Request For Afghanistan Microfinance Association (AMA)
Annual External Audit for FY-2024
The Afghanistan Microfinance Association (AMA) is the national network of development finance Institutions in Afghanistan. AMA aims to promote, support, strengthen, and provide appropriate support to institutions involved in the developmental finance sector in Afghanistan through effective lobbying and advocacy on behalf of the sector, knowledge management, sector coordination & networking, and capacity building. AMA was established in 2005 by the Microfinance program stakeholders.
AMA was registered with the Ministry of Justice in 2007. Since inception, AMA has received technical and financial supports from MISFA and it is now considered a reliable source of information and a coordinator of the microfinance sector in Afghanistan.
In 2009, AMA enrolled as a member of the South Asian Microfinance Entrepreneur Network (SAMN), a regional microfinance network, and is also one of the founding members of (SAMN). Currently, AMA has eight members: The First Microfinance Bank (FMFB) Afghanistan, Aga Khan Foundation (AKF), Ghazanfar Bank, OXUS-A, Mutahid-MFI, Aurum Afghanistan MFI, Momin Afghan MFI, and Shahy Khazana MFI.
AMA operates a centralized accounting system in its office in Kabul, overseen by Finance Manager, with support from the Executive Director.The finance department bears the responsibility for the organization’s financial management, encompassing tasks such as data entry and financial reporting to donors/management as well as furnishing financial information to various stakeholders. Since 2011, AMA has utilized QuickBooks accounting software for its financial data recording and reporting.
The Financial year for auditing purpose runs twelve months from January 01, 2024 to December 31, 2024.
- OBJECTIVE:
AMA wishes to engage the services of external auditors of international reputation for conducting the annual audit of its financial statements and all financial records in accordance with the statutory requirements, International Financial Reporting Standards (IFRSs) guidelines, and International Standards on Auditing (ISA). AMA inviting Audit firms to submit both technical and financial proposals for this purpose. The objective of the audit is to enable the auditors to express an opinion on the financial position and financial performance of the AMA for the year ended December 31, 2024.
- SCOPE OF AUDIT:
The audit will be conducted in accordance with ISAs as published by the International Auditing and Assurance Standards Board of the International Federation of Accountants (IFAC).The audit will also be based on the instructions for the program accounting and will comply with AMA’s finance manual.
To ensure that audit objectives are met at the organizational/program/units/geographical level, special attention should be paid to the following:
- Assessment of the adequacy of internal controls over funds received by AMA and subsequently utilized.
- Assess AMA’s compliance with the terms of grant funding from all sources.
- Assessment of the adequacy of the system of internal controls over procurement of supplies, equipment, and services. Under this, verify whether AMA’s and National Procurement Authority (NPA) procedures and guidelines regarding procurement are followed.
- Verification of income and expenditure and the control of fixed assets management at all levels as specified hereunder (but not limited to):
- Check and/or verify the vouchers and other relevant documents.
- Evaluate the evidence i.e. vouchers and receipts, to determine their reliability and authenticity, and as a basis for the financial statements.
- Assess the usage of the assets by going through the various records.
- Ensure that AMA complies with local laws and regulations, e.g. withholding of any applicable taxes on deliveries from suppliers and that any withheld amount is remitted to the relevant authorities on time.
- Identify any expenditure variances by comparing the budget against the actual expenditure and providet an explanation.
- During the year, the physical count of assets should be carried out, including cash checks/ count, confirmation and reconciliation of bank accounts, direct confirmation of selected accounts receivables and observation and verification of physical inventories and fixed assets. This includes reviewing the adequacy of fixed assests control procedures. Examine the accounting records, including a detailed examination of vouchers will be part of the audit. Ensure that the financial records maintained in Quick Books software are recorded accurately and up-todate.
- Audit of AMA’s payroll system to ensure that recruitment has been done in compliance with NTA guidelines and AMA HR policy, that salaries paid to employees are according to the NTA grade and step, that it aligns with staff attendance, that the payroll is tax- compliant, and that the relevant statutory deductions are made from the staff salaries and remitted to the relevant authorities on time.
- Questionable or Ineligible Expenditure: If the auditor identifies any expenditure that involves; i) a purpose other than that of the project; ii) non-compliance with legal agreements; iii) non-compliance with applicable government regulations; and, iv) procurement in violation of applicable guidelines, it should be separately reported as questionable or ineligible expenditure in the management letter.
- Project FM arrangements: The auditor shall review whether project financial management arrangements are in line with those defined in the Project Appraisal Document (PAD) or Emergency Project Paper (EPP). (If applicable).
