Request for expressions of interest for Consulting Firm for Audit Services of Financial Statements

Country: Republic of Kosovo

Project Name: Kosovo Energy Efficiency Fund (KEEF)

Ref No: KEEF/1C17/CQ/2023

Introduction

The Kosovo Energy Efficiency Fund, as an important independent, autonomous and sustainable entity has been established by passing Law No. 06/L-079 on Energy Efficiency, to achieve the objectives of the Republic of Kosovo in the Energy Efficiency by promoting, supporting and implementing Energy Efficiency measures, as well as attracting and managing financial resources in order to finance and implement investment projects in the area of Energy Efficiency in a sustainable manner

Description of the assignment

Under the European Union’s Energy Efficiency Directive (Directive 2012/27/EU), Kosovo approved an Energy Efficiency Law on November 7, 2018. The EE Law includes provisions for the establishment of the Kosovo Energy Efficiency Fund (KEEF) which would serve as the primary financing institution for the EE market in sectors currently not served by local banks (e.g., municipal, and central government buildings, multifamily apartment buildings etc.). As envisaged in the Law, KEEF has been established as an as an independent, autonomous and sustainable non-profit legal entity, and serves the interest of the public. KEEF will be an important mechanism to help finance energy efficiency investments in a significant share of the public-sector market. The government is also obliged to renovate a share of government buildings each year under the EE Law1 and has imposed mandates for municipalities to prepare, submit and implement Municipal EE Action Plans (MEEAPs). The KEEF serves as the primary financier for municipal EE building renovations in Kosovo. Donor and state grant funds to be used for energy efficiency investments will be channeled through KEEF, with the Fund becoming a mechanism for pooling funds, coordinating programs, and ensuring implementation experience is housed in one institution. As such, the KEEF will start with the municipal building sector and then expand to the other municipal sectors (e.g. water pumping) and eventually to the residential sector, focusing on multifamily apartment buildings. KEEF is currently implementing an energy efficiency project co-funded by a grant from the EU Instrument for Pre-Accession (IPA), World Bank IDA financing and Government of Kosovo. Among other components, this project will invest in energy efficiency measures in the municipal buildings and street lighting projects. For the purpose of future development and opening new windows of operation in the field of energy efficiency and renewable energy KEEF seeks to Audit Firm for “Audit Services of Financial Statements 2022”

The objectives of this assignment is the financial audit of Kosovo Energy Efficiency Fund (KEEF) financial statements for the year ended on and as of December 31, 2022, prepared in accordance with International Financial Reporting standards as published by the International Accounting Standard Board (IASB). The financial audit will be conducted in accordance with the requirements of Law No. 06/L -079 For Energy Efficiency and Law No. 06/L-032 for Accounting, Financial Reporting and Auditing.

The audit firm will be selected in accordance with World Bank’s Procurement Regulations for IPF Borrowers’ (the Regulations), issued July 2016, and revised in November 2017, and Aug 2018 for the supply of goods, works, non-consulting and consulting services.

The selection process will follow the selection based on Consultants Qualification (CQ) method, as defined in the mentioned Procurement Regulations.

Tasks to be performed:

• Audit the Financial Statements for year 2022;
• Prepare the Audit Report and Management Letter (in Albanian, English and Serbian) in accordance with International Financial Reporting Standards (IFRS);
• Discuss of the Auditor’s Report and the Management Letter with the management and the Board of Directors of FKEE before the publications;
• Financial statements of KEEF for the previous year must be audited and published no later than June 30. As a result of this, the final draft of the Audit Report must be submitted to KEEF one month before this deadline (May 30). The report must be in Albanian, English and Serbian.

The audit firm should offer a team composed with the following expertise:

• The Audit Firm must be a licensed company in accordance with Law No. 06/L-032 for Accounting, Financial Reporting and Auditing and to be authorized to provide audit services of financial statements in Kosovo;
• The Audit Firm must have: (a) at least two (2) key audit partners responsible for Kosovo, statutory auditors certified by an association of accountants and auditors of Kosovo affiliated to the International Federation of Accountants (IFAC), and (b) at least one member of the audit team, certified with the relevant certificate.
• Audit Firm must have at least three (3) years of experience in conducting audit services of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as well as audits of entities with operations similar to KEEF in Kosovo, banks and/or other financial institutions and to provide evidence of prior audit services in the last three years;
• The same external auditor or firm cannot be used for more than three (3) consecutive years.

The evaluation and shortlisting criteria

Selection will be based on the following evaluation criteria:

• Minimum five (5) years of practical experience providing Audit Services of Financial Statements – 60%;
• Relevant experience during the last in auditing financial statements for co-financed entities/projects, working for governments, Banks, Funds and/or international organizations in implementing audit services- 40%;

All experts shall have good verbal and written communication skills in English and be proficient in MS Office programs.

