Norwegian People’s Aid

GROUP AUDIT
INSTRUCTIONS

Annual 31st of December 2021

Auditor: BDO AS

Issued by: Erik Lie, engagement partner

Date issued: 11.10.2021

Version 01.2020
GROUP AUDIT INSTRUCTIONS .............................................................................................. 1
Key information ..................................................................................................................... 4
A-1 Current year information ............................................................................................... 4
A-1.1 Relevant information for this year’s audit .................................................................. 4
A-1.2 Significant risks, including risks of material misstatement due to fraud ............... 6
A-1.3 Significant accounting and auditing issues ......................................................... 7
A-2 Recurring information ................................................................................................... 7
A-2.1 Company Background .............................................................................................. 7
A-2.2 Financial reporting framework .................................................................................. 7
A-2.3 Applicable auditing standards................................................................................... 7
A-2.4 Related parties ......................................................................................................... 7
A-2.5 Ethical requirements, including independence ......................................................... 8
A-2.6 Internal Control and Risks of Fraud .......................................................................... 8
A-3 Timetable of communications, BDO contacts and communication protocols ................... 9
A-3.1 Timetable ................................................................................................................. 9
A-3.2 Group Auditor contacts............................................................................................10
A-3.3 Planned conference calls and BDO visits ................................................................11
A-3.4 Communication protocols & use of the BDO Client Portal .......................................11
A-4 Representation letters ....................................................................................................12
Scope of work ......................................................................................................................13
B-1 General ......................................................................................................................13
B-2 Scope of work to be performed for group audit purposes ...........................................14
B-3 Subsequent events procedures ..................................................................................16
Reporting forms ....................................................................................................................16
C-1 Acknowledgment of group audit instructions and confirmation of independence ........16
C-2 Understanding of the component auditor ...................................................................18
C-3 Audit planning memorandum .....................................................................................19
C-4 Early warning memorandum (EWM) ..........................................................................20
C- 4.1 Early warning memorandum (EWM) format ...........................................................21
C-4.2 Internal Control .......................................................................................................22
C-5.1 Auditor’s report to the Group Auditor on the audit of financial statement information for
group audit purposes ........................................................................................................23
C-5.2 Trial balance signed by FM and CD ........................................................................25
C-6.1 Audit Report Projects ..............................................................................................26
C-6.2 Audit Report Projects - reporting income and expenditures by project ....................28
C-7 Summary of identified misstatements.........................................................................29
C-8 Final summary memorandum.....................................................................................30
C-9 Component auditor confirmation ................................................................................32
C-10 Subsequent events procedures................................................................................33
C-11 Management letter ...................................................................................................34
C-12Questionnaire ...........................................................................................................36
KEY INFORMATION

We, as the Group Auditor, have been engaged to perform an audit of the group financial statements of
Norwegian People’s Aid (the Company) for the year ended 31 December 2021.

The Company prepares its financial statements in NOK in accordance with Norwegian Generally Accepted
Accounting Procedures (NGAAP).

We have also been engaged to perform audits of projects financed by MFA (Norwegian Ministry of Foreign
Affairs), NORAD and others. For each of these projects we send a separate audit report to the donor, see
C-6.1 and C-6.2.

A significant part of the country program projects are implemented through local partners and a
significant part of the costs in the country program financial statements will be costs expensed by
the partners. This implies that we need to ensure that the same quality of control and administration
for the project funds is also being carried out by the local partners. We would like to emphasize that
it is you as the NPAs country auditor who is responsible for all funds transferred to partners.

Transfers to partners, actual expenditure by partner and partner balance need to be confirmed by
partner’s auditor and you. An example of instructions which you as local auditor may send to the
partner auditor is provided in attachment 2 in the portal.

These group audit instructions are designed to inform you, as component auditor, of the scope of work
we require you to perform for the purpose of the group audit. The instructions outline, among other
areas, the key reporting deadlines, audit deliverables to be submitted to us and communication
guidelines.

Section A of these instructions describes the information related to Norwegian People’s Aid that is
necessary for you to complete your work.

Section B of these instructions describes the scope of your work and all related information.

Section C of these instructions contains all reporting deliverables you should use to communicate to us.
Please send your acknowledgement of receipt of these group (Section C-1) upon receipt.

A-1 CURRENT YEAR INFORMATION

A-1.1 Relevant information for this year’s audit

Reliance on the work of other auditors

Please specify in audit strategy documentation (template C-3) whether it is planned to rely on work
from other auditors, and, if not, reasons not to rely on work from other auditors.

We would also like to highlight the following topics:

Engagement letters

Please ensure that the engagement letters between local auditors and NPA external offices cover all
the work as described in these audit instructions.
Project audit reporting requirements

NPA Head Office requires all project audits to be reported using templates C-6.1 and C-6.2 in these
instructions. All transfer to partners has to be confirmed by the local auditors according to the
template. These audit reports have to be reported to the NPA local office according to timetable of
communication A-3.1. This does however not include donor projects where the donor has chosen their
own auditor, i.e. USAID/USDOS. Projects financed by NMFA frame agreement, NORAD cooperation
agreement, Oil for Development and Strategic Partnership, NUMGE (Fagforbundet) and SIDA also needs
to be reported to BDO Oslo. The list of projects to be audited will be provided by NPA locally.

There is a requirement for partner costs to be reported to NORAD and NMFA in activities/categories.
The initial posting in Agresso when transferring funds will be activity 6810 “transfer to partner”. This
will be reposted from 6810 to correct activities according to partners financial report. You must
confirm that this is posted correctly as part of your audit of the projects.

Examples of activities/categories are:

Agio gain/losses

Agio gain and losses should be managed in accordance with NPA currency management guidelines.
Please refer to the management at the local component for these guidelines.

Account 1213

The 1213 account is used by the Head office to correct temporary imbalance between locations. I.E.
when Head office records a grant to a local office from donor, it is booked debit Donor with Oslo
location 3000, and the Form 701GL (09 August 2017) credit will have the location of the project. This
imbalance between locations is corrected by the Head office at the end of each month using account
1213 to show individual trial balances summing up to zero.

Account 1213 will be audited by BDO Oslo for all EO’s (audit regions), and auditors are not to audit this
account. We ask you to not make a qualified opinion based on this.

Wage expats

All expat salaries are audited by BDO Oslo, and are not a part of your audit, and EO auditors are not to
audit these accounts. We ask you to not make a qualified opinion based on this.

Exchange rates

Exchange rates are audited by BDO Oslo are not a part of your audit, and EO auditors are not to audit
these accounts. We ask you to not make a qualified opinion based on this.
Transfer to partner

We would like to emphasize that NPAs country auditor is responsible for all funds transferred to
partners. Please see C-6.2 for partner specification.

Timetable

We would like to emphasize the deadlines in the scheduled timetable in A-3.1. Please plan your audit
accordingly and make sure you meet these deadlines.

Please read the instruction carefully. We would like to emphasize that all reporting forms in section
C need to be used; no internal forms will be accepted.

