Multiple Framework-Contract in the field of external audit of programs and projects of external aid

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• Publié par: Mafer
• Nombre de lectures: 26
• Langue: English

Extrait

CC AUDIT JO 2010/S1-000108

Annex I

Framework Contract in the field of external audits of programmes and projects of external aid financed by the European Commission from the European Development Fund (EDF) and the general budget of the European Union (EU budget)     Global Terms of Reference   Lot 2: Other audit assignments and related services

      TABLE OF CONTENTS   1 Introduction............................................................................................................2 2 Objective ................................................................................................................2 3 Scope: Other Audit Assignments and Related Services ........................................3 3.1 Forensic Audits and Investigations ................................................................4 3.2 Performance Audits .......................................................................................4 3.3 Audits in the framework of Budget Support Programmes.............................5 3.4 Compliance Assessments...............................................................................6 3.5 Verifications of International Organisations..................................................7 3.6 Other Audit related Services ..........................................................................7 4 Requirements and Standards for Auditors .............................................................7 4.1 General Requirements....................................................................................7 4.2 Standards and Ethics ......................................................................................9 5 Requirements for specific assignments..................................................................9 5.1 Forensic Audits and Investigations, Performance Audits and Audits of Budget Support Programmes .....................................................................................9 5.2 Compliance Assessments.............................................................................10 5.3 Verifications of International Organisatiosn................................................10 6 Annual Summary Reports....................................................................................11 7 Modalities of contract execution..........................................................................11 7.1 Procedure .....................................................................................................11 7.2 Request for services .....................................................................................11 7.3 Offers ...........................................................................................................11 7.4 Offer’s evaluation ........................................................................................12 7.5 Specific contract...........................................................................................13 7.6 Conflict of interest .......................................................................................15 8 Miscellaneous ......................................................................................................15    

 

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1 Introduction EuropeAid's mission is to implement the external aid instruments of the European Commission 1  which are funded by the General Budget of the European Communities (‘Budget’) and the European Development Fund (‘EDF’). EuropeAid is responsible for all phases of the Project Management Cycle which ensures the operational translation and implementation of the programming documents and overall objectives established under the responsibility of the Directorates-General for External Relations and Development. Commission services at EuropeAid and in Delegations must ensure the legality, regularity and sound financial management of external aid operations. Audits of external actions are an important component of EuropeAid's overall control framework. The term ‘audits of external operations’ means audits of external aid projects and programmes carried out by or on behalf of Commission services at the level of beneficiaries, contractors and intermediaries. Audits used by EuropeAid are assurance engagements and their main purpose is to provide assurance on the legality and regularity of external aid actions. Assurance is primarily related to compliance with the applicable regulations and rules. Compliance with criteria for legality and regularity is essential for all external aid projects. Compliance can be defined as the ability to reasonably ensure conformity and adherence to the applicable legislation and rules. Compliance criteria which the auditor will measure are determined by the engagement type and the documents that constitute the legal and regulatory basis for a project. The latter are typically Financing Agreements, external aid contracts and programme estimates. These criteria in these documents are referred to as 'agreement terms and conditions'. The term 'audits of external operations' also covers related services engagements. Related services engagements are not assurance engagements - they are not audits – and they include certain specific types of verifications and compliance assessments. Auditors contracted by EuropeAid are expected to have a good understanding of and to comply with the principles of the IFAC Code of Ethics and the International Framework for Assurance Engagements. They should comply with International Standards on Auditing (ISAs), the International Standard on Assurance Engagements (ISAE) or International Standards on Related Services (ISSR) where this is specified by the terms of reference.   2 Objective The purpose of these global terms of reference is to explain the general context of the assignments and to describe the principles and main features of the services envisaged by lot 2 of the framework contract.

                                                  1  Except for the pre-adhesion instrument, cooperation with occidental Balkans, humanitarian activities, macro-financial aid, CFSP and rapid reaction mechanism.

