SPECIFICATION DOCUMENT PROCUREMENT OF EXTERNAL AUDIT SERVICES

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1 BID NO: NMISA (12-13) T0009 SPECIFICATION DOCUMENT PROCUREMENT OF EXTERNAL AUDIT SERVICES NB. On the last page of this document the bidder needs to declare and indicate that they have read and understood the document in full. Non completion of the declaration as mentioned above will lead to disqualification. SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 1

2 1. BACKGROUND The NMISA is a Type 3A Public Entity established in line with the Measurement Unit and Measurement Standards Act, No. 18 of NMISA mandated by the Measurement Units and Measurement Standards Act, No. 18 of 2006 (The Act), to provide for the use of the international measurement units (the SI) in South Africa, to maintain national measurement standards and to ensure the comparability and international acceptance of the NMS. More information can be obtained from According to Section 3 (a) for the Public Audit Act, the Auditor General may audit and report on the accounts, financial statements and financial management of any public entity listed in the Public Finance Management Act. 2. THE OBJECTIVES OF THE AUDIT The objective of the audit is to provide an independent audit opinion of the accounts, financial statements and annual financial reports of the NMISA for each financial year covered by the term of the audit appointment. The external auditor must adhere and meet all statutory requirements of the Public Audit Act, 2004 (Act No. 25 of 2004, etc.), the International Auditing Standards (ISA), and a requirements as may be set by the Auditor General (SA) (AGSA). 3. TERM OF THE AUDIT APPOINTMENT The NMISA is seeking to make an appointment for a maximum of three (3) years with the option for a two (2) years renewal period, commencing this financial year ending 2012/13 through to the financial year ending 2014/15. The auditor, at the end of the 5 year term, cannot be re-appointed, however if an audit firm is appointed as distinct from an individual, an alternative audit engagement partner is eligible to be appointed as the lead auditor. 4. SCOPE OF THE AUDIT The External Auditors will be required to perform audit functions in terms of the Public Audit Act, 2004 (Act no. 25 of 2004), which includes: a. The evaluation of public finance management; b. Conducting audits in accordance with auditing standards as published by the professional standards and best practice guidelines for public sector auditors; c. evaluating compliance with applicable legislation relating to financial matters, financial management and other related matters audit of performance against predetermined objectives SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 2

3 d. Other legislative functions The External Auditor will also be required to: 1. Carry out such work as is necessary to form an opinion as to whether: a) the accounts are properly kept; and b) the annual financial statements: i. are prepared in accordance with the financial records; and ii. represent fairly in all material respects, the financial position of the NMISA as at 31 March, and its financial performance and cash flows for the year then ended in accordance with SA Standards of GRAP and the requirements of the PFMA. 2. Determine his or her scope, methodology and approach as per the AGSA guidelines and legislative requirements (Public Audit Act (Act no 25 of 2004) section 14 through Communicate audit findings and make recommendations to management. 4. Provide a final report with management responses on corrective actions and the presentation thereof to the Audit and Risk Committee, where necessary. 5. MANDATORY REQUIREMENTS 1. Tax clearance certificate 2. Registration as Auditors in terms of the Public Accountants and Auditors Act (IRBA Independent Review Board of Auditors) 3. Completed all SBD form (Attached) 6. TECHNICAL/ COMPETENCIES REQUIREMENTS External Auditors must meet the below stated competency requirements: a. The External Auditor must be registered in terms of the Public Audit Act as an accountant and auditor and engaged in public practice (registration with SAICA South African Institute of Chartered Accountants, IRBA - Independent Review Board of Auditors). b. Evidence of dedicated resources available to the external auditor for the duration of the contract, qualifications and experience of such resources, (attached CV s, qualifications, etc.) c. Profile of the audit firm ( reference should be attached to the proposals) SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 3

