Final SOL 72030620Q00002 (Signed).pdf

72030620Q00002

3 | P a g e

SECTION B SERVICES AND PRICES/COSTS

B.1 AUTHORITY

This Order is entered into pursuant to the Federal Acquisition Regulation (FAR) Part 8.4

B.2 PURPOSE

The purpose of this Task Order is to provide financial audit services as described in detail in Section C for the financial audit of costs incurred for Afghanistan including a review of compliance with vetting procedures for USAID/Afghanistan. The estimated amount to be audited is specified for each Group under Section C.

B.3 CONTRACT TYPE

This is a firm fixed price (FFP) type task order with reimbursable travel and per diem.

B.4 FIRM FIXED PRICE

This is a Firm Fixed-Price order for a Six (6) months Base Period. The Contractor must perform services for the Firm Fixed Price proposed, regardless of the amount of labor days required to complete the scope of work and deliverables.

FFP for Period of Performance (Six (6) months base period $(TBD) Reimbursable Travel $90,000.00 Total $(TBD)

B.5 OBLIGATED AMOUNT

Within the firm fixed price specified in paragraph B.3.above, the amount currently obligated and available for payment to the Contractor for performance hereunder is $(TBD). The amount obligated for travel is $(TBD). The Total Obligated Amount is $(TBD). The Contractor shall not exceed the aforesaid obligated amounts.

B.6 PAYMENT SCHEDULE

Payment will be made in accordance with FAR 52.232-32 Performance-Based Payment and will be made as the work proceeds based on estimates of work accomplished as set forth in the table below and in accordance with standards outlined in Section E – Review Checklist.

Deliverable Description Payment Amount

#1 Approved Audit Work Plan and Milestone Plan

20% $[TBD]

#2 Approved draft final (# of reports TBD)

30% $[TBD]

4 | P a g e

Audit Reports

#3 Approved Final (# of reports TBD) Audit Reports

30% $[TBD]

#4 Final (# of reports TBD) Audit Report Accepted by OIG

20% $[TBD]

Total Amount 100% $[TBD]

B.7 OTHER DIRECT COSTS –TRAVEL

a) Local travel, commuting costs or the relocation of Contractor personnel from other geographic areas for the purpose of staffing a project are not subject to Government reimbursement. The Government will not pay charges for travel to and from the Contractor's home to a Government office or offices or to/from one company or subcontractor's building to another. Travel for technical personnel on approved STTA and LTTA to missions is reimbursable.

b) All international travel shall be in compliance with the provisions of the Federal Travel

Regulations (FTR) 301.10.121, Federal Acquisition Regulation (FAR) Subpart 31.205-46 and USAID Travel Policy. The Federal Travel Regulations and current per diem rates can be accessed at: http://www.gsa.gov/ftr.

c) No profit or fee will be applied to Travel, in accordance with FAR 16.601.

[END OF SECTION B]

[[This section is intentionally left blank]

5 | P a g e

SECTION C – STATEMENTOF WORK

C.1 BACKGROUND

The U. S. Agency for International Development (USAID) Mission in Afghanistan is seeking highly qualified audit firms to conduct financial and closeout audit services, including a review of compliance with vetting procedures, on various projects implemented through 26 awards. The audit shall ensure that USAID funds are properly accounted for; used for their intended purposes, and in compliance with applicable regulations, policies and procedures. This statement of work covers the following implementing partners (Recipients and Contractors) and awards divided into five (5) groups (Group A-E) as follows: (See next pages and Attachment J.4).

C.2 TITLE

AUDIT MANAGEMENT PLAN (AMP) 2020.

The audits are either Financial Audits or Close-out Audit of Costs Incurred in Afghanistan of the USAID Resources Managed by the implementing partners under the respective awards specified in each of the Groups A-E (See next pages and Attachment J.4). The actual implementing partners and their respective awards will be specified for each Task Order at the time of award.

Group A - Awards Information:

1. AECOM INTERNATIONAL DEVELOPMENT INC, under

- Award number 306-AID-306-C-17-00001, Strengthening Watershed and Irrigation

Management (SWIM), for the period from 10/01/2019 to 09/30/2020; and

- Award number 72030619C00003, Afghan Urban Water and Sanitation Activity (AUWS) for the period 3/10/2019 to 9/30/2019

2. AUAF, under award number 306-A-13-00004, Support to the American University of

Afghanistan (AUAF), for the period from 7/1/2019 to 5/31/2020

3. Creative Associates International, under award number 306-AID-306-TO-16-00003, Afghan Children Read (ACR), for the period from 10/1/2018 to 9/30/2019

4. FHI360, under

- Award number 72030618CA00006, The Goldozi Project, for the period from 10/01/2019 to 09/30/2020; and Award number 306-AID-306-C-16-00007, Initiative for Hygiene, Sanitation, and Nutrition (IHSAN) for the period 10/1/2019 to 9/30/2020

Group B - Awards Information:

1. CONSORTIUM FOR ELICTIONS AND POLITICAL PROCESS (CEPPS), under award number 72030618LA00004, Strengthening Civic Engagement in Elections in Afghanistan Activity (SCEEA), for the period from 1/1/2019 to 9/30/2019

2. CHECCHI AND COMPANY CONSULTING, under award number 306-AID-306- TO-16-00007, Assistance for the Development of Afghan Legal Access and Transparency (ADALAT) for the period from 7/1/2019 to 6/30/2020

3. CHEMONICS INTERNATIONAL INC., under award number 306-AID-306-C-17- 00005, Capacity Building Activity at the Ministry of Education for the period from

