1. The auditing is to be conducted by a chartered or registered accountant appointed by the competent body of the organisation.

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1 Updated May 2018 DPOD Administrative Guidelines Audit Instructions concerning the performance of audits in connection with the administration of grant funds from mini-programmes applicable to single projects with a budget of DKK and above. The Audit Instructions presented here describe the auditing tasks that the Danish Ministry of Foreign Affairs (MFA) requires to be carried out in connection with grant funds allocated by DPOD to the Disability Fund. The authority of the MFA to issue instructions in the area of auditing is contained in document /9 90 and in the Disability Fund Agreement concluded with DPOD, to which the Audit Instructions presented here are appended. 1. The auditing is to be conducted by a chartered or registered accountant appointed by the competent body of the organisation. (2) If there is a change of auditor, the incoming auditor must approach the outgoing auditor, who is obliged to inform the organisation, DPOD and the incoming auditor of the reasons for his or her withdrawal. (3) If the audit of activities abroad is carried out locally in the recipient country, the auditing must be carried out by a recognized audit firm with a status equivalent to a state authorised auditor. The member organisation's auditor also has the overall supervision of the local audit of expenses abroad. 2. Audits in Denmark are to be conducted according to the standards of public auditing. Abroad, financial audits and performance audits are to be conducted according to recognized international standards (IFAC or INTOSAI). Foreign auditors should be informed of the content of this audit instruction, as appropriate. (2) The auditor must verify the correctness and accuracy of the project accounts and check whether the transactions presented in the accounts are in conformity with the allocated grants, negotiated agreements with DPOD, contracts concluded, and legislation and other rules for grant management. The auditor conducts an assessment of whether due financial considerations have been taken in the management of the granted funds and operating support that is included in the accounts. 3. The scope of the audit is dependent on the administrative structure and procedures of the organisation, including internal control routines and other matters of importance for the presentation of financial statements.

2 2 4. Audits are conducted on a regular basis. As part of the auditing, the auditor shall examine the organisational structure and existing procedures of the organisation with special emphasis on accounting, financial management and reliable internal controls. Substantive tests are carried out as a point of departure by means of spot checks of the quality of the vouchers and their correct registration in the accounts, among other things on the basis of an assessment of importance and risk. The auditor examines whether the abroad submitted accounts are audited according to recognized international standards, cf. 2, (1), and have endorsement from the local auditor and from a person authorized by the member organisation. The auditor makes a general assessment of the extent and quality of the foreign audit, if necessary after contact with the local auditor. The auditing procedure should incorporate unannounced cash and asset audits. (2) During the audit, the auditor must verify that the organisation lays out the final project accounts in accordance with the provisions stipulated in the administrative guidelines. In this regard, the auditor must verify: that the accounts are correct and accurate and do not contain any significant errors and omissions, that the conditions for the grant have been complied with, including the provisions contained in the agreement with DPOD, that the transactions presented in the accounts are in conformity with the allocated grants and the main purpose of their utilisation, which was agreed with DPOD, whether the audit conducted has given rise to significant remarks or whether qualifications have been expressed. If the auditors expressed qualifications, it shall be mentioned in the auditor s endorsement on the accounts, that the balances in the final project accounts have been reconciled with the general annual accounts of the organisation. (3) The juridical-critical audit examines whether the grant management has met the requirements. The audit is planned and completed in accordance with the Danish Standard for Public Audit No. 6 (SOR 6). (4) The performance audit examines whether due financial considerations has been taken into account in the grant management. The audit is conducted in accordance with the Danish Standard for Public Audit No. 7 (SOR 7) and based on the member organisation's financial report and other reporting to DH on goals and results achieved, as well as on economy, productivity and efficiency. (5) The auditor must verify that the government grants are separate from other funds either deposited in a separate bank account or handled separately in the member organisation s book keeping system. The auditor must be able to verify that grant funds have not been mixed with the member organisation s own funds.

