Financial Audit Guidelines

May 2011
Revised November 2011




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General information

1.1 Purpose

The purpose of these guidelines is to define the scope of financial audits and to serve as a steering
document for their implementation. The guidelines follow the financial audit requirements of the
Swedish International Development Cooperation Agency (Sida).

1.2 Scope
The audit plan covers audits of projects financed by Spider. The Spider center itself is audited annually
by external auditors, as per agreement with Sida.

1.3 Program overview
The Swedish Program for ICT in Developing Regions (Spider) is a resource center for ICT for Development
(ICT4D). Spider was established in 2004 and is primarily financed by the Swedish International
Development Cooperation (Sida), with complementary funding from Stockholm University. The center is
administered by the Department of Computer and Systems Sciences (DSV) at Stockholm University.
Spider functions like a node in a network of actors from academia, public sector, private sector, and civil
society. Networking and brokering of knowledge and expertise is combined with support to innovative
ICT4D projects in partner countries.

Type and scope of financial grants:
Catalytic seed funding (project grants), program coordination, capacity development, research
components, research projects, travel grants, conferences, and workshops
Financial grants are generally limited to SEK 500.000. Any contributions above this amount are subject
to approval by the Spider Board.

1.4 Point of contact
The Director of Spider has overall responsibility for the implementation of financial audits. The
implementation of financials audit is managed by Spider project staff and collaborating partners.
Administrative staff at DSV/SU is also involved if and when relevant.


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2.0 Audit Process

2.1 Type of audit
These guidelines cover financial audits.
Ongoing monitoring and evaluation of projects is the responsibility of Spider project staff and
collaborating partners as stipulated in separate agreements.

2.2 Audit standards
Financial audits shall be carried out in accordance with international audit standards (ISA) issued by the
International Federation of Accountants (IFAC). The audit shall be carried out by an external,
independent and qualified auditor (Certified Public Accountant/Authorized Public Accountant) and
follow the ISA 800/805 standard. Swedish government agencies may use their internal auditor, as long
as they fulfill the audit requirements.

Spider shall approve beforehand (i.e. prior to audit start) the selection of auditor. The auditor must be
able to provide proof of qualifications, e.g. membership of IFAC affiliated organization. Audit costs shall
be paid by the party and be included as part of their budgets. In some cases, Spider may partially
coordinate and cover the costs of financial audits, in which case this will be stipulated in separate
agreements with partner organizations.

Financial audits shall follow the Terms of Reference specified in Annex I. The Organization is responsible
for communicating the Terms of Reference to the auditor.

2.3 Scope
The party receiving financial grants from Spider is responsible that the use of funds is audited annually
by an external, independent and qualified auditor. Swedish government agencies are allowed to use
their internal auditor, as specified above. Audit shall be conducted in accordance with internationally

acknowledged auditing standards, as specified above.

In cases where the party transfers grants to other recipient local organizations, the local organization
shall be responsible for a grant being annually audited in accordance with requirements given above. An
unbroken chain of audit reports shall exist up to and including the final grant recipient organization.
Current audit directions shall where applicable be passed on to the organization immediately following
in the chain.
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2.4 Reporting

Spider expects to receive a report consisting of an auditor’s opinion (auditor’s report); letter from the
auditor to the project management regarding the audit and the auditor’s findings, comments and
recommendations (management letter); and the management’s response to the auditor’s letter
(management response). These reports should be submitted within the timeline specified below.

Auditors shall express an opinion in accordance with ISA 800/805 in their reports whether the
submitted financial report corresponds with the organization accounting records and Spider directions
for financial reporting. Auditor’s report shall contain the audit findings made by auditor during auditing
process. Auditor’s report shall also contain information on whether the organization has taken
reasonable steps with regard to earlier audit recommendations. The party shall submit their auditor’s
report to Spider in connection with submission of their annual financial report to Spider as of
agreement. A response containing the organization standpoint and planned measures shall be drawn up
by the party and sent to Spider together with the auditor’s report.

Unless otherwise agreed, the auditor’s report must be submitted to Spider no later than 31 January in
the year following the receipt of the financial grant, together with financial and project reports as

stipulated in the agreement with Spider. The organization’s response to the auditor’s report shall be
submitted to Spider at the same time unless otherwise agreed.

2.5 Supplementary audits

Spider may demand financial audits supplementary to the process outlined here. The party shall
collaborate with and assist Spider in the case of any supplementary audit, follow-up and financial studies
requested by Spider. Spider has the right to visit, audit and/or evaluate each project or activity financed
partially or entirely with grants by Spider. Visits, audit and evaluation should be preceded by
consultation with the organization concerned. Spider does retain the right to carry out unannounced
spot checks.

2.6 Revisions
These financial audit guidelines may be revised and updated if and when necessary. Any revisions will be
reported to Sida.

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Annex I - Terms of Reference for Annual Audit

I. Introduction
Brief project background information:

[X] wishes to engage the services of an audit firm for the purpose of auditing the [project/program]
[name], as stipulated in the agreement between [X] and [Spider/Stockholm University]. The audit shall
be carried out in accordance with international audit standards issued by International Organization

Federation of Accountants (IFAC). The audit shall be carried out by an external, independent and
qualified auditor (Certified Public Accountant/Authorized Public Accountant).
II. Objectives and scope of the audit
Audit the Financial report for period [January-December 20XX] as submitted to Spider and express an
audit opinion according to ISA 800/805 on whether the financial report of X [project/program]
submitted to Spider, is in accordance with [X]s accounting records and Spider’s requirements for
financial reporting.

Examine, assess and report on compliance with the terms and conditions of the agreement [agreement
articles] and applicable laws and regulations regarding accounting and taxes.
The auditor shall examine on a test basis that there is supporting documentation related to reported
expenditure. The size of the test shall be based on the auditor's risk analysis and that should be stated in
the report. The auditor shall report the identified amount in case there is any missing supporting
documentation.

Examine if [X] has agreements with the organizations to which it channels parts of the funds and
whether [X] has followed Spider’s audit requirements and have acted on received audit reports from
these organizations.
III. The reporting
The reporting shall contain details regarding used audit methodology and the scope of the audit.
The reporting shall contain an assurance that the audit was performed in accordance with international
standards and by a qualified auditor.

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The reporting shall contain the responsible auditor's signature (not just the audit firm) and title.
The reporting from the auditor shall contain the audit findings made during the audit process. It shall
state which measures that have been taken as a result of previous audits and whether measures taken

have been adequate to deal with reported shortcomings.
The auditor shall make recommendations to address any weaknesses identified. The recommendations
should be presented in priority.

The reporting shall not exceed 20 pages
j be written in English and be presented to [X] in [X] copies and
one digital for onward transmission to Spider, within
[X] weeks after the last visit.

Please also attach an annual report or other reports/documentations that might be relevant


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