6 | P a g e

1/1/2019 to 12/31/2019; and Award number 306-AID-306-TO-15-00044, Promote - Component 3: Women in Government for the period from 1/1/2019 to 12/31/2019

Group C - Awards Information:

1. DEVELOPMNET ALTERNATIVES INC., under

- Award number 72030618C00011, Afghanistan Value Chains - Livestock, for the period from 12/1/2018 to 11/30/2019; and

- Award number 306-AID-306-BC-15-00005, ACE II (Agriculture Credit Enhancement II) for the period from 12/1/2018 to 6/30/2019; and

- Award number 306-AID-306-C-14-00002, Regional Agriculture Development Program

(RADP North) for the period from 12/1/2018 to 5/20/2019; and

- Award number 306-AID-306-C-16-00011, Regional Agriculture Development Program-

East (RADP-E) for the period from 12/1/2018 to 11/30/2019; and

- Award number 306-AID-306-TO-15-00073, Promote - Musharikat for the period from

12/1/2018 to 11/30/2019; and Award number 306-AID-306-TO-15-00062, Women in Economy (WIE) for the period from 12/1/2018 to 11/30/2019

Group D - Awards Information:

1. INTERNATIONAL FINANCE CORPORATION, under award number 306-AID- EGEE-G-15-00001, Afghanistan Investment Climate Reform Program (AICR), for the period from 3/27/2015 to 3/26/2020

2. INTERNEWS NETWORK, INC, under award number 306-A-17-00001, Rasana - (Media), for the period from 1/1/2019 to 3/28/2020

3. INTERNATIONAL ORGANIZATION FOR MIGRATION (IOM), under award number 306-A-00-08-00512, Support for the USAID Construction of Health and Education Facilities Program, for the period from 1/1/2015 to 6/30/2016

4. MANAGEMENT SYSTEMS INTERNATIONAL (MSI), under award number 72030619C00004, Afghanistan Monitoring, Evaluation and Learning Activity (AMELA), for the period from 3/13/2019 to 6/30/2020

5. PALLADIUM INTERNATIONAL LLC, under award number 306-AID-306-C-15- 00009, Health Sector Resiliency (HSR), for the period from 7/1/2019 to 9/27/2020

Group E - Awards Information:

1. THE ASIA FOUNDATION (TAF), under

- Award number 306-G-12-00003, Survey of the Afghanistan People, for the period from

10/1/2018 to 9/30/2019; and

- Award number 306-AID-306-A-14-00008, Strengthening Education in Afghanistan (SEA

II), for the period from 10/1/2018 to 9/30/2019; and

- Award number 306-AID-306-C-17-00014, Financial and Business Management Activity, for the period from 10/1/2018 to 3/4/2020

2. TETRA TECH INC, under award number 306-AID-306-C-16-00010, Engineering

Support Program, for the period from 10/1/2019 to 1/22/2020

3. VIRGINIA POLYTECHNIC INSTITUTE, under award number 72030618LA00002, Catalyzing Afghan Agricultural Innovation, for the period from 5/28/2018 to 12/31/2019

7 | P a g e

Implementing Partner Award Number Program Name Estimated

Audit Amount

Cost Share

Audit Type

Records Location

AECOM

INTERNATIONAL

DEVELOPMENT INC

306-AID-306-C-17-

00001

Strengthening Watershed and Irrigation

Management (SWIM) $1,849,362 $0 Financial

AECOM

INTERNATIONAL

DEVELOPMENT INC

306-72030619C00003

Afghan Urban Water and Sanitation Activity

(AUWS)

$1,315,362 $0 Financial

AUAF - American University of Afghanistan

306-A-13-00004 Support to the American University of Afghanistan

(AUAF)

$7,112,253

Will be provided with

Questions Closeout Kabul

CAII - CREATIVE

ASSOCIATES

INTERNATIONAL,

INC.

306-AID-306-TO-16-

00003

Afghan Children Read

(ACR)

$15,627,732 $0 Financial Kabul

FHI 360

306-

72030618CA00006

The Goldozi Project $345,233

Will be provided with

Questions Financial

FHI 360

306-AID-306-C-16-

00007

Initiative for Hygiene, Sanitation, and Nutrition

(IHSAN)

$2,802,916 $0 Financial

$29,052,858

Group A

Period to be Audited

10/1/2019 to 9/30/2020

DT Global US HQ office in Washington, DC, USA

FHI 360 (HQ)

Durham, NC 2 &

Connecticut Avenue, NW

10/1/2019 to 9/30/2020

3/10/2019 to 9/30/2019

7/1/2019 to 5/31/2020

10/1/2018 to 9/30/2019

10/1/2019 to 9/30/2020

8 | P a g e

Implementing Partner

Award Number Program Name Estimated

Audit Amount

Cost Share Audit Type

Records Location

CEPPS-

Consortium For

Elections and Political Proce

306-

72030618LA00004

Strengthening Civic Engagement in Elections in

Afghanistan Activity

(SCEEA)

$3,683,912 Will be provided with Questions Financial Kabul

Checchi and Company

Consulting, Inc

(CCCI)

306-AID-306-TO-16-

00007

Assistance for the Development of Afghan

Legal Access and Transparency (ADALAT)

$9,501,146 $0 Financial Checchi's HQ Washigton D.C

Chemonics International Inc.

306-AID-306-C-17-

00005

Capacity Building Activity at the Ministry of

Education $5,758,773 $0 Financial

Chemonics International Inc.