3 3 5. The management of the member organisation must provide the auditor with the information that must be regarded as important for assessing the accounts and for the auditor s evaluation of the administration, including objectives and results achieved. The management of the member organisation must give the auditor access to conduct the examinations, which the auditor finds necessary and ensure that the auditor receives the information and assistance that must be regarded as necessary for conducting the audit. 6. If the auditor - in connection with the administration of the grant funds - becomes aware of offences or significant non-observance of the provisions of the agreement or the basis for the grant, it is the duty of the auditor to immediately notify the management and competent body of the organisation and ensure that information concerning the matters discovered is forwarded together with the auditor s remarks to DPOD within three weeks. Failing that, the auditor is obliged to notify DPOD. The remarks of the auditor are to be submitted together with the notification. (2) The same applies if the auditor during the audit or by other means becomes aware that continuation of operations is uncertain for financial or other reasons. 7. The audited project accounts must carry the auditor s endorsement, stating that the accounts have been audited in accordance with the guidelines for Danish Standard for Public Audit no. 5 (SOR5). (2) The auditor must conduct an audit protocol, including information about: Which audit work has been carried out and the results, Significant uncertainty, errors or deficiencies regarding the member organisation's book keeping, accounting or internal control, The performance audit, in particular the auditor's examination, assessments and conclusions regarding economy, productivity and efficiency, as well as transactions that fall outside the cooperation with DH, The auditor's assessment of the audit abroad, including whether the accounting has any qualifications or significant remarks in the audit reports. In the protocol for the accounts it must be stated: whether the auditor meet the legislation s competency rules; whether the auditor during the auditing has received all requested information and whether the auditor has had any special remarks for the use of the funds. In the protocol it must be stated if there are any special reports, statements, advice or assistance to mark. (3) A copy of the audit report along with the financial project accounts will be submitted by member organisation to DPOD. The same applies to the member organisation's audited annual accounts with an audit protocol, as soon as these documents are approved by the member organisation's executive committee or competent assembly.

4 4 8. These instructions will be included as an annex to the agreement between the organisation and DPOD and enter into force together with the agreement. Before signing the agreement, it is the duty of the organisation to obtain confirmation from the appointed auditor that he/she will perform the audit of the received grant funds in compliance with the provisions of these instructions.

5 5 Supplement to audit instructions regarding audit tasks in connection to host organisations' management of activities in developing countries Reporting of the performance audit is based on the audit protocol. It must be stated in the audit report that the audit has been carried out in accordance with the audit instructions, including rules on good public auditing practice. Significant deficiencies and/or a reasonable presumption of violation of the provisions and conditions for the grant and use of funds must be stated in the audit report. Practically, the auditor's detailed reporting on the audit can be done in the host organisation's audit protocol or in a separate report not included in the audit protocol's page numbers; provided that reference is made to such separate reports in the audit protocol and provided that significant remarks are restated in the audit protocol. The auditor s control of 4 (4) can be done as follows: The auditor can go through the Danish organisation s established procedures for determining data collection and reporting of productivity and efficiency goals. The auditor s report on this may be done in the Danish organisation s audit report or in a separate report cf. above section. To the extent that the host organisation collects concrete actual measurements of productivity and efficiency, it is expected that the auditor assesses the reliability of these measurements and reports on it in the audit protocol. If the measurements are not available, the auditor must evaluate whether the organisation (often on a more qualitative basis) collects any other reasonable assessments of performance, which the auditor can propose as reliable measurements. The auditor may report lack of reliable measurements of productivity and efficiency, etc. in the audit protocol without making reservations or providing additional information in the audit report on the accounts. If there are no measurements of productivity and efficiency or if the available measurements are of such a nature that they cannot form the basis of auditor's control according to 4, (4), the auditor shall report on this in the audit protocol or in a separate report outside of the audit protocol's page numbers, provided that reference is made to such separate reports in the audit protocol and that significant remarks are restated in the audit protocol.