TERMS OF REFERENCE (ToR): EXTERNAL FINANCIAL AUDIT

Background

SOS Children’s Villages in Ethiopia (SOS CVE) is a member of the global SOS Children’s Villages Federation and has been operating in Ethiopia since 1974. The organization is registered under the Civil Society Organizations Proclamation No. 1113/2019 and operates as a non-governmental, non-political, non-denominational charitable child welfare organization.

SOS CVE operates through nine programme locations: Addis Ababa, Arbaminch, Bahir Dar, Dessie, Gode, Harar, Hawassa, Jimma, and Mekelle. In addition, the organization manages emergency response programmes, donor-funded projects, sponsorship programmes, and income-generating activities.

SOS CVE’s Vision: Every child belongs to a family and grows up with love, respect and security.

Regulatory Context

SOS CVE operates within an evolving regulatory environment governed by:

• Civil Society Organizations Proclamation No. 1113/2019 (ACSO)
• Income Tax Proclamation No. 979/2016 (ERCA)
• National Bank Directives on Foreign Currency (NBE)
• Accounting and Auditing Proclamation No. 716/2011 (AABE)

Note: Draft amendments to Proclamation No. 1113/2019 have been proposed. The auditor is expected to assess compliance with any regulatory changes in effect during the audit period.

Mandate for External Audit

In accordance with SOS Children’s Villages International Statutes, the Good Management and Accountability Quality Standards, and legal requirements under Proclamation No. 1113/2019, SOS CVE is obliged to perform an annual external financial audit conducted by an independent and recognized audit company.

Purpose and Objectives

Purpose

The purpose of the engagement is to provide an independent professional opinion on the annual financial statements of SOS CVE and to assess whether:

• Financial statements present a true and fair view of the financial position;
• Funds have been utilized for intended purposes;
• Internal controls are adequate and effective;
• Assets are safeguarded;
• Applicable laws, regulations, donor requirements, and SOS Federation standards have been complied with;
• Risks of fraud, corruption, and non-compliance are adequately managed.

Objectives

The audit shall provide reasonable assurance on:

Audit Scope

The audit shall cover all operations of SOS CVE for each fiscal year (January 1 – December 31).

Organizational Scope

Financial Scope

Specific Areas of Review

Audit Standards and Methodology

Audit Standards

The audit shall be conducted in accordance with:

• International Standards on Auditing (ISA)
• International Public Sector Accounting Standards (IPSAS)
• SOS CV Accounting Standard
• Ethiopian Government reporting requirements (ACSO…)

 Audit Methodology

The auditor shall apply a risk-based audit approach including:

• Planning and risk assessment
• Materiality determination
• Analytical review
• Substantive and compliance testing
• Physical verification
• Third-party confirmations
• Site visits
• Management interviews

Site Visit Requirements: The auditor shall physically visit programme locations on a risk-based rotational basis and ensure all nine programme locations are visited at least once during the three-year contract period.

Deliverables

Mandatory Deliverables

  Reporting of Findings

All findings shall be classified as:

Each finding shall include Observation, Root Cause, Risk Implication, Recommendation, Management Response, Responsible Person, and Target Completion Date.

Timeline and Deadlines

Annual Audit Schedule

Key Regulatory Deadlines

 Contract Duration

Three-year framework contract covering FY 2026, FY 2027, and FY 2028. Annual performance reviews will be conducted before confirming continuation to the next audit cycle.

Right to Accept or Reject

SOS CVE reserves the right to accept or reject any or all proposals, cancel or reissue this RFP, and is not bound to accept the lowest or any proposal submitted.

Confidentiality and Independence

The selected audit firm shall:

• Maintain strict confidentiality and sign a confidentiality agreement;
• Comply with the IESBA Code of Ethics;
• Disclose any actual or perceived conflicts of interest;
• Declare independence annually

Auditor Qualifications

Mandatory Requirements