Adaptation to Climate Extremes and Disasters (BRACED X) for all expenditure including sub-grantee expenditure managed by Mercy Corps under Grant Agreement KPMG / Mercy Corps Grantee Reference No. B16 for the Period 1 January 2018 through 30 June 2019 (18 months) carried out by an auditor, who is member in good standing of ICPAK.

II. Background

On 23 December 2014, KPMG East Africa Limited – The BRACED Fund Manager (Referred to as KPMG or Fund Manager (FM)) entered into a contract with Mercy Corps Europe (The Grantee) to implement Component B of the DFID funded BRACED programme under Grantee Reference No. B16. and is implemented in Kenya (Wajir) and Uganda (Moroto). The initial phase project duration was for 36 months ending to 31 December 2017.

At the end of October 2017, DFID decided to extend the BRACED programme for another 15 months (from January 2018 to March 2019).

This period (and the wrap up period that follows) is referred to as BRACED-X.

The extension includes (1) extra funding for BRACED-X projects and Component D activities and (2) a one quarter no-cost extension to extend current BRACED implementation activities (until March 31st 2018 with wrap-up to June 2018).

The additional funding for BRACED projects was separated into two distinct windows; implementation and policy.

The implementation window has been allocated £16 million (with individual grants capped at £2 million) and is intended to fund resilience building activities that directly support vulnerable people, and activities that scale and consolidate the work to date. In doing so, it aims to support Components A & B of the BRACED programme. As with original BRACED funding, projects could have included policy-related activities within their proposals for implementation window funding, provided it did not contribute to a significant amount of funding.

The policy window has been allocated £2.5 million (with grants capped at £500,000) and is intended to fund engagement in national or local policy processes relevant to project activities. The purpose of this window is to provide grants that will yield positive and tangible policy outcomes within the 15-month duration of the extension. This is most likely to happen through engagement with existing policy processes or dialogues. Policy window projects are referred to Component D1 (see below).

The total grant award for this BRACED & BRACED X project is GBP 6,501,469 (Six million, Five hundred and one thousand Four Hundred and Sixty-Nine British Pounds). The annual sums under this grant as per the table overleaf:

*Reasonable and necessary costs for final reporting and close out will be allowed post 30 June 2019 as agreed in the final budget realignment

III. Objectives

The objective of this engagement is to conduct a financial audit of the DFID resources managed by the Mercy Corps under BRACED X Grantee Reference No. B16 for the Period 1 January 2018 through 30 June 2019 (18 months) in line with International Standards on Auditing.

In addition, the audit should include but not be limited to:

• To obtain and examine the last annual project financial statements submitted to the fund manager and to reconcile these statements to the accounting records held by the organization;


• To check that the incomes and expenditures (including in-kind contributions) have been duly and properly recorded in the financial statements (including verification of exchange rates used), that they are supported by proper evidence and wholly, exclusively and necessarily incurred for the activities of the BRACED X project as per the approved budget;


• To check that the contribution made by BRACED X and the matching funds that the organization and third parties have provided, have been duly and properly recorded in the project financial statements and that they are supported by proper evidences;


• To check that Mercy Corps complies with the clauses in the BRACED X Grant Agreement;


• Any specific additional procedures requested directly by the BRACED X Fund Manager (as per agreement);


• Conclusion of whether the funds have been spent in accordance with the Grant Agreement; and


• Any specific matters required to be included by the Fund Manager and/or DFID.

The audit scope should include the expenditures made by sub-grantees (i.e. actual sub-grantee project expenditure) in addition to the actual disbursements made by Mercy Corps

IV. Audit Scope

The audit scope should include the expenditures made by sub-grantees (i.e. actual sub-grantee project expenditure) in addition to the actual disbursements made by Mercy Corps.

The auditors must perform the following steps:

1. Hold entrance and exit conferences with the recipient.

2. During the planning stages of an audit, communicate information to the auditee regarding the nature and extent of planned testing and reporting on compliance with laws and regulations and internal control over financial reporting. Such communication should state that the auditors do plan to provide opinions on compliance with laws and regulations and internal control over financial reporting. This communication should be in the form of an engagement letter.

3. Institute quality control procedures to ensure that sufficient appropriate evidence is obtained through inspection, observation, inquiries, and confirmations to afford a reasonable basis for an opinion regarding the financial statements under audit. While auditors may use their standard procedures for ensuring quality control, those procedures must, at a minimum, ensure that:

a. Audit reports and audit documentation are reviewed by an auditor, preferably at the partner level, who was not involved in the audit. This review must be documented.

b. All quantities and monetary amounts involving calculations are footed and cross-footed.

c. All factual statements, numbers, conclusions, and monetary amounts are cross-indexed to supporting audit documentation.

4. Obtain a management representation letter in accordance with AICPA Professional Standards AU-C, section 580 (Written Representations) signed by Mercy Corps’ management.

V. Audit Reports

Mercy Corps will submit the audit report to DFID. This report will be due no later than six months after the end of the implementation period for the project, by August 10, 2019.

VIII. Terms of Performance

The effective date of this contract will be the date of Mercy Corps’ signature. The audit must begin as soon as practicable after the signing of the audit contract, and from the audit start date, the audit firm must submit to Mercy Corps: (a) a complete audit program in writing within 2 calendar days, (b) a draft indexed audit report in English within 10 calendar days, and (c) a final audit report that includes revisions incorporating Mercy Corps comments within 42 calendar days. The audit firm must submit to Mercy Corps six hard copies of the final report in English and one soft copy.

It is the responsibility of Mercy Corps to ensure that all records are available, all accounting entries and adjustments are made, and all other necessary steps are taken to make it possible for the audit firm to perform the work necessary to be able to present the final audit report within 42 calendar days.

IX. Evaluation Criteria

IX. Submission

Proposals should be sent to ke-pr@mercycorps.org to be received not later than 21st June, 2019 at 1700 hrs.

Please quote “Braced X Audit consultancy” in the subject line.

All questions should be sent to ke-pr@mercycorps.org not later than 18th June, 2019 at 1200 hrs.

All questions will be answered by 18th June, 2019 at 1700Hrs.

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