A-1.2 Significant risks, including risks of material misstatement due to fraud

Our overall risk assessment identified the following factors of which you should be aware when performing
your procedures locally. In the Financial Handbook there are procedures to reduce the risk assessment
factors. We expect that you address these risks in your Audit Planning Memorandum (C-3) and Final
Summary Memorandum (C-8):

We have identified the following significant risks, including risk of material misstatement due to fraud of
the group financial statements:

• Segregation of duties in relation to asset handling, ordering and approval of costs

• Bank: Reconciliation of bank accounts, authorization, segregation of duties
• Cash: Cash box reconciliation/counting
• Assets: Securing purchased assets
• Investments: Approval of contractors, completions of projects, handing over certificates to
beneficiaries
• Fictious cost: Look for vouchers and see that thy are originals and signed in accordance with the
Financial Handbook
• Cut-off costs: All costs should be related to goods or services that have been delivered at the
balance sheet date. Intention to purchase goods or services, although the purchase is agreed with
vendor, does not meet the requirements.
• COVID-19: All component teams should as part of their audit pay attention to the following focus
areas related to COVID-19:
• COVID-19 implications on projects
• COVID-19 implications on existing routines and procedures; segregation of duties in relation
to asset handling, ordering and approval of costs, bank, cash box reconciliation/counting,
securing of purchased assets, approval of contractors, completions of projects, handing over
certificates to beneficiaries, fictious costs and cut-off costs.
• Any other COVID-19 related risks

Please immediately inform BDO Oslo if you identify any issues that you believe may represent a significant
risk of material misstatement of the group financial statements other than those noted above. An example
of a matrix for identified risk is presented under the section for management letters.
A-1.3 Significant accounting and auditing issues

The following provides a summary of significant accounting and auditing issues that may be encountered
during the audit of Norwegian People’s Aid. We ask you to consider these issues to the extent applicable
to your component. This includes the effect that new auditing standards will have on your audit strategy,
including the procedures we expect you to perform.

• Cut-off costs
• Tax issues/local legislation
• Existence of cash

A-2 RECURRING INFORMATION

A-2.1 Company Background

Norwegian People’s Aid (NPA) was established in 1939 and is a politically independent non-profit
organization, which is involved in humanitarian work both nationally and internationally. NPA’s centers
on two strategic areas which are just distribution of power and resources and protection of life and
health. NPA’s work is organized into four main activities: Development and Humanitarian
Cooperation(international), Mine action and disarmament(international), first aid and rescue services
(Norway) and refugee and integration work (Norway).

A-2.2 Financial reporting framework

The accounting policies applied by Norwegian People’s Aid are in accordance with Norwegian Generally
Accepted Accounting Procedures (NGAAP) and current practices in the humanitarian organizations.

The Group Financial Handbook describes the accounting principles to be applied by your component for
the purpose of preparing its financial statement. We have assessed the compliance of the GAPM with
NGAAP.

A-2.3 Applicable auditing standards

We are required to perform our audit in accordance with the international auditing standards. Section
C-12 contains a confirmation that you have complied with these additional audit requirements
described in Section B- 2 when performing your work.

A-2.4 Related parties

At Norwegian People’s Aid homepage, you will find an updated view of the board members of the
organization: Norwegian People's Aid | National Board (npaid.org) . This view is regarded as the
organizations related parties.

We require you to review the list of related parties and notify us on a timely basis if you identify issues
with the accuracy and completeness of this list. Any inaccuracy or any related parties not previously
identified should be communicated to us as detailed in Section B-1.
A-2.5 Ethical requirements, including independence

As the partner in charge of the component engagement 1, you are responsible for forming a conclusion
on compliance with the Ethical and Independence requirements 2 and confirm to us that, in respect of
the component, you are independent in accordance with the independence requirements of the
International Ethics Standards Board for Accountants (IESBA) code of Ethics.

In order to manage independence for group purposes we require that you provide this representation
using the format in Section C-2. If you identify any potential conflicts or threats with respect to your
independence, please contact us to enable consideration at the group level immediately.

We especially point out that Norwegian independence regulations do not contain “safeguarding
mechanisms” allowed under IFAC rules in certain situations, nor any procedures to fix an unintentional
breach of independence. Below is a general description of services we are prohibited from providing to
NPA partners.
The following services are prohibited in all instances.
• Bookkeeping or other services related to the accounting records or financial statements of the audit
client
• Financial information systems design and implementation
• Appraisal or valuation services
• Actuarial services
• Internal audit outsourcing services
• Management functions (see below)
• Human resources (i.e., executive recruiting)
• Broker or dealer, investment adviser, or investment banking services
Legal services “Management functions” is defined broadly by the Norwegian regulator and covers “in
fact” as well as “in appearance” matters. We should therefore never take on a “role” that can be seen
as carrying out work or tasks that is management responsibility (e.g. establishing or maintaining proper
internal controls, compensate for lack of resources or skills at the client, perform recurring
reconciliation of accounts etc.). Further, we should never be considered to “advocate client’s
interests” or “represent the client externally” (except in tax matters where we can follow IFAC
guidelines).

A-2.6 Internal Control and Risks of Fraud

Description of internal control at group level and risks of fraud

Below is a summary of the key findings of the group internal control considerations considered relevant
to the Local Teams in performing the Component’s procedures related to internal control and the risks
of fraud.

1 The partner in charge of the component engagement is a partner or other person in the firm who is responsible for the component
engagement and its performance, and for the report that is issued on behalf of the firm.
2 Refer to ISA 220.11
 • Cash

• Bank

• Inventory

• Segregation of duties

Related work to be performed by the Local Team

Utilize the information provided above in performing your assessment of internal control at the local
entity level and the risks of fraud at your Component to the extent relevant. Please inform BDO Oslo if
you identify any issue that you believe would be significant to the group.

A-3 TIMETABLE OF COMMUNICATIONS, BDO CONTACTS AND

COMMUNICATION PROTOCOLS

A-3.1 Timetable

Relevant
audit
DESCRIPTION OF APPENDIX3 Scope DUE DATES Report Report
COMMUNICATION BDO NPA
REPORTING
Acknowledgment of C-1 All Upon receipt X
group audit instructions
Compliance with ethical C-2 All Upon receipt X
requirements,
including independence
Understanding of the C-2 All Upon receipt X
component auditor
Audit Planning C-3 All 4th of December 2021 X
Memorandum
Conference call Need for To be confirmed
regarding risk, need basis
instructions
Early Warning C-4 All As soon as issues X
Memorandum (EWM) are noted
Internal control C-4.2 All 14 March 2022 X
 Audit report and signed C-5.1 All 14 March 2022 X X
trial balance C-5.2
Audit Report Projects C-6.1 All 14 March 2022 X X
and reporting income C-6.2
and expenditures by
project (NORAD, SIDA
NMFA,
NUMGE/Fagforbundet)
Audit Report Projects C-6.1 All 14 March 2022 X X
and reporting income C-6.2
and expenditures by
project (Other projects,
as agreed with NPA)
Summary of identified C-7 All 14 March 2022 X
misstatements
Final Summary C8 All 14 March 2022 X
Memorandum
Component auditor C9 All 14 March 2022 X
confirmation
Subsequent events C-10 All 24 May 2022 X
procedures
Management letter C-11 All 14 March 2022 X X
Questionnaire C12 All 14 March 2022 X

Please immediately advise Petter Skarpnes (contact information below) if you anticipate that you will
not be able to meet one or more of the requested deadlines. Refer to the relevant schedules in Section
C for guidance on the content of each communication.

