TOR for LAP-2 Audit 2017/2018

SECOND LAND ADMINISTRATION PROJECT

IDA Credit No. 4870-GH

 

Terms of Reference for Audit of Project Financial Statements

 

1. 0      Introduction

The Government of Ghana has received financing in the amount of US$50 million  equivalent from the World Bank toward the cost of the Second Land Administration Project, and it intends to apply part of the proceeds to payments for goods, works, related services and consulting services to be procured under this Project. This Project is jointly financed by the Department of Foreign Affairs Trade and Development-Canada (DFATD).

The main Components of the Project are:

a.               strengthening the Policy, Legal and Regulatory Framework for Land Administration;

b.               decentralizing and Improving Business and Service Delivery Processes;

c.               Ensuring improved Maps and Spatial Data for Land Administration; and

d.               Engaging in Human Resource Development and Project Management.

The Project has been prepared using standard World Bank preparation criteria in the selection and detailed costing of the Components. The total cost of the Project, which commenced in 2011, is US$72.00 million shared as follows:

                                                                                                                        US$ Million

            International Development Association (IDA)                                       50.00

            Department of Foreign Affairs Trade and Development (DFATD).       15.00

            Government of Ghana (GOG)                                                                5.00

            Beneficiaries                                                                                           2.00

                                                                                                                        ______

            Total                                                                                                      72.00

                                                                                                                        ______

The Credit is due to close on 28th February, 2018.

1.1.      Participating Agencies

The participating Agencies are as follows:

i.                Lands Commission;

ii.              Land Use and Spatial Planning Authority (Formerly Town and Country Planning Department);

iii.             Office of the Administrator of Stool Lands;

iv.             Judicial Service;

v.               Accra Metropolitan Assembly; and

vi.             Coalition of Civil Society  Organizations on Land (CICOL)

1.2.      PROJECT FINANCING

As indicated in (1) above, the International Development Association (IDA) is the main financier with additional support from the Department of Foreign Affairs Trade and Development-Canada (DFATD).  The Government of Ghana, together with the Land Agencies and Beneficiaries will provide the needed Counterpart/Matching Funds for the programme.

1.3.      ROLE OF THE PROJECT COORDINATING UNIT (PCU)

1.               The Project Coordinating Unit (PCU), on behalf of the Ministry of Lands and Natural Resources (MLNR), is acting as the over-all Coordinator and Management Unit of the Project.

Objective

2.               The objective of the audit of the Project Financial Statements (PFS) is to enable the Auditor to express a professional opinion on the Project’s Financial Position as at the end of December 31, 2017 and subsequently end of February 2018, involving incomes and expenditures for the accounting period from January 1, 2017 and ending December 31, 2017 and the period January 1, 2018 to February 28, 2018. The Project’s books of account, as maintained by the Project Coordinating Unit (PCU) and the Agencies provide the basis for the preparation of financial statements and are established to reflect the financial transactions in respect of the Project.

Responsibility for preparation of financial statements

3.               The responsibility for the preparation of financial statements including adequate disclosure is that of the Project’s Management. This includes the maintenance of adequate accounting records and internal controls, the selection and application of accounting policies, and the safeguarding of the assets of the Project. As part of the audit process, the Auditor will request from Management written confirmation concerning representations made to Management in connection with the audit.

Scope

4.               The audit will be conducted in accordance with International Standards on Auditing . Those Standards require that the Auditor plans and performs the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

5.               In complying with International Standards on Auditing, the Auditor is expected to pay particular attention to the following matters, including special considerations for public sector entities.

(a)            In planning and performing the audit to reduce audit risk to an acceptably low level, the Auditor should consider the risks of material misstatements in the financial statements due to fraud as required by International Standard on Auditing 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

(b)            When designing and performing audit procedures and in evaluating and reporting the results thereof, the Auditor should recognize that noncompliance by the entity with laws and regulations may materially affect the financial statements as required by International Standard on Auditing 250: Consideration of Laws and Regulations in an Audit of Financial Statements.

(c)            The Auditor should communicate audit matters of governance interest arising from the audit of financial statements to those charged with governance of an entity as required by International Standard on Auditing 260: Communication of Audit Matters with those Charged with Governance.

(d)            The Auditor should communicate appropriately to those charged with governance and management deficiencies in internal control that the Auditor has identified in an audit of financial statements as required by International Standard on Auditing 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.

(e)            In order to reduce audit risk to an acceptably low level, the Auditor should determine overall responses to assessed risks at the financial statement level, and should design and perform further audit procedures to respond to assessed risks at the assertion level as required by International Standard on Auditing 330: The Auditor’s Procedures in Response to Assessed Risks.

(f)             In instances where certain aspects of an entity’s operations are performed by a third party service provider, the Auditor is expected to include an understanding and assessment of the internal control environment of the service provider during the audit process as required by International Standard on Auditing 402: Audit Considerations Relating to an Entity Using a Service Organization.

