Tender for a project audit: how to read the donor terms of reference

Most Ukrainian non-profits look for an auditor through a procurement announcement rather than directly: tender for a project audit, audit of the project financial statements, project audit services. The wording varies, the service is the same. How the terms of reference are written determines both the fee and whether the donor accepts the finished report first time.

What follows is for both sides: the organisation publishing the tender and the firm reading someone else’s announcement before bidding.

First question: audit or agreed-upon procedures

This is the most common confusion in announcements. The heading says audit, and further down the donor lists specific actions: test a sample of transactions, reconcile amounts to the financial report, confirm that contracts and acceptance acts exist. That is no longer an audit, it is an agreed-upon procedures engagement under ISRS 4400.

The difference is not terminology, it changes the volume of work:

• An audit under ISA 800 or ISA 805 ends with the auditor opinion on the project statements. More procedures, more evidence, a longer timeline.
• Agreed-upon procedures under ISRS 4400 end with a report of factual findings and no opinion. The auditor does exactly what the list of procedures says and reports what was found.
• A review under ISRE 2400 gives limited assurance. It appears less often in grant projects and more often for the annual statements of an organisation.

A one-minute check: look for the words opinion, express an opinion. If they are absent and a numbered list of procedures is present, the donor wants ISRS 4400. If the announcement says audit while the list of procedures comes as a separate attachment, clarify it with the donor before publishing the tender rather than after signing the contract.

Seven items in the terms of reference that drive scope and timeline

1. The period covered. One year or the whole project. A two-year project is not double the work of one year, it is roughly one and a half times.
2. Project budget and number of partners. Every partner adds separate records, separate documents and a separate reconciliation.
3. Sample size. Donors phrase it differently: a percentage of expenditure, a threshold above which everything is tested, a minimum number of transactions per budget line. This is the single biggest driver of the timeline.
4. Currencies and exchange rates. Costs in hryvnia, budget in euro or dollar, rate at payment date or the donor rate. Retranslation often produces differences that have to be explained in the report.
5. Procurement. Whether the supplier selection procedure is in scope or only the presence of documents. Procurement testing is a separate layer of work.
6. Report language. English, Ukrainian or both. Two languages are not a translation, they are two agreed documents.
7. Report format. The donor template or the standard form under international standards. A donor template is always longer.

What the bidder pack has to contain

The list repeats in almost every announcement:

• an extract from the Ukrainian register of auditors and audit entities, with the number and the section;
• experience with comparable engagements: how many grant projects and for which donors;
• the team assigned to this engagement and the qualifications of each member;
• professional indemnity insurance in force;
• confirmation of independence from the organisation;
• a proposal with the timeline and the fee against your terms of reference.

What to check in the register, and why a firm being listed means little without the section, is covered separately: the register of auditors and how to check a firm.

Four mistakes that force a tender to be republished

The word audit with no standard. Bidders price different things: some a full audit, some agreed-upon procedures. Proposals differ several times over and cannot be compared. State the standard explicitly.

A submission deadline shorter than the work itself. An announcement runs for five days while the donor needs the report in a week. Serious firms simply do not bid. Allow two to four weeks for a grant audit from the moment documents are handed over.

No report language stated. The organisation receives a Ukrainian report while the donor expects English. Redoing it costs time that is already gone.

The auditor is also the bookkeeper. Independence rules bar an auditor from examining records it produced itself. If your accounting provider bids for the audit, that bid has to be rejected.

What we do

MK Audit has worked since 2000, is entered in the Ukrainian register of auditors under No. 4624 and belongs to the DFK International network. We bid for non-profit tenders on the Prostir, GURT and Ednannia portals, assemble the full bidder pack and read the terms of reference before bidding rather than after.

If you are publishing a tender and are unsure about the wording, send us the draft terms of reference or the grant agreement. Within one business day we will say which report format the donor needs and what timeline is realistic. There is no charge for that. The service in detail: grant audit for donors.