The external auditor shall conduct an independent audit of the financial statements and related financial records of the project implemented in Lebanon and Northwest Syria. The audit shall be performed in accordance with International Standards on Auditing (ISA) and shall also ensure compliance with:

• Donor contractual requirements and specific donor guidelines.
• Applicable Lebanese and, where relevant, Syrian regulations; and
• The organization’s internal financial, procurement, and operational policies.

The audit scope includes, but is not limited to, the following:

• Examination of Financial Records
  • Audit the project’s consolidated financial statements, covering income, expenditure, and, where applicable, balance sheet and cash flow statements.
  • Verify that all transactions are properly documented, accurately recorded, and comply with the approved project budget and donor agreement.
• Compliance with Donor and Local Regulations
  • Assess compliance with donor financial reporting requirements.
  • In Lebanon: verify compliance with Lebanese tax laws, NSSF obligations, Ministry of Finance reporting, and banking regulations.
  • In Syria: consider the operational challenges of cross-border aid and verify compliance with donor requirements for programming in non-government-controlled areas, including procurement, fund transfers, and remote management protocols.
• Bank and Cash Management
  • Verify bank accounts and reconciliations covering both Lebanon and Syria-related transactions.
  • Confirm the adequacy of documentation for cash withdrawals, deposits (including via service providers like OMT), and transfers, including any cash-based interventions in Syria.
• Field-level Financial Review
  • Assess the accuracy, completeness, and timeliness of transactions recorded in field offices or by field teams in Lebanon and Syria.
  • Examine supporting documentation and processes for remote or cross-border programming in Northwest Syria, acknowledging constraints in physical verification.
• Eligibility and Reasonableness of Expenditures
  • Verify that expenditures are reasonable, allowable, and allocable according to the donor agreement and project objectives.
  • Identify any ineligible costs and recommend corrective actions.
• Financial Reporting and Consolidation
  • Ensure that the project’s financial data from Lebanon and Syria have been properly consolidated and presented in the final financial statements.
  • Confirm consistency between financial data and narrative reports submitted to the donor.

Reporting

• Issue an audit report expressing an opinion on whether the project’s financial statements present a true and fair view, in accordance with the applicable financial reporting framework.’
  • Provide a management letter detailing internal control weaknesses, compliance gaps, and practical recommendations to strengthen financial management in both countries.

Contextual Considerations

• In Lebanon: ensure proper treatment of VAT, NSSF, and adherence to Lebanese laws.
• In Syria: consider challenges of operating in conflict-affected areas, limitations in physical verification, and donor guidelines for high-risk environments, while still ensuring the highest level of assurance possible.

Methodology & Standards

• The audit shall be conducted in accordance with International Standards on Auditing (ISA) or IDW Auditing Standards (IDW AuS).
• The auditor shall apply generally accepted auditing standards (GAAS) and auditing methods suitable for the non-profit and humanitarian sector.
• Sampling techniques shall be risk-based, focusing on high-value and high-risk transactions, and considering the complexities of cross-border humanitarian programming.