Proposal External Project Auditor

1.  Introduction
1.1.        Background
Oxfam is an international confederation of 20 organisations working together with partners and local communities in more than 90 countries. Oxfam has a long and rich presence in Lao PDR, working on numerous initiatives covering many themes and areas. These have included among others: support to CSO capacity building, community development, social protection, gender justice, support to small farmers and organic agriculture, private sector engagement, disaster risk management, and natural resource management. This has entailed working at different levels, from the community to the national level. Currently, Oxfam in Laos has approximately 30 partners including Ministries, the National Assembly, Mass organizations, INGOs, NPA/CSOs, universities/research institutes, UN agencies, and the private sector. Visit https://laos.oxfam.org/ for more information.
1.2.        Background of the Project

Lao PDR has made good progress in recovering from the impacts of the COVID-19 pandemic. An effective vaccination campaign has protected the population, allowing borders to be re-opened and restrictions lifted, and life has begun to return to normality for many people. However, the economic impacts still linger, and these have been further exacerbated by a volatile and changing world characterized by multiple crises, including the impacts of climate change, supply chain disruptions and economic tensions. Those crises have contributed to rising inflation and reaching the highest level in 2023, which are greatly impacting the cost of living and livelihoods of many people, particularly the rural poor.
1.3.        Funding
New Zealand Ministry of Foreign Affairs and Trade (MFAT) undertakes to finance the Project by way of grant up to a maximum amount of  NZD 3.351.135 ( three million three hundred fifty one thousand one hundred thirty five New Zealand Dollar or equivalent to EUR 1.927.375,49 (One million nine hundred twenty-seven thousand three hundred seventy-five euros and forty-nine centimes.) over four years (the Grant) subject to New Zealand Ministry of Foreign Affairs and Trade (MFAT) appropriation.

Fund transfer from donor

Date
Description
Amount in NZD
Amount in EUR

23/06/2022
Phase 1_transfer
1.500.000,00
885.001,38

20/12/2023
Phase 2_1st transfer
925.567,50
524.241,43

24/05/2024
Phase 2_2nd transfer
462.783,75
258.742,39

30/08/2024
Phase2_3rd transfer
462.783,75
259.390,29

Total amount
3.351.135,00
1.927.375,49

2.  Objective of the audit
Oxfam (In Laos) wishes to engage the services of an Independent, External and Qualified Auditor for the purpose of auditing the above-described program. The audit shall be carried out in accordance with international audit standards issued by International Auditing and Assurance Standards Board (IAASB).

The objectives of this audit are to enable the Auditor to express an opinion on whether:

2.1    The Financial Report of the Essential Cash and Livelihoods Support to Vulnerable Communities Affected by the COVID-19 Pandemic in Lao PDR  project presents fairly, in all material respects, the actual expenditure incurred, and the revenue received for the Project for the period from 1st July 2022 to 30th June 2025.

The report is in accordance with Oxfam (In Laos) accounting records and in accordance with MFAT’s requirements for financial reporting as stipulated in the agreement, including appendices, between MFAT and Oxfam Novib.

2.2    The Project funds provided by MFAT have, in all material respects, been used in conformity with the applicable Contractual Conditions.

2.3    The internal control systems i.e. the control environment and the control procedures are adequate to ensure that:

• Assets are safeguarded
• Fraud is prevented and detected
• Segregation of duties is adopted and strictly followed
• Accounting records are complete; reliable and understandable

For item 2.3; the Auditor is expected to prepare a Management Letter to highlight possible weaknesses

2.4    The audit terms of reference must be read together with the MFAT ToR in Annex D.
3.  Scope of the Audit

• Oxfam Country offices will be audited by their own auditors and will manage their own audit and their respective National Partners’ audits, as provided below. Country offices will share their Audit reports with the PMU along with their respective Audit Opinions according to ISA 800/805 and ISRS 4400. Local partners will follow Oxfam countries’ audit project period and process as local partners are under agreements with Oxfam countries having a joint budget with countries.

• Each country office will be responsible for finalising a summary sheet including country offices their partners, in particular:
• Fund Transfers from Oxfam Novib
• Reconciliation sheets (fund transfer, Interest Income for the project and Exchange Gain)
• Income and Expenditure summary for Cultivating Change project.

• The country auditor will give an opinion on each country office financial report adding a management letter and a management response to answer the main findings resulting in the audit exercise.

4.  Audit Procedures
The Auditor should perform the audit in accordance with the International Standards on Auditing (ISA) which requires that the Auditor should prepare audit documentation and obtain sufficient appropriate audit evidence to support audit findings and to draw reasonable conclusions on which to base the audit opinion. The Auditor uses professional judgment to determine whether audit evidence is sufficient and appropriate considering the Contractual Conditions

The Auditor should exercise due professional care and judgment and determine the nature, timing and extent of audit procedures to fit the objectives, scope and context of the audit.