A-3.2 Group Auditor contacts

Your main contact person regarding these instructions:

Name Level Cell Phone No. Email Address

Petter Skarpnes Associate +47 976 83 290 Petter.skarpnes@bdo.no

Other relevant team members for information purposes only:

Name Level Cell Phone No. Email Address

Erik Lie Engagement Partner +47 992 16 735 Erik.lie@bdo.no
Nabil El Hamouti Senior Manager +47 917 50 683 neha@bdo.no
A-3.3 Planned conference calls and BDO visits

We are planning on holding a conference call to inform local auditors of these instructions and clarify any
questions local auditors may have. The date for the conference call will be communicated to the
component auditors in due time.

A-3.4 Communication protocols & use of the BDO Client Portal

To minimize the time and effort involved in administrating the multi-location Group audit engagement
and to facilitate communication among the auditors servicing the engagement, we will use the BDO
Client Portal to gather data for the worldwide audit of NPA. The BDO Client Portal allows users to
download and return documents for the NPA global audit. You will have authorized access to the BDO
Client Portal via internet.

Access to the BDO Client Portal is provided under the following internet address: https://portal.bdo.no

You should have already received your personal password for the authorized access and a user guideline
for the BDO Client Portal by e-mail. In case of problems with the login, please contact Petter Skarpnes
(Associate, BDO) immediately.

For each reporting requirement and/or group audit procedures as outlined in these audit instructions
you will have to perform a separate task for the single entity that you will have to audit.

All necessary reporting documents which have to be issued by the component auditors can be found
attached in these instructions.

Even when using the BDO Client Portal, we need to insist on receiving documents, which bear an
original signature of the auditor in charge. In order to receive originally signed documents via the BDO
Client Portal, we prefer documents in the PDF format. Thus, if you have the ability to scan documents
please sign, scan and save / convert all required documents as a PDF file and attach these files to the
respective task. If possible, please do not use any other format than PDF for a scanned document. If
you do not have these technical opportunities, we need to ask you to send hardcopies of your signed
documents via fax and letter mail.

The BDO Client Portal should be used for all reporting.

All other general communication (questions, problems arising etc.) besides the reporting via the BDO
Client Portal should be made by e-mail using the contact information provided. To increase effectiveness,
please contact/send all communications to the persons specified below:

► Seeking clarifications of the Instructions, please contact Petter Skarpnes, Associate.

► Communication of significant issues, please contact Nabil El Hamouti, Senior manager.
Other contact information:

Primary Team Office

BDO AS
Attention: Mr. Petter Skarpnes
P.O Box 1704 Vika
N-0121 Oslo
Norway

A-4 REPRESENTATION LETTERS

Below is the wording of the representations to be included in the representation letter. These
representations have been agreed with group management.

Please include this wording in your representation letter from component management and attach your
Summary of identified misstatements to the representation letter. Your representation letter covers the
period from 1.1.2021 to the date of the financial statement.

► Availability of information
► Contingent liabilities
► Accounting estimates and related disclosures
► Litigations and claims
► Related parties
► Laws and regulations
► Subsequent events
► Fraud
► Going concern
► Uncorrected misstatements

You are required to notify us immediately when there are exceptions noted to the standard wording
communicated to you.

You are required to confirm in your Final summary memorandum (C-8) that you have obtained the written
representations from component management and notify us immediately when there are exceptions
noted to the standard wording communicated to you.
SCOPE OF WORK

B-1 General

We have defined scope levels and any additional procedures required for group audit purposes as follows:

(i) An audit of the financial information of the component, in accordance with International
Standards on Auditing (ISAs), using materiality levels assigned to the component, and a report
to us using the auditor’s report template in Section C-6

(ii) An audit of the projects financed by NMFA frame agreement, Norad cooperation agreement,
Oil for Development and Strategic partnership and NUMGE (Fagforbundet), in accordance with
International Standards on Auditing (ISAs), using the materiality levels assigned to the
component (for each project), and a report to us using the auditor’s report template in
Section C-6. Please note that all transfers to partners are supposed to be reported by you as
their local auditor, as according to the template in C-6.2.

The scope of work is determined by donor requirements and this instruction. All amounts are reported in
NOK (all projects are to be audited and reported in the currency of the grant).

Materiality levels
We have determined the component performance materiality and the threshold for clearly trivial
misstatements for your engagement.4 Those amounts are included in Section B-2 of these instructions.

Component performance materiality is the amount you should use for purposes of:

For an audit of the financial information of the component or an audit of specified account balances,
classes of transactions or disclosures:
 Assessing the risks of material misstatement of the financial information of the component
 Designing further audit procedures in response to the assessed risks

For a review:
• Making inquiries and designing and performing analytical review procedures

For all scopes

• Evaluating whether detected misstatements are material, individually or in the aggregate, to the
component

The threshold for clearly trivial misstatements is the amount below which misstatements need not to
be accumulated during the audit [review] of the component financial information. 5Corrected and
uncorrected misstatements above the threshold for clearly trivial misstatements should be reported on
your Summary of identified misstatements.

Communication of additional significant risks identified at component level

We have identified and communicated in Section A-1.2 the significant risks of material misstatement of
the group financial statements, including, where applicable, risks of material misstatement due to fraud.
If you identify additional significant risks of material misstatement of the group financial statements at

4 Refer to ISA 600.22 and related application material ISA 600.A46

5 Refer to ISA 600.21
component level, please document these identified risks in the Audit planning memorandum (C-3) or in
the Early warning memorandum (C-4), if you already submitted the Audit planning memorandum.

Related parties
Please review the list of related parties communicated in Section A-2.4, and notify us on a timely basis
if you identify issues with the accuracy and completeness of this list. Any inaccuracy or any related parties
not previously identified should be communicated to us immediately.

Deficiencies in internal control at component level

Communicate to us any deficiencies in internal control at the component level identified during the
performance of your work on the financial information of the component.

B-2 Scope of work to be performed for group audit purposes

Scope of work:
Your component has been designed as a full scope engagement. The financial information of the
component for which you are responsible will be included in the group financial statements of NPA. The
Primary Team intends to evaluate and, if considered appropriate, use your work for the audit of the group
financial statements. The Primary Team may also determine that it needs to be involved in the work you
are requested to perform. An audit for group audit purposes consists of an audit of the financial
information of Norwegian People’s Aid in accordance with ISAs, using the following materiality levels as
stated below.

The financial information of the component for which you are responsible will be included in the group
financial statements of Norwegian People’s Aid. We intend to evaluate and, if considered appropriate,
use your work for the audit of the group financial statements. We will be involved in the work you perform
for group reporting purposes as we consider necessary.

An audit for group audit purposes consists of an audit of the financial information of Norwegian People’s
Aid in accordance with ISAs, using the following materiality levels:

 Component Materiality

II. Component materiality for each NPA CO has been established, see specification for the set
materiality level for your Country Office in the table below. Specific performance materiality /
performance materiality can be determined by you as the component auditor but cannot exceed
75% of your component materiality.