The qualification of key staff (or their CVs) will not be taken into consideration for the shortlisting/evaluation criteria above. The first ranked/successful consulting firm will be required at contract negotiations to provide the required key staff with respective qualification requirements.

Expressions of interest must be delivered in English or in the Albanian language in a PDF form to [email protected] not later than 10.03.2023, at 16.00h.

Further information can be obtained at the address below during office hours – 08.30 to 16.30 hours.

Kosovo Energy Efficiency Fund (KEEF)

Floor 7, Former Banka of Ljubljana building

10000 Pristina, Republic of Kosovo

Terms of Reference (TOR)

Audit Firm for “Audit Services of Financial Statements 2022”

Ref No: KEEF/1C17/CQ/2023

1. GENERAL INFORMATION

The Kosovo Fund for Energy Efficiency (FKEE) was established by the Republic of Kosovo, by this Law 06/L-079 of Energy Efficiency as an independent, autonomous and sustainable non-profit legal entity, at the service of the public interest, with full legal personality and legal identity that is separate and distinct from the KEEF Board of Directors and Executives.

KEEF has full operational and administrative autonomy and functions outside the framework of the Kosovo governmental structures and the Kosovo Civil Service, and is not considered as budget organization in terms of Law on Public Finance Management and Accountability and Law on Budget of Republic of Kosovo.

All questions regarding the content of this Request for Proposals should be submitted to the e-mail address above by the deadline. After the end of the deadline for receiving questions, a document containing all the anonymized questions, together with the responses of the KEEF will be sent to all proposers to their e-mail addresses specified in the e-mail for RFP and that must be noted inside the technical part of their proposal. Questions made over the phone will not be accepted or answered.

KEEF reserves the rights to reject any proposals that deemed to be technically or financially not responsive to this Request for Proposals.

KEEF is not and will not be responsible for any costs related to the preparation and submission of proposals, presentations, negotiation process or other activities related to the selection process.

1. PURPOSE OF ASSIGNMENT

The overall objective of this assignment is the financial audit of Kosovo Energy Efficiency Fund (KEEF) financial statements for the year ended on and as of December 31, 2022, prepared in accordance with International Financial Reporting standards as published by the International Accounting Standard Board (IASB). The financial audit will be conducted in accordance with the requirements of Law No. 06/L -079 For Energy Efficiency and Law No. 06/L-032 for Accounting, Financial Reporting and Auditing.

The assignment scope will cover one financial year (year ended on December 31, 2022), with the possibility of extension for the following two subsequent years, subject to cost and review after the 

satisfactory completion of work for the previous year. The audit firm (the auditor) will be appointed by the Board of Directors, in accordance with Article 40 of Law No. 06/L -079 For Energy Efficiency

III. SERVICES REQUIRED

1. Audit of the Financial Statements Responsibility for preparation of financial statements

The KEEF’s management is responsible for the preparation of entity financial statements in accordance with IFRS, as required by Law No. 06/L -079 For Energy Efficiency, including the maintenance of adequate accounting records and internal controls, the selection and application of accounting policies, the safeguarding of the assets of the project, and adequate disclosure. As part of the audit process, the auditor will request from management written confirmation concerning representations made to us in connection with the audits.

Financial statements

The auditor should verify that the entity’s financial statements have been prepared in accordance with

IFRS. It defines a complete set of financial statements as comprising the following components:

• a statement of financial position as at the end of the year;
• a statement of comprehensive income for the year;
• a statement of changes in equity for the year;
• a statement of cash flows for the year;
• notes, comprising a summary of significant accounting policies and other explanatory information; and
• a statement of financial position as at the beginning of the earliest comparative period when an entity applies an accounting policy retrospectively or makes a retrospective restatement of items in its financial statements, or when it reclassifies items in its financial statements.

Scope

The audit will be conducted in accordance with International Standards on Auditing. Those Standards require that the auditor plans and performs the audit to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.

In complying with International Standards on Auditing, the auditor is expected to pay particular attention to the following matters, including special considerations for public sector entities:

• In planning and performing the audit to reduce audit risk to an acceptably low level, the auditor should consider the risks of material misstatements in the financial statements due to fraud, as required by International Standard on Auditing 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

• When designing and performing audit procedures and in evaluating and reporting the results thereof, the auditor should recognize that noncompliance by the entity with laws and regulations may materially affect the financial statements, as required by International Standard on Auditing 250: Consideration of Laws and Regulations in an Audit of Financial Statements.