306-AID-306-TO-15-

00044

Promote - Component 3:

Women in Government

$6,524,693 $0 Financial

$25,468,524

1/1/2019 to 12/31/2019

Kabul and Washington D.C

Group B

Period to be Audited

1/1/2019 to 9/30/2019

7/1/2019 to 6/30/2020

1/1/2019 to 12/31/2019

9 | P a g e

Audit Amount

Cost Share Audit Type

Records Location

DAI-Development Alternatives Inc.

306-72030618C00011

Afghanistan Value Chains - Livestock

$7,322,136 $0 Financial

DAI-Development Alternatives Inc.

306-AID-306-BC-15-

00005

ACE II (Agriculture Credit Enhancement II)

$2,794,843 $0 Closeout

DAI-Development Alternatives Inc. 306-AID-306-C-14- 00002

Regional Agriculture Development Program

(RADP North) $11,802,390 $0 Closeout

DAI-Development Alternatives Inc. 306-AID-306-C-16- 00011

RADP East(Regional Agriculture Development

Program- East) $4,649,561 $0 Financial

DAI-Development Alternatives Inc.

306-AID-306-TO-15-

00073

Promote - Musharikat $5,072,139 $0 Financial

DAI-Development Alternatives Inc.

306-AID-306-TO-15-

00062

Women in Economy

(WIE)

$14,805,743 $0 Financial

$46,446,812

12/1/2018 to 11/30/2019

12/1/2018 to 11/30/2019

12/1/2018 to 11/30/2019

Kabul

Group C

Period to be Audited

12/1/2018 to 11/30/2019

12/1/2018 to 6/30/2019

12/1/2018 to 5/20/2019

10 | P a g e

Audit Amount

Cost Share

Audit Type

Records Location

INTERNATIONAL FINANCE CORPORATION

306-AID-EGEE-G-15-

00001

Afghanistan Investment Climate Reform Program

(AICR)

$6,131,266 $0 Closeout Kabul

INTERNEWS NETWORK, INC 306-A-17-00001 Rasana - (Media) $3,059,835

Will be provided with Questions

Closeout HQ - California

IOM - INTERNATIONAL ORGANIZATION

FOR MIGRATION

306-A-00-08-00512

Support for the USAID Construction of Health and Education Facilities

Progr

$1,074,002

Will be provided with Questions

Closeout

MSI (Management Systems International Inc.) 306-72030619C00004

Afghanistan Monitoring, Evaluation and Learning

Activity (AMELA) $1,496,097 $0 Financial

MSI’s headquarters in Arlington, VA

PALLADIUM INTERNATIONAL, LLC

306-AID-306-C-15-

00009 Health Sector Resiliency

(HSR)

$2,576,669 $0 Closeout

Kabul and Washington D.C

$14,337,869

7/1/2019 to 9/27/2020

Group D

Period to be Audited

3/27/2015 to 3/26/2020

1/1/2019 to 3/28/2020

1/1/2015 to 6/30/2016

3/13/2019 to 6/30/2020

11 | P a g e

Implementing Partner

Award Number Program Name Estimated

Audit Amount

Cost Share

Audit Type

Records Location

TAF-The Asia Foundation

306-G-12-00003 Survey of the Afghanistan

People $1,480,066 $0 Financial

TAF-The Asia Foundation

306-AID-306-A-14-

00008

Strengthening Education in Afghanistan (SEA II)

$9,701,651

Will be provided with Questions

Financial

TAF-The Asia Foundation

306-AID-306-C-17-

00014

Financial and Business Management Activity

$1,719,042 $0 Closeout

Tetra Tech, Inc.

306-AID-306-C-16-

00010 Engineering Support

Program $2,511,272 $0 Closeout

Kabul & Marlborough, MA 01752

VIRGINIA

POLYTECHNIC

INSTITUTE

306-

72030618LA00002

Catalyzing Afghan Agricultural Innovation

$1,960,088

Will be provided with Questions

Financial documents are loaded on a google drive.

The University uses Banner System to record our financial transactions.

$17,372,119

5/28/2018 to 12/31/2019

Kabul and Washington

D.C

Group E

Period to be Audited

10/1/2018 to 9/30/2019

10/1/2018 to 9/30/2019

10/1/2018 to 3/4/2020

10/1/2019 to 1/22/2020

12 | P a g e

C.3 OBJECTIVES

The financial audit objectives must include the following:

A. Audit of USAID Funds

Auditors must design steps and procedures in accordance with GAGAS. A financial audit of the funds provided by USAID must be performed in accordance with Government Auditing Standards, or other approved standards where applicable, and accordingly includes such tests of the accounting records as deemed necessary under the circumstances. The specific objectives of the audit of the USAID funds are to:

● Express an opinion on whether the fund accountability statement for the USAID-funded programs presents fairly, in all material respects, revenues received, costs incurred, and commodities and technical assistance directly procured by USAID for the period audited in conformity with the terms of the agreements and generally accepted accounting principles or other comprehensive basis of accounting (including the cash receipts and disbursements basis and modifications of the cash basis, if appropriate).

● Evaluate and obtain a sufficient understanding of the contractor's internal controls related to the USAID-funded programs, assess control risk, and identify reportable conditions, including material internal control weaknesses. This evaluation must include the internal controls related to required cost-sharing contributions.