 

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Annex I

In the interest of  transparency and independence and in order to strengthen its supervisory and audit capability, the Commission intends to conclude the framework contract (lot 2) with a maximum of four professional firms for the purpose of auditing external aid actions financed from the EC Budget and the EDF. The framework contract enables the Commission to set out, in advance, the terms and conditions for performing the services described at 3 below. The framework contract is used for the financing of audits launched by the Commission. The general modalities of the framework contract are described at 4 below. 3 Scope: Other Audit Assignments and Related Services The Commission requires certain specific services with regard to actions financed from the EC Budget or the EDF. These services include but are not necessarily limited to: •   Forensic audits and investigations; performance audits and audits in the framework of budget support programmes. •   Compliance assessments of: o   International Organisations under joint management o   procedures and arrangements under decentralised management o   procedures and arrangements under indirect centralised management •   Verifications of international organisations. •   Other audit related services. Tenderers for this framework contract are advised to refer to the Guidelines for Auditors . These guidelines provide written guidance and background information to auditors performing audits and related services engagements with regard to external aid actions. Annex 1 of the Guidelines describes the external aid activities in the geographic and thematic areas, management modes and the legal and regulatory instruments by which activities are implemented. These guidelines are available at: http //ec.europa.eu/europea _ _ _ : id/work/framework-contract/audit2006/terms of reference en.htm Terms of reference ('ToR') for the compliance assessments are also provided at the above website. These ToR are composed of a standard model ToR and two annexes. The first annex includes a description of the organisation, the action and the context. The second annex is a comprehensive questionnaire for the assessment of compliance with criteria for the management mode concerned. In the case of verifications of international organisations, use is made of a more or less standard ToR model if and when this is specifically agreed with the international organisation concerned, usually within a framework agreement (e.g. with United Nations organisations and the World Bank Group). Such ToR will be provided on a case-by-case basis. In the case of forensic audits and investigations, performance audits and audits in the framework of budget support programmes, there are no standard ToR. Specific ToR for these engagements may at some point become available. Framework contractors will be consulted if and when such ToR will be developed. In the meantime the terms and conditions for specific assignments in these areas will be provided on a case-by-case basis with the requests for service.

 

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3.1 Forensic Audits and Investigations Forensic audits and forensic investigations may be requested in cases where there are suspicions or indications of fraud or irregularities with regard to the implementation of an external aid project. It is important that suspicions or indications of fraud or irregularities are properly founded and explained before a forensic audit or forensic investigation is launched. These engagements are no alternative for and do not replace investigations carried out by OLAF, which is the Commission's European Anti-Fraud Office responsible for investigations into fraud and irregularities. If it is necessary or desirable to launch a forensic audit or investigation this will only be done after consulting and informing OLAF. A distinction should be made between a fully-fledged forensic audit or investigation and a financial audit with additional specific objectives that relate to specified issues of fraud or irregularities. The latter option is currently often used when this is found to be appropriate and sufficient to identify and prove or disprove the suspicions and to conclude whether any further work (e.g. a fully-fledged forensic audit or investigation by auditors or by OLAF services) is required. The objective, scope and nature of a forensic audit are different from other audit types but it may have characteristics of one or more of them. Due to the confidentiality and sensitivity of forensic audits the auditor will have to pay special attention to evidence gathering and keeping and the distribution of the report. The report has to be adapted to requirements that result from the objectives and scope of a forensic audit and the nature and circumstances of the investigation. 3.2 Performance Audits Performance audits are concerned with the examination of economy, efficiency and/or effectiveness of performance aspects of external aid projects. In contrast to financial and systems audits, which are subject to fairly specific requirements and expectations, performance audits cover a wide range of performance aspects relating to the inputs, processes and outputs of an audited entity. It is critical to identify the performance aspects to be audited and the criteria against which the performance aspects should be assessed before a performance audit is launched. The scope of the performance audit should not be too wide in order for the audit to be effective and cost-beneficial. EuropeAid also wants to obtain assurance with regard to sound financial management and in this respect performance audits may prove useful as they are concerned with the economy, efficiency and effectiveness of external aid project activities. Economy means that the resources used for the activities are made available in due time, in appropriate quantity and quality and at the best price. Efficiency concerns the best relationship between resources employed and results achieved. Effectiveness concerns attaining the specific objectives set and achieving the intended results. Performance audits may concern a wide range of subject matters. The subject of a performance audit may be the performance of a project, an action or a contract or specific aspects thereof. Performance audits may to some extent overlap with evaluations as regards the principles of efficiency and effectiveness. The objective of a performance audit of an external aid action is to enable the Auditor to express an opinion with regard to the effectiveness, efficiency and economy of an action ( e.g.   a project) or with regard to specific aspects of an action, based on certain criteria. Performance audit engagements should be carried out in accordance with International Standard on Assurance Engagements (‘ISAE’) 3000: Assurance Engagements other than Audits or Reviews of Historical Financial Information.

