Terms of Reference for the Annual External Audit Service

Background

Last Mile Health’s mission is to save lives in the world’s most remote communities. Last Mile Health (LMH) partners with governments to expand access to high quality community-based primary health care to people living in rural and remote communities by strengthening health systems, upskilling the health workforce and delivering community based care and treatment. We strengthen health systems by leading advocacy activities with global institutions and national governments that garner political will and mobilize resources to build strong, equitable health systems where community health workers are supervised, salaried, supplied and skilled.

LMH Ethiopia is a non-profit organization registered on 17 February 2022 with the Authority for Civil Society Organizations (ACSO) with registration number 6070, and address at Addis Ababa, Bole Sub city, Woreda 03, H.No. 10341. The accounting and financial management practices of LMH are governed by the ACSO Financial Regulations and Procedures. Financial Statements of LMH are prepared in accordance with the International Financial Reporting Standards (IFRS).

Purpose and objective of the Audit:

The overall purpose of the annual external audit is to give the reasonable assurance that all income received and cost incurred in the current fiscal year are in accordance with the relevant policy of LMH, compliance with Government of Ethiopia’s rules and regulation and produce a report.

Audit Scope and Assignment:

The scope of the Annual Audit is to check the income provided and costs incurred through the original vouchers and other related project documents (contracts, agreements…), based on the annual plan/program and financing plan. This will review Income and Expenditures of LMH Ethiopia for the period of twelve months of the financial year, July 2024 – June 2025. LMH Ethiopia Country Office accounts have been audited for the previous years since its registration and operation in Ethiopia. The auditor should verify the report by the means of;

• Checking and verifying whether the appropriate supporting documents, records, and books of accounts relating to all project activities have been kept and whether these documents clearly relate to the activities they were assigned for,
• Checking and verification of the inventory records,
• Checking and verifying whether the compliance with local applicable laws is made or not,
• Verify, in sample, the quantitative and qualitative program reports, review of compliance with laws, regulations and other external requirements, management policies and directives and other internal requirements.
• The audits should be carried out in accordance with International Auditing Standards (IAS). 4. Audit Methodology: In order to present the true and fair view on the financial statement/reports, the auditor shall conduct accuracy checks, observations, inspection of records and document, and interviewing the beneficiaries, inquiry and analysis, recommendation, comparison including;
• Review of vouchers, invoices and all supporting documents for all the amount expensed and income received
• Review staff, rental, and other relevant contract
• Review of payroll and tax compliance
• Review the LMH policies and compliances

Procedure:

Following the completion of the recruitment process, the selected auditor/ audit team will start the audit process passing through the following major phases:

A. Inception/planning phase: The auditor should propose the plan in LOI (Letter of Intent)

B. Auditing:

i) The auditor audits the financial transactions of LMH Ethiopia for the specified financial period and primary discussion on findings with the Country Team.

ii) Preparation of draft report and issue the draft report for management comment on agreed timeline.

iii) Receipt of Final Management Comments from LMH Ethiopia.

iv) Finalize the Management letters: LMH Ethiopia and auditors.

v) Finalization of report and issue final audit report with certified statements and a management letter for the period specified.

C. Final Reporting:

The final audit report should be submitted to LMH Ethiopia no later than one month from inception of the audit. The report:

i) To include the Audit Report and Management Letter ii) Should clearly indicate the auditor’s opinion

iii) The accounting standards that have been applied and indicate the effect of any deviations from those standards.

iv) Any other issues the auditor finds relevant from their professional judgment

Debriefing Meeting:

The Auditor/Audit Team should conduct debriefing meeting to relevant program and finance staff and Management Members regarding the audit in overall, response on the management letter, and auditor’s final view on the response of management.

Auditor Independence and Qualification

The auditor must be completely impartial and independent from all aspects of management or financial interests in the entity being audited. The auditor should not, during the period covered by the audit nor during the undertaking of the audit, be employed by, serve as director for, or have any financial or close business relationships with any senior participant in the management of LMH Ethiopia.

The auditor should disclose any relationship that might possibly compromise his/her independence. The audit firm/engagement partner must be a Chartered Accountant and registered with the Accounting and Auditing Board of Ethiopia (AABE). The firm must have at least five years of relevant and diversified professional experience in auditing with sizeable portfolio and experience in the audit of donor funded projects, NGOs and INGOs.

The auditor must employ adequate staff with appropriate professional qualifications and suitable experience with International Standard of Auditing or national standards Chartered Accountants, including experience in auditing the accounts of entities comparable in size and complexity to LMH Ethiopia.

Curriculum vitae (CVs) should be provided to LMH Ethiopia by the principal of the audit institution who would be responsible for signing the opinion and key personnel proposed as part of the audit team. CVs should include details on relevant audits carried out by the applicable staff, including ongoing assignments indicating capability and capacity to undertake the audit and experience in auditing financial statements compliant with the Chartered Accountants Standards.

Tentative Timetable: The audit assignment will take place from 1st August 2025 to 31st Sept 2025 including management letter, debriefing meeting, and submission of the final report.