(g)            As part of the audit process, the Auditor is expected to obtain written representations from management and, where appropriate, those charged with governance as required by International Standard on Auditing 580: Written Representations. 

6.               In evidencing compliance with agreed project financing arrangements the Auditor is expected to carry out tests to confirm that:

(a)            all external funds have been used in accordance with the conditions of the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which the financing was provided. Relevant financing agreements include Financing Agreement No. 4870 GH;

(b)            counterpart funds have been provided and used in accordance with the relevant financing agreements, with due attention to economy and efficiency, and only for the purposes for which they were provided;

(c)            goods, works and services financed have been procured in accordance with relevant financing agreements, including specific provisions of the World Bank Procurement Guidelines;

(d)            all necessary supporting documents, records, and accounts have been maintained in respect of all project activities, including expenditures reported using Statements of Expenditure (SOE) or Interim Unaudited Financial Statements (IFS) methods of reporting. The Auditor is expected to verify that respective reports issued during the period were in agreement with the underlying books of account;

(e)            Special Account of the PCU and Advance Accounts of the Agencies have been maintained in accordance with the provisions of the relevant financing agreements; and.

(f)             the Project Accounts have been prepared in accordance with consistently applied International Accounting Standards and give a true and fair view of the financial position of the Project as at 31st December each year and of resources and expenditures for the year ended 31st December 2017 and February 2018.

Project Financial Statements

7.               The Auditor should verify that the financial statements have been prepared in accordance with International Public Sector Accounting Standards. The financial statements should include:

(a)            a statement of financial position;

(b)            a statement of financial performance;

(c)            a statement of changes in net assets/equity;

(d)            a cash flow statement;

(e)            when the entity makes publicly available its approved budget, a comparison of budget and actual amounts either as a separate additional financial statement or as a budget column in the financial statements; and

(f)             Notes, comprising a summary of significant accounting policies and other explanatory notes.

As an Annex to the Project’s Financial Statements, the Auditor should prepare a Reconciliation Statement between the amounts shown as received by the Project from the World Bank and those shown as being disbursed by the Bank.  As part of the reconciliation, the Auditor should indicate the mechanism for the disbursement i.e. Special Accounts, Statement of Expenditures (SOE’s) or direct disbursement.

Review of Statements of Expenditure and Interim Unaudited Financial Statements

8.               The Auditor is required to audit all SOE/IFS submitted to the World Bank in support of requests for periodic replenishment of the Project’s designated account(s). Expenditures should be examined for eligibility based on criteria defined in the terms of the financing agreement and detailed in the Project Appraisal Document. Where ineligible expenditures are identified as having been included in withdrawal applications and reimbursed, they should be reported.

Review of Designated Accounts

9.               During the audit of the project financial statements, the Auditor is required to review the activities of the Project’s designated account(s). Activities to be examined will include deposits received, payments made, interest earned and reconciliation of period-end balances.

9.1       Special Account

In conjunction with the audit of the Project Financial Statements, the Auditor is also required to audit the activities of the two Special Accounts of the Project viz., IDA, and DFATD which are maintained by the PCU.  Transactions on the Special Accounts usually consist of:

a.    deposits received from the donors;

b.     replenishments substantiated by Withdrawal Applications;

c.      disbursements substantiated by contracts, invoices, certificates, “no objections”, memos, etc;

d.     interest that may be earned from the balances and which belong to the borrower; and

e.      the remaining balances at the end of each fiscal year.

The Auditor must form an opinion as to the degree of compliance with the donors’ procedures and the balance of the Special Accounts at year-end.  The audit should examine the eligibility and correctness of financial transactions during the period under review and fund balances at the end of such a period, the operation and use of the Special Account in accordance with the financing agreement and the adequacy of internal controls for this type of disbursement mechanism.

For this project, the Special Accounts are referred to in Section 4.09(b) of the Financing Agreement (FA).

9.2       The Advance Accounts

Each of the five Agencies maintains an Advance Account for the IDA and DFATD funds.  The Auditor is also required to audit these accounts which usually comprise:

a.    deposits received from PCU;

b.     replenishments substantiated by Disbursement Requests to PCU;

c.      disbursements substantiated by contracts, invoices, certificates, “no objections”, memos, etc;

d.     interest that may be earned from the balances and which belong to the borrower; and

e.      the remaining balances at the end of the fiscal year.

The Auditor must form an opinion as to the degree of compliance with the Bank’s procedures and the balance of the Advance Accounts at year-end.  The audit should examine the eligibility and correctness of financial transactions during the period under review and fund balances at the end of such a period, the operation and use of the Advance Account in accordance with the financing agreement and the adequacy of internal controls for this type of disbursement mechanism.  