4 7. HOURS, FEES AND EXPENDITURE The External Auditor will be required to provide the following detail: a) Appropriate evidence of statutory registrations requirements, memberships and associations; b) An estimate of the hours to be spent on the audit and the rates thereof; c) Fees for completing the audit in accordance with the specification and with reference to different levels of proposed resources to be utilised; d) Appropriate experience associated with the external auditing of Public entities and other AGSA audits Note: No variation, to the accepted quote, will be allowed unless the service provider has obtained prior written approval from the NMISA. 8. TERMS AND CONDITIONS The following conditions should be noted by auditors: a) The appointment of the auditor is subject to the AGSA s annual approval of the appointment, extension or reappointment in terms of section 25 (4) of PAA, Act no. 25 of 2004 and general notice 839 issued by Government Gazette No of 28 November b) The auditor shall not, and has no right to, assign the audit contract to third parties. c) The auditor shall not be engaged by the NMISA to undertake any financial consultancy with the NMISA that requires the preparation of financial information that will be the subject of the annual audit. d) The auditor shall confirm that they are, and shall maintain during the duration of the audit term, total independence relating to the NMISA. e) The duration of the assignment will be determined by annual performance review by the Audit and Risk Committee and the Board, but will not be renewed for longer than five (5) years 9. TERMINATION OF APPOINTMENT The appointment as auditor is terminated if: a) the AGSA objects to the appointment b) the auditor ceases to be a registered as described by regulations; c) the auditor is a disqualified person under relevant legislation; d) the auditor ceases to be eligible for appointment as auditor; SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 4

5 e) the auditor resigns by notice in writing to the NMISA; f) the auditors independence is comprised 10. AUDITORS INDEPENDENCE The auditor is required to certify that they are independent of the NMISA and nothing has transpired that would compromise their independence during the conduct of the audit. 6. EXTERNAL AUDITOR DELIVERABLES The External Auditor will be required to submit the following upon appointment: a. Detailed Audit Planning Memorandum b. Detailed budget in line with the Audit Planning Memorandum; c. Draft and issue audit reports upon completion of audit assignments; d. Attend Audit and Risk Committee meetings; e. Present External Audit Report to the Audit and Risk Committee. 7. SECURITY CLEARANCE OF BIDDERS NMISA will conduct all relevant security clearance on the appointed service provider prior to the awarding of the contract. Supplier Information and good standing will also be verified with National Treasury database in order to determine whether the bidder is listed on the List of Restricted Suppliers for Tender Defaulters. SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 5

6 8. EVALUATION The evaluation criteria will be according to the following: o o Bid documentation. 90/10 Principle (Historically disadvantaged individuals (HDI), broad based black economic empowerment (BBBEE and Pricing) Companies scoring less than sixty (60) per cent for functionality, as evaluated by a Tender panel, will not be considered for further evaluation (90/10 principle). The bid will be evaluated in terms of resources; skills, expertise, approach, price, independence, track record and preference points. NMISA reserves the right to request proof/evidence of performance or claims stipulated in the proposal. SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 6

7 All proposals will be evaluated on the following criteria indicated below. No. Criteria Weight 1. Company information and relevant experience; History/background Years established Financial stability/sustainability Technical/competency requirements; Human resources (skills, expertise and capacity to deliver) Methodology and approach Experience in external auditing and other AGSA audits Verifiable references; List of major clients and previous contracts especially with Government audits and other Public entities 10 Totals 100 NB: The firm s submissions and proposals should be addressing the above evaluation criteria. The information required for functionality should be presented in an orderly fashion for easy reference by the evaluation panel. SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 7

8 9. DECLARATION I, THE UNDERSIGNED (NAME).. CERTIFY THAT I NOTED THE INFORMATION PROVIDED, AND UNDERSTOOD THE ABOVE DOCUMENT IN FULL.. SIGNATURE. DATE SEPECIFICATION FOR EXTERNAL AUDIT FUNCTION NMISA (12-13) T0009 Page 8

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