Donor-Funded Project Audits for South African NPOs

Start with the donor agreement

Collect the signed agreement, approved budget, amendments and donor correspondence affecting expenditure or reporting. Identify the organisation responsible for commissioning the engagement and whether the donor must approve the practitioner or terms of reference.

Before appointment, confirm whether the request is for an audit opinion, a compliance engagement, agreed-upon procedures or another form of report. These deliverables are different. Ask for clarification where the agreement says only “certified accounts” or “audited expenditure” without explaining the expected output.

• Reporting entity: the whole organisation, a project, a consortium or a subrecipient.
• Period: the exact start and end dates, including any close-out period.
• Criteria: the accounting basis and the grant conditions against which expenditure will be assessed.
• Deliverables: required statements, schedules, opinion, findings and management responses.
• Deadline: time for fieldwork, queries, corrections, governance approval and submission.

Build an evidence file before fieldwork

Organise documents so a reviewer can trace a reported cost back to the ledger, approval and underlying evidence. A list of invoices is less useful when the project code, reporting period or reason for the expense cannot be established.

• Signed agreements, budget versions and written donor approvals.
• Project ledger, expenditure schedules and reconciliations to the organisation’s accounts.
• Bank records and reconciliations for accounts used by the project.
• Invoices, procurement records, contracts and payment approvals.
• Payroll records, staff allocations and time records where required by the agreement.
• Asset records, subrecipient reports and monitoring evidence where relevant.
• Prior findings, corrective actions and correspondence on unresolved issues.

Use TPCSA’s audit readiness folder structure as a starting point and adapt it to the donor’s terms of reference. Apply consistent file names and record which version of a schedule is final.

Allocate responsibility for queries

Nominate a finance contact and identify who can answer procurement, programme and payroll questions. Record requests in one query log with an owner, due date and evidence link. Avoid sending several conflicting responses to the same question.

Reconcile the donor report to your accounts

Prepare a bridge from the project ledger to each line in the donor expenditure report. Explain reclassifications, exchange differences, timing differences and adjustments. The amounts should be reproducible from the records, rather than depend on an undocumented spreadsheet formula.

Make shared-cost allocations understandable

Where staff, premises or other resources serve several projects, retain the basis used to allocate costs and evidence of any required approval. Check that the same expense has not been charged twice and that the method agrees with the funding conditions.

For example, if one employee works across three grants, a payroll payment alone may not explain how the cost was split. Keep the relevant allocation calculation and supporting records together. Do not invent time records retrospectively to fill a gap; identify the missing evidence and discuss the implications.

Separate budget monitoring from eligibility

An expense can be within a budget category and still lack the approval or evidence required by the agreement. Review the amount, purpose, timing and documentation together. Our donor reporting guide explains the ongoing reporting process, while financial controls for NPOs covers preventive checks.

Plan for findings and follow-through

Allow time for management to consider findings and provide factual responses. Assign responsibility for corrective actions and preserve evidence showing what changed. A recurring finding needs an operational fix, not only a revised response in the next report.

Keep a final pack containing the signed report, final schedules, governance approvals, submission evidence and action tracker. Restrict sensitive payroll and personal information to authorised users.

Specialist donor-funded audit experience

TPCSA’s Director of Audit, Farida Lavangee CA(SA), has experience in NPO audits and USAID-, CDC- and EU-funded audit assignments. Discuss the specific award and proposed scope with the team so the applicable requirements can be assessed.

For U.S. health awards, the HHS OIG foreign-organisation audit FAQs direct recipients to their award terms and grant contacts. For USAID-related background, see the OIG information brief on non-federal audits. These references do not replace the terms of your own award.

For awards involving U.S. funding, our USAID and CDC audit preparation guide explains the award-specific questions to resolve before fieldwork.

What to send when requesting support

Share the agreement, audit clause, approved budget, latest expenditure schedule, reporting deadline and any prior findings. This gives the practitioner a sound basis for clarifying the work and preparing a proposal.