Country Allocated materiality (USD)

Iraq 700 000
South Sudan 500 000
Lebanon 400 000
Laos 400 000
Vietnam 400 000
Cambodia 400 000
Bosnia 400 000
Rwanda 400 000
Myanmar 300 000
Zimbabwe 300 000
Mozambique 300 000
West Bank 300 000
Afghanistan 200 000
Somalia 200 000
Angola 200 000
Kosovo 200 000
South Africa 100 000
Tajikistan 100 000
Bolivia 100 000
Yemen 100 000
Palau 100 000
Ecuador 100 000
El Salvador 100 000
Thailand 100 000
Honduras 100 000
Cuba 100 000
Guatemala 100 000
Colombia 100 000
Syria 100 000
Solomon Islands 100 000
Egypt 100 000
Peru 100 000

 Clearly Trivial Threshold

The threshold above which misstatements cannot be regarded as clearly trivial to the group
financial statements is 5% of component materiality.

The group audit plan has been developed using a risk-based approach. The Primary Team has defined
scope levels and any additional procedures required for group audit purposes. All amounts are
reported in NOK.

In addition to the assigned scope for group audit purposes, you may also be engaged to issue an audit
opinion on the component’s statutory financial statements. Please take care to understand the difference
between what is required locally and what is required for group audit purposes.

 Project materiality

Project materiality has been established at 1 % of total costs on the project. Specific performance
materiality / performance materiality for the project can be determined by you as the component
auditor but cannot exceed 75 % of your component materiality. However, note that all identified errors
in the project audit are to be corrected.
B-3 Subsequent events procedures

You are required to perform subsequent events procedures, covering the period from the date of your
Final Summary Memorandum to the anticipated date of auditors’ report on the group financial
statements. The subsequent events procedures should include the following procedures:
► Ask the management if there are any changes in the organisation
► Receive the latest financial data

Communicate the results of the subsequent events procedures performed to us using the template in
Section C- 10. You should notify us if you become aware, during the performance of your procedures, of
a subsequent event that may require adjustment to or disclosure in the group financial statements. 6

REPORTING FORMS

C-1 Acknowledgment of group audit instructions and confirmation of independence

Name(s) of component(s):
Group code/Component identifier:

Please provide the following information:

Role Name Phone Email

7
Partner in charge
of engagement
(Senior) Manager
Other resources

Please indicate below your professional qualifications, the number of years with your firm, the number
of years of industry experience and the number of years of experience with the component(s) listed
above.

Acknowledgment of receipt of the instructions

Initials
1. I acknowledge that I have read the audit instructions.
2. I confirm that I am the partner in charge of the engagement who is responsible for the
work to be performed in relation to the component entity and project(s) listed above.
3. I confirm that I understand the audit scope and the instructions for the component and
project(s) for which I am responsible.
4. I confirm that our component audit team and project audit team possess the necessary
skills to perform the work on the financial information, has the appropriate experience and
an appropriate understanding of the relevant auditing standards and project applicable

6 ISA 600.39
7 The partner in charge of the project engagement is a partner or other person in the firm who is responsible for the component
engagement and its performance, and for report that is issued on behalf of the firm.
 Initials
financial reporting framework that is sufficient to fulfil our responsibilities for the audit of
the component financial statements and project financial statements.
5. I confirm that I have read the due dates set out in the timetable in Section A-3 and that I
do not expect any problems in complying with your reporting deadlines, requirements and
communication protocols.
6. I confirm that we will cooperate with you and provide you with access to relevant audit
documentation.

Describe any exceptions to your ability to comply with the instructions or specify the
instructions for which you do not have a clear understanding and for which you require a
clarification.

Confirmation of independence

Initials
I acknowledge that the Ethics and Independence requirements applicable to Norwegian
People’s Aid comprise the IESBA Code of Ethics for Professional Accountants and any other
local-country independence rules applicable to this engagement (see also guidelines provided
under A.2-5 above for more details regarding Norwegian independence rules).

I confirm that I am independent of Norwegian People’s Aid in accordance with the applicable
Ethics and Independence requirements.

All members of our component team have confirmed to me that they are independent of
Norwegian People’s Aid in accordance with the applicable Ethics and Independence
requirements.

I also confirm that my firm is independent of Norwegian People’s Aid in accordance with the
applicable Ethics and Independence requirements.
I confirm that it is my responsibility to inform you of any changes to the above representations
that could occur during the course of our work on the financial information of the component(s)
for which I am responsible.

Component engagement partner’s

name

Component auditor’s firm and

address

Component auditor’s signature

Date
C-2 Understanding of the component auditor

In addition to the acknowledgment of the group audit instructions as stated above, please provide us with
some details on your audit firm.

Please describe:
► Your firm in terms of its size, number of people employed and related network firms

► The membership of your firm with a professional organization, and whether your profession is subject
to regulatory oversight

► Your firm’s system of quality control to provide the firm with reasonable assurance that reports issued
by your firm or its engagement partners are appropriate in the circumstances. For example, are partners
subject to inspection on a cyclical basis and remedial actions taken?

► Does your firm have internal training programs or use external training programs (such as, those
provided by the professional bodies)?

► Is the engagement subject to quality control review?

Component engagement partner’s

name

Component auditor’s firm and

address
 Component auditor’s signature

Date

C-3 Audit planning memorandum

You are requested to complete an Audit planning memorandum. The Audit planning memorandum is the
document that summarizes your overall strategy and audit plan. The extent of documentation in the Audit
planning memorandum is commensurate with the assigned component materiality.

The Audit planning memorandum includes, at a minimum, the following matters:

► Significant changes in the component or its environment, including a brief description of the
component’s business, markets, other key environmental factors, and key stakeholders and the effect on
your audit.

► Factors arising from the acceptance / continuance procedures, including a brief description of any
factors arising from the acceptance/continuance procedures that may indicate additional risks of material
misstatements at the group level.

► Observations from the overall analysis of financial and non-financial information that have an
effect on the component audit.

► The component materiality and threshold for clearly trivial misstatements used for group reporting
purposes.

► The composition of the team and whether you use the work of experts or internal audit work.

► Significant accounting and auditing matters, including a brief discussion of your plan to address them,
and any changes in the selection and application of the accounting policies at the component.
► Summary of your observations relating to the key elements of the control environment at the
component.8

► Related party relationships and transactions not in the ordinary course of business that require
consideration at component level

► A description of the significant accounting estimates and the planned audit procedures to be
performed

► Significant risks, including those risks communicated by us or identified by you in addition to those
communicated by us and the proposed response(s) to those risks.

► The identified risks of material misstatement due to fraud and the proposed audit procedures to
address the identified fraud risks. If you have not identified revenue recognition as a risk of material
misstatement due to fraud, include the reasons supporting your conclusion. Also include information that
indicates suspected or identified fraud.

► Matters related to litigations and claims which may be significant for the group audit.

8
Refer to ISA 315.15 for further details.
► Going concern issues, including the need for the component auditor to remain alert for factors that
may affect the going concern assumption.

► Whether it is planned to rely on work from other auditors, and, if not, reasons not to rely on work
from other auditors.

