Donor audit requirements in Ukraine: EU, GIZ, UN agencies, Sida, embassies
The reporting format is set neither by the auditor nor by the organisation but by the donor’s terms of reference. One donor wants an audit under International Standards on Auditing, another an expenditure verification under ISRS 4400, a third a review or a partner micro-assessment. Below is what each group of donors actually requires, which documents to prepare and which criteria the audit firm has to meet.
A project audit is needed when the donor requires independent confirmation of expenditure. The terms of reference decide the format: an ISA audit, an ISRS 4400 expenditure verification, an ISRE 2400 review or a HACT partner micro-assessment. Send us the terms of reference and we will tell you which one applies and how long it takes.
What each group of donors requires
Expenditure verification under agreed-upon procedures
EU grants typically call for an Expenditure Verification: the auditor performs the procedures listed in the annex to the contract and reports findings without an opinion. The report follows the donor’s template and cannot deviate from it. Eligibility of costs, procurement procedures, supporting documents and the exchange rate are all tested. More: EU grant audit requirements.
ISA audit plus a budget execution schedule
The German agency normally asks for an audit report under International Standards on Auditing together with a line-by-line budget execution schedule. Local taxes, payroll and the justification of administrative costs receive particular attention. More: GIZ project audit.
Partner micro-assessment and HACT audit
Before the first significant cash transfer the agency micro-assesses the partner’s capacity, and at the end of the period commissions an audit or a spot check. This is not a conventional audit of financial statements but an assessment of internal control systems. More: HACT micro-assessment and UN project audit.
Project audit with a separate internal control section
Beyond confirming expenditure they ask for an assessment of the partner’s internal control system and a description of weaknesses in a management letter. An English report is mandatory.
A simpler format, the same documents
For grants of a few tens of thousands a report of factual findings or a review is usually enough. The scope is smaller, but the requirements for source documents and procurement are identical. More: embassy and private foundation grants.
Their own template and cost glossary
Large private foundations set their own eligibility rules and a report format that differs from both the EU and the UN. Reading the agreement before work starts is critical here: what one foundation accepts, another disallows.
Four different engagements that get confused
The highest level of assurance. The auditor expresses an opinion on whether the statements are fairly presented. Required when the donor or the charter asks for an auditor’s report with an opinion.
Agreed-upon procedures: the auditor performs the listed steps and reports factual findings, with no opinion. The most common format for EU grants. More: ISRS 4400 report.
Limited assurance: fewer procedures, a shorter timeline and a lower fee than an audit. Suitable where the donor does not require a full audit. More: review of financial statements.
An assessment of the partner’s capacity to handle funding: accounting, procurement, internal control and prior audits. The result drives the size and form of future transfers.
If the terms of reference say “audit”, that does not necessarily mean an ISA audit. Half of the disputes between an organisation and its donor arise precisely because the wrong engagement was commissioned. Reviewing your terms of reference before the engagement letter takes us one working day and costs nothing.
What donors require from the audit firm
Usually three to five years specifically with NGOs. We have operated since 2000, and grant audit is a standing practice area.
Donors want external quality control. MK Audit belongs to DFK International, present in more than 90 countries.
Ukrainian audit register No. 4624, company code 39419346. The register is public and can be checked before the tender.
The report is issued in English and Ukrainian in one package, with no separate charge for translation.
What to prepare whoever the donor is
The grant agreement with annexes, the approved budget and every revision, correspondence on changes and prior reports to the donor.
Statements for the project account, confirmation of tranches, invoices, acceptance acts, delivery notes and payment orders for every cost.
Requests for quotations, the quotations received, the selection minutes, contracts and conflict of interest declarations.
Employment and service contracts stating the share charged to the project, signed timesheets, payroll registers and proof of tax payment.
A register of equipment with inventory numbers, the exchange rate rule from the agreement and the calculation of exchange differences by tranche.
An expenditure register referencing a document on every line, reconciled to the donor report to the last hryvnia. Discrepancy between report and ledger is the most common finding.
The full checklist with explanations is in the article how to prepare for a grant audit.
What clients ask most often
How do we work out which report our donor requires?
The format is set in the terms of reference or the grant agreement. Send it to us and within one working day we will tell you exactly what is needed: an ISA audit, an ISRS 4400 expenditure verification, a review or a micro-assessment. There is no charge.
How much does a grant audit cost for an NGO in Ukraine?
The fee depends on the grant amount, the number of transactions, the number of procurements and how many years the engagement covers. We send a proposal after reviewing the assignment, normally within one working day.
Can several projects be audited at once?
Yes, and it usually costs less than separate engagements. Where donors differ, the reports are separate and follow each donor’s format, but the fieldwork runs at the same time.
We are running a tender for an auditor. How do we invite you?
Send the invitation and the terms of reference to mkauditsend@gmail.com. We reply stating whether we meet the requirements and which documents are needed for the bid.
Do you issue the report in English?
Yes, in English and Ukrainian in one package. The firm belongs to DFK International, so the format is familiar to foreign donors.
Send us your terms of reference
Send the terms of reference or the agreement. We will tell you which report the donor needs and how long it takes. Free, one working day.