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TERMS OF REFERENCE: AUDITOR

1.0 BACKGROUND

The Caribbean Disaster Emergency Response Agency (CDERA), a regional inter-governmental Agency was established in September 1991 by an Agreement of theConference of Heads of Government of CARICOM to be responsible for disastermanagement. There are presently sixteen Participating States within CDERAsmembership.

1.1 StructureCDERA comprises:

i. The Coordinating Unit, which is the CDERA secretariat, headquartered inBarbados;

ii. 16 National Disaster Organisations, one in each of the ParticipatingStates;

iii. A Board of Directors, comprising the 16 National Disaster Coordinators(the head of each National Disaster Organisation). The Board serves in a

technical advisory capacity and makes recommendations to the Councilon the Agency's Work Programme, Administrative Budget, and any othermajor policy decisions required;

iv. A Council, which is the supreme policy making body. It comprised theHeads of Government of the Participating States and meets annually toreview the work of the Agency, approve its Work Programme andAdministrative Budget and make any other major policy decisionsrequired.

1.2 FunctionsCDERA's main function is to make an immediate and coordinated response toany disastrous event affecting any Participating State, once the state requestssuch assistance.

Other functions include:

i. Securing, collating and channeling to interested governmental and non-governmental organizations, comprehensive and reliable information ondisasters affecting the region;


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Terms of Reference: Auditor 2

ii. Mitigating or eliminating as far as possible, the consequences of disastersaffecting Participating States.

iii. Establishing and maintaining on a sustainable basis, adequate disasterresponse capabilities among Participating States; and,

iv. Mobilizing and coordinating disaster relief from governmental and non-governmental organizations for affected Participating States.

Additionally, in its efforts to provide more effective services to the region theAgency has refocused its attention on Comprehensive Disaster Management(CDM), a new thrust in disaster management for the 21st Century. Within thiscontext the focus is on all cycles of a hazard, involving all sectors of the society,and a concentrating on all hazards.

Towards fulfilling this new mandate CDERAs operation focus on:

i. Training for Disaster Management Personnel;ii. Development of model training courses and products includingaudiovisual aids;

iii. Institutional Strengthening for Disaster Management Organizations;iv. Development of model Disaster Legislation for adaptation and adoption

by Participating States;v. Development of model policies and guidelines for use in emergencies;vi. Contingency Planning;vii. Resource mobilization for strengthening disaster management

programmes in Participating States;viii. Improving Emergency Telecommunications and Warning Systems;ix. Development of Disaster Information and Communication Systems;x. Education and Public Awareness;xi. Establishment of a dynamic CDERA website for information dissemination.

1.3 Appointment of Auditor

The following list of Funds are to be included in the Audit.

I. OPERATING FUNDII. SUPPORT SERVICES FUND

III. EMERGENCY ASSISTANCE FUNDSIV. OTHER RESTRICTED FUNDS

The appointment of auditors for the Caribbean Disaster Emergency ResponseAgency will be subject to recommendation of the Coordinator and the approvalof the Board of Directors in accordance with CDERA Agreement (1991) Article 24paragraph 3.


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The appointment will be for a period of 2 years subject to an annual review. Theappointed Auditor will commence work following the receipt of a letter ofengagement from the Coordinator.

2.0 PURPOSE

Against this background CDERA is seeking the services of an Audit Firm to audit theAgencys annual financial statements for the 2005 -2006 accounting period.The basic responsibilities of the auditors are;

(a) Providing reasonable assurance that the financial statements audited by themgive a true and fair view, have been prepared in accordance with the relevantaccounting and other requirements and are in accordance with the authoritiesthat govern them;

(b) Identifying, assessing and examining risks to regularity, propriety and financialcontrol and report on significant weaknesses; and(c) Providing constructive advice that will help the Agency to improve governance,

including financial management, control and reporting.

3.0 OBJECTIVES

3.1 To collect and review policies, procedures, plans, and forms used withinCDERA CU in accordance with the International Financial ReportingStandards (IFRS);

3.2 To provide a Final Audit report and management letter

4.0 AUDIT GUIDELINES

4.1 Start Date

The Audit is expected to commence by mid November. Prior to the start of audit

work the auditors will be required to attend a Pre-Audit Meeting to be conductedby the Deputy Coordinator of CDERA with a view to obtaining an understandingof the scope of work and agreement on an audit schedule. Further, uponcompletion of the draft audit report and management letter, the auditor will berequired to meet with the Deputy Coordinator to debrief him on the majorfindings from the audit and the recommendations for future improvements aswell as to seek the Agencys feedback thereon.


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4.2 Audit Scope

4.2.1. Scope of WorkThe Auditors will be expected to:

1) Audit the accounting records, for the accounting period 2005-2006 of theCDERA located at 1 Manor Lodge, St Michael, Barbados

2) Conduct the audit in accordance with International Accounting Standards(ISA) and will have authority to audit all financial resources of the Agencyand objectively determine the following:

a) Programmes, projects and activities are being conducted asapproved by Council to accomplish the intended objectives.

b) Programmes, projects and activities are efficiently and effectivelyimplemented.

c) Funds expended are in compliance with established procedures.d) Revenues are being properly collected, deposited and accounted

for.

e) Financial and other reports are being provided that disclose fairlyand fully information necessary to determine the scope and natureof programme activities and also provide a proper basis forevaluating programmes and activities.

f) There are adequate operating and administrative procedures andpractices, internal control system and internal managementcontrols.

g) There are no indications of fraud or abuse which may requirefurther investigation.

