Terms of Reference for External Audit of Refuge Project

A. BACKGROUND Terre des Hommes Deutschland e.V. (tdh) is an international non-profit and non-governmental development organisation based in Germany. tdh implements programmes in the Southern Africa region through its Regional Office in South Africa. The objective of the tdh programme is to support projects that contribute to the improvement of the lives of children and the realisation of children's rights, particularly for children and young people in vulnerable and disadvantaged situations. The tdh programme is implemented through a network of local and international partners established in various countries, including Mozambique, Namibia, South Africa, Zambia, Kenya Mali, Burkina Faso and Zimbabwe. In 2024, tdh received funding from the Federal Ministry for Economic Cooperation and Development (BMZ) for a three and half-year project to be implemented by CARITAS & COPAZ. The project has an estimated total budget of 1.339.653,00 Euros The purpose of this Terms of Reference (ToR) is to engage an independent and suitably qualified external auditor to audit the financial statements and assess the financial management and internal control systems of the project for the financial year ending 31 December 2026. 3 B. SCOPE OF THE AUDIT These Terms of Reference address the requirement for an external audit of the financial statements of the REFUGE Project for the calendar year 2026, covering the period from 1 January 2026 to 31 December 2026. The final signed audit report shall be submitted by 15 March 2027, and the Management Letter shall be submitted by 8 March 2027. The auditor shall present the annual audit report to the relevant management of the tdh Country Office, Regional Office, Head Office, and REFUGE, and shall provide any clarification required by management. The audit shall be conducted in accordance with the International Standards on Auditing (ISA) and other applicable professional and regulatory requirements. The auditor shall obtain sufficient and appropriate audit evidence to support the audit opinion and to determine whether the financial statements present fairly, in all material respects, the financial position and financial transactions of the project. The auditor shall disclose in the audit report any significant departure from the applicable accounting or auditing standards and indicate the alternative standards, procedures, or approaches applied. Further details of the required audit procedures are provided in Annex 1: Audit Services Required. Duties and responsibilities C. AUDIT REPORT AND MANAGEMENT LETTER 1. Audit Report The audit report shall clearly state the auditor's independent opinion and shall include, at a minimum, the following: 1.1 Title, Addressees and Introductory Paragraph The audit report shall include: 4 a) Identification of the financial statements and financial information audited, including the financial period covered; b) A statement of management's responsibility for the preparation and presentation of the financial statements; and c) A statement of the auditor's responsibility to express an independent opinion based on the audit conducted. 1.2 Scope and Methodology The report shall include a description of the scope and methodology of the audit, including: a) The accounting standards and principles applied, including any significant deviations and their effect on the financial statements; b) Confirmation that the audit was conducted in accordance with the International Standards on Auditing (ISA); and c) A description of the principal audit procedures and work performed. 1.3 Auditor's Opinion The auditor's opinion shall, at a minimum, address: a) Whether the financial statements and supporting schedules fairly present, in all material respects, the receipts and expenditures of the project and whether project funds have been used for the purposes defined in the approved work programme and financing agreement; b) Whether the financial transactions reflected in the financial statements are, in all material respects, in accordance with applicable regulations, procedures, approved budgets, financing agreements, and other relevant directives; and c) The auditor's assessment of the adequacy and effectiveness of the project's financial management and internal control systems, including any material weaknesses identified. Where applicable, the auditor shall clearly disclose any qualifications, reservations, emphasis of matter, or other matters arising from the audit. 5 The audit report shall be prepared in English. Financial statements and supporting financial information shall be presented in the project's reporting currency,USD & Kwacha, unless otherwise agreed with tdh. 2. Management Letter Upon completion of the audit, the auditor shall submit a Management Letter to COPAZ, CARITAS and tdh. The Management Letter shall include, at a minimum: • An assessment of the effectiveness and efficiency of the administration, financial management, and internal control systems of CARITAS &COPAZ • A description of any significant or specific internal control weaknesses identified during the audit; • The potential risks and implications associated with the identified weaknesses; • Practical and clearly defined recommendations for addressing and eliminating the weaknesses identified; • Management's responses to each audit finding and recommendation; and • Where applicable, an indication of the responsible person and expected timeframe for implementing the agreed corrective actions. The auditor shall discuss the draft Management Letter with management before issuing the final version. 3. Auditor's Certificate The final auditor's certificate shall contain, at a minimum, the following statement: 6 "We hereby certify that we have audited the statement of accounts of [name of the project-executing agency] in respect of the financing of the project: Creation of Sustainable Livelihoods and Durable Solutions for Young Refugees and Host Communities in Zambia and Zimbabwe To this end, we have examined the books of account, vouchers, supporting documents and reports and confirm that: a) Evidence of receipts and expenditure has been properly provided in the form of supporting documentation and vouchers. b) The expenditures for which supporting evidence has been provided are in accordance with the approved purpose as set out in the Financing Plan. Any deviations from the Financing Plan have been separately identified and explained. c) The amount and source of documented income accounted for as counterpart contributions from the project-executing agency, target groups, and/or other agencies in the project country have been properly identified and disclosed. d) The terms and conditions established by the donor have been complied with, except for the matters specifically identified and explained in this report. e) Any other significant matters or observations arising from the audit are disclosed in the audit report and/or Management Letter." 4. Receipts and Payments Statement The Receipts and Payments Statement shall be presented in a format consistent with the approved project budget and financing plan. Any material changes in the presentation or classification of budget lines shall be clearly explained and agreed with tdh where applicable How to apply The auditor shall also have the right to access relevant records and documents held by banks, financial institutions, consultants, contractors, suppliers, and other persons or organisations engaged by the project during the period under review. CARITAS, COPAZ and tdh shall provide reasonable cooperation and access to relevant personnel to facilitate the completion of the audit within the agreed timeframe. Submission of Proposals Proposals should be submitted to: COPAZ Attention: Fungai Ndedzu Finance Manager 183 First Avenue, Chipinge, Zimbabwe Email: financemanager@copaz.co.zw Cell: +263 77 252 1347 For further information or clarification regarding the assignment, please contact: Caston Magaya Email: c.magaya@tdh.de Tel: +27 84 350 9184