Selection of Auditors and Auditor Terms of Reference

Transcription

1 Selection of Auditors and Auditor Terms of Reference

2 Selection of Auditors... The Loan Agreement requires that the auditor be acceptable to the Bank Can be Private or Governmental, but must:» Be independent» Comply with international auditing standards Or national standards, if established and at least as stringent as international standards

3 Selection of Auditors To be acceptable to Bank, the auditor should: Be experienced in the audit of development projects Be acceptable to other international donors (e.g. USAID & IDB) Have the capacity and resources to carry out the proposed work Be able to comply with other requirements of the Bank

4 Other Requirements of the Bank That the auditors be willing to:» Comply with their terms of reference» Respond to a desk review of the audit report and its results» Accept Quality Control Reviews (QCRs)

5 Terms of Reference All Audits of projects financed by the Bank should be carried out in accordance with the Terms of Reference approved by the Bank Some of the information provided can be included in the Audit Report

6 Terms of Reference: Components I. Basic Considerations II. Background of the Project III. Background of the Audit IV. Title of the Audit Report V. Audit Objectives VI. Procedures and Scope VII. Other Responsibilities of the Auditor

7 Terms of Reference: Components VIII. Audit Reports IX. Review and Acceptance of the Audit Work and the Audit Report X. Relationships and Responsibilities XI. Terms of Performance of the Work

8 I. Basic Considerations Provides general information regarding the financial statements which are to be prepared by the project implementing agency and reviewed by the auditors States that the auditors should familiarize themselves with:» The FARAH» The Minimum Guidelines for Audits (FMs)

9 II. Background of the Project Provides general information about the project (which is also useful to write the audit report) including, but not limited to: Description Amounts involved, including budgets Components Implementing agencies Amount and volume of the transactions to be audited

10 III. Background of the Audit Provides information Provides information regarding the regarding the Bank s audit Bank s audit requirements, requirements, including including whether the project whether the project has has been audited before been audited before

11 IV. Title of the Report Audit of the Resources Managed during the period from ---- to by [implementing agency] under the project [name of the project], partially financed by World Bank loan [loan or credit number] Indicate if this is IBRD or IDA

12 V. Audit Objectives... General: Financial Audit of the Project, or Financial Audit of the Project and the Implementing Agency Specific: Of the Entity Of the Project

13 V. Specific Objectives of the Audit... For the implenting agency: To issue an opinion as to the reasonableness of the basic financial statements To issue an opinion as to the reasonableness of the supplementary financial information

14 V. Specific Objectives of the Audit... For the Project: To issue an opinion on:» The reasonableness of the project financial statements and the supplementary financial information» The adequacy of the internal control structure of the project» The entity s compliance with the terms of the Loan Agreement, and the applicable laws and regulations

15 V. Specific Objectives of the Audit To issue an opinion on:» The reasonableness and eligibility of SOE expenditures, the procedures followed in their preparation, and whether the associated expenditures were consistent with the project s objectives» The reasonableness of the Special Account Statement

16 VI. Procedures and Scope of the Audit Discusses general considerations for the performance of the audit Will not include everything» Should not limit the auditors as to their level of testing, nor exempt them from exercising due care and professional judgement

17 VII. Other Responsibilities... Entrance and Exit Conferences Planning and Interim Review Referencing of the Report Obtaining a Management Representation Letter

18 VII. Other Responsibilities Referencing of the Report The Referencer, independent of the audit team, reports to the partner-in-charge of the audit, and:» Ties all amounts, dates, and assertions contained in the report to the audit workpapers» Assures the quality of the evidence, that the conclusions are logical, and that the recommendations can be implemented» Leaves evidence of the referencing process

19 VIII. The Audit Report... Should be delivered to the implementing agency, and directly to the Bank if required, by the stipulated deadline The report should contain:» A section on Background and Results of the Audit» Opinion as to the financial statements of the project and the related supplementary information

20 VIII. The Audit Report...» Opinion with respect to the internal control structure of the Project, including all key findings» Opinion with respect to compliance with the terms of the Loan Agreement and all applicable laws and regulations» Opinion as to the SOE Statement

21 VIII. The Audit Report Opinion on the Special Account Statement Report on the follow-up of recommendations made in prior audits If required, an opinion on the Entity s Financial Statements and Supplementary Information

22 IX. Review and Acceptance of the Report Normally a Desk Review of the report will be performed in order to verify compliance with the Bank s formal requirements and with the Terms of Reference In some instances, a Quality Control Review of the audit workpapers will also be performed

23 X. Relationships and Responsabilities The client is the Implementing Agency, but the Bank can monitor the work, participate in the entrance and exit meetings, and comment on drafts of the report The entity should prepare the Financial Statements in a timely manner and send the Audit Reports to the Bank The auditor must mantain and file the workpapers, and provide them to the Bank when requested to do so

24 XI. Terms of Performance of the Work Performance of interim work Dates for issuing draft reports and the final report Form of payment for the auditing services provided