Multiple Framework-Contract in the field of external audit of programs and projects of external aid
Description
CC AUDIT 2006/S 1-000094 Annex I Framework-Contract covering independent audits of external aid programmes and projects funded by the European Commission from the European Development Fund (EDF)° and the general budget of the European Communities (EC budget) Global Terms of Reference Lot 2 : other audit assignments and related services 1 Introduction EuropeAid Co-operation Office is in charge of the implementation of 1Commission ’s external aid instruments, funded from the general budget of the European Communities or the European Development Fund, in an efficient and effective way, ensuring a high quality and rapidity level for the implementing of the projects, contributing therefore to the visibility of the European community aid. EuropeAid Co-operation Office is responsible for all phases of the project cycle which ensure the operational translation and the realisation of the objectives defined by the programming adopted by the Commission (identification, instruction, preparation of financial decisions, implementation, monitoring and evaluation) maximising the quality, pertinence, effectiveness, efficiency, impact, durability and appropriation by beneficiaries of all the actions. The main activity areas of external aid are: - Relations with oriental Europe, Caucasus and Central Asia; - Relations with the Middle East and South Mediterranean; - Relations with Asia; - s with Latin America; - Relations with Sub-Saharan Africa, Caribbean, ...
Informations
| Publié par | Baheh |
| Nombre de lectures | 25 |
| Langue | English |
Extrait
CC AUDIT 2006/S 1-000094
Annex I
Framework-Contract covering independent audits of external aid programmes and projects funded by the European Commission from the European Development Fund (EDF)° and the general budget of the European Communities (EC budget) Global Terms of Reference Lot 2 : other audit assignments and related services 1 Introduction EuropeAid Co-operation Office is in charge of the implementation of Commissi 1 ’s external aid instruments, funded from the general budget of the on European Communities or the European Development Fund, in an efficient and effective way, ensuring a high quality and rapidity level for the implementing of the projects, contributing therefore to the visibility of the European community aid. EuropeAid Co-operation Office is responsible for all phases of the project cycle which ensure the operational translation and the realisation of the objectives defined by the programming adopted by the Commission (identification, instruction, preparation of financial decisions, implementation, monitoring and evaluation) maximising the quality, pertinence, effectiveness, efficiency, impact, durability and appropriation by beneficiaries of all the actions. The main activity areas of external aid are: - Relations with oriental Europe, Caucasus and Central Asia; - Relations with the Middle East and South Mediterranean; - Relations with Asia; - Relations with Latin America; - Relations with Sub-Saharan Africa, Caribbean, Pacific and Indian Ocean; - Thematic aid programmes. 2 Objective The purpose of these terms of reference is to explain the general context of the assignments and to provide overall guiding principles for the lot 2 of the contract. 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 programmes and projects financed from the EC Budget and the EDF. The framework contract enables the Commission to lay down, in advance, the terms and conditions to carry out the types of services as described in point 3 below for programmes and projects financed from the EC Budget and the EDF over a given period of time. The framework contract is used for the financing of audits launched on the initiative of the Commission. The general modalities of the framework contract are described at 7 below. Further details on objectives, scope, assignment process and other terms and conditions of
1 Excepting pre-adhesion instrument, cooperation with occidental Balkans, humanitarian activities, macro-financial aid, CFSP and rapid reaction mechanism
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a specific audit assignment will be set out in specific terms of reference to a request for services, which will be established for each assignment. 3 Scope The Commission wishes to be able to perform several types of audits of external aid programmes and projects financed from the EC Budget or the EDF within the framework of its external aid policy in the activity areas as described at 1 above. For this purpose the Commission requires the types of services as described below in point 3.1. 3.1 Lot 2: Other audit assignments and related services The Commission may request other audit engagements and related services which may include but are not limited to the ones set out in Sections 3.1.1 to 3.1.3 below. 3.1.1 Performance Audits Background and Context 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 focus on the principle of sound financial management. This is not limited to financial aspects but it may also concern non-financial aspects such procurement management. In performance auditing the basic questions are: Are things being done in the right way? Are the right things being done? 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. Evaluation can be defined as an assessment of on-going and completed projects, programmes and policies, as regards their design, implementation and results. Key evaluation criteria are: relevance, efficiency, effectiveness, impact and sustainability. Objective and Scope The objective of a performance audit of an external aid operation 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 (‘ XYZ’ ) criteria.