9.3       GOG/Agencies Matching Funds Accounts

10.            The PCU and the Agencies maintain Matching Funds Accounts to finance the GOG  portion of eligible expenditure under the Project. The Auditor must examine these accounts to ascertain sufficiency of releases into these accounts to meet obligations as and when they become due.

Audit Reports

11.            The Auditor will issue an audit opinion on the financial statements.

12.            In addition to the audit opinion, the Auditor will also report, either in the audit report or in the report to management:

(a)            provide comments and observations on the accounting records, systems, and controls that were examined during the course of the audit;

(b)            identify specific deficiencies and areas of weakness in systems and controls and make recommendation for their improvement;

(c)            report on instances of non-compliance with the terms of the financial agreement(s);

(d)            quantify and report expenditures that are considered to be ineligible and either paid out of the designated account(s) or which have been claimed from the World Bank;

(e)            communicate matters that have come to attention during the audit which might have a significant impact on the implementation of the project; and

(f)             bring to the borrower's attention any other matters that the Auditor considers pertinent.

13.            The Auditor’s opinion on the financial statements and management letter should be received by the Bank no later than June 30, 2018 for both the 2017 Audit and January 1 to April 30, 2018 audit

14.            The Contract for the Audit Services will cover Financial Statements from January 1, 2017 to December 31, 2017 and January 1, 2018 to April 30, 2018

General

15.            The Auditor is entitled to unlimited access to all information and explanations considered necessary to facilitate the audit including legal documents, project preparation and supervision reports, reports of reviews and investigations, correspondences, and credit account information. The Auditor may also seek written confirmation of amounts disbursed and outstanding in the Bank records.

16.            The Auditor is encouraged to meet and discuss audit related matters including input to the audit plan with the World Bank project task team.

17.            It is highly desirable that the Auditor reviews the Bank's Guidelines: Annual Financial Reporting for World Bank - Financed Activities, June 30, 2003, which summarizes the Bank's financial reporting and auditing requirements. The auditor should also be familiar with the Bank's Disbursement Handbook and Financial Monitoring Reports for World Bank – Financed Projects: Guidelines for Borrowers, November 30, 2001; Guidelines: Procurement under IBRD Loans and IDA Credits, January 2011 (Revised July 2014) and Guidelines: Selection and Employment of Consultants by World Bank Borrowers, January 2011 (Revised July 2014).

18.            Specifically relating to the Second Land Administration Project are the following documents:

a.      Financing Agreement (FA) No. 4870 GH

b.     Credit Agreement (DFATD)

c.      Project Appraisal Document (PAD) and

d.     Project Implementation Manual (PIM).

19.        Duration

The duration of the consultancy will be for a period of four (4) months.  It is estimated that the assignment will require 2 man-months.

20.       Qualification

The Auditor must be a Firm with considerable experience in auditing. The key staff will comprise a Senior Auditor with 15 years professional experience and an Auditor with 8 years professional experience.

21.       Services and Facilities to be provided by the Client

The Client will provide the following.

  • Suitable office space.
  • Trail balance and draft accounts for the year ended December 31, 2017.
  • Trail balance and draft accounts for the four months ending April 30, 2018

22.       Institutional and Organisational arrangements for the assignment.

The overall Financial Management responsibility is handled by a Financial Management Specialist based at the Project Coordinating Unit (PCU) under the supervision of the Financial Controller at the Ministry of Lands and Natural Resources.  The responsibility of the Financial Controller is to ensure that throughout the implementation there are adequate financial management systems in place which can report adequately on the use of project funds.

The project operates a single US Dollar denominated Designated Account (DA) under the direct responsibility of the Project Coordinator but managed and operated by the Chief Director and the Financial Controller of the MLNR.  Transfers are then effected to all Implementing Agencies from this Account.  This arrangement is important to ensure that the PCU of the MLNR has oversight responsibilities over transfers and payments related to the implementation of programme activities.

The Consultants’ work will, therefore, be overseen by the Ministry of Lands and Natural Resources. The Consultants will work closely with the Implementing Agencies at both the national and regional levels as well as the Customary Land Secretariats at the district and local levels.

The Project Coordinating Unit led by the Project Coordinator will be responsible for coordinating this assignment.  The Firm shall send all reports to the Project Coordinating Unit of the Land Administration Project.

All correspondence should be addressed to the Project Coordinator, Project Coordinating Unit for the attention of the Chief Director.

23.       Contact

Further information may be obtained from the address below:

The National Project Coordinator,

Second Land Administration Project,

Ministry of Lands and Natural Resources,

P. O. Box MB 212,

Accra,

Ghana.

Tel: 233 302 666711

Fax: 233 302 666801

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Contact us

National Project Co-ordinator Land Administration Project (LAP) Ministry of Lands and Natural Resources 
P. O. Box MB 212 
Accra, Ghana

  • Tel: 233 – 0303 – 969687

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