► The list of material account balances, classes of transactions or disclosures, including the overview
of the audit strategy and, where applicable, audit plan at the account /assertion level. 9

• When an account balance or class of transactions is above the assigned component materiality
and is not considered as material, include the rationale

► Other matters of significance as considered appropriate.

If one or more of the topics above are not applicable to your component, or you don’t have anything to
report, please so indicate in your Audit planning memorandum.

C-4 Early warning memorandum (EWM)

An Early warning memorandum (EWM) is required for when a component engagement identifies a
significant auditing or accounting issue that needs to be communicated on a timely basis.
The following matters are communicated immediately to us (if they have not been communicated to us
in the Audit planning memorandum):

► Audit evidence obtained from performing work on the financial information of the components that
contradicts the audit evidence on which the Group Auditor originally based the risk assessment performed
at group level.
► Related parties not previously identified by group management or by us.
► Significant risks of material misstatement, identified at the component and your audit response to
such risks.
► Unusual events
► Significant unusual transactions
► Significant accounting, financial reporting and auditing matters that have been identified, including
accounting estimates and related judgments and apparent accounting policy changes and potential year-
end exposures
► Matters relating to the going concern status of the component
► Matters relating to litigation and claims
► Identified control deficiencies
► Deficiencies in internal control at the component level that you have identified during the performance
of your work on the financial information of the component

9 ISA 330.18
► Information that indicates suspected or identified non-compliance with laws and regulation, including
fraud or questionable or illegal acts, including questionable payments, may have occurred
► Reporting timetable problems
► Proposed adjustments that may have a significant effect on the component’s financial information
► Potential report modifications

The template to be used to report EWM is provided below.

C- 4.1 Early warning memorandum (EWM) format

Name(s) of component(s):
Group code/Component identifier:
Reporting currency:
Year-end:

Issue Action required Date

Accounting and auditing issues
(Describe the nature of the issue and the
potential
effect on the reporting package)
• Unusual transactions
• Accounting estimates
• Changes in accounting policy
• Going concern
• Litigations and claims
• Potential year-end exposure
Significant risks
(Describe the nature of the significant risk and
the proposed procedure to address it)
Information that indicates suspected or
identified non-compliance with laws and
regulations, including fraud
Identified significant deficiencies in internal
control at the component level (or material
weaknesses if required to be communicated
in the jurisdiction)
Unusual events including significant unusual
transactions

Related parties not previously identified

Proposed adjustments or potential report

modifications

Audit evidence obtained that contradicts

information previously communicated
 Reporting timetable problems

Other

Discussed with management: Yes No

Management comments (if any)

In completing the action required:

► Specify by whom the action is required to be taken (i.e., component or group management, Primary
Team, or component team)

► If the issue is cleared, mark “resolved”

► If the issue is open, describe briefly the action to be taken and by whom

► If the issue requires a proposed adjustment, indicate value and nature

► If multiple EWMs have been issued, please report all matters previously communicated into the current
EWM issued, together with an indication of the date(s) when these matters were communicated and an
update on their current status

C-4.2 Internal Control

Question Yes/No Explanation

1. Are purchases approved in accordance with the
authorization structure?
2. Have there been any instances of perpetrated,
suspected or alleged fraud in the entity (including
both misappropriation of assets and fraudulent
financial reporting)?
3. Does the accounting documentation include the
original supporting documents according to the
Logistics Handbook?
4. Does the entity have adequate segregation of
duties (bookkeeping – access to bank)?
5. Does the entity on a monthly basis perform
reconciliations of balances in their general ledger,
either by using third party confirmations (e g bank),
or by comparing general ledger and sub-ledgers (e g
accounts receivable, accounts payables)? And are
the reconciliations signed by FM?
 6. Does the management on a monthly basis monitor
that control activities (reconciliations, specification
of balances) have been performed? Is the
monitoring documented and filed?
7. Does the cash keeper at the country office count the
cash on a regulary basis and are the counting signed
by the FM and CD?
8. Are the bank balances reconciled each month and
confirmed at year end by the bank?
9. Are NPAs operations in compliance with
national laws and regulations?
10. Are all local partners audited by an auditor
registered in the relevant national body of auditors
and accountants?
11. Are there a fixed asset register established and
updated regularly?
12. Have project accounts been submitted to, reviewed
and approved by the program managers

C-5.1 Auditor’s report to the Group Auditor on the audit of financial statement
information for group audit purposes

To Group auditor / Erik H. Lie

From Name of component auditor

Date XX Month 20XX

Subject Independent auditor’s report on the special purpose financial

information (reporting package) of Name of component for period
ending XX Month 20XX

To Group Auditor / Erik H. Lie

As requested in your group audit engagement instructions dated XX Month 20XX, we have audited, for
purposes of your audit of the consolidated financial statements of Norwegian People’s Aid, the
accompanying special purpose financial information of Name of component as of XX Month 20XX and for
the year then ended on pages xx to xx of the accompanying financial reporting package of Name of
group.

Management’s Responsibility for the Special Purpose Financial Information

Management is responsible for the preparation and presentation of this special purpose financial
information in accordance with policies and instructions contained in Name of group’s accounting
manual XX Month 20XX or with the instructions issued by Name of group’s management on XX Month
20XX and the policies contained in the Name of Group’s accounting manual/disclosed accounting
policies. This responsibility includes designing, implementing and maintaining internal control relevant
to the preparation and presentation of the special purpose financial information that are free from
material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances. This special
purpose financial information has been prepared solely to enable Name of group to prepare its
consolidated financial statements.

Auditor’s Responsibility

Our responsibility is to express an opinion on this special purpose financial information based on our
audit. We conducted our audit in accordance with International Standards on Auditing. As requested,
our audit procedures also included the additional procedures identified in your instructions.
International Standards on Auditing require that we comply with ethical requirements and plan and
perform the audit to obtain reasonable assurance whether the special purpose financial information is
free from material misstatement. As requested by you, we planned and performed our audit using the
materiality level specified in your instructions, which is different than the materiality level that we
would have used had we been designing the audit to express an opinion on the financial information of
the component alone.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in
the financial information. The procedures selected depend on the auditor’s judgment, including the
assessment of the risks of material misstatement of the special purpose financial information, whether
due to fraud or error. In making those risk assessments, the auditor considers internal control relevant
to the entity’s preparation and presentation of the special purpose financial information in order to
design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of accounting
estimates, if any, made by management, as well as evaluating the overall presentation of the special
purpose financial information.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion. The conclusions reached in forming our opinion are based on the component
materiality level specified by you in the context of the audit of the consolidated financial statements of
the group10.

Basis for Qualified Opinion

As requested, we did not perform the following procedures […..] and thus the scope of our audit was
restricted by your instructions.

Qualified Opinion

In our opinion, except for the possible effects of adjustments, if any, as might have been determined to
be necessary had we performed all audit procedures required by ISAs, the accompanying special
purpose financial information for name of component as of XX Month 20XX and for the year then ended
has been prepared, in all material respects 11, in accordance with the policies and instructions contained

10
In some jurisdictions, requirements under local GAAS or professional responsibilities may require the auditor
to deal with the fact that the component audit has been conducted using a materiality level determined in the context
of the group audit in a different manner (such as considering it to be a scope limitation and, therefore, modifying the
auditor’s opinion accordingly).
11
In some jurisdictions, requirements under local GAAS or professional responsibilities may require the auditor
to use different wording for the auditor’s opinion.
in the Name of group’s accounting manual XX Month 20XX or with the instructions issued by Name of
group’s management on XX Month 20XX and the policies contained in the Name of Group’s accounting
manual/disclosed accounting policies.