● Perform tests to determine whether the contractor complied, in all material respects, with agreement terms (including cost-sharing/matching contributions, if applicable) and applicable laws and regulations related to USAID-funded programs. All material instances of noncompliance and all illegal acts that have occurred or are likely to have occurred must be identified. Such tests must include the compliance requirements related to any required cost-sharing contributions.

In addition, if applicable:

● Review cost-sharing/matching contributions to determine whether cost-sharing/counterpart contributions were provided and accounted for by the implementing partner in accordance with the terms of the agreements. The auditors will review the cost-sharing/counterpart table to determine if the computation is fairly presented in accordance with the basis of accounting used by the implementing partner to prepare the schedule. The auditors should question all cost-sharing/counterpart contributions that are either ineligible or unsupported costs.

● For a non U.S. Organization, perform an audit of the indirect cost rate(s) if the contractor has been authorized to charge indirect costs to USAID using provisional rates. If so, the fund accountability statement should be reconciled to the USAID funds included in the general purpose income statement by a note to the fund accountability statement. If the contractor does not have a USAID authorized indirect cost rate, this fact must be disclosed in the report.

13 | P a g e

● For a non U.S. Organization, if the recipient has been authorized to charge provisional indirect cost rate, then perform a financial audit of the recipient’s organization-wide general-purpose financial statements.

● The audit of the general-purpose financial statements must be performed in accordance with GAGAS. The objective of this audit is to express an opinion on whether the general-purpose financial statements present fairly, in all material respects, the results of its operations for the year then ended, in conformity with generally accepted accounting principles.

● Determine if the contractor has taken adequate corrective action on prior audit report recommendations.

Auditors must design steps and procedures in accordance with Government Auditing Standards, Chapter 4, to provide reasonable assurance of detecting situations or transactions in which fraud or illegal acts have occurred or are likely to have occurred. If such evidence exists, the auditors must immediately contact the appropriate USAID Mission and the Office of Inspector General’s cognizant regional office and must exercise due professional judgment in pursuing indications of possible fraud and illegal acts so as not to interfere with potential future investigations or legal proceedings.

B. Review of the Compliance with Vetting and Sub-Awards and Procurement

Auditor is required to perform a review of Auditee’s compliance with vetting procedures. The Auditor must review the following documents before commencing this review:

1. The United States prohibition against support for terrorism, as stipulated in Executive Order 13224 and as required in USAID/Afghanistan’s Mission Order (MO) 201.03 entitled “Terrorist Financing Risk Assessment” effective October, 2009; as supplemented by MO 201.06 (National Security Screening (Non-US Party Vetting), dated June 7, 2015;

and award provision no. A.16.12, Vetting;

2. IP Letter issued by the Office of Acquisition and Assistance (OAA) #OAA-IP-2013-010 dated 11/25/2013, entitled “Consolidation of Vetting Requests per MO 201.05” and IPs Letter #OAA-IP-2013-007 dated 7/23/2013, entitled “Updated MO 201.05 – National Security Screening (Non-US Party Vetting)”; Anti-Terrorism Certification (ATC) - In order to ensure compliance with E.O. 13221 and related requirements, all contractors are expected to conduct their own review of Non-US Parties competing for Sub-Awards.

The audit must conduct focused review of Partner’s files including sub-award documentation to verify that it complies with all vetting sub-awards compliance related procedures including Vetting Special Provisions, and Instructions to contractors issued by the Office of Acquisition and Assistance (OAA) and Anti-Terrorism clauses (ATC). The auditor will perform the following categorical reviews for each sub award:

a. Review and determine if awardee has complied with the vetting requirements outlined in Mission Order No. 201.03 (and its supplement(s) entitled, 14 | P a g e

‘National Security Screening (Non-US Party Vetting)’. Review and determine if internal procedures were established by the awardee to ensure compliance with Mission Order No. 201.03 as supplemented.

b. Check if contractor has implemented and followed procedures designed to ensure that funds are not being diverted from their development purpose outlined in the contract and are not vulnerable to corruption, extortion or otherwise benefiting malign groups.

c. For sub-awards over $25,000 or that cumulatively total more than $25,000 over any 12 month period: Review IP’s procurement files and obtain a complete list of contracts, subcontracts, grants, sub-grants, vendors. Check that the full name of the subcontractor is accurately written in English if the name has been translated. Compare the full name of the subcontractor as it appears in the sub-award against any approval documents such as vetting.

Check that sub-contractors are properly licensed with GIRoA. Send the list of the sub-awardees to the USAID’s Vetting Unit to cross-check against its list of vetting approvals.

d. Check the instrument of all sub-awards with a value exceeding $25,000: What is the sub-award type? (Contract, Grant, Memorandum of Understanding (MOU) or other). Were proper procedures/provisions/rules followed in contract with the type of instrument used?

e. Check the start date of all sub-awards with a value exceeding $25,000: When was the sub-award signed? Was vetting approval received prior to award?

Was consent to sub-award approval, if required, received prior to award?

f. Check the end date of all sub-awards with a value exceeding $25,000: When did the sub-award end? Were there any amendments? Have these been reported if required?

g. Check that the prime contractor electronically transfers all project funds to sub-contractors. If they do not, does the financial infrastructure exist for them to do so?

h. Check that sub-contractors are limited to two tiers below the prime contractor in accordance with any applicable requirements.

i. Check that all required information has been properly input into the FFATA Sub award Reporting System (FSRS) if sub-award is over $25,000.

j. Ascertain whether the prime contractor ensured that periodic audits of its sub-contractors were performed to ensure accountability for USAID funds.

k. Review all required certifications, including anti-terrorism mandatory provisions, were obtained and included in the sub-award document.