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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. 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. The Auditor’s Report The audit or assurance report with regard to a performance audit should in principle include the same basic elements as for a System Audit. (a) A title that clearly indicates that the report is an independent assurance report; (b) An addressee; (c) An identification of the subject of the assurance engagement ( i.e. an entity’s internal control system). (d) Identification of the criteria (e) Where appropriate, a description of any significant, inherent limitation associated with the audit of the subject against the criteria; (f) When the criteria used to audit the subject are available only to specific intended users, or are relevant only to a specific purpose, a statement restricting the use of the assurance report to those intended users or that purpose; (g) A statement to identify the responsible party and to describe the responsible party’s and the Auditor’s responsibilities; (h) A statement that the engagement was performed in accordance with ISAE 3000; (i) A summary of the work performed and a reference to the Terms of Reference for the audit engagement; (j) The Auditor’s conclusion; - In a reasonable assurance engagement, the conclusion should be expressed in the positive form. For example: ‘ In our opinion, internal control is effective, in all material respects, based on XYZ criteria’ . - In a limited assurance engagement, the conclusion should be expressed in the negative form. For example: ‘ Based on our work described in this report, nothing has come to our attention that causes us to believe that internal control is not effective, in all material respects, based on XYZ criteria’ . (k) The assurance report date; (l) Auditor’s address; and (m) Auditor’s signature. As to the Auditor’s conclusion the formulations may be as follows: • In a reasonable assurance engagement, the conclusion should be expressed in the positive form. For example: ‘in our opinion, the action (or project, contract) was, in all material respects, in compliance with the principles of effectiveness, efficiency and economy based on XYZ criteria’.
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• In a limited assurance engagement, the conclusion should be expressed in the negative form. For example: ‘ Based on our work described in this report, nothing has come to our attention that causes us to believe that the action (or project, contract) was not, in all material respects, in compliance with the principles of effectiveness, efficiency and economy, based on XYZ criteria’. The Auditor may, as a result of the audit tests and procedures, find significant weaknesses in the entity’s internal control system or find indications or evidence of fraud or irregularities. Such findings may or may not affect the Auditor’s opinion but the Auditor should immediately report them in a separate memorandum. This is necessary as the issues may have to be urgently and adequately addressed by a separate investigation.
3.1.2 Audits and Compliance tests in a Context of Public Finance Assessment Background and Context Public Finance Assessments (‘PFAs’) are an important and growing source of information to governments and donors on the state of Public Financial Management (‘PFM’) systems in partner countries. They help to identify risks and constraints with regard to the use of budget resources, including those provided by donors. PFAs do not track individual items of expenditure and can generally not be considered as audits. The objective of PFAs at various stages of programme implementation is to assess whether the beneficiary state meets the conditions for budget support operations. There are currently many different sources of information for carrying out PFAs and there is no fixed format for them. PFAs concern a wide range of issues and cover areas such as Overall performance of the PFM System (Budgetary outcomes and budget credibility), Performance of PFM processes and institutions (Legal and institutional framework, budgeting (including forecasting, collection and accounting of revenues, cash flow management, debt management, the expenditure process, internal control system and procurement), accounting and reporting, external accountability, audit) and Government strategy and reform program. PFAs do not fall within the scope of the Audit Framework Contract b ut in assessing the quality of PFMs the Commission attaches importance to audits or compliance tests in the case of budget support. A distinction should be made between two types of activities: • Audits of targeted budget support; and • Compliance tests in the case of untargeted budget support. The nature of budget support operations requires a type of audit that cannot be usefully classified as one of the commonly used audits such as financial, systems and performance audits. The audit type required has characteristics of one or more of these audits. Nevertheless, the nature of budget support operations requires that there is always a strong focus on compliance. Moreover, the Commission is increasingly moving to untargeted budget support which implies that compliance tests become more and more important. Audits of Targeted Budget Support The audit scope under targeted budgetary support concerns a specific purpose or subject, for example a specific budget chapter, heading or budget line. Audits of targeted budget support are designed to justify the transfer of programme funds provided by the Commission without looking at the PFM system as a whole. Audits are undertaken as a condition for the disbursement of funds and have following characteristics:
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• Compliance with applicable legislation and rules. This concerns financial, accounting and budgetary rules as well as procedural aspects (e.g. procurement rules); • Compliance with technical aspects. Compliance Tests in the case of Untargeted Budget Support In the case of non-targeted budget support the scope is the global budget. There is no specific expenditure to be audited but compliance tests through using a sample of expenditures should allow for a global assessment of PFM. So in contrast to targeted budget support, compliance tests are designed to look at a PFM system as a whole and to give some idea about the trends. Compliance tests may be undertaken as a condition for the disbursement of funds and have following characteristics: • They are a mixture of audit techniques and tools used in financial, systems and technical audits; • They also touch on value for money issues and performance aspects and indicators which are aspects usually covered by performance audits; • Compliance tests should, to the extent possible, assess whether certain conditions are met and provide indications as to whether the trend in improving public financial management is in the right direction. The Auditor’s Report Audits and compliance tests usually have characteristics of one or more of the aforementioned audit types. Therefore, the audit or assurance report for audits and compliance tests should in principle include the same basic elements as set out above under financial, systems and performance audits. However, the report has to be adapted to requirements that result from the specific objectives and scope of the audit or compliance tests in question.