Restriction on Use and Distribution

This special purpose financial information has been prepared for purposes of providing information to
Name of group to enable it to prepare the consolidated financial statements of the group. As a result, the
special purpose financial information is not a complete set of financial statements of name of component
in accordance with applicable financial reporting framework underlying the group’s accounting policies
and is not intended to give a true and fair view of / present fairly, in all material respects, the financial
position of name of component as of XX Month 20XX,and of its financial performance, and its cash flows
for the year then ended in accordance with applicable financial reporting framework underlying the
group’s accounting policies. The financial information may, therefore, not be suitable for another
purpose.

This report is intended solely for Name of Group Audit Firm and should not be used by or distributed to
other parties.

If applicable: component auditors to add liability wording following local policies and procedures.

Component engagement partner’s

name

Component engagement partner’s

signature

Component auditor’s firm and

address

Date

C-5.2 Trial balance signed by FM and CD

Please include audited financial statements which is signed by the FM and CD. The financial statements
should include all activities in the country.

See below for example of signed trial balance:

180000 CT 5.2.pdf
C-6.1 Audit Report Projects12

Name of Local Entity:

Year End: 31.12.XX

To: BDO Oslo / Erik H. Lie

Independent auditor’s report on project financed by (donor name)

Conclusion

We have audited the project report for project name, for the period ending xx.xx.xxxx, comprising a
statement of expenditures showing total expenditures of NOK xxxx and note x describing the basis of
accounting for the statement of expenditures.

In our opinion, the project report for project name, for the period xx.xx.xxxx – xx.xx.xxxx, are prepared,
in all material respects, in accordance with the basis of rendering the accounts described in note x.

Basis for Opinion

We conducted our audit in accordance with laws, regulations, and auditing standards and practices
generally accepted in Norway, included International Standards on Auditing (ISAs). Our responsibilities
under those standards are further described in the Auditor’s Responsibilities for the Audit of the project
report. We are independent of the Project as required by laws and regulations, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We believe that the audit evidence
we have obtained is sufficient and appropriate to provide a basis for our opinion.

Emphasis of matter - Basis of Accounting and Restriction on Distribution

We draw attention to Note X to the project report, which describes the basis of accounting. The project
report is prepared to provide information to Project name and other intended users. As a result, the
project report may not be suitable for another purpose. Our report is intended solely for Project name
and other intended users, and should not be distributed to any other parties. Our opinion is not modified
in respect of this matter.

Responsibilities of the Management for the project report

The management is responsible for the preparation of the project report, and for such internal control as
management determines is necessary to enable the preparation of a project report that is free from
material misstatement, whether due to fraud or error.

Auditor’s Responsibility for the Audit of the project report

Our objectives are to obtain reasonable assurance about whether the project report as a whole is free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit
conducted in accordance with laws, regulations, and auditing standards and practices generally accepted
in Norway, including ISAs will always detect a material misstatement when it exists. Misstatements can

12 List of projects to be audited will be provided by Finance Manager.

arise from fraud or error and are considered material if, individually or in aggregate, they could
reasonably be expected to influence the economic decisions of users taken on the basis of these financial
statements.

As part of an audit in accordance with laws, regulations, and auditing standards and practices generally
accepted in Norway, included International Standards on Auditing (ISAs), we exercise professional
judgment and maintain professional scepticism throughout the audit. We also:

• identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error. We design and perform audit procedures responsive to those risks,
and obtain audit evidence that is sufficient and appropriate to provide a basis for our
opinion. The risk of not detecting a material misstatement resulting from fraud is higher than
for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.

• obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Project’s internal control.

• evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.

We communicate with the Board of Directors regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit

Location, date

Partner name
Title
C-6.2 Audit Report Projects - reporting income and expenditures by project

Example of reporting income and expenditures by project:

C-6.2.xlsx

Please make sure to fill in all the sections of the form, including the section regarding transfer to
partner. In addition, please include an overview of all projects, including name of donor,
name of project and donor funds spent.
C-7 Summary of identified misstatements

The Final summary memorandum (C-8) includes a Summary of identified misstatements which is used to
accumulate and summarize misstatements on all engagements. You are required to use the attached
template to accumulate all corrected and uncorrected misstatements above the threshold for clearly
trivial misstatements (refer to section B-2).

Appendix C-7 -
Summary of misstatements.xls

Provide adequate explanation of the nature of each misstatement (including a brief discussion of
component management's position and an explanation of your position) in the Final summary
memorandum and note whether it has been discussed with component management.

In order for us to appropriately communicate with those charged with governance, we need to be aware
of the reasons why component management has not corrected all misstatements, therefore, please
indicate the reason in the template.
C-8 Final summary memorandum

Provide a Final summary memorandum for your component that summarizes important audit (or review)
results and conclusions, highlighting major issues. Please write your Final summary memorandum in a
manner that fully explains the facts of the issues, amounts involved, and conclusions reached.
We expect you to address all issues discussed in the Audit planning memorandum in the Final summary
memorandum. The extent of documentation in the Final summary memorandum is commensurate with
the component materiality assigned to you in accordance with Section B-2. The Final summary
memorandum includes, at a minimum, the following:

► A description of any significant changes to the audit (or review) strategy not reflected in the Audit
planning memorandum

► A brief description of the project which should include:

• Purpose of the project
• Progress report with an explanation of any deviations from planned duration of the project
• Planned duration of the project and
• Status of the project as of December 31 20XX

► Breaches to independence and ethical requirements if not already reported to the Group Auditor

► Significant accounting or auditing/review issues, which includes at a minimum:

• Significant risks identified and a brief discussion of how each significant risk was addressed
in the audit

• Judgmental areas where auditing procedures required extensive independent or subjective

analysis (e.g., loss provisions when there has been a material impairment in asset values)

• Transactions that are either complex or unusual in nature (e.g., significant non-routine
transactions immediately prior to period end)

• An issue that affects (or had it not been resolved to your satisfaction, would have affected)
your opinion or conclusion (e.g., satisfactory explanations and documentation for transactions
that did not appear to have a clear business purpose)

• Deficiencies in internal control, including deficiencies in IT applications, IT-dependent

manual controls or IT general controls (ITGCs), that you plan to communicate to those charged
with governance of the component

• Circumstances that required either unusual or extended auditing procedures, or caused you
significant difficulty in applying audit procedures:
o Existence of material misstatements or omissions in the financial statements
o Suspected or identified fraud or suspected or identified non-compliance with laws and
regulations
o Misstatements above the amount below which misstatements are clearly trivial, whether
or not corrected by management
o Other important results and conclusions of our audit work
o Significant findings or issues related to the selection, application and consistency of
accounting policies, including related disclosures
• A brief description of other significant accounting or auditing/reviewing issues, including how any
significant accounting or auditing/reviewing issues identified in the Audit planning memorandum were
addressed during the audit