 

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Compliance with appropriate criteria is essential so it is critical for the Auditor to: •   Examine whether he can accept the engagement considering ISAE 3000 (in particular paragraphs 7 to 9). In particular the Auditor should examine whether the persons who perform the engagement collectively possess the necessary professional competencies. Some performance audits may require specialized skills ( e.g.  engineering) beyond those ordinarily possessed by an individual Auditor; and •   Have an identification and description of the subject (i.e. the performance aspects) to be audited as well as the period of time to which the audit relates; and •   Have an identification of the criteria against which the performance aspects should be assessed. 3.3 Audits in the framework of Budget Support Programmes A key feature of budget support programmes is that they contribute to financing the totality of a country’s budget and not a specific subset of budgeted expenditures. The use of audits in budget support operations can be useful but only if this is complementary to and aligned with other measures and tools that aim to assess the Public Finance Management ('PFM') systems of a country and the use of budget support funds through these systems. PFM aims to ensure that the financial management and control of a government's national budget spending centres (including foreign funds) complies with relevant legislation, budget descriptions, and the principles of sound financial management, transparency, efficiency, effectiveness and economy. PFM comprises a wide area of policies, systems, measures and disciplines and in particular a government's financial, budgetary and overall (internal) control systems. The use of traditional audits in budget support operations will depend on the disbursement method being used i.e. whether the budget support is targeted or untargeted. By traditional audits is meant financial audits, as distinct from the wider class of audits that are frequently used, such as systems and performance audits. Audits of budget support operations require a good basic understanding of the concepts and principles of EC budget support operations. The objectives and scope of these audits and the budget support context in which they are performed must be well understood. There are two types of audits of budget support operations. Traditional audits are, so to speak, 'consubstantial' with targeted budget support as the Financing Agreements generally make them mandatory by including them in the disbursement conditions. In this sense the requirement to carry out an audit is a condition for disbursement. The main purpose of these audits is as a criterion for the disbursement of targeted budget support. In untargeted budget support operations audits might sometimes be used to examine a country's overall (internal) control systems to provide evidence on Public Expenditure and Financial Accountability ('PEFA') scores. The management and control of budget support operations takes place within the very wide context and scope of PFM. Within this scope certain audit types can be useful but as a complementary tool and in addition to a range of other tools and measures to assess PFM systems and the use of budget support funds.  

 

