Financial Crime World

USAID Contracting Template: Engaging Audit Services

Purpose

To outline the process for selecting and engaging audit services for USAID-funded projects, ensuring compliance with relevant regulations and standards.

Scope

This template applies to all USAID recipients expending federal awards exceeding $750,000 in a fiscal year, or those procuring audit services as required by their USAID award.

Responsibilities

USAID Operating Units

  • Provide assistance, expertise, and participate in audit entrance and exit conferences as needed.

Cognizant Controller

  • Maintain a list of acceptable audit firms available for selection by recipients.
  • Review the final Statement of Work (SOW) to ensure compliance with USAID requirements.

Auditee (Recipient)

  • Procure audit services from an independent auditor on the USAID List of Audit Firms or obtain approval from the cognizant Controller for a new audit firm.
  • Ensure timely and high-quality audits in accordance with professional auditing standards.

USAID List of Audit Firms

The list includes audit firms that meet specific criteria, including:

  • Ability to produce reports in English.
  • Sufficient quality control program in place meeting GAGAS standards.
  • Passing quality control review within three years.
  • Good standing membership with AICPA or country’s public accounting organization (PAO).
  • At least three years of operation or partners with previous acceptable experience with USAID-funded audits.
  • Continuing professional education (CPE) requirements for audit partners and staff.
  • Senior staff holding a Chartered Accountants or Certified Public Accountant designation.

Selection Criteria

When selecting an independent auditor, recipients should consider factors such as:

  • Past performance in terms of quality, timeliness, and ability to conduct audits in accordance with professional auditing standards.
  • Independence from the audited entity during and for any period covered by the financial statements or subject matter information.

Consequences

  • Failure to select an independent auditor on the USAID List of Audit Firms may result in unacceptable audit reports and disallowance of costs.
  • Auditors submitting unacceptable work or failing to provide timely responses to USAID requests may be noted and excluded from the list.
  • Audit firms not performing audits under this Guide for a period of five years may be removed from the list, with an opportunity to update their information before removal.

Timeline

Recipients should allow at least six months’ advance notice when submitting new audit firms for screening. USAID encourages local audit firms and rotating audits among eligible audit firms to ensure independence.

Conclusion

By following this template, USAID recipients can ensure compliance with relevant regulations and standards while engaging high-quality audit services for their projects.