► The nature and scope of consultations or discussions with your technical resources regarding
important accounting and auditing/review issues or other significant matters, and a summary of
conclusions reached

► Related party relationships or transactions not in the normal course of business, that require
consideration of disclosure in the group financial statements

► Information of instances of non-compliance with laws and regulations that could give rise to a
material
misstatement of the group financial statements

► Indicators of possible management bias

► Other significant matters that you have communicated or expect to communicate to those charged
with governance of the component

► Whether audit evidence was obtained while performing the work on the financial information of
component(s) that contradicts the information communicated to you by us

► Your considerations and results of the procedures performed on going concern

► Key findings from your overall analytical review

► The Summary of identified misstatements

► When reviews of interim financial information are required, a brief discussion of important matters
that arose during the interim periods, if not already covered elsewhere in the Final summary
memorandum

► Exceptions noted in the written representations that you requested from component management
and a confirmation that you obtained a representation letter from component management

► Any other matters that may be relevant to the group audit, or that you want to draw to our
attention

► The opinion of the preparer of the Final summary memorandum, which covers the overall conclusion
on the procedures performed, including:

• Whether sufficient appropriate audit evidence has been obtained in support of your opinion
• Whether the financial information at the component has been prepared, in all material
respects, in accordance with the accounting policies and instructions contained in the group
audit instructions
• Whether any modification to the conclusions to the Group Auditor are appropriate.
C-9 Component auditor confirmation

Relevant members of component auditor’s team

Role Names Phone Email

Partner in charge of
project engagement
(Senior) Managers
Other Resources

Initials

1. I confirm that we have complied with ethical requirements in accordance with the IFAC Code of
Ethics for Professional Accountants, including independence and professional competence
2. I confirm that we have completed our audit/review procedures in accordance with International
Standards on Auditing13 and that we have completed additional procedures as described in the
project audit instructions or in other instructions received from you.
3. I confirm that we will have complete and final documentation that supports the reporting package
forms and the completion of procedures described in the audit instructions no more than [insert as
appropriate] days after the auditors’ report date, which is currently estimated to be [date] If we
have any concerns about meeting this requirement, I will bring them to your attention as soon as
they are known.

Describe any exceptions to the statements above:

Component engagement partner’s

name

Component auditor’s firm and

address

Date

13 If you perform a review in accordance with ISRE 2400, or ISRE 2410, replace International Standards on Auditing with International
Standards on Review Engagement (ISRE)
C-10 Subsequent events procedures

To Name of group auditor

From Name of component auditor

Date XX Month 20XX

Subject Work on the special purpose financial information (reporting

package) of Name of component for period ending XX Month 20XX

We confirm that we have performed a subsequent events review in accordance with relevant auditing
standard e.g. ISA 560, from the date of our report on our audit of the special purpose financial
statements of the component [or completion of our fieldwork] XX Month 20XX to Group reporting date.
Our review comprised discussions with management and a review, to the extent appropriate, of
management accounts, minutes and other management information until Group reporting date.
At your request, we have also paid attention to possible material going concern issues until Group
reporting date.

No/The following matters were identified which would result in an adjustment to the reporting package
of the above component for the period / year ended XX Month 20XX previously reported to you during
our reporting in connection with the audit of the group financial statements of name of group for the
period/year ended XX Month 20XX or result in any change to our opinion to you dated XX Month 20XX.

Subsequent events:
Description and quantification of transactions/events

Component engagement partner’s

name

Component auditor’s firm and

address

Date
C-11 Management letter

If you have identified a significant deficiency in internal control at the component, you should describe
it in the Final Summary Memorandum (C-8) and we also request that you prepare a management
letter comment describing this significant deficiency. Management letter comments are to be
discussed and agreed with component management.

In addition to any significant deficiency in internal control identified and described in the Final
Summary Memorandum, management letters address deficiencies noted over business and accounting
processes, potential recommendation identified and business issues that will demonstrate to the client
our knowledge of the business. Management letters are subject to wide circulation within the group.
Therefore, it is important that they are of a high standard.

RANKING
All issues must be ranked as high, medium or low using criteria described below:

High: This indicates an issue we consider high risk and is critical. Management should pay particular
attention to this area to ensure that the issue is given high priority to be addressed and resolved.

Medium: This indicates a medium level of risk, where we felt there is some scope of material
misstatement in this area and therefore the responsible manager should review it carefully.

Low: Any issues in this area are regarded as having a low level of risk. Whilst not critical, the
responsible manager should be aware of this issue and monitor it to ensure it does not become medium
or high risk.

Please use the assigned materiality levels when writing the management letter. The following
topics (if any deficiencies) must be included in the management letter:

- Internal control and fraud - Legal claims

- Laws and regulations
- Supporting documents
- Transfers to partners

Please make sure the management letter addresses any issues noted in the C-4.2 Internal control
questionnaire.

Standard format for management letter comments is as follows and must be followed:

A. INTRODUCTION
In planning and performing our audit procedures for [name of component] in support of the audit of the
(group) financial statements of [name of Company for the Year-ended [balance sheet date], we noted
certain matters involving internal control over financial reporting and its operation at [name of
component] that we consider to be deficiencies in internal control under standards established by
Norway. The following suggestions, which resulted from our consideration of internal control, are
submitted to assist in improving procedures and controls. [or During our audit, the following matters
came to our attention that we believe merit your consideration.]
B. DEFICIENCY
1. Summary of Points Arising from Current Year's Audit

Ref Summary of weaknesses Risk (high/medium/low)

1. Internal control and fraud
1.x [Description of
deficiency/weakness)]
2. Legal claims
2.x [Description of
deficiency/weakness)]
3. Supporting documents
3.x [Description of
deficiency/weakness)]

[Add/remove points under each topic in accordance with identified deficiencies]

2. [Description of deficiency/weakness in accordance with table and reference above)

Description of the Business risk/Risk Recommendation Risk ranking

deficiency implication

Management Account/process
Comment [Account/process]
Individual
responsible
[Individual
responsible]
Implementation
date
[Implementation
date]

[Add description tables for each deficiency identified, i.e one table as above for each point 2.1,
3.x, 4.x etc]

3. MANAGEMENT ACTIONS ON PRIOR MANAGEMENT LETTER POINTS

Ref Observation Status

Management
Comment
C-12 Questionnaire

A. QUALIFIED AUDIT REPORT

If you have qualified your project audit report on the financial statements or intend to do so, please give
details and background for the reasons for the qualification below.

B. SIGNIFICANT MATTERS NOT COVERED BY THE DETAILED AUDIT QUESTIONNAIRE

Please indicate all matters of a significant nature which arose during the course of your audit and which
have not been covered in the answers to the questions in Section C (where available, receipt of a copy
of your final project audit review notes would be appreciated). Please also include any other matters
which you consider should be brought to our attention as auditors of NPA. Please also comment on any
significant variations in balance sheet and profit and loss account items from the previous year. Indicate
if any items have been significantly affected by non-recurring or exceptional items. Please comment on
any extraordinary items shown in the financial statements or the reporting package for the project.