15 | P a g e

l. Check that contractor has a system in place to provide training to sub-contractors on financial controls, reporting requirements and business ethics and monitors sub-contractors on their performance in these areas.

m. Obtain, review, and provide a recommendation of the adequacy, efficiency, and internal controls of the IP’s procedures and processes with regard to the implementation of the MO 201.06.

n. Review and determine if IP’s and sub-award/subcontract key individuals requiring vetting, as defined in MO 201.06, were appropriately submitted for vetting in advance of contract award or upon reaching $25,000 in a one year period.

o. Verify compliance with Appendix A section 6 of MO 201.06:

i. Determine if new vetting was conducted for awards that exceed one year or were modified to increase in duration to exceed one year

ii. Determine if new vetting was conducted in instances where there were changes in the awardee’s key individuals;

iii. Determine if new vetting was conducted for awards that had substantial changes (i.e., location, award amount, time frame);

p. Check that a written code of conduct has been created which is sufficient to ensure due diligence is followed to prevent and detect criminal conduct, conflict of interest and to otherwise promote an organizational culture that promotes ethical conduct and a commitment to compliance with the law.

q. For any instance of non-compliance with USAID’s vetting policies and procedures, the auditee must as applicable report the following:

i. Name of auditee, type of award, type of service received, amount of the award;

ii. The circumstances behind the non-compliance;

iii. Internal control deficiency or non-compliance with internal control policies and procedures;

iv. Provide recommendations to address the internal control deficiency or non-compliance with internal control policies and procedures.

16 | P a g e

C.4 ILLUSTRATIVE FINANCIAL REVIEW TASKS

AUDIT SCOPE

The financial audit must include a specific audit of all the recipient’s USAID-funded programs.

The objective of this engagement is to conduct a financial audit based on the fiscal year end or closeout audit of costs incurred in Afghanistan including a review of the compliance with vetting procedures and National Technical Assistance guidelines by the implementing partner(s) listed under section C.1 in accordance with the specifications outlined in the statement of work and in accordance with:

USAID Financial Audit Guide (hereinafter referred to as the Guide);

U.S. Generally Accepted Government Auditing Standards (GAGAS or the "Yellow Book"); hereinafter referred to as GAGAS, issued by the Comptroller General of the United States General Accountability Office; and , as applicable;

International Standards on Auditing issued by the International Auditing and Assurance Standards Board (IAASB) of the International Federation of Accountants (IFAC), in conjunction with GAGAS; and

The International Standards of Supreme Audit Institutions (ISSAIs) issued by the International Organization of Supreme Audit Institutions (INTOSAI) for public-sector audits, in conjunction with GAGAS.

The auditor must use the following steps as the basis for preparing audit programs. They are not all-inclusive or restrictive in nature and do not relieve the auditor from exercising due professional care and judgment. The steps must be modified to fit local conditions and specific program design, implementation procedures, and agreement provisions which may vary from program to program. Any limitations in the scope of work must be communicated as soon as possible to the USAID cognizant COR and Contracting Officer.

A. Pre-Audit Document Review Following is a list of documents applicable to different USAID programs. The auditor must review the applicable documents considered necessary to perform the audit:

1. The awards between USAID and the auditees.

2. The sub-awards between the auditees and other implementing entities, as applicable.

3. Contracts and subcontracts with third parties, if any.

4. The budgets, implementation letters, and written procedures approved by USAID.

5. USAID Automated Directives System Chapter 636 – “Program Funded Advances”.

6. 2 CFR 200 Subpart F on audit and 2 CFR 700 on Cost Principles.

7. Federal Acquisition Regulation (FAR), Part 31, Contract Cost Principles and Procedures.

8. USAID Acquisition Regulation (AIDAR), which supplements the FAR.

17 | P a g e

9. Mandatory Standard Provisions for U.S. and Non-U.S. Non-governmental Grantees (USAID Automated Directives System, Chapter 303, Grants and Cooperative Agreements to Non- Government Organizations).

10. Standard Provisions Annex for Agreements with Foreign Governments (USAID Automated Directives System, Chapter 350, Grants to Foreign Governments).

11. All program financial and progress reports; and charts of accounts, organizational charts;

accounting systems descriptions; procurement policies and procedures; and receipt, warehousing and distribution procedures for materials, as necessary to successfully complete the required work.

12. Any previous audits, financial reviews, etc., that directly relate to the objectives of the audit.

B. Fund Accountability Statement The auditor must examine the fund accountability statement1 for USAID programs including the budgeted amounts by category and major items; the revenues received from USAID for the period covered by the audit; the costs reported by the auditee as incurred during that period; and the commodities and technical assistance directly procured by USAID for the auditee's use. The fund accountability statement must include all USAID funds identified by each specific program or award. The revenues received from USAID less the costs incurred, after considering any reconciling items, must reconcile with the balance of cash-on-hand or in bank accounts2. The fund accountability statement must not include cost-sharing/matching contributions provided by the auditee.

The audit firm may not prepare or assist the auditee in preparing the fund accountability statement when the same audit firm will then perform the audit. If a third party prepares or assists the auditee in preparing the fund accountability statement from the books and records maintained by the auditee, then the auditee must accept the responsibility for the statement’s accuracy before the audit commences.

