Bhutan Trust Fund for Environmental Conservation

ToR for Internal Audit

1. Project Background

The Bhutan Trust Fund for Environmental Conservation (BTFEC) is an independent grant making organization established in 1992, by the partnership of governments and donors specifically committed to environmental conservation. An initial target endowment capital of US$21 million was set up as an innovative mechanism to finance long-term conservation programs in Bhutan. Donors to the trust fund include the World Wildlife Fund and the Global Environment Facility, the governments of Bhutan, Denmark, Finland, the Netherlands, Norway and Switzerland.

The endowment of $21 million that was set up two decades ago has grown to more than $50 million as of 30 June 2015, net of total spending over $17 million. The BTFEC’s annual investment income is able to support 10–12 proposals each fiscal year, and the numbers increasing annually.

The Global Environment Facility (GEF) has agreed to support activities under the project “Sustainable Financing for Biodiversity Conservation and Natural Resource Management” (SFBCNRM) to assist BTFEC to enhance its operational effectiveness and ensure sustainability. This objective will be achieved through carrying out the update and implementation of the Second Strategic Plan 2011 by adopting more modern governance and business practices, modernizing grant-making process, improving monitoring and evaluation, updating the operational manual, improving institutional structure and capacity and ensuring the adequacy of its resources and tools to move forward.

1. Implementation arrangements of the Project

II (i) Objective

The objective of the consultancy is to provide the Management Board timely assurance that (a) the implementation of project activities by BTFEC and Grantee Institutions are being carried out in adherence to the provisions of Royal Charter, GEF-Grant Agreement, Interim Grant Implementation Hand Book, Operations Manual, World Bank Procurement Guidelines, January 2011, RGoB FRR 2001 or other applicable Laws/documents (b) the financial reports being submitted by the BTFEC and Grantee Institutions are in agreement with the books of account and can be relied upon to support the disbursements made by the Bank.

II (ii) Scope of Work

Specific areas of coverage of the internal audit will include the following:

1. Assessment of the adequacy of the project financial management system, including internal controls. This would include aspects such as adequacy and effectiveness of accounting, financial, procurement and operational control; level of compliance with various documents listed in Para 1 above;
2. An assessment of management procedures (finance and operations) of BTFEC and Grantee Institutions, in order to evaluate and improve the effectiveness of risk management, control and governess processes in BTFEC, by reviewing systems and operations that is based on the mandate and strategic needs of BTFEC;
3. That all GEF funds received under the project have been used in accordance with the financing agreement with due attention to economy and efficiency and only for the purposes for which the financing was provided; and that all procurements are conducted in accordance with the World Bank Procurement Guidelines 2011 and approved procurement plan;
4. Fund flows are adequate and timely and with respect to Grantee Institutions are in a timely manner and not used for non-project activities;
5. That all necessary supporting documents, contracts, records, and accounts have been kept in respect of all project expenditures reported by the implementing units, and that clear linkages exist between that accounting records and accounts books and the monthly/ quarterly financial reports submitted by Grantee Institutions to BTFEC;
6. That adequate records are maintained regarding the assets created and assets acquired by the project, including details of cost, identification and location of assets; and that physical verification of assets are being done.

III. Coverage & Timing of the Internal Audit

The Internal Audit shall be carried out at on half yearly basis and would cover all the project activities implemented by BTFEC and Grantee Institutions.

III (i) Reporting

The Internal Auditor will provide a report at the end of each audit and shall contain the records verified, deviations, if any, the adequacy of internal controls and the adherence to documents stated in Para 1 above. The report should be discussed and agreed with the respective head of office and should be structured in a manner giving the observations, the implications of the observations, the suggested recommendation and the management comments/ agreed actions. This will be in the form of a management letter (including an executive summary highlighting critical and cross cutting issues key issues, which require the attention of the Management Board.

1. General

The Internal Auditor would be given access to all documents, correspondence, and any other information relating to the project and deemed necessary by the Internal Auditor. The Internal Auditor should become familiar with the project and the documents stated in Para 1 above.

1. Duration of Assignment

Expected duration of consultancy: 30 working days spread over two months.

Specific service commencement dat