3.1.3 Forensic Audits Context and Background Forensic audits or forensic investigations carried out by Auditors are no alternative for and do not replace investigations carried by OLAF, the Commission’s Directorate-General responsible for investigations into fraud and irregularities. If EuropeAid feels that it is necessary or desirable to launch a forensic audit this shall only be done after consulting and informing OLAF. Alternatively EuropeAid may want to launch a forensic audit on the request or advice of OLAF. Forensic auditing can be defined as the application of auditing skills to situations that have legal consequences. An example of forensic auditing is the investigation of a fraud or presumptive fraud with a view to gathering evidence that could be presented in a court of law. Generally, there is an increasing use of auditing skills to prevent fraud by identifying and rectifying situations which could lead to frauds being perpetrated ( i.e. risks). Objective and scope Forensic audits may be viewed from different aspects such as: Forensic audit or investigation: complaints, allegations in the press or in parliament, anonymous tips from employees or others could all in their separate ways require to be adequately addressed by an investigation. The techniques of forensic auditing are useful in such cases. The objective in the case of reactive forensic audit is to investigate cases of suspected fraud or irregularities so as to prove or disprove the suspicions, and if the suspicions are proven, to identify the persons involved, support the findings by evidence and
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to present the evidence in an acceptable format in any subsequent disciplinary or criminal proceedings. Statutory and other audits : in this context forensic audit methodologies can be used to obtain a more detailed understanding of the entity and its activities to identify risks both in determining the direction of the audit and in expressing an opinion. Regulatory compliance : the techniques of forensic auditing may be used to assess compliance with regulations, contracts and agreements governing the payment of funds such as for example grants. Diagnostic tool : forensic auditing can be used to carry out general reviews of activities to highlight risks arising either out of fraud or from any other source with the purpose of initiating focussed reviews of particular areas, targeting specific threats to the organisation. Depending on the circumstances forensic audits focus on one or more of the following aspects: finances (e.g. examination of the use of funds), procedural (e .g. procurement rules), systems (i.e. internal control system, performance (efficiency and effectiveness) or the role of staff and employees. The Auditor’s Report on a Forensic Audit 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. 4 Audit Standards and Ethics Standards Good audit practice for auditing public funds such as those provided by the Commission can be found in international and national audit standards. Audits of programmes and projects should be conducted in accordance with international auditing standards promulgated by either the International Organisation of Supreme Audit Institutions (INTOSAI) or the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC). The national Supreme Audit Institution (SAI) may follow national or international audit standards. The INTOSAI has issued international audit standards, which focus on the public sector. The IFAC through its IAPC has issued International Standards on Auditing (ISAs) which were initially prepared for the private sector but now a ‘Public Sector Perspective (PSP) issued by the Public Sector Committee of IFAC is set out at the end of each ISA. Where no PSP is added the ISA is applicable in all material respects to the public sector. Where national auditing standards are in all material respects consistent with either INTOSAI or ISA they may be used.
