TERMS OF REFERENCE (TOR) FOR STATUTORY AUDIT OF THE FINANCIAL STATEMENTS OF 2024 CANDLELIGHT ACCOUNTS

Job description

BACKGROUND

Candlelight for Environment Education and Health (CLEEH) is a developmental, non-governmental, non-profit organization dedicated to addressing development issues in underserved and marginalized communities in Somaliland. The organization aims to alleviate human suffering by utilizing all available and appropriate means to achieve its goals, focusing on various aspects of socio-economic life in Somalia. CLEEH is committed to promoting sustainable social development rooted in local traditions through participatory approaches. The organization has branches located in Hargeisa, Burao, Erigavo, and Nairobi.

Since 1995, CLEEH has been registered as a national NGO with the Ministry of Planning and National Development in Somaliland, in compliance with Somaliland NGO law no. 43/2010, under registration number L.43.13.54.2025 M/J.

1.1 Audit Proposals

By Candlelight Constitution, the Board Members are mandated to ensure the preparation of financial statements that accurately reflect the organization’s financial position as of the end of the financial year, as well as its operating results for the year. It is also the Board Members' responsibility to maintain proper accounting records that disclose, with reasonable accuracy, the financial status of the organization. Furthermore, the Board is tasked with safeguarding the organization's assets and ensuring that all financial transactions are appropriately documented and accounted for.

In line with our organizational accounting policies and procedures, which are developed in collaboration with our donor partners, we are required to conduct an independent audit of our financial statements. This audit will cover both the annual income received from donors and the organization's contributions.

We are therefore inviting qualified and authorized auditors to submit proposals to conduct a statutory audit of the organization’s financial accounts for the fiscal year from January 1, 2024, to December 31, 2024.

2. OBJECTIVES OF THE AUDIT

The primary objective of the audit is to provide users of the financial statements with an opinion on whether the statements are presented fairly, in all material respects, in accordance with the applicable financial reporting framework and the organizational policy outlined in the Accounting Administration Manual.

The audit will be conducted in accordance with International Standards on Auditing.

2.1 Specific Objectives of the Audit

a)      To assess compliance with the terms and conditions of the organizational policy. 

b)     To evaluate adherence to the relevant project agreements, regulations, and directives as necessary. 

c)      To verify that accounting practices align with international accounting standards. 

d)     To review the organizational administration system concerning the terms and conditions of organizational procedures. 

2.2 Scope of Work

The statutory audit will cover the financial year from January 1, 2024, to December 31, 2024. 

     2.3 Auditors' Responsibilities

a)      The auditor shall conduct the audit in accordance with the International Standards on Auditing (ISA) and comply with the reporting requirements outlined by the policy and the donor. 

b)     The auditor shall provide an independent opinion on the financial statements after the audit. 

c)       The auditor will submit at least seven (7) copies of the financial statements and seven (7) copies of the management letter at the end of the audit. 

3. TIME FRAME

The audit work will begin on April 20, 2025, and will conclude on April 26, 2025.

4. REPORTING

The auditors will issue a draft auditor’s report, which will include both a short-form independent auditor’s report and a management letter, on an annual basis, regardless of the number of projects. This report will be submitted to the management of Candlelight. A discussion session regarding the draft auditor’s reports will also be organized with the organizational management team. The final auditor’s report will be issued within six working days after the discussion on the draft report.

4.1  The reports should address at least the following topics:

Ø  Short-form Independent Auditor’s Report:

For project audits, the audit report must include an opinion according to Generally Accepted Accounting Principles (GAAP), financial statements, a balance sheet for the organization, and notes to the accounts. The notes should specify the funds received and the funds not received, which should reflect the accounts receivable and payable of the organization.

Ø  Management Letter: The auditor will submit a letter to the management of Candlelight upon completion of the audit. The topics to be covered in this letter should include:

-          An assessment of the efficiency of the administration, management, and internal control systems.

-          A description of any specific internal control weaknesses identified in financial management, along with recommendations to address these weaknesses.

-          All instances of noncompliance with the terms and conditions of the organizational policy, including procurement requirements and other relevant laws, regulations, and directives.

-          The status of findings and questioned costs from the prior year.

-          Management comments and responses to the audit findings and recommendations.

5. REQUIREMENTS

5.1 Eligibility of the Firm

Audit firms eligible to submit proposals must meet the following criteria:

Ø  Hold a renewed business license/trade license.

Ø  Hold a renewed Practicing Certificate for 2025.

Ø  Membership of association of certified auditors ICPAK.

The auditor must remain completely impartial and independent from all aspects of management or financial interests within the country office and its partners. Throughout the period covered by the statutory audit, and during the audit engagement, the auditor must not be employed by, serve as a director for, or maintain any financial or close business relationships with any senior management personnel at the organization's headquarters. The auditor is required to disclose any relationships that could potentially compromise their independence.

Skills and qualifications

Qualifications, Experience, and Team Composition 

The auditor shall assign a team of staff members who possess appropriate professional qualifications and relevant experience in accordance with International Standards on Auditing. 

The firm must provide Candlelight with the CVs of the partner or other individuals responsible for the audit and signing the report, as well as the CVs of the audit managers, senior auditors, and assistant auditors proposed for the audit team. These CVs should include detailed information about the types of audits conducted by the staff, demonstrating their capability and capacity to undertake the audit, as well as relevant specific experience. Preference will be given to auditors who can document experience in auditing NGOs.

The firm should also provide a list of references along with their contact information.

5.3 Proposals

The proposal should contain the following criteria:

I. The eligibility of the firm,

II. Understanding of the requirements for a statutory audit,

III. Proposed approach, methodology, timing, and deliverables,

IV. Proposed audit team and their CVs,

V. Estimated time to submit the signed auditor’s report.

How to apply

Candlelight will not be responsible for any expenses incurred in preparing and submitting the technical proposal. Such costs should not be included in the proposal.

Any firm which  fulfilled the above selection criteria should submit their technical and financial proposal to hr@candlelightsom.org not later than 31st March 2025 at 2:30 Pm.

Note: The Title of the Audit Application should be marked “STATUTORY AUDIT FOR CANDLELIGHT.”