ToR for Conducting Statutory Audit

I. BACKGROUND

1. Solidaridad is a global civil society organization that provides market-driven solutions for sustainable production practices across different supply chains. With 50 years of experience globally in facilitating the development of socially responsible, ecologically sound, and profitable supply chains, Solidaridad is a frontrunner in sustainable economic development.

Solidaridad established a country office in Ethiopia in November 2015 with registration # 3531. The office re-registered on July 11, 2019, under Proclamation 1113/2019 of the CSO. Solidaridad Ethiopia is currently implementing initiatives in the cotton, textile, leather, and dairy sectors in collaboration with the Ethiopian government and private sector partners & stakeholders.

2. Solidaridad has an average annual income and expenditure ranging from 45 to 60 million ETB

3. Solidaridad is seeking the services of an independent external auditor to carry out audits of its financial statements. The auditor will be appointed to conduct audits of the fiscal year January 1st, 2025 December 31st, 2025.

4. The continued engagement of the auditor is subject to satisfactory performance and the timely submission of audit reports in accordance with the engagement.

II. OBJECTIVES OF THE AUDIT

5. The objective of the audit of Solidaridads’s financial statements is to enable the auditors to express an independent professional opinion on (i) whether the financial statements (including the notes thereto and supplementary statements) present fairly, in all material respects, (or give a true and fair view of) the financial position, and its cash flows, in conformity with the accounting standards (ii) whether the funds of the organization have been used for their intended purposes (iii) whether the books of accounts of the organization provide the basis for preparation of the Financial Statements (iv) whether proper books of accounts as required by law have been maintained and (v) whether the organization maintain adequate internal controls and supporting documentation for the transactions.

III. ACCOUNTING STANDARDS

6. The financial statements will be prepared on a modified cash basis of accounting in accordance with Generally Accepted Accounting Principles (GAAP).

IV. MANAGEMENT RESPONSIBILITY

7. Solidaridad is responsible for preparing and fairly presenting its financial statements, including adequacy of disclosure, and for maintaining sufficient internal controls to ensure that the financial statements are free from material misstatement, whether due to fraud or error.

8. The project’s books of accounts provide the basis for the preparation of the financial statements and are established to reflect the financial transactions in respect of the activities. This includes maintenance of adequate accounting records and supporting documentation for transactions, selection and application of accounting policies, and safeguarding of project assets.

V. AUDITING STANDARDS

9. The auditor will carry out the audit in accordance with International Standards of Auditing and local Standards of Supreme Audit Institutions.

VI. AUDITORS RESPONSIBILITY

10. Carries out tests and verification procedures as the auditors deem necessary.

11. Verify all funds have been used in accordance with the established rules and regulations of the organization and only for the purposes for which the funds were provided

12. Verify whether goods, works, and services financed have been procured in accordance with the organization’s established rules and procedures.

13. Ensures that appropriate supporting documents, records, and books of accounts relating to all activities have been kept, and clear linkages should exist between the books of accounts and the financial statements presented to.

14. Express opinion that the financial statements have been prepared by Solidaridad management in accordance with applicable accounting standards and give a true and fair view of the financial position of Solidaridad and of its receipts and expenditures for the period ended on that date.

15 Conducts a comprehensive assessment of the adequacy and effectiveness of the accounting and overall internal control system to monitor expenditures and other financial transactions.

16. Express an opinion as to the reasonableness of the financial statements in all material respects.

17. Include in their reports an opinion on compliance with procedures designed to provide reasonable assurance of detecting misstatements due to errors or fraud that are material in the financial statements.

18. Conduct entry and exit meeting with the Country Director of Solidaridad Ethiopia .

19. In addition to the audit report, the auditors will prepare a Management Letter on the following:

• Give comments and observations on the accounting records, procedures, systems and controls that were examined during the course of the audit.
• Identify specific deficiencies and areas of weakness in systems and controls and make recommendations for improvement.
• Report on the implementation status of recommendations about the previous period audit reports.
• Communicate matters that have come to their attention during the audit that might have a significant impact on the sustainability of the organization.
• Bring to the Management’s attention any other matters that the auditors consider pertinent.

VII. AUDIT DURATION

20. The audit work shall be completed within two weeks from the date of commencement of the audit.

VIII. DELIVERABLES

1. The Auditors, on completion of the audit work, will submit 3 (Three) original copies of the Audit Report and its Euro Equivalent appended to the Financial Statements along with the reports to the attention of the Management.
2. Management letter in accordance with the scope of work described.

25. Award or Evaluation Criteria

AUDITOR QUALIFICATIONS

The auditor must satisfy the following minimum requirements:

• A legal entity in Ethiopia with a business license granted by the appropriate authority.
• A member of a professional body affiliated with the International Federation of Accountants or the International Organization of Supreme Audit Institutions.
• Have adequate relevant professional and educational qualifications, or be able to provide audit staff with adequate qualifications, experience, and competence.
• Technically competent and able to conduct an audit in line with the auditing standards.
• Objective and independent from the organization, its staff, and activities, and from all aspects of management or financial interests of the organization
• Possesses a proven track record in the financial audit of non-governmental organizations

OTHER MATTERS

Essential (exclusion) Criteria

• Valid & renewed Audit and trade license.
• Meet required technical expertise
• Registered by Accounting and Auditioning Board of Ethiopia (AABE)