3) Verify the mathematical accuracy of the accounts by ensuring that theexpenditures described in the supporting documentation are reconciled to theexpenditures, by disbursing source, in the accounts.

4) State in the audit report if the audit was not in conformity with any of theabove and indicate the alternative standards or procedures followed.

4.2.2 The Audited Report

The audited report will be presented to the Deputy Coordinator.


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The auditors opinion should include the following. (Refer to Appendix 2 for asample Audit Report):

i. The nature of the report and its intended use.ii. The audit standards that were applied.iii. The period covered by the opinion.iv. Whether the financials present fairly the expenditures for the Agency and

that the funds were utilized for the purposes described in the Agencywork plan.

The due date for submission of a first draft of the audit report is sixty (60) daysafter the commencement of the audit and the due date for the submission of thesigned audited report is sixty (60 days) after the submission of the first draft.The Management Letter will accompany the final draft report.

4.2.3 Management Letter

The auditors are required to submit a management letter on the completion ofthe audit. The topics/issues to be covered in the management letter, includeinter alias:

An assessment of the Agency's internal control system with equal emphasis on(i) the effectiveness of the system in providing the Management with useful andtimely information for the proper management of the Agency and (ii) the generaleffectiveness of the internal control system in protecting the assets andresources of the Agency.

A description of any specific internal control weaknesses noted in the financialmanagement of the Agency and the audit procedures followed to address orcompensate for the weaknesses. Recommendations to resolve/eliminate the

internal control weaknesses noted should be included.

Comments as to whether recommendations made in the management letter forthe previous audit were implemented or, if not, the implementation status.

4.2.4 Assessment of internal control

The auditor is expected to conduct a general assessment of internal controlsaccording to established internal control standards.In addition to the above general assessment, additional specific steps include the

following:

i. Review expenditures made by the agency and assess whether they are inaccordance with project document, work plans and budgets; and are incompliance with the Finance and Administration procedures of theOrganization.


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ii. Review the process for procurement/contracting activities and assesswhether it was transparent and competitive.

iii. Review the use, control and disposal of non-expendable equipment andassess whether it is in compliance with the Agencys AdministrativeProcedures Manual; and also whether the equipment procured met theidentified needs and whether its use was in line with intended purposes.

iv. Review the process for recruiting project personnel and consultants andassess whether it was transparent and competitive.

v. Review the Agency accounting records and assess their adequacy formaintaining accurate and complete records of receipts and disbursementsof cash; and for supporting the preparation of the quarterly financialreport.

vi. Review the records of requests for direct payments and ensure that theywere signed by authorised officials.

4.2.5 Recommendations for improvement

Recommendations should be directed to a specific department so there is noconfusion regarding who is responsible for implementation. The response of thedepartment should be included in the management letter, immediately followingthe recommendation. Also, the auditor may wish to comment on goodpractices (if any) that were developed by the Agency.

4.2.5 Available Facilities and Right of AccessAll records and documents are located at CDERAs office situated at Building # 1Manor Lodge Complex, St Michael. The auditors would have full and completeaccess at any time to all records and documents (including books of account,legal agreements, minutes of committee meetings, bank records, invoices andcontracts etc.) and all employees of the entity. The auditor have a right of accessto banks, consultants, contractors and other persons or firms engaged by theAgency.


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Appendix 1: Qualifications of an Auditor

Firms invited to propose will not be pre-qualified under a prequalification process.The auditor must be completely impartial and independent from all aspects of

management or financial interests in the entity being audited. The auditor should not,during the period covered by the audit nor during the undertaking of the audit, beemployed by, serve as director for, or have any financial or close business relationshipswith any senior participant in the management of the entity. The auditor is required todisclose any relationship that might possibly compromise his/her independence.

The auditor should be experienced in applying ISA standards and must employ adequatestaff with appropriate professional qualifications and suitable experience with ISAstandards, including experience in auditing the accounts of entities comparable in sizeand complexity to the entity being audited.

Curriculum vitae (CVs) must be provided to the Agency by the principal of the firm of

auditors who would be responsible for signing the opinion, together with the CVs ofmanagers, supervisors and key personnel proposed as part of the audit team. CVsshould include details on audits carried out by the applicable staff, including ongoingassignments indicating capability and capacity to undertake the audit.


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Appendix 2: Sample Audit Report

Auditor's report to:

The Coordinator , CDERA

We have audited the accompanying balance sheet of the Caribbean DisasterEmergency Response Agency (CDERA) as at August 31, 20XX and the relatedstatements of changes in fund balances, operations and cash flows for the yearended August 31, 20XX. These statements are the responsibility of theAgencys management. Our responsibility is to express an opinion on theaccompanying statement based on our audit.

We conducted our audit in accordance with International Standards on Auditingpromulgated by the International Federation of Accountants. These standards

require that we plan and perform the audit to obtain reasonable assuranceabout whether the financial statements are free of material misstatement. Anaudit includes examining, on a test basis, evidence supporting the amountsand disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management aswell as evaluating the overall financial statement presentation. We believe ouraudit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above presents fairly, in allmaterial respects the financial position of the Agency as at August 31, 20XXand the results of its operations and its cash flows for the year ended August

31, 20XX in accordance with International Standards on Auditing.

________________________ __________________AUDITOR'S SIGNATURE DATE

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