• The auditor should communicate audit matters of governance interest arising from the audit of financial statements to those charged with governance of an entity, as required by International Standard on Auditing 260: Communication with those Charged with Governance.

• The auditor should appropriately communicate to those charged with governance and to management any deficiencies in internal control that the auditor has identified in an audit of financial statements, as required by International Standard on Auditing 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.

• To reduce audit risk to an acceptably low level, the auditor should determine overall responses to assessed risks at the financial statement level, and should design and perform further audit procedures to respond to assessed risks at the assertion level, as required by International Standard on Auditing 330: The Auditor’s Responses to

Assessed Risks.

• When certain aspects of an entity’s operations are performed by a third-party service provider, the auditor is expected to include an understanding and assessment of the internal control environment of the service provider during the audit process, as required by International Standard on Auditing 402: Audit Considerations Relating to an Entity Using a Service Organization.

• As part of the audit process, the auditor is expected to obtain written representations from management and, where appropriate, those charged with governance, as required by International Standard on Auditing 580: Written Representations.

• When the external auditor decides to use the work of an entity’s internal audit function to modify the nature or timing, or reduce the extent, of audit procedures to be performed directly by the external auditor, the determination shall be in accordance with International Standard on Auditing 610: Using the Work of Internal Auditors.

• In determining whether to use the work of an auditor’s expert or the extent to which the work of an auditor’s expert is adequate for audit purposes, the determination shall be made in accordance with International Standard on Auditing 620: Using the Work of an

Auditor’s Expert.

• In planning and performing the audit to reduce audit risk to an acceptably low level, the auditor should consider the risks of material misstatements in the financial statements due to fraud, as required by International Standard on Auditing 240: The Auditor’s Responsibilities Relating to Fraud in an Audit of Financial Statements.

• When designing and performing audit procedures and in evaluating and reporting the results thereof, the auditor should recognize that noncompliance by the entity with laws and regulations may materially affect the financial statements, as required by International Standard on Auditing 250: Consideration of Laws and Regulations in an Audit of Financial Statements.

• The auditor should communicate audit matters of governance interest arising from the audit of financial statements to those charged with governance of an entity, as required by International Standard on Auditing 260: Communication with those Charged with Governance.

• The auditor should appropriately communicate to those charged with governance and to management any deficiencies in internal control that the auditor has identified in an audit of financial statements, as required by International Standard on Auditing 265: Communicating Deficiencies in Internal Control to Those Charged with Governance and Management.

• To reduce audit risk to an acceptably low level, the auditor should determine overall responses to assessed risks at the financial statement level, and should design and perform further audit procedures to respond to assessed risks at the assertion level, as required by International Standard on Auditing 330: The Auditor’s Responses toAssessed Risks.

• When certain aspects of an entity’s operations are performed by a third-party service provider, the auditor is expected to include an understanding and assessment of the internal control environment of the service provider during the audit process, as required by International Standard on Auditing 402: Audit Considerations Relating to an Entity Using a Service Organization.

• As part of the audit process, the auditor is expected to obtain written representations from management and, where appropriate, those charged with governance, as required by International Standard on Auditing 580: Written Representations.

• When the external auditor decides to use the work of an entity’s internal audit function to modify the nature or timing, or reduce the extent, of audit procedures to be performed directly by the external auditor, the determination shall be in accordance with International Standard on Auditing 610: Using the Work of Internal Auditors.

• In determining whether to use the work of an auditor’s expert or the extent to which the work of an auditor’s expert is adequate for audit purposes, the determination shall be made in accordance with International Standard on Auditing 620: Using the Work of anAuditor’s Expert.

Critical matters to ’be audited

2.1 Governance and Control

• Strategic/Risk Planning
• Budget Management
• Internal Controls
• Compliance with Law, Policies and Procedures

2.2 Financial Accounting and Reporting

• The income
• Expenditures
• Short-Term assets
• Long-Term assets
• Obligations

Other (disclosure of contingent liabilities, disclosure of off-balance sheet items, accounting policies and notes in financial statements)

2.3 Other matters

The auditor will also be required to perform follow-up procedures by the date of the audit report.

