External Auditors for WaterAid Pakistan

Terms of Reference

Hiring of External Auditors for WaterAid Pakistan

For 3-Years’ Term (FY 2025–26, FY 2026-27 & FY 2027–28)

1. Background

WaterAid Pakistan (WAP) is a not-for-profit organization, established in 2006, works to improve access to clean water, sanitation, and hygiene (WASH) across the country, particularly for marginalized communities. Partnering with local organizations and government bodies, it focuses on sustainable water solutions, hygiene education, and policy advocacy to address challenges like rapid urbanization and climate-related disasters. With millions still lacking safe water and proper sanitation, WaterAid Pakistan aims to ensure that clean water, decent toilets, and good hygiene become accessible for everyone.

WaterAid is using Sun Financials, a web-based multi-currency accounting package that is housed in the UK and Vision Excel is used as standard report writer. Accounts are prepared on accrual basis of accounting and financial statements need to comply IFRS, as mandated by signing of MoU with Ministry of Interior, Government of Pakistan.

WAP implements projects in 4 Provinces of Pakistan and ICT through local organizations. WAP uses an automated online payment system, and all the data is available online and in Islamabad. However, the projects implemented by the partners keep the financial data at their main offices and submit reports to WaterAid on monthly basis. For the next year, projects will majorly be implemented by 8-10 partners located in various cities of Pakistan.

2. Objective of the Assignment

The objective of this assignment is to conduct an independent audit of WaterAid Pakistan’s (WAP) annual financial statements, and to express an audit opinion on whether the financial statements present a true and fair view of the financial position and performance of WaterAid Pakistan, in accordance with the following:

• International Standards on Auditing (ISA)
• International Financial Reporting Standards (IFRS) as applicable in Pakistan
• Accounting standards for NPOs issued by ICAP as notified under the Companies Act 2017
• WaterAid Pakistan’s and WaterAid UK Operating Manuals and internal policies
• Relevant legal and statutory requirements under Pakistani law
• MoU with Ministry of Interior, and related policies in this regard

3. Scope of Work

The external auditor will:

• Audit the annual financial statements.
• Verify compliance with WaterAid Pakistan’s and WaterAid’s UK (as applicable) operating manuals and policies, donor agreements, and applicable local laws.
• Assess internal controls and identify any material weaknesses.
• Verify the proper utilization of funds, including donor-funded restricted and unrestricted grants.
• Review compliance with all the statutory requirements.
• Conduct audit of partners
• Review risk areas identified in the annual risk register or by management.
• Provide management recommendations for improving internal controls and compliance.
• Verify the gratuity/ provident fund (currently WAP is maintaining an unregistered and unrecognized gratuity fund)

As part of external audit, the external auditor must also certify that the funds were utilized for their intended purposes, giving particular attention to:

• The accounting system in place, data entry system, and ease of access to accounting documentation
• The analysis of the internal control system (separation of tasks, protection of assets in terms of security and proper use)
• The procedures for the management of the funds (bank account, advances and conformity with SOPs, petty cash, bank reconciliation, control of receipts)
• The financial aspects of personnel management (personnel contracts, human resource practices, leavers and joiners review, remuneration of salaries, allowances and other benefits, deduction at source according to regulations currently in force, remittances made to the authorities including Income Tax)
• Verify that allowances/ benefits have been paid in conformity to the WAP employee contracts and HR Policy
• The procedures followed by WAP for the procurement of goods and services (purchase requests, purchase orders, appropriate certification that the goods/services have been delivered in satisfactory condition before a payment is made)
• The procedures on the control of expenses (complete documentation, issuance of cheques in the name of the supplier stipulated in the contracts/purchase orders, proper signatories, bank accounts, etc.)
• The procedures on inventory control of assets owned by the WAP (catalogued/inventoried on a regular basis, identification by serial number or other means, condition of the inventory, location).

Every year, out of total partners; we expect that external auditor must also audit at least 5% partners (3 at minimum) of the WAP partners, based on risk assessment and previous year audit selections. The audit of selected partner organizations (WAP funded projects only) should be considerate of internal controls within partner organization for cash and bank payment controls; procurement and budgetary control; inventory controls; authorization of expenditure; coding of expenses; accuracy and integrity of the reports to WaterAid; fixed assets recording; human resource reviews, checking that there is no dual fund charging; compliance with local tax and legislation and compliance with partnership agreement and relevant donor rules and regulations.

4. Deliverables

The audit firm will provide:

• An audit opinion report on the financial statements including Balance Sheet, Income & Expenditure Statement, Cash Flow, Notes to the financial statements
• A management letter, identifying any control weakness as High, Medium or Low priority and recommendations to improve and
• Audited financial statements of selected Partners with their respective management letters

5. Eligibility and Qualification of the Audit Firm

The audit firm must:

• Be registered with ICAP and hold a satisfactory QCR rating
• Have at least 10 years of relevant audit experience including NGOs/INGOs
• Have no conflict of interest with WaterAid or its partners
• Have presence in Pakistan with adequate staff strength
• Must be category ‘A’ firm on panel of State Bank of Pakistan on date of evaluation

6. Proposal Requirements

Interested firms should submit:

• Company Profile
• Valid ICAP registration, NTN certificate, QCR certificate
• Evidence for Category A firm
• Evidence for approved firm by INGO committee
• Audit methodology and work plan
• Details of key engagement team members
• List of NGO/INGO clients audited in the past three years
• Financial proposal (fee quotation including taxes)
• Declaration of independence and non-conflict of interest

7. Evaluation Criteria

8. Contract and Terms

A three-year framework agreement will be signed, renewable annually based on performance. An annual engagement letter will specify details each year.

9. Ethical Standards

The firm must comply with ICAP’s Code of Ethics for Chartered Accountants, WaterAid’s Global Code of Conduct, and anti-bribery policies.

10. Submission of Proposals

Please provide your financial quote, in PKR, in the following format:

WAP will be responsible to make all travel and accommodation arrangements for any outstation visits (beyond the ICT Islamabad limits), as per WAP’s Travel Policy.

Application Process and Closing date

Please send your one sealed bid having Technical & Financial proposal in separate envelopes inside through registered mail/courier or by hand to the following address on or before November 07, 2025, COB. Please write the subject “WAP/01926/24-10-25/Consultancy-ExternalAuditors3Years” on the envelope

Head of Admin Security & Govt Relations
WaterAid Pakistan
2nd Floor, Executive Heights
65 West, A.K. Fazl-ul-Haq Road,
Blue area, Islamabad, 44000

Tel: +92 51 2806120
Enquiries may be directed to wapprocurement@wateraid.org
WaterAid reserves the right to accept or reject any bid or part of any bid without assigning any reason to it.

Apply By:

Application Process and Closing date

Please send your one sealed bid having Technical & Financial proposal in separate envelopes inside through registered mail/courier or by hand to the following address on or before November 07, 2025, COB. Please write the subject “WAP/01926/24-10-25/Consultancy-ExternalAuditors3Years” on the envelope

Head of Admin Security & Govt Relations
WaterAid Pakistan
2nd Floor, Executive Heights
65 West, A.K. Fazl-ul-Haq Road,
Blue area, Islamabad, 44000

Tel: +92 51 2806120
Enquiries may be directed to wapprocurement@wateraid.org
WaterAid reserves the right to accept or reject any bid or part of any bid without assigning any reason to it.