Request for Proposal (RFP): Agreed Upon Procedures

Terms of Reference (ToR)

1. Background

Habitat for Humanity International, Inc. (“HFHI”) is a non-profit organization under the laws of the State of Georgia, USA, having an address at 285 Peachtree Center Avenue NE, Suite 2700, Atlanta, Georgia 30303 USA, operating through its branch office in Nepal namely Habitat Nepal having an address at New Colony Marg, House #126 Dhobighat, Lalitpur (PAN No. 302017292). The organization is driven by its vision “A world where everyone has a decent place to live”. In Nepal, we address the housing needs of low-income families through our partnership with homeowners, duty bearers, civil society, financial institutions, academia, and relevant stakeholders.  The organization serves families and communities that are at the bottom of the pyramid, by promoting greener, affordable, and disaster-resilient solutions and technologies for safe housing construction, advocating for land tenure security and joint land titles, and empowering communities at the risk of climate-related disasters to apply local knowledge and practices for nature-based solutions. Through decent and adequate housing, we support families to build strength, stability, and self-reliance.  

2. Objectives and Standards

The objective of the engagement is to undertake the assignments as per agreed-upon procedures with regard to the subgrant agreement between partner NGOs and Habitat Nepal. The engagement shall be carried out in accordance with the International Standard on Related Services (‘ISRS’) 4400 Engagements to perform Agreed- upon Procedures regarding Financial Information as promulgated by the International Federation of Accountants (IFAC). The reviewer is expected: 

• To carry out the agreed-upon procedures assignment listed in Section 4 of this TOR – Scope of the engagement 
• Issue a report on factual findings that will support Habitat Nepal’s conclusions on the eligibility of the reported expenditure.

3. Period and Location

Expenditure Coverage Period: 01 July 2024 to 30 June 2027

The reviewer firm will conduct the required number of review visits for any period range as determined by Habitat Nepal.

Locations to be covered: On-site visits to the PNGO offices and project sites.  For details, please refer to Annex I

4. Scope of the Engagement

The reviewer must review at least 85% of the expenses of the sampled PNGO from the list provided in Annex I for the requested period. A minimum of six partners must be sampled as determined by the Habitat Nepal. Scope of engagement are as follows:

4.1 Verification of the expenditures and adequacy of supporting documents: 

• The reviewer must examine the financial report submitted by partners to Habitat Nepal.
• Review of applicable documents, which includes the sub-grant agreement with modifications thereon.
• All program financial and progress reports, charts of accounts, organizational charts; accounting systems of PNGOs; financial policies and procedures, procurement policies and procedures; inventory management procedures, as necessary to successfully complete the required work.
• Any previous audits, financial reviews, etc., that directly relate to the objectives of the review.
• Check whether salaries charged to the project accounts have been paid to the funded staff and if there is no practice of transferring “Contributions” from salaries or remuneration provisioned under the program implementation to an institutional account.
• Ensure that funds are used exclusively for expenditures under the subgrant agreement.
• Ensure reliability and authenticity of the supporting documents that are produced by the subgrant agreement 
• Understand the functioning of user committees.
• Verify documents produced by user committees, particularly those related to house construction.

Before commencing construction, user committees comprised of beneficiaries are formed.  The construction is carried out in collaboration with the local government. Funds from both the local government and Habitat Nepal are deposited into the user committees' accounts. Habitat Nepal’s funds are channeled through the partner NGOs These committees oversee the construction process, manage the budget, and handle payments to vendors and laborers.

4.2 Review of the internal control system:

• Reviewers must develop a thorough understanding of the entity and its environment, including internal controls, and report any internal control gaps identified by the reviewers. 
• Conduct a review of bank accounts, evaluate control measures over their operations, and verify bank reconciliation statements.
• Examine outstanding advances and payables.
• Inventory management and controls thereof.

4.3 Compliance check of applicable laws, policies, and guidelines:

• Ensure compliance with the terms of the sub-grant agreement, including timely reporting to Habitat Nepal. 
• Ensure compliance with the applicable laws and regulations, particularly the Income Tax Act, 2058, and Labor Laws, 2074. 
• Ensure relevant compliance with the by-laws and relevant policies of PNGO.
• Ensure compliance with the regulatory requirements such as timely renewal of registration with DAO and local government, completion of audits and general assembly, tax clearance, and renewal of tax exemption certificates.

4.4 Project site visits:

On need base, conduct a project site visit for review. 

5. Other responsibilities of the reviewer

• Hold an Entrance meeting with the Habitat Nepal central office after receiving a request for conducting the review for the finalization of the scope of review per PNGO and engagement schedules.
• Share a detailed plan with Habitat Nepal, outlining the scope, methodology, and timeline.
• The reviewer shall comply with the IFAC Code of Ethics for Professional Accountants, which establishes fundamental ethical principles for reviewers regarding integrity, objectivity, independence, professional competence and due care, confidentiality, professional behavior, and technical standards.
• Conduct an entry meeting with each PNGO to introduce the process.
• Hold an exit meeting with each PNGO to discuss factual findings, ensuring that observations are resolved through satisfactory justifications and documentary evidence.
• Submit a draft management letter to Habitat Nepal to obtain the management response from each PNGO and Habitat Nepal’s action plan.
• Conduct a debriefing meeting with the Program Director and/or Finance Director, and relevant program and finance staff of Habitat Nepal to discuss factual findings and recommendations.
• Submit all final deliverables to Habitat Nepal within the agreed timeframe. 