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Ethics Auditors are expected to apply and uphold the following guiding principles: Integrity . Auditors must perform their work in an honest, diligent and responsible way. They should observe the law and make disclosures expected by the law and the profession. They should not knowingly be party to any illegal activity, or engage in acts that are discreditable to their profession or organisation; Objectivity . Auditors should have an unbiased mental attitude that requires them to perform assignments in such a manner that they have an honest belief in their work product and that no significant quality compromises are made. Objectivity requires auditors not to subordinate their judgement on audit matters to that of others. Confidentiality . Auditors should be prudent in the use and protection of information acquired in the course of their duties. They must ensure that information obtained in the course of audits is kept confidential and handled with discretion. In no circumstances may contractors use or divulge such information to gain an immediate or potential commercial advantage, nor may they transmit it to unauthorised persons or companies. Competence . Auditors should apply the knowledge, skills, and experience needed in the performance of their duties. 5 Audit process The audit assignment can be structured around four stages: • Planning and preparation; • Execution; • Reporting and Communication; • Follow-up. For each stage the responsibilities of the auditor and the Commission are briefly described below. For each assignment the Commission nominates an Audit Task Manager who will be responsible for co-ordination. The Audit Task Manager will be the auditor’s main point of contact in the Commission or where applicable in a Delegation. 5.1 Planning and Preparation The auditor plans the assignment in accordance with international auditing standards and the policies of the firm concerned. Planning issues include amongst others: objectives, scope, risk assessment, a preliminary survey to understand the context and activities, resource allocation and developing work programmes.
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The Commission will inform its Delegation, the beneficiary, and, where appropriate the competent authorities of the recipient country that an audit is planned. The Commission informs, as a rule in advance the authorities of the beneficiary country, which are required to provide any information and documents, which may be requested and to take all measures to facilitate the task of the auditors. The Contractor will organize the execution of the mission and shall keep regular contact with the audit task manager and the Delegation of the Commission in the beneficiary country. Usually, Commission officials will organise a briefing in Brussels or at the Commission Delegation to hand over relevant documentation and explain the nature and scope of the audit to the auditor. 5.2 Execution The auditor should, in accordance with international auditing standards and the policies of the firm concerned, identify, analyse, evaluate and record sufficient information to achieve the objectives of the assignment. Assignments should be properly supervised. The Auditor should record and document relevant information in files and working papers to support the findings, recommendations and conclusions. These documents must be kept for a period of 5 years after the final payment of the service rendered in such a way as to allow them to be consulted by the Commission in the offices of the Auditor. More specifically the requirements during the execution of the audit are: • During the audit the team leader will inform the competent national authorities of the recipient country or the auditee of the findings and ask for their comments. This should be documented. • Where the team leader believes that certain findings should be immediately reported to the relevant Commission departments, the latter will decide whether the competent national authorities or the recipient should be informed of their substance. • The team leader must notify the Commission immediately of any attempt by the recipient to restrict the scope of the audit, any lack of co-operation on the part of the recipient and any suspicion of fraud or irregularity. • Commission officials may take part in audit missions. They may also decide to take over responsibility for conducting the audit. • The Commission reserves the right to request, at any moment and stating its reasons, the replacement of one or more experts. Save in the event of failings attributable to the expert(s) whose replacement is requested, the Commission will assume any resulting additional costs and adjust the deadlines accordingly; the Commission will be the sole judge of the reasons invoked.