C. DETAILED QUESTIONNAIRE
1. GENERAL
1.1 Please confirm that no limitations were placed on the scope of your examination by management
that would preclude you from conducting a full scope audit in accordance with the international audit
instructions sent to you by us.
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable: ……………………………………………………………………………….

1.2 Has the audit been performed in accordance with International Standards on Auditing (or auditing
standards generally accepted in a designated country) covering the following areas:
(a) planning, controlling and recording;
(b) accounting systems;
(c) audit evidence;
(d) internal controls; and
(e) review of financial statements?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.3 Did you obtain from project officials a management representation letter in respect of all significant
matters where subjective management judgment was important?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
1-4 Did you carry out the audit of the whole organisation, which the project is a part of? If no,
please note the name of the auditor below.
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.5 Did your audit include a study and evaluation of the entity's system of internal control?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.6 In determining the nature, timing and extent of substantive tests of account balances, was reliance
placed on the functioning of the system of internal control? If so, were compliance tests performed to
test the function of the system of internal controls?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.7 During your study and evaluation of the internal controls, were any material weaknesses in the
system of internal controls identified?
If so, have all material weaknesses
- been considered in the design of your audit procedures?
- discussed with the management of the local project and reported to us as auditors of the parent
project? Please attach copies of any communications with the client on internal control and other
matters.
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.8 Did you specifically consider the requirements of the auditing standards being applied with respect
to the risk of material misstatements in the financial statements resulting from fraud or error?
If so, where there any matters that were identified which were communicated to management? Please
attach a copy of any communications with the client on fraud and error.
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.9 During the course of your project audit did you identify any conditions or events that lead you to
question whether the entity was complying with laws and regulations?
If so, where there any conditions or events that were identified that were discussed with management?
Please attach a copy of any communications with the client on noncompliance with laws and regulations.
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.10 Did you carry out a review of events after the balance sheet date?
Did this confirm that no amendments were required to the financial statements, and in particular that
the going concern basis was appropriate?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

Please give the date up to which your review was carried out: xx.xx.20XX
1.11 Are the financial statements /project financial reporting packages prepared in accordance with
the relevant requirements of:
(a) Project audit engagement instructions?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.12 Have all accounting policies necessary for a full understanding of the financial statements been
disclosed?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.13 Did you obtain letters from lawyers to obtain corroborative audit evidence that there is no
litigation or claims pending against the organization which, if decided adversely, would have a material
effect on the financial statements?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.14 Did you perform audit procedures to identify contingencies and post balance sheet events? If so,
have they been appropriately accounted for and is the disclosure adequate?
☐Yes ☐ No ☐ Not applicable
Reason for "not applicable": ……………………………………………………………………………….

1.15 Are you satisfied that you have been given all relevant information in respect of all contracts of
a material nature that were effective during the period under review or could give rise to losses?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.16 Have the relevant matters included in the minutes been appropriately reflected in the financial
statements?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.17 What material variations have there been in the following:

(a) actual results as compared with budget?
Please quote explanations you have received from local management

……………………………………………………………………………………………………………….

1.18 Were detailed audit programs prepared for the audit of all significant accounts?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

1.19 Have all the working papers been reviewed by a person other than the person performing the
work?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

2 CASH AND CASH EQUIVALENTS

2.1 Did you obtain confirmation of all bank balances direct from the bank?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

2.2 Have petty cash been counted/checked by yourselves?

☐Yes ☐ No
Reason for no ……………………………………………………………………………

2.2 Have all reconciliations been checked by yourselves?

☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

2.3 Are you satisfied as to the local paying-in arrangements by branches and the transfers there from
to the head office bank account?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

2.4 Are year-end bank balances or the cash in hand unusually large/small in relation to the normal
balance?
☐Yes ☐ No ☐ Not applicable
Reason for yes or not applicable……………………………………………………………………………

2.5 Are any bank balances blocked or restricted in any way?

☐Yes ☐ No ☐ Not applicable
Reason for yes or not applicable……………………………………………………………………………

3 ACCOUNTS RECEIVABLE
3.1 Has there been a review of after date receipts?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

3.2 Are any accounts received due after more than one year?
☐Yes ☐ No ☐ Not applicable
Reason for yes or not applicable……………………………………………………………………………
4 ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
4.1 Did you satisfy yourselves regarding purchase cut-off at the year end?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

4.2 Have satisfactory steps been taken to ensure that all liabilities have been included in the accounts?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

4.3 At the balance sheet date, had the project any:

(a) significant purchase commitments for quantities in excess of requirements or at prices in excess
of market value at that date?
☐Yes ☐ No ☐ Not applicable
Reason for yes or not applicable……………………………………………………………………………

4.4 Is there adequate disclosure in the accounts of the nature and amount of unusual and/or substantial
provisions?
☐Yes ☐ No ☐ Not applicable
Reason for "not applicable": ……………………………………………………………………………….

6 INVENTORIES/ASSETS
6.1 Are you satisfied as to the existence of the assets according to sub sheet?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

6.2 Do you have a register showing the balance as of 1.1.20xx, movements in the period and balance
as of 31.12.20xx?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

7 INFORMATION ON POLICIES/PROCEDURES/SYSTEMS

7.1. Have you seen the organisation’s policy/procedures regarding:

(a) Procurement
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

(b) Fraud and corruption prevention

☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
(c) Vehicle use
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

7.2 Does the organisation have a stock control system?

☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

7.3 Does the organisation have a comprehensive annual budget process?

☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

7.4 Does the organisation carry out any consolidated audits?

☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

7.5 State the accounting system used by the organisation

…………………………………………………………………………………………………………………………………

7.6 State what external audits are annually carried out by the organisation

…………………………………………………………………………………………………………………………………

8. BALANCE WITH PARTNERS

8.1 Are the local partner audited by a sufficiently qualified auditor and are the audit carried out in
accordance with generally accepted auditing practices in order to be able to rely on the partner audit?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
8.2 Do the audit covers the local accounts of the partner’s activities according to the audit report on the
partner’s financial statement and management letter?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
8.3 Do the audit covers visits to projects according the work of the partner auditor? ☐Yes ☐ No ☐
Not applicable
Reason for no or not applicable……………………………………………………………………………
8.4 Do the local auditor verify that the partner’s income from country program equals “expenditure” in
the country program’s accounts?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
8.5 Do the local auditor verify that the liability to (receivable from) the country program equals to
receivable (liability) in the country program’s books?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

9. COOPERATION WITH LOCAL PARTNER

9.1 Have the NPA office signed a contract between themselves and the cooperating partner? ☐Yes ☐
No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
9.2 Have a budget between NPA and the local partner been agreed and signed?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
9.3 Have the cooperating partner submitted a narrative progress report quarterly, biannually and
annually on the implementation of the project?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
9.4 Have NPA visited the project implemented by the cooperating partner on a regular basis and hold
discussions with the cooperating partner on issues of mutual interest concerning the project?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………
9.5 Have NPA ascertain that the funds are utilized in accordance with the agreed budget and NPAs overall
policy guidelines?
☐Yes ☐ No ☐ Not applicable
Reason for no or not applicable……………………………………………………………………………

Component engagement partner’s

name

Component auditor’s firm and

address

Date