Subsequent event assurance procedures may include:

• Review the financial reports published by KEEF after the year-end date, and agree and/or reconcile them with the accounting data records, ensuring that the accounting principles used are consistent with recent audited financial statements of KEEF;
• Inquiring any material transaction, including related party transactions, occurred during the period from the year-end date of the KEEF up to the date of the auditor’s report and reporting details that (transactions/or following transactions) occurred;
• Inquiring whether there was any financial occurrence during the KEEF data period up to the date of the auditor’s report, which will have a material effect on the financial position or results of operations of KEEF;

3. Reporting and schedule The auditor will:

• Prepare the Audit Report and Management Letter (in Albanian, English and Serbian);
• Discuss of the Auditor’s Report and the Management Letter with the management and the Board of Directors of FKEE before the publications;

The Financial statements of KEEF must be audited and published no later than June 30 of the subsequent year. As a result of this, the final draft of the Audit Report must be submitted to KEEF one month before this deadline (May 30). The report must be in Albanian, English and Serbian.

1. GENERAL REQUIREMENTS

The Audit Firm Team Leader shall liaise with KEEF Authorized Representative stated in the Contract.

KEEF shall coordinate the work of the Audit Firm for the assignment.

1. INPUTS/FACILITIES TO BE PROVIDED BY KEEF

KEEF will provide to the Audit Firm with all available documentation and data needed to compile the reports and complete the documents related to the scope of the assignment. The Audit Firm will work closely with KEEF counterpart staff.

KEEF will provide the audit representatives with office space during the auditors stay on site.

1. SELECTION PROCESS AND EVALUATION CRITERIA MANDATORY CRITERIA

The Audit Firm must clearly demonstrate that they meet the mandatory criteria set out below or they will be excluded from further consideration during the evaluation process:

• The Audit Firm must be a licensed company in accordance with Law No. 06/L-032 for Accounting, Financial Reporting and Auditing and to be authorized to provide audit services of financial statements in Kosovo;
• The Audit Firm must have: (a) at least two (2) key audit partners responsible for Kosovo, statutory auditors certified by an association of accountants and auditors of Kosovo affiliated to the International Federation of Accountants (IFAC), and (b ) at least one member of the audit team, certified with the relevant certificate.
• Audit Firm must have at least three (3) years of experience in conducting audit services of financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as well as audits of entities with operations similar to KEEF in Kosovo, banks and/or other financial institutions and to provide evidence of prior audit services in the last three years;
• The same external auditor or firm cannot be used for more than three (3) consecutive years.

An Audit Firm will be selected in accordance with World Bank’s Procurement Regulations for IPF Borrowers’ (the Regulations), issued July 2016, and revised November 2017, and Aug 2018 for the supply of goods, works, non-consulting and consulting services)

The selection process will follow the selection based on Consultants Qualification (CQ) Method, as defined in the mentioned Procurement Regulations.

Applications submitted by the firms will be first screened against the minimum qualification requirements listed below:

1. Qualification requirements for the Audit Firm:

The company must state:

The location and general size of the company, the experience and current skills of its partners, managers and staff related to this task;

• Availability of company resources to ensure that deadlines are met;
• Quality control/peer review programs within the company;
• The proposed team that should be engaged in this assignment, must have relevant experience and skills directly related to the audit of the KEEF;
• It is preferred that the responsible staff (audit partner) possess at least ten (10) years of work experience in auditing and relevant qualification to perform external audit;
• It is preferred that the audit team manager has at least four (4) years of work experience in external auditing.
• It is preferable that the partner and the manager of the audit team have international certifications (such as ACCA, etc.).

2. Proposed Audit Strategy

The proposal must set out a work plan, including an explanation of the audit methodology and perform the services as requested in this Request for Proposals:

• The overall audit strategy and methodology to be used;
• Perceived audit needs of the KEEF and understanding of the main issues faced, as well as the implications of these issues for conducting the audit. In addition, specific audit strategies and methodologies for KEEF including, but not limited to:
• Preliminary audit plan;
• The substantive control procedures to be undertaken;
• The compliance audit procedures to be undertaken;
• Reports the achievements.

The level of staffing that will be assigned to each proposed engagement segment.

3. Evaluation and shortlisting criteria

Selection will be based on the following evaluation criteria:

• Minimum five (5) years of practical experience providing Audit Services of Financial Statements –60%;
• Relevant experience during the last in auditing financial statements for co-financed entities/projects, working for governments, Banks, Funds and/or international organizations in implementing audit

services- 40%;

VII.               PAYMENT SCHEDULE

The payment will be made not more than 7 (seven) days after obtain of audit report into English, Albanian and Serbian language.

VIII.             TIMELINE OF ASSIGNMENT AND LEVEL EFFORTS

The assignment is expected to start immediately following the contract signature.

The decision on the appointment of the external auditor will be taken by the Board of Directors, after passing the procedures provided by the internal regulations of KEEF. If the bidder deemed appropriate, contracting can be done for three years, or only for one year with the possibility of extension, depending on the proposal sent and the quality of the report.

In case of any discrepancy English Language will prevail.