- Reconciliation with the Bank’s record: The auditor should verify that receipts from the Bank as shown in the financial statements correspond with the Bank’s disbursement record and that the receipts include direct payment by the Bank.
- Review of Interim Financial Reporting (IFR): The auditor shall review the process of preparation of the project’s component IFRs, reconcile the quarterly IFRs submitted to the donors with the accounting records and review the supporting documentation underlying the IFRs. The figures reported in the IFRs shall reconcile with the Annual Financial Statements (AFS) and accounting records.
IV. REPORTING:
The annual audit should begin as soon as possible after the contract is signed. Draft audit reports, along with financial statements should be submitted to AMA for its review and comments within ten days of completion of the audit executions/detailed examination. Final audit reports, along with the management letter shall be issued within 5 days after the receipt of comments from AMA. the final audit report should be submitted to AMA within one month of starting the audit.
The auditor’s report shall include a reference to the financial reporting framework according to which the AMA/Project’s financial statements are prepared. The opinion will include a reference to compliance with the terms of legal and financing agreements. The auditor's opinion will include reference to the application of funds for the purpose intended in the financing agreement.
The head of the field audit office will sign the auditor’s report, which will comply with the requirements of ISSAI 1700 “The Independent Auditor's Report on General Purpose Financial Statements”. The auditor’s report will include the following elements:
- A title
- An addressee
- An introductory paragraph that identifies the financial statements audited
- A description of the responsibility of management for the preparation of the financial statements
- A description of the auditor’s responsibility to express an opinion on the financial statements and the scope of the audit, that includes, a reference to International Standards on Auditing and the law or regulation and a description of an audit in accordance with those standards.
- An opinion paragraph containing an expression of opinion on the financial statements and a reference to the applicable financial reporting framework used to prepare the financial statements, as well as the application of funds for the purpose intended in the financing agreement
- The auditor’s signature
- The date of the auditor’s report
- The auditor’s address.
The auditor will issue a Management Letter that is a report on anorganization’s internal controls and operating procedures and their effectiveness. It is based on the auditor’s reviews during the normal course of an audit. The management letter will include:
- Summary of outstanding audit observations
- Follow-up of previous years outstanding audit observations
- Ineligible expenditure (if any)
- Current year’s audit observations
V. PROVISION OF INFORMATION BY AMA:
AMA shall make available all necessary financial documents to the auditors for the purpose of audit.
VI. DELIVERABLES:
The company will be responsible for the following deliverables:
- Methodology, including work plan outlining timeframe for completion of the assignment
- Share the audit findings with the AMA, with proper recommendations
- Draft audit report for review by AMA management
- Audit opinion on AMA’s overall financial statements of the year 2024
- Final Audit Report
- Management letter in which the auditor will;
- Give comments and observations on the accounting records, systems, and controls that were examined during the course of the audit;
- Give comments on Income and Expenditure recognition;
- Identify specific deficiencies and areas of weakness in systems and controls and make a recommendation for their improvement;
- Report on the lack of compliance of each financial covenant in the relevant financing agreement;
- Communicate matters that have come to their attention during the audit which might have a significant impact on the operations of the organization; and
- Include management's comments in the final management letter.
VII. LOCATION AND TIMEFRAME OF THE AUDIT
The audit will be carried at AMA office in Kabul Afghanistan. The audit assignment is expected to commence not later than one week after signing the contract and be completed by May 31, 2025.
VIII. TEAM COMPOSITION AND REQUIRED QUALIFICATIONS
The Audit firm is expected to deploy adequate staff with appropriate professional qualifications and suitable experience in undertaking this audit assigngment especially for member-based institutions in the development finance sector.
Shortlisting Criteria:
- Similar experience in External Auditing with Reputable organizations.
- Experience in auditing services within the financial sector.
- Excellent technical skills to ensure high-quality deliverable.
- Local firms/companies must be registered with Afghanistan government.
Submission of proposal
- The proposal must be sent through e-mail ( finance@ama.org.af; ed@ama.org.af No later than April 20, 2025, at 14:00 Hours (Kabul local time).
- For further information you can contact at the following address, by email or in person during office hours (08:00-16:00 Hours)
Mirwais Waak
Admin and Finance Manager
Afghanistan Microfinance Association (AMA)
House no 42, Street 3, Taimani Project, District 4, Kabul- Afghanistan
Phone Number: +93794999915
E-mail: finance@ama.org.af, mirwais.waak@ama.org.af
Web site: www.ama.org.af