The Audit procedure should include:

• Obtaining an understanding of the engagement context

The Auditor should obtain a sufficient understanding of the engagement context including the Project, the Entity, Donor requirements which apply to the Project and the Contractual Conditions for the Project which is set out in the scope. The Auditor should pay specific attention to the Contractual Conditions for:

• Documentation, filing and record keeping for Project expenditure and income;
• Eligibility of Project expenditure and income;
• Procurement and origin rules insofar these conditions are relevant to determine the eligibility of Project expenditure and follow up whether the cooperation partner has adhered to the procurement guidelines referred to or annexed to the agreement;
• Asset management (management and control of Project fixed assets; e.g. equipment);
• Cash and bank management (treasury) noting that the way the Oxfam system is established generally means that the Oxfam country office does not have a separate bank account for the project;
• Payroll and time management, follow up whether salary costs debited to the project are recorded throughout the duration of the year in a systemized way and examine whether the salary costs can be verified by sufficient supporting documentation and its compliance with applicable tax legislation in regard to taxes (eg. P.A.Y.E) and social security;
• Recruitment process;
• Accounting (including the use of exchange rates and include exchange gains and losses, disclosed in accordance with what is stipulated in the agreement) and financial reporting of Project expenditure and income;
• Examine whether the financial report includes a comparison, for every budget item, between the actual costs/expenditures of activities and the budgeted costs/expenditures as approved by Oxfam Novib and MFAT for the period.
• Review if outgoing balance for previous period is the same as incoming balance for the current period.
• Internal controls notably financial internal controls.

4.2 Regarding forwarding of funds to third parties, the following should be examined;

• Does The country office have signed agreements with its implementing partner organisations?
• Are the Audit requirements in agreements with implementing partner organisations in accordance with the audit requirements as stipulated in Oxfam Novib’s agreement with MFAT?
• Review whether there is an unbroken chain of audited financial reports according to the requirements as stipulated in the agreement between each country office and Oxfam Novib and whether country office documented assessments of the audited financial reports received.

• The understanding should be sufficient to identify and assess the risks of material errors or misstatements in the expenditure and revenue stated in the Financial Report, whether caused by error or fraud, and sufficient to design and perform further audit procedures.

4.3 Applying materiality

• For determining what a material misstatement or error is, the Auditor will apply
• Materiality threshold: 1 % of total (actual) expenditure for the reporting period of the Financial Report of a specific implementing partner.
• Performance materiality: 80% of the tolerable error
• Clearly trivial threshold: 5% of the Materiality.
• Performing a risk assessment
• Obtaining evidence regarding the design of controls and performing tests of controls if considered appropriate by the Auditor
• Performing substantive (including analytical) procedures
• Sampling and other means of selecting items for testing as considered appropriate by the Auditor
• Extrapolation as considered appropriate by the Auditor
• Using the work of Internal Auditors as considered appropriate by the Auditor
• Obtaining written representations (Engagement letter prior to the commencement of the audit).
• Deliverables

• The auditor is responsible for conducting the audit procedures as specified in this ToR and in line with MFAT requirements as per the Grant Agreement between MFAT and Oxfam Novib.

• The auditor will deliver a Draft Audit Report for management discussion purposes. After processing of proposed revisions and changes a Final Audit report is expected to be delivered in softcopy (supplied in .pdf format and editable Word format).

• In addition to the audit report, the auditor will also provide a “Management letter” summarizing the observations on the accountability and internal control issues. Also, in addition to the findings following the audit of the financial report for the year 2022-2025, the auditor will add a section reporting on the follow-up on previous year’s findings, if applicable.

• The auditor will have a meeting with management of Oxfam Country Office and National Partner to discuss any audit observations and any audit observations that have been sufficiently addressed will be removed from the letter.  Observations on the accountability and internal control issues would include the following:

• Comments and observations on the accounting records, systems and controls that were examined during the audit.
• Specific deficiencies and areas of weakness in systems and controls and recommendations for improvement.
• Matters that have come to the attention during the audit which might have significant impact on the implementation of the project
• Any other matter that the auditor considers significant to report to the management.
• The observations in the “Management letter” must be accompanied by the implications, suggested recommendations from the auditors and the management comments on the observations/recommendations. The recommendations need to indicate urgency and priorities for follow up. This management letter will include comments from the management of the relevant organisation.

• Reporting from the ISRS 4400 assignment

5.  Preliminary Planning

• Agreement between ONL and the auditor on the audit instructions: 4 August 2025
• Meeting with the auditors of the partners by 7th August 2025
• Audit field works and performed in the country office 11-22 August 2025
• Send an audited report with a management letter to Oxfam office by 29 August 2025
• Send the draft audited report to Oxfam office by 5 September 2025
• Send the Final audited report to Oxfam office by 10 September 2025
• Final audited report sent to Oxfam Novib auditors by 11 September 2025

6.  Disclaimers
Oxfam may require the Auditors to clarify its quotation and/or provide supporting documentation.

Oxfam reserves the right to stop the procurement procedure completely or partly, temporarily or permanently until the moment of contract signing. In these situations, the Auditor is not entitled to reimbursement of any costs or damages incurred in connection with this procurement procedure.

Quotations should be valid for at least three months.

Oxfam cannot be charged in any way for costs related to preparation and submission of a quotation. This can also include interviews and/or providing further information about the quotation.

The risk of any costs and/or damages which may arise by not awarding this contract to an Auditor lay solely with the Auditor. Oxfam cannot be held responsible for any such costs or damages.

By submitting a quotation, the Auditor agrees all the terms and conditions specified in this procedure and the provisions of the contract template. The quotation will not contain any reservation(s) to these terms and conditions. A quotation with one or more reservations can be excluded from the procedure.

If you need more information, please send your email to xayvisith.sosengphet@oxfam.org

Application and proposal to be submitted to sisomphone.thadavong@oxfam.org and xayvisith.sosengphet@oxfam.org before 4 August 2025.