The fund accountability statement must separately identify those revenues and costs applicable to each specific USAID award. The audit must evaluate program implementation actions and accomplishments to determine whether specific costs incurred are allowable, allocable, and reasonable under the award terms and applicable cost principles, and to identify areas where fraud and illegal acts have occurred or are likely to have occurred as a result of inadequate internal control. At a minimum, the auditors must:

1. Review direct and indirect costs billed to and reimbursed by USAID and costs incurred but pending reimbursement by USAID, identifying and quantifying any questioned costs. All costs that are not supported with adequate documentation or are not in accordance with the agreement terms must be reported as questioned. Questioned costs that are pending

1 A "fund accountability statement" is a financial statement that presents USAID auditee's revenues, costs incurred, cash balance of funds (after considering reconciling items), and commodities directly procured by USAID that were provided by USAID awards.

The opinion on the fund accountability statement must comply with Statement on Auditing Standard SAS No. 62 (AU623).

2 If the auditee does not receive any advances from USAID, i.e., it operates on a reimbursement basis, then the auditee will not hold any balances of USAID funds.

18 | P a g e reimbursement by USAID must be identified in the notes to the fund accountability statement as not reimbursed by USAID.

2. Questioned costs must be presented in the fund accountability statement in two separate categories. Ineligible costs that are explicitly questioned because they are unreasonable, prohibited by the awards or applicable laws and regulations, or not program related. In addition, if an awardee was required to place USAID funds in an interest-bearing account but did not, then the imputed interest that would have been earned is also classified as an ineligible cost. Unsupported costs are not supported with adequate documentation or did not have required prior approvals or authorizations. All questioned costs resulting from instances of noncompliance with award terms and applicable laws and regulations must be included as findings in the report on compliance. Also, the notes to the fund accountability statement must briefly describe the questioned costs and must be cross-referenced to any corresponding findings in the report on compliance.

3. Review general and program ledgers to determine whether costs incurred were properly recorded. Reconcile direct costs billed to, and reimbursed by, USAID to the program and general ledgers.

4. Review the procedures used to control the funds, including their channeling to contracted financial institutions or other implementing entities. Review the bank accounts and the controls on those bank accounts. Perform positive confirmation of balances, as necessary.

5. Determine whether advances of funds were justified with documentation, including reconciliations of funds advanced, disbursed, and available. The auditors must ensure that all funding received by the auditee from USAID was appropriately recorded in the auditee's accounting records and that those records were periodically reconciled with information provided by USAID.

6. Determine whether program income, if applicable, was added to funds used to further eligible project or program objectives, to finance the non-federal share of the project or program, or deducted from program costs, in accordance with USAID regulations, other implementing guidance, or the terms and conditions of the award.

7. Review procurement procedures to determine whether sound commercial practices including competition were used, reasonable prices were obtained, and adequate controls were in place over the qualities and quantities received.

8. Review direct salary charges to determine whether salary rates are reasonable for that position, in accordance with those approved by USAID when USAID approval is required, and supported by appropriate payroll records. Determine if overtime is charged to the program and whether it is allowable under the terms of the awards. Determine whether allowances and fringe benefits received by employees are in accordance with the awards and applicable laws and regulations. The auditors must question ineligible or unsupported salary charges in the fund accountability statement.

19 | P a g e

9. Review travel and transportation charges to determine whether they are adequately supported and approved, when required. Travel charges that are not supported with adequate documentation or not in accordance with awards and regulations must be questioned in the fund accountability statement.

10. Review commodities (e.g., supplies, materials, vehicles, equipment, food products, tools, etc.) procured by the auditee as well as those directly procured by USAID for the auditee's use. The auditors must determine whether commodities exist or were used for their intended purposes in accordance with the terms of the awards, and whether control procedures exist and have been placed in operation to adequately safeguard the commodities. As part of the procedures to determine if commodities were used for intended purposes, the auditors must perform end-use reviews for an appropriate sample of all commodities based on the control risk assessment of this statement of work). End-use reviews would normally include site visits to verify that commodities exist or were used for their intended purposes in accordance with the terms of the awards. When conducting end-use reviews, the auditors must ensure that commodities are marked in accordance with award requirements. The cost of all commodities whose existence or proper use in accordance with the terms of the awards cannot be verified must be questioned in the fund accountability statement. (The auditor should determine the cost of commodities based on supporting documentation available from the auditee or USAID, as appropriate).

11. Review technical assistance and services procured by the auditee. The auditors must determine whether technical assistance and services were used for their intended purposes in accordance with the terms of the awards. The cost of technical assistance and services not properly used in accordance with the terms of the awards must be questioned in the fund accountability statement.

If the technical assistance and services were contracted by the auditee from a non-U.S.firm, the auditors are still responsible for determining whether technical assistance and services were used for their intended purposes in accordance with the terms of the awards. However, the auditors are not responsible for performing additional audit steps for the costs incurred under the technical assistance and services awards, since either USAID or a cognizant U.S.

Government agency is responsible for contracting for audits of these costs.

12. For final close-out audits, review unliquidated advances to the auditee and pending reimbursements by USAID. Validate that the auditee has returned any excess cash to USAID. Also, ensure that all assets (inventories, fixed assets, commodities, etc.) procured with program funds were disposed of in accordance with the terms of the awards. The auditors should present, as an annex to the fund accountability statement, the balances and details of final inventories of nonexpendable property acquired under the awards. This inventory must indicate which items were titled to the U.S. Government and which were titled to other entities. These closeout audit procedures must be performed for any award that expires during the period audited.

