ToR for External Audit

Project Background

SOS Children’s Villages In Ethiopia is a non-governmental, non-political and non-profit organization and an active member of the international umbrella organization of SOS Children’s Villages International, which is active in 137 countries. Since the year [year], SOS SOS Children’s Villages In Ethiopia has been operational the field of social protection of children and young people without parental care as well as families at risk.

While SOS Children’s Villages In Ethiopia is responsible for the implementation of the projects and programmes, the German funding association SOS-Kinderdörfer weltweit, Hermann-Gmeiner-Fonds e.V. supports SOS Children’s Villages In Ethiopia through monitoring, public relations and fundraising. Project cooperation and responsibilities are written down in internal agreements and signed by both parties as well as SOS Children’s Villages International.

The project STEP in Addis Ababa and Adama which is to be audited has been co-funded by SOS-Kinderdörfer weltweit, Hermann-Gmeiner-Fonds e.V. and The German Ministry of Economy Cooperation.

The project aims at Strengthening youth employment under decent conditions in Addis Ababa and Adama. 3,500 young people (60%women) utilize the improved professional and/or entrepreneurial skills and established structures to earn a decent income.

SOS Children’s Villages in Ethiopia is seeking to pre-qualify a certified audit firm to conduct external financial audits for the project Sustainable Training for Employment Promotion (STEP) and the period 01 May 2024 to 31 December 2025.

Mandate and Relevance

In accordance with the requirements of SOS-Kinderdörfer weltweit, Hermann-Gmeiner-Fonds e.V. all The German Ministry of Economy Cooperation-cofinanced projects are obliged to undergo a complete project audit covering the whole project duration as well as annual or interim audits, as specified in the Project Proposal, to be conducted by an independent and recognised audit company. The audits of the accounts are essential for SOS Children’s Villages to prove to the donor that all the funds have been used for the intended purpose and according to donor’s regulations.

Scope and Location of Auditing

The auditing shall be conducted at the location of the project, in particular at the place where the project bookkeeping is done. The auditor’s assignment includes the following tasks:

• To verify whether the entity has accounting and operating policies and procedures manuals and their conformity with the agreements and relevant national regulations.
• To verify whether the Project has special bank accounts: one in EUR, that may be used to receive funds from various donors and one in LCY, that is used especially and exclusively for the project.
• For all transferred installments, examine the accuracy and completeness of records (dates and amounts of exchange transactions, relevant fees, etc.) of the exchange transactions between EUR funds received from HGFD and LCY.
• To examine whether any gain was generated from payments of HGFD and/or any third party, and if so, whether the interest thus gained was properly reflected in the accounting documents and used for the financing of project e
• To thoroughly examine the bookkeeping records and ensure their alignment with the voucher l
• On a sample basis, verify that the Project transactions are supported with supporting documents required by Partnership Agreement (e.g. invoice, receipt voucher, copy of cheque, copy of bank transfer…).
• For all assets procured for project purposes with value above EUR 800 (excluding value-added tax) (or the respective amount in local currency, using the actual donor’s exchange rate), check whether the inventory and internal procedures for ensuring compliance with appropriation periods are in line with the procedures stipulated
• To verify that procurement of goods and services is made in conformity with Partnership Agreement conditions/ SOS [pls insert name of National Association] procurement procedures. Thus documenting most economical and efficient use possible of funds made available for purchasing or construction/renovation purposes; if no quotation or tenders were obtained, the auditor shall give an assessment in his/her written report.
• If immovables were purchased or buildings erected or renovated as part of the project, to examine evidence of ownership or of right of disposal, and to find out whether any encumbrances or obligations to third parties were created; also to examine whether they are being used for project purpose for which they were destined as stipulated in the Project Pr
• To certify that any transfer of ownership for items financed out of the grant has been documented (Asset Transfer Agreement) and previously agreed upon with HGFD.
• To reconcile the project cash balance (considering all bank accounts used for the project) and obtain entity justification with regard to unspent amounts, if any.
• In case of Revolving Funds (e. g. Microcredit Schemes) to examine whether the same have been utilized in accordance with the terms laid down in the project proposal, especially referring to the loan purpose, the defined target groups and loan
• Provided that expenses are recorded when paid (cash-based method), verify that non-cash items including depreciation and imputed costs are NOT charged to the project

Auditing of Annual Statements

• The auditor shall audit the accounts for periods annual audit 01 May 2025 -31 December 2025, final audit (01 May 2025- 30 April 2027 of the project)

Auditing Procedure

• The auditing shall be conducted in accordance with the relevant national regulations as well as SOS-internal auditing standards. In addition to the auditing as such, the auditor may provide professional advice in whatever financial management and bookkeeping matters

Auditor’s Report

• The auditor shall draw up his statement according to the specimen provided by HGFD (Pls. refer to Annex 4.2: Format Audited Statement of Accounts)
• SOS [pls insert name of National Association] shall provide the auditor with all supporting documentation in originals (in exceptional cases, digital copies can be accepted), preferably structured in conformity with the items of the financing plan and in chronological order.
• The Annual Audited Statement of Accounts should be accompanied by a condensed voucher list in chronological order, including all payments effected by SOS [pls insert name of National Association] in original currency (expenditures paid by HGFD, e.g. for monitoring visits, shall be excluded). Digital copies shall be sufficient for annual and interim audits. Hard copies signed and certified by the auditor only are required for the final audit.
• The audit report should contain a statement of cash receipts (including converted funds, if available) which is to be supported by documentation (bank statements, exchange receipts, etc.) as well as a fund accountability statement (see templates in Annex 4.3: “Financial statement template”)
• The final auditor’s certificate is to be worded as in Annex 4.2: “Format Audited Statement of Accounts”.
• Budget items that exceed the budget appropriations by more than ± 20% must be explained separately, if prior approval has not been obtained from HGFD.
• Any significant deviation between budgeted and actual receipts must be explained
• The audit report shall contain a description of the detailed task that has been entrusted and a detailed list of documents which have been made available for inspection.
• The audit report shall also include precise comments and recommendations on the accounting systems/procedures in force. Each following audit report shall refer to such recommendations and verify whether the same have been implemented by the project holder.
• The copy of official registration certificate is attached to the audit report.
• The yearly audit report shall be submitted to HGFD not later than 15/16 March every year and the final audit covering the whole project duration not later than 3.5 months after the end of project.

Final Audit Package

The auditor shall submit the following documents, properly signed and stamped, on the completion of the audit process as Audit Package:

• Auditors’ report, according to the format provided in Annex 4.2: “Format Audited Statement of Acc
• Audited statement of accounts according to the format provided in Annex 4.3: “Financial Statements template
• List of key employees.
• Financial Statements are signed by National Director of SOS Children’s Villages In Ethiopia and authorized person or as specified by the law of the country

Location of Audit and timelines

The proposal should be submitted by 15 March 2026.

 

Selection Criteria

• Quality of technical proposal
• Relevant experience
• Valid licence
• Tax registration and clearance