6. Profile of the Reviewer firms and engagement team

The applicant firm must be a chartered accountant's firm registered with the Institute of Chartered Accountants of Nepal and affiliated with international accounting and auditing firms. The engagement team should have the following core competencies, qualifications, and work experiences: 

• The firm must be registered with the Institute of Chartered Accountants of Nepal (ICAN).
• The Firm must have at least 12 years of relevant and diversified professional experience in auditing with a sizeable portfolio and experience in the audit/agreed-upon procedure assignment of donor-funded projects, the Development sector, NGOs, and INGOs. Previous experience in conducting agreed-upon procedures shall be desirable.
• The engagement team leader must be a qualified chartered accountant with at least 3 years of experience in the audit of donor-funded projects, development sector, NGOs, and INGOs. 
• Adequate and experienced staff workforce. 
• Strong communication and reporting skills.

7. Documents to be submitted 

The audit firm shall submit the following documents:

• Separate Technical and Financial Proposals. Please refer to Annex II for the Financial Proposal template. Signed and stamped copy of the financial proposal (must be in Nepalese rupees, including all taxes) in a separate file.
• Updated Organizational/Firm profile with the statement of experience highlighting related engagements undertaken in the past five years.
• Updated CV of the engagement partner, Team Leader, and Team members. 
• Certificate of membership registration in ICAN and renewal thereof.
• Certificate of firm registration in ICAN and renewal thereof.
• Certificate of VAT Registration. 
• Tax clearance certificate of FY 2080/81.
• As required by Habitat Nepal’s Safeguarding Standards, all individuals involved in this assignment need to submit criminal background check (Police Report) to be eligible for assignments.

8. Deliverables

A report on factual findings, within the scope of agreed-upon procedures as outlined in Section 4 of this TOR. The report on factual findings shall at least include: 

• Background information of the project subject to engagement  
• Overview of transaction population and sample 
• Short descriptions of the testing process 
• Risk definition as high, medium, and low
• Summary of findings with risk rating categorized in each review scope
• Detail findings, including reviewer’s recommendations, risk rating, root cause, PNGO response, and Habitat Nepal action plan. Any identified ineligible expenditure should be clearly mentioned. 
• Where applicable, follow up on the issues identified in the previous year's report on factual findings. 
• Best practices implemented by PNGO.

Reports are to be delivered to Habitat Nepal’s central office in Kathmandu.

9. To Apply: 

Interested qualified firms should submit their technical and financial proposal including testimonials/certificates at procurement@habitatnepal.org with subject line “Agreed Upon Procedures Engagement for Partner NGO.”

Any queries related to TOR can be sent to SKhatri@habitatnepal.org or contacted at +977-1-5421182, 5454976, 9801465018 before the proposal submission deadline mentioned in the notice.

Application deadline: 8 April 2025

10. Proposal Evaluation Criteria and Process 

There will be 70% weightage for the technical proposal and 30% for the financial proposal. The first technical proposal will be evaluation giving score on predetermined criteria. The proposal securing 45 score or above out of 70 will be considered for financial proposal evaluation. Finally, the sum of both proposals secured score will determine the winning proposal.

11. Ethical Standards and Intellectual Property 

In accordance with its foundational mission principles, Habitat for Humanity Nepal is committed to the highest ethical standards and opposes all forms of discrimination, exploitation, and abuse. We intend to create and maintain a work and living environment that is safe, productive, and respectful for our colleagues and for all we serve. We require that all staff and representatives (consultants, contractors, vendors/suppliers, interns, volunteers, agents, and implementing partner organizations) take seriously their ethical responsibilities to Safeguarding (Child Protection, Prevention of Sexual Exploitation Harassment, and Abuse) our intended beneficiaries, their communities (especially children), and all those with whom we work. Abiding with the organization, the consultancy service has responsibilities to maintain an environment that prevents harassment, sexual exploitation, and abuse, safeguards the rights.

Annex: I-Details of PNGO

Note: The list will be updated each year

Appendix: II

Financial Proposal Template

Notes:

• Please provide a quote for the professional fees for this engagement using the template above.
• Transportation, per diem, and accommodation expenses incurred during the engagement will be reimbursed based on actual costs.
• A VAT invoice will be required to claim per diem expenses, which will not exceed 1,500 plus VAT per day per reviewer engaged in the onsite review visit.
• Kindly quote the fee for the current financial year (July 2024 – June 2025). A 5% annual increase will be applied to the first-year fee for the subsequent two years.
• A rate agreement will be entered into with the selected review firm based on the quoted rates of Y1 with an annual increment of 5% on professional fees valid till 30 June 2027. 
• Please provide financial quotes and technical proposals separately.