20 | P a g e

The fund accountability statement must separately disclose the financial information (revenues, costs, etc.) for each award, and must identify the USAID missions/offices that provided funding for each award. Questioned costs, and internal control and compliance findings of any audits of sub-recipients must be reported in the auditee’s financial audit using the same treatment and procedures as the auditee’s own questioned costs and findings.

The auditors must generally express a single opinion on the fund accountability statement for each ward audited.

The fund accountability statement is the basic financial statement to be audited when indirect cost rates are not used. All amounts in the financial audit report must be stated in U.S. dollars.

The auditors should indicate the exchange rate(s) used in the notes to the fund accountability statement.

C. Compliance with the National Technical Assistance (NTA)

Perform a review of Auditees’ compliance with the National Technical Assistance (NTA) Salary Scale and Implementation Guideline. The Auditor must as applicable review the following documents before commencing this review:

(1) The Government of the Islamic Republic of Afghanistan’s (GIRoA) Ministry of Finance’s (MoF) “Self-Reliance through Mutual Accountability Framework (SMAF)” report and requisite annexes effective September 5, 2015.;

(2) Implementing Partner (IP) letter issued by the Office of Acquisition and Assistance (OAA) #OAA-IP-2019-001 dated March 10, 2019, which updates #OAA-IP-2016-001 dated 7/7/2016, entitled “National Technical Assistance Scale and Guidelines”, IPs Letter #OAA- IP-2016-001 dated 7/29/2016, IPs Letter #OAA-IP-2017-004 dated 8/17/2017, and any associated USAID Questions and Answers documentation;

(3) MoF’s National Technical Assistance Salary Scale and Implementation Guideline clarification notes 1 and 2 and,

(4) MoF Website hosted at http://www.budgetmof.gov.af/index.php/en/nta/about-nta/83-directorate-general-budget

The auditor must as applicable conduct a review of the auditee’s files, including hiring and salary documentation, to verify compliance with salary and hiring procedures, NTA-related provisions, USAID guidance and instructions, and GIRoA legal requirements.

The auditor must perform the following categorical reviews:

a. Review and determine if auditee has complied with the NTA hiring requirements outlined in the respective provisions, USAID/Afghanistan’s policy, and GIRoA rules and regulations;

b. Review and determine if internal procedures were established by the auditee to ensure compliance with NTA policies and guidelines;

21 | P a g e

c. Verify if auditee has implemented and followed the procedures designed to ensure that hiring, position classifications and salaries are in compliance with applicable guidelines and regulations;

d. Review and determine if adjustments to salaries for “embedded” staff were implemented as per the Mission and GIRoA guidelines;

e. Verify that internal employees assuming new roles after the issuance of guidance to partners were properly assigned salaries in compliance with NTA guidelines;

f. Verify that any exceptions to the policy were justified, documented and properly approved;

g. Verify that internal salary structure is consistent with the NTA classification system and any deviations are properly documented and have received prior approval.

h. For any instance of non-compliance with NTA policies and procedures, the Auditor must report the following:

1. Name of auditee, hiring mechanism, position title and description, salary amount and classification;

2. The circumstances behind the non-compliance;

3. Internal control deficiency or non-compliance with internal control policies and procedures;

4. Provide recommendations to address the internal control deficiency or non-compliance with internal control policies and procedures.

If red flags are identified, the auditor should select a larger sample of source documents for examination. As part of this examination, reference must be made back to the source of the document (for example, actual verification of source documents with the vendor).

D. Cost Sharing/Matching Contribution Schedule (If Applicable) USAID awards may require contributions by the auditee. USAID and awards may establish a life-of-project budget or an annual budget for cost sharing/matching contributions. In either case, the review consists principally of inquiries of auditee personnel and analytical procedures applied to financial data supporting the cost sharing/counterpart contributions Table.

The auditors may prepare or assist the auditee in preparing the cost sharing/matching contributions schedule from the books and records maintained by the auditee. The awardee must, however, accept responsibility for the schedule's accuracy before the review commences.

For an award with a life-of-project budget for cost-sharing/matching contributions, it is not possible to determine whether the contributions have been made as required until the award ends.

Nonetheless, USAID and the awardee need reliable information to monitor actual cost-sharing/matching contributions throughout the life of the award.

The auditors will review the cost sharing/matching contributions schedule to determine if the schedule is fairly presented in accordance with the basis of accounting used by the awardee to

22 | P a g e prepare the schedule. The auditors must question all cost-sharing/matching contributions that are either ineligible or unsupported costs. An ineligible cost is unreasonable, prohibited by the awards or applicable laws and regulations, or not program related. An unsupported cost lacks adequate documentation or does not have required prior approvals or authorizations. All questioned costs must be briefly described in the notes to the cost sharing/matching contributions. In addition, material questioned costs must be included as findings in the report on compliance.

Notes to the cost sharing/matching contributions schedule must be cross-referenced to the corresponding findings in the report on compliance. Also, significant deficiencies in internal control related to cost-sharing/matching contributions must be set forth as findings in the report on internal control.

In addition, for closeout audits the auditors will review the cost-sharing/matching contributions schedule to determine if the auditee provided such contributions in accordance with the terms of the award. If actual contributions were less than budgeted contributions, the shortfall will be identified in the appropriate column of the cost sharing/matching contributions schedule.

E. Internal Controls The auditors must review and evaluate the auditee's internal controls related to USAID programs to obtain a sufficient understanding of the design of relevant control policies and procedures and whether those policies and procedures have been placed in operation. The auditor's understanding of the internal controls must be documented in the audit documentation files.