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3.4 Compliance Assessments The Commission makes use of related services engagements for compliance assessments of International Organisations under joint management and procedures and arrangements under decentralised and indirect centralised management. Compliance assessments do not aim to provide assurance and are therefore not assurance engagements. They can be considered as related services engagements and have some characteristics of agreed-upon procedures. Compliance assessments involve the performance of work, where desired by professional audit firms, which includes tests and procedures that may often be of an audit nature. The Commission specifies the work to be performed and the way the results of this work should be reported. Compliance Assessments of International Organisations ('IOs') Where the Commission implements the budget by joint management, certain implementation tasks are entrusted to international organisations as specified in the Implementing Rules ('IR') of the Financial Regulations for the EC Budget and the EDF. IOs are defined in art. 43 IR, as “(a) international public-sector organisations set up by intergovernmental agreements, and specialised agencies set up by such organisations; (b) the International Committee of the Red Cross (ICRC); (c) the International Federation of National Red Cross and Red Crescent Societies." Article 53.7 of the Financial Regulation sets out the criteria which the IO needs to apply in order for joint management to be possible. These criteria relate to accounting, auditing, internal control and procurement and within these four areas IOs should have procedures offering guarantees equivalent to internationally-accepted standards. Compliance assessments of procedures and arrangements under decentralised management Where the Commission implements the budget by decentralised management, certain implementation tasks may be delegated to third countries in conformity with title IV of Part Two  of the Financial Regulation. Article 164 of the Financial Regulation stipulates that the Commission may decide to entrust management of certain actions (for example, procurement, payment, recovery etc.) to the authorities of beneficiary third countries, after having established that the beneficiary third country or countries are in a position to apply in whole or in part (according to the degree of decentralisation agreed) five criteria. The five criteria relate to an effective and efficient internal control system, accounting, external audit, procurement and grant award procedures and adequate annual ex-post publication of beneficiaries. For the EC Budget, the third parties to which the Commission may entrust tasks of public authority and in particular, budget implementation tasks, are defined in Article 54(2c) as: national [or international] public-sector bodies or bodies governed by private law with a public-service mission providing adequate financial guarantees and complying with the conditions provided for in the implementing rules. For the EDF, the entity is a public-sector body of the recipient country that will be responsible for the management and implementation of the action.   This responsible public authority can be a Ministry, Department or Agency of the recipient country but also a public institution created by the constitution or by the laws of the country concerned (for instance, National Assembly, Senate, Supreme Court, Court of Auditors, Human Rights Commission, Anti- corruption Commission, etc.).

 

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Compliance assessments of procedures and arrangements under indirect centralised management In compliance assessments of arrangements under indirect centralised management the Auditor assesses compliance with requirements of sound financial management, effective and efficient internal control and with the principle of non-discrimination and the visibility of the Community action. Where the delegation of powers is done on the basis of the method of implementation called 'indirect centralised management', the Commission delegates budget-implementation tasks to particular bodies as defined in article 54.2 of the Financial Regulation. These tasks must be clearly defined and supervised. The delegation of budget-implementation tasks must comply with the requirements of sound financial management and effective and efficient internal control and shall ensure compliance with the principle of non-discrimination and the visibility of the Community action. No implementing tasks in this way may give rise to conflict of interest. Tasks entrusted to these bodies might refer notably to the preparation, implementation and conclusion of procurement and grant procedures as well as to the management of the corresponding expenditure.   3.5 Verifications of International Organisations The EC Financial Regulation stipulates that verification agreements concluded with International Organisations shall apply. Verification missions to UN entities must be carried out on the basis of the verification agreements concluded between the UN and the EC, being an integral part of the Financial and Administrative Framework Agreement (FAFA) concluded with certain UN organisations. Verifications of IOs are complementary to compliance assessments of IOs. The initiative to launch a verification should result from a specific need identified by the Commission e.g. a risk analysis in the context of EuropeAid's Annual Audit Plan. The objective of the verification is to obtain an understanding of, and to report on the adequacy of the system of accountability (accounting systems and procedures, control and procurement procedures, reporting, oversight mechanisms) in place, to enable the Commission to report to its own institutions on the proper use of EC funds. The verification will result in a report of factual findings including a conclusion and, where appropriate, recommendations.  

3.6 Other Audit related Services Other audit related services may be requested and the specific terms and conditions for such assignments will be provided on a case-by-case basis.   4 Requirements and Standards for Auditors 4.1 General Requirements General principles   Generally speaking auditors and/or their firms who perform assignments under lot 2 for EuropeAid are expected to be a member of a national accounting or auditing body or institution which in turn is member of the International Federation of Accountants (IFAC). Other conditions may also be acceptable and will be assessed by the Commission on a case- by-case basis.

