Foundation Audit Protocol EO Metterdaad
- Implementing organisation - the foreign organisation implementing the project.
- Dutch Partner - Organisation in the Netherlands with which EO Metterdaad maintains adirect relationship, and that has ANBI ("Public Benefit Organisation") status
Donors entrust their money to EO Metterdaad for financing projects abroad. In the context of the Biblical mission of good stewardship, EO Metterdaad also has the duty of monitoring the use of funds, or to have this monitored.
Proceeds are to be spent on the specified project within predefined frameworks. Clear conditions shall be set, with agreements made about the target spending and reporting on the project. This accountability covers both the content of the supported project and its financial aspects.
When is an audit report required?
Prior to awarding grants above € 25.000, EO Metterdaad expects annual accounts from the implementing partner, in conjunction with an assessment by the Dutch partner of the financial administrative organisation.
EO Metterdaad requires a final memo drafted by the Dutch partner complementary to the implementing partner's reporting. This should include an assessment of the implementing organisation's accounting system. Projects with expenditures up to € 100,000 rely on the audit of the Dutch partner, projects with higher expenditures require auditing by an external auditor. In the independent audit report, the auditor shall give an assessment of the accuracy, completeness and lawfulness, financial or otherwise, of the financial statements. This audit should be conducted in accordance with the legislation of the country of implementation and the applicable audit standards. The minimum level of assurance for audit purposes is 95%.
Which auditor should perform the audit?
The auditor may be the accountant who audits the accounts of the local implementing organisation or the accountant who auditsthe accounts of the Dutch partner. The auditor shall, however, invariably be paid by, and receive audit instructions from, EO Metterdaad's Dutch partner. The project budget should include the fee for the audit in an appropriate manner.
The following issues are of importance with respect to auditing the financial statements:
- The conditions and agreements made when the contribution was initially granted.
- The local regulations and standards regarding audit procedures and, where possible, in accordance with the International Standard on Auditing (ISA).
- The financial statements should not include costs that are not attributable to the project.
- The financial statements should merely include costs incurred within the agreed period and that are borne by the implementing organisation. The project costs should be reflected in the financial statements.
- The implementing organisation shall declare all revenue, including the contribution from EO Metterdaad, that has been used to part-finance the project to which the contribution relates. EO Metterdaad's contribution shall be recorded separately in the accounts.
In the course of their work, the auditor shall pay specific attention to:
- Proper authorisation procedures within the implementing organisation, applying the "four eyes" principle and separation of functions at all times.
- Larger expenditures and purchases (> €1000). In doing so, he/she shall verify whether the executive partner's procurement procedures are being followed and pay particular attention to proper procedure in relation to cash purchases.
- In the case of several donors: verifying whether there has been absolute transparency in the accounting of each of the donors' contributions and what has been financed with them, paying particular attention that expenditure or purchases have not been accounted for twice.
- Attention to reliability of data underlying financial statements (completeness and accuracy);
- Verify procedures in relation to distribution of funds and/or goods: purchasing / procurement manual, stock movements of goods to distribution of goods, receipts.
- Expenditure is to be supported by documentation.
- The implementing organisation shall keep project records and documentation with justification for linking costs, related to staff or otherwise, to the project (such as timesheets). The data in the project administration and other documentation shall match the data contained in the financial records.
- Verification as to whether the content of the project's descriptive report is consistent with the financial statements.
- Verification of mandatory payments to government for payroll taxes, social security, etc. in accordance with the tax laws of the country where the implementing organisation is located.
Content of audit report and LoR
The auditor shall record the findings of the audit in an audit report. EO Metterdaad may carry out a review of the audit carried out. In addition, the auditor shall report separately - if and insofar as applicable - on the findings and conclusions in relation to each of the considerations specified under 'more specifically'.
The auditor should obtain a Letter of Representation (LoR) from project management stating that, to the best of their knowledge, the financial statement includes all transactions and receipts, is accurate and complete in all respects and that all project conditions, including those outside the scope of the audit, have been met. In the letter of representation, management should specifically confirm that they have met the conditions attached to financing, namely that they would not offer or accept anything of any kind by/to third parties should this be interpreted as an illegal or corrupt practice. Should the partner's management refuse to incorporate this statement in the letter, and/or refuses to issue this latter statement, the auditor shall make a note of this in his/her report of the findings
Hilversum, 31 January 2022