Auditors must prepare the report required by the Guide (Appendix 2), identifying any significant deficiencies or material weaknesses in the design or operation of internal control. A material weakness is a deficiency, or combination of deficiencies, in internal controls, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or combination of deficiencies, in internal control that is less severe than a material weakness but that is important enough to merit attention by those charged with governance. Any significant deficiencies or material weaknesses must be set forth in the report as “findings”.

Any other matters related to internal controls – such as suggestions for improving operational or administrative efficiency, effectiveness, or control deficiencies that are not significant deficiencies or material weaknesses – may be reported in a separate management letter to the auditee and referred to in the report on internal control. A copy of the management letter should be provided to the USAID/Afghanistan along with the audit report.

The major internal control components to be studied and evaluated include, but are not limited to, the controls related to each revenue and expense account on the fund accountability statement. The auditors must:

1. Obtain an understanding of the design of the internal control related to USAID programs and determine whether they have been placed in operation.

2. Assess inherent risk, control risk, and determine the detection risk. Inherent risk is the susceptibility of an assertion, such as an account balance, to a misstatement that could be material, either individually or when aggregated with other misstatements, assuming that there are no related controls. Control risk is the risk that a misstatement that could occur in a

23 | P a g e relevant assertion and that could be material, either individually or when aggregated with other misstatements, will not be prevented or detected on a timely basis by the entity's internal control. Detection risk is the risk that the auditor will not detect a material misstatement that exists in an assertion. Detection risk is based upon the effectiveness of an auditing procedure and the auditor’s application of that procedure.

3. Summarize the risk assessments for each assertion in the audit documentation file. The risk assessments must consider the following broad categories under which each assertion should be classified: (a) existence or occurrence; (b) completeness; (c) rights and obligations; (d) valuation or allocation; and (e) presentation and disclosure. At a minimum, the audit documentation files must identify the name of the account or assertion, the account balance or the amount represented by the assertion, the assessed level of inherent risk (high, moderate, or low), the assessed level of control risk (high, moderate, or low), the combined risk (high, moderate, or low), and a description of the nature, extent, and timing of the tests performed based on the combined risk. These summary audit documentation files must be cross-indexed to the supporting audit documentation files that contain the detailed analysis of the fieldwork. If control risk is evaluated at less than the maximum level (high), then the basis for the auditor's conclusion must be documented in the audit documentation files.

4. Evaluate the control environment, the adequacy of the accounting systems, and control procedures. Emphasis must be placed on the policies and procedures that pertain to the auditee’s ability to record, process, summarize, and report financial data consistent with the assertions embodied in each account of the fund accountability statement. This evaluation must include, but not be limited to, the control systems for:

a. Ensuring that charges to the program are proper and supported;

b. Managing cash on hand and in bank accounts;

c. Procuring goods and services;

d. Managing inventory and receiving functions;

e. Managing personnel functions such as timekeeping, salaries, and benefits;

f. Managing and disposing of commodities (such as vehicles, equipment, and tools, etc.)

purchased either by the program or directly by USAID; and

g. Ensuring compliance with award terms and applicable laws and regulations that collectively have a material impact on the fund accountability statement. The results of this evaluation must be contained in the audit documentation section described in this Statement of Work and presented in the compliance report.

5. Evaluate internal control established to ensure compliance with cost sharing/matching contribution requirements, if applicable, including both provision and management of the contributions

24 | P a g e

6. Include in the study and evaluation other policies and procedures that may be relevant if they pertain to data the auditors use in applying auditing procedures. This may include, for example, policies and procedures that pertain to nonfinancial data that the auditor uses in analytical procedures.

F. Compliance with Agreement Terms and Applicable Laws and Regulations

In fulfilling the audit requirement to determine compliance with award terms and applicable laws and regulations related to USAID programs, the auditors must follow the reporting standards contained in GAGAS for reporting on compliance which incorporate the AICPA Professional Standards. The auditor's report on compliance must set forth as findings all material instances of noncompliance, defined as instances that could have a direct and material effect on the fund accountability statement, and/or the financial statements, as applicable. Nonmaterial instances of noncompliance must be included in a separate management letter to the auditee and referred to in the report on compliance. A copy of the management letter should be provided to the USAID/Afghanistan along with the audit report.

The auditor's report must include relevant information about identified or suspected fraud based on sufficient, appropriate evidence obtained that a fraud or illegal act either has occurred or is likely to have occurred. In reporting material fraud, illegal acts, and abuse or other noncompliance, the auditors must place their findings in proper perspective. In presenting material irregularities, illegal acts, or other noncompliance, auditors must follow the reporting standards contained in GAGAS.

If the auditors conclude that sufficient evidence of any known or likely fraud or illegal acts exists, regardless of whether material to the financial statements, they must contact the USAID/Afghanistan or OIG and exercise due professional care in pursuing indications of possible fraud and illegal acts to avoid interfering with potential future investigations or legal proceedings.

In planning and conducting the tests of compliance the auditors must:

1. Identify award terms, conditions, and pertinent laws and regulations and determine which of those, if not observed, could have a direct and material effect on the fund accountability statement. The auditors must:

a. List all standard and program-specific award terms and conditions that cumulatively, if not observed, could have a direct and material effect on the fund accountability statement;

b. Assess the inherent and control risk that material noncompliance could occur for each of the compliance requirements

c. Determine the nature, timing and extent of audit steps and procedures to test for errors, fraud, and illegal acts that provide reasonable assurance of detecting both intentional and unintentional instances of noncompliance with award terms and applicable laws and regulations…