 

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Qualifications and experience The Auditor is expected to employ adequate staff with appropriate professional qualifications and suitable experience with IFAC standards, in particular International Standards on Auditing, and with experience in performing assessments and/or audits of entities comparable in size and complexity to the Entity. Other specific conditions can be set out in the ToR depending on the case. Team composition and categories of auditors A team of auditors will normally be composed of a category 1 auditor who has the ultimate responsibility for the audit and an audit team which is composed of an appropriate mix of category 2 – 4 auditors. For each category the auditors must have the qualifications and experience as set out hereafter. It is the responsibility of the auditor to propose and use an audit team which is composed of an appropriate mix of auditors for this engagement.   Category 1 – Audit Partner An audit partner must be a highly qualified expert with a relevant university or professional qualification and assuming or having assumed senior and managerial responsibilities in public audit practice. He/she should be a member of a national accounting or auditing body or institution. He/she must have at least 12 years of professional experience as a professional Auditor or accountant in public audit practice. Experience with working with the recipient countries of Community external aid will also be taken into account. An audit partner, or another person in a position similar to that of a partner, is the person of the audit firm who is responsible for the audit and its performance, and for the report that is issued on behalf of the firm. He/she has the appropriate authority from a professional, legal or regulatory body and is authorized to certify accounts by the laws of the country in which the audit firm is registered. Category 2 - Audit Manager An audit manager must be a qualified expert with a relevant university or professional qualification. He/she must have at least 6 years experience as a professional auditor or accountant in public audit practice including relevant managerial experience of leading audit teams. Category 3 – Senior Auditor A senior auditor must be a qualified expert with a relevant university or professional qualification and at least 3 years professional experience in public audit practice. Category 4 – Assistant Auditor An assistant auditor must be a qualified expert with a relevant university or professional qualification and between 6 months and 3 years professional experience in public audit practice.   The auditor will provide the Commission with CV's of the partner or other person in the audit firm who is responsible for the audit and for signing the report together with the CVs of the audit managers, supervisors and staff proposed as part of the audit team.  

 

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4.2 Standards and Ethics The Auditor is expected to perform assignments under lot 2 in accordance with the Code of Ethics for Professional Accountants issued by the IFAC and notably in compliance with the principles of integrity, objectivity, independence, professional competence and due care, confidentiality, professional behaviour and technical standards. As regards the audit types covered by lot 2, Auditors are expected to comply with IFAC standards and guidance which are relevant for the type of audit concerned and insofar these are specified in the ToR for these audits. Generally speaking these standards include: - the IFAC International Framework for Assurance Engagements and more specifically the standards relating to Audits and Reviews of Historical Financial Information and to Assurance Engagements other than Audits or Reviews of Historical Financial Information (ISAE 3000)  insofar this standard can be usefully applied in the audit and in its specific compliance context - International Standards on Auditing (ISA's)   100 – 999 (including ISA 800 – The Auditor's Report on Special Purpose Audit Engagements)  insofar these standards can be usefully applied in the audit and in its specific compliance context. The auditor may find useful guidance in the International standards on Related Services, (and specifically ISRS 4400: Engagements to perform Agreed-Upon Procedures regarding financial information )  issued by the IFAC. This ISRS is directed toward engagements regarding financial information, but may provide useful guidance for engagements regarding non-financial information provided the auditor has adequate knowledge of the subject matter in question and reasonable criteria exist on which to base findings. In the case of verifications of international organisations, use is made of a more or less standard ToR if and when this is specifically agreed with the international organisation concerned and in that case the general requirements as well as the standards and ethics described above do equally apply. In the case of forensic audits and investigations, performance audits, audits in the framework of budget support programmes and other related audit services there are no specific ToRs and terms and conditions will be provided on a case-by-case basis. However, in these cases contractors would be expected to equally comply with the general requirements as well as the standards and ethics described above. 5 Requirements for specific assignments The requirements (including reporting requirements) for the various types of assignments in Lot 2 vary significantly. Established Terms of Reference ('ToR') and prescribed report models are not always available. The main requirements are briefly described below for each type of assignment. 5.1 Forensic Audits and Investigations, Performance Audits and Audits of Budget Support Programmes There are no established ToR and prescribed report models for these audits and the requirements will be detailed in specific ToR on a case-by-case basis. However, the requirements for financial and systems audits (Lot 1 of the Audit Framework Contract) are to a large extent also applicable for the audits covered by Lot 2. The fundamental differences are in the objectives and scope of the audits. This obviously affects the reporting requirements but generally speaking the formal aspects of reporting would be similar or the same.

