TERMS OF REFERENCE

Internal Audit of the CBM Country Office, Pakistan

In accordance with the 2020 Internal Audit Programme, we shall conduct an internal audit of the CBM Country Office Pakistan (P3085-CO1-2019 and 2020, P3289-CO2- 2019 and 2020) in Islamabad. The audit has a budget of 7 internal audit field days, 02 days for preparation and reporting. A local audit consultant will conduct the audit in coordination with the Internal Audit Unit at CBM.

OBJECTIVES

The aims of the audit are to review of the operational and financial performance of the Country Office in Islamabad to provide management in CBM International with an objective assessment of whether systems and controls are working effectively and to assist management in introducing improvements where weaknesses are identified. The findings are documented in a report including a risk assessment and recommendations for identified weaknesses.

• Provide Executive Management of CBM with an opinion on existing systems, controls, gaps and potential risks.
• Provide the Heads of Finance & Operations Development and Communication & Programmes Departments with an opinion how reliable the systems and controls are which they are responsible for and have assistance in making improvements to those systems.
• Provide the Regional Hub Director and the Country Director with assessments and recommendations on systems and controls as documented in in the Internal Audit Checklist & Report.

SCOPE

We have already gathered some background information. Based on this information, our suggested scope is to review the following:

1. Internal Control system at the CO :legal status, staff management at the CO, accounting system, adherence to internal regulations. Control of assets and expenditures, adherence of four-eye principle in administrative and financial transactions, audits and assignments, budgets and data security. Review local procurement practises (e.g. invite offers, maintenance policy) and compliance with procurement guidelines (checks of lease/service contracts).
2. CO financial project monitoring: maintenance of project files, workflow of control measures, project agreements, financial control of expenditures, financial monitoring, budget control and knowledge about the CBM Code of Conduct (protection from sexual exploitation and abuse/child safeguarding/fraud and corruption) among staff as well as roll out to partner organisations.

We are specifically excluding the following from the scope, as they will be covered in other audits:

1. Annual financial reports and statements 2019
2. Balance Sheet 2019

CONTROL OBJECTIVES

The focus of the audit is on the control objectives of the system. The control objectives for this system have been agreed as:

1. To ensure that legal frame for the operation of the CO complies with regulatory and legal requirements
2. To ensure that internal control procedures are adequate and effective
3. To ensure that financial monitoring of CBM project funds are in compliance with CBM policy
4. To ensure that CBM assets are properly safeguarded
5. To ensure that the general control environment provides consistent and adequate support to the work of the area.

APPROACH

The audit will be conducted in accordance with generally accepted auditing standards and, accordingly, will include such tests of the accounting records and other auditing procedures, as we consider necessary to accomplish our audit objectives. We will follow-up on previously raised audit issues, review internal controls, the human resource function, operating efficiencies, year 2019 status, and other audit procedures considered necessary based on the circumstances encountered.

At the initial stage of the audit, we will meet staff to gain an understanding of each area and its operation and to identify potential risks within the system under review. Internal audit resources will be targeted in the highest risk areas. We will examine internal guidance and any other appropriate instructions and documents and evaluate the procedures as documented. We will then conduct appropriate audit tests to form an opinion on the systems as they are operated.

The approach is expected is to be as per general internal audit standards and any other guidelines given by CBM International Internal Audit Department. The reporting format will be provided by the Internal Audit Unit as it has to comply with CBM standard reporting. In an introduction meeting the specifics of this reporting format will be explained to the auditors.

The ultimate aim should be to enable us to form our conclusions on the adequacy of the systems and controls in place, and to frame recommendations for improvement, as appropriate.

TIMING

The Internal Audit at sight will be implemented in the period of 1 - 10 September 2020.

REPORTING

As the audit progresses, all related topics and their findings will be discussed with the Country Director, Country Finance Manager, the Internal Audit Team and respective staff of the CO or Asia Regional Hub. Any significant points arising will be discussed with management and internal audit immediately.

At the completion of the audit, the document presenting Internal Audit findings and recommendations including responsibilities and deadlines for implementation will be finalised and signed by the auditee and the auditors.

In addition, the audit team will hold a debrief meeting with the Country Director, the Finance and Programmes Managers and the Internal Audit Manager before finalising the IA report.

The final report will be presented to the Country Director Pakistan and the Internal Audit Unit.