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• At the end of the fieldwork a closing meeting will be organised. The participants at this meeting will be designated according to the findings of the audit. The presence of a representative of the auditee as well as the Auditor is mandatory. Other participants may also be invited. The Commission will be invited to attend. 5.3 Reporting and Communication The auditor should communicate the results of the assignment in accordance with international auditing standards and the policies of the firm concerned. The Commission will indicate in the specific terms of reference for an assignment to the auditor what the auditor is expected to state or to issue an opinion and when and how this should be delivered. The Commission may specify a reporting format and structure to be provided for a specific assignment. Without prejudice to what is agreed in specific terms of reference, generally speaking, the reporting requirements are: • The ‘report’ or ‘audit report’. The purpose of the report is to describe the assignment and its objectives, the scope and the work carried out. The report should include a conclusion (where agreed in the form of an opinion) as well as a list of the audit findings and where applicable recommendations (e.g. under the form of a matrix of corrective measures or a proposal for amounts to be recovered). • The report should present the facts and an evaluation of these in a clear and objective manner and should be limited to the key issues. They should be well structured and easy to follow. Particular attention will be paid to the findings, results and conclusions of the audit, to the Auditor’s recommendations and to the beneficiary’s comments. The list of findings serves to facilitate the follow-up to be made by the Commission. • Each report should be submitted in both a paper version and an electronic version. The report should be drawn up in Word for Windows format and all tables should be in Excel for Windows format. As a general rule, reports should be drawn up in English and French. • The “aide mémoire: At the end of the fieldwork, the Auditor will submit to the Commission a summarised report outlining the main findings and recommendations. This report will also contain the beneficiary’s point of view. It will be used as a key document during the closing meeting and for drawing up of the audit report. • The ‘draft report’ shall be transmitted to the Commission within 30 working days after the end of the fieldwork. The Commission will then have 30 working days to inform the Auditor of its observations and comments. The Auditor should present a final report within 10 working days of receipt of the Commission’s comments and observations. The person authorised to certify accounts in the country where the Auditor’s Head Office is based should sign the report.
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• The ‘complementary letter’: the objective of the complementary letter is to inform the Commission on findings of particular interest to the Commission which can also cover issues which are not subject of the audit report. • A debriefing meeting will be organised, when necessary, on reception of the draft report by the Commission, between the team leader and the Commission officials. The Head of the Commission Delegation or a representative will attend that meeting, as necessary, thereof. • The ‘final report’: the Auditor should present a final report within 10 working days of receipt of the Commission’s report approval. The person authorised to certify accounts in the country where the Auditor’s Head office is based should sign the reports. • The ‘6 months review’: the contractor will prepare, each 6 months, a summary of the main audit findings. • The ‘annual review’: at the end of each calendar year the Contractor will prepare a summary, by country and programme or as instructed by the Commission, of the main findings and recommendations of all assignments carried out. 5.4 Follow-up The Commission takes responsibility for the follow-up of audit findings and recommendations. If and where needed the Commission may consult the auditor or request the auditor’s assistance to monitor the progress made on certain issues. 6 Qualifications and Experience required The qualifications and experience required from the experts will depend on the audit assignment ordered by the Commission. Depending on the nature and scope of the audit specific qualifications and experience may be required or desired. Generally speaking there are four categories of experts: • Category 1 Audit partner Highly qualified experts possessing relevant university qualifications and assuming or having assumed important responsibilities in their area of specialisation. They must have at least 12 years of professional experience in their area of specialization and to be authorized to certify the accounts by the law of the country in which the contractor has its registered place of business. Their knowledge of the recipient countries of Community development aid will also be taken into account. • Category 2 Audit manager Qualified experts possessing relevant university qualifications and a good knowledge of the sector(s) concerned. They must have at least six years' professional experience, including experience of leading a multidisciplinary audit team.
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• Category 3 Senior auditor Qualified experts possessing relevant university qualifications and at least three years' professional experience in the sector concerned by the audit. • Category 4 Assistant auditor Technical and administrative staff of at least three years' standing with the contractor or qualified experts possessing relevant university qualifications and less than three years' professional experience in the sector concerned by the audit. Contractors must undertake to provide replacement wherever necessary and to provide their experts in the field with all necessary support. The contractor must provide curriculum vitae for every expert proposed for audit assignments. The Commission must approve these curriculum vitaes before an order form is signed. If and when expertise in specific areas is required this will be indicated in the specific terms of reference for the assignment concerned. Generally speaking, the requirements for qualifications and experience for such experts are analogue to the ones for audit experts. 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. For each lot, a framework contract will be concluded with the tenderers selected at the end of the evaluation procedure.
7.2 Request for services Each specific assignment will be the subject of a request for services, which will be sent to all the contractor of lot 2. The detailed specific terms of reference for each assignment will be annexed to this request.
7.3 Offers Within 10 working days of a request for service being sent by the Commission, the Contractors shall submit a proposal including the composition of the audit team, the experts’ curriculum vitae (maximum 3 pages) and a financial proposal. On a case by case basis, the contractor shall submit experts satisfying the linguistic criteria required for each mission. For each specific order form, the proposed experts should have the nationality of one of the European Community countries or of eligible countries according the programme by which the audit is financed.
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