Audit of Grant Project Reporting

and Other Services related to the Verification and Monitoring of Grant Funds

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Audit of Grant Project Reporting


and Other Services related to the Verification and Monitoring of Grant Funds

Since the outbreak of full-scale war, the humanitarian and economic situation in Ukraine has deteriorated significantly. This has resulted in an increase in the number of internally displaced persons, damage to critical infrastructure, and other severe consequences for the population.

In response to these challenges, Ukraine’s international partners and donor organizations have increased the amount of assistance provided through various grant programs. This surge in grant funding has given rise to new challenges related to the effective fund management and ensuring their designated use. Consequently, issues such as reporting, transparency, and monitoring have become paramount.

The majority of donors, especially those from international organizations, require independent oversight of grant program funds. This practice is considered a standard form of reporting. Donors require this assurance to confirm that funds are utilized exclusively for the designated purposes outlined in the grant agreement.

One of the key tools for ensuring such control is an audit that our company can conduct in accordance with the requirements of donors. Audit procedures include verifying compliance with the grant terms, analyzing financial documentation, and evaluating the use of funds.

                        
Reports of BDO in Ukraine as an independent auditor are accepted by most international donors, reflecting a high level of confidence in our services and offering extra assurances for both donors and project implementers.


We take pride in our expertise and stand ready to assist our clients in ensuring transparency and adherence to donor requirements during the implementation of grant projects.

We have experience working with projects funded by:
  • World Bank
  • European Investment Bank
  • European Bank for Reconstruction and Development (EBRD)
  • German Federal Foreign Office
  • Aktion Deutschland Hilft e.V. 
  • Ministry of Foreign and European Affairs
  • Danish International Development Agency
  • International Committee of the Red Cross 
  • And many more

The list of services may include audit procedures conducted in accordance with the following standards, depending on the donor’s requirements and the specifics of the grant project: 

  • Audits in accordance with International Standards on Auditing (ISA 800/805