 

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5.2 Compliance Assessments There are specific 'ToR for compliance assessments of international organisations and compliance assessments of procedures and arrangements under decentralised management. They can be found at: http://ec.europa.eu/europeaid/work/framework-contract/audit2006/tor_for_compliance assessments en.htm   _ _ The ToR for compliance assessments of procedures and arrangements under indirect centralised management are not publicly available and will be provided a case-by- case. Generally speaking the ToR for the three types of compliance assessments include definitions, a description of the action and its context, requirements for the auditor (general requirements, qualifications, experience and team composition), standards and guidance, objectives, scope and a description of the assessment process and methodology (in particular the use of a detailed assessment questionnaire). The reporting requirements for the three types of compliance assessments are similar and set out in terms of reference (Section 7.3). Generally speaking the main reporting requirements for compliance assessments are: The report will describe the assignment and its objectives and detail the work carried out. It should include a conclusion as well as a list or tables of all observations. The report will present the facts and evaluate them in a clear and objective manner and will be limited to the key issues. The report will be well structured and easy to follow. Specifically it should include:  A definition of the criteria used for and applicable to the assessment - - The completed questionnaire, together with any other observations made on the criteria, also presented in the form of a list or table - A description of the governance and control aspects of the entity - A description of the existing procedures of the entity subject to the assessment in respect of each criterion assessed.  An assessment, per criterion, of the degree of compliance of the entity with the criteria - defined There are no prescribed report models for compliance assessments. The procedures for the consultation and submission of draft and final reports are specified in the ToR (Section 7.3). 5.3 Verifications of International Organisatiosn The objectives and scope of verifications of International Organisations ('IOs') are specific and fundamentally different from any other assignment in Lots 1 and 2 of the Audit Framework Contract. Moreover, these verifications are usually governed by specific rules and conditions set out in (verification) agreements concluded with IOs. As a consequence the frameworks for verification or audit vary with the IO concerned. The most important ones are those with the United Nations and the World Bank. Key documents related to International Organisations can be found at: http://ec.europa.eu/europeaid/work/procedures/implementation/international_organisations/  

 

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Verification missions to UN entities must be carried out in accordance with the 'Common Terms of Reference for Verification Missions'  agreed between the Commission and the UN. Similar procedures apply for verifications of projects managed by the World Bank. 6 Annual Summary Reports The Contractor will prepare an annual summary report for all assignments (audit and other) completed under Lot 2 of the Framework Contract. This report should provide a summary overview of the assignments completed during the year as well as a synthesis of the opinions or conclusions and the main findings and recommendations in the reports. The annual summary report is due on 15 th January of the year following the year in which the final reports were completed and send to the Commission. For this purpose the Commission will provide a model annual summary report. 7 Modalities of contract execution 7.1 Procedure The Commission proposes to conclude a framework contract for “lot 2: other audit assignments and related services” with a maximum of 4 professional firms or consortia. The  framework contract is used to mobilize experts within a very short delay. 7.2 Request for services Each specific assignment will be the subject of a request for services, which will be sent via e-mail (fax may be used in exceptional cases only) to all the contractors of lot 2. The specific contracts may be either global price contracts or fee-based contracts, based in both cases on a detailed offer. This will be specified in the request for services. The detailed specific Terms of Reference for each assignment will be annexed to the request for services. The specific Terms of Reference will specify the objectives of the assignments, the expertise or the expert's profile, the specific technical skills required, etc. If justified by the complexity of the assignment, a short methodology may be requested to be submitted together with the offer. The contractors must send by e-mail the next working day an acknowledgment of receipt of the request for services and their confirmation of intention to submit an offer. 7.3 Offers Contractors shall submit, for each specific request for services, an offer including: ƒ   A cover note describing how the assignment will be performed in accordance with the specific Terms of Reference, ƒ   if required in the specific Terms of Reference, a methodology (should not exceed 5 pages), ƒ   the composition of the audit team, ƒ   the experts’ curriculum vitae (maximum 3 pages) for all the experts proposed,   ƒ   and a financial offer / breakdown of prices in line with the financial conditions (in particular respecting the market prices of reimbursable items and the maxima of the fees fixed at the level of the FWC), within 14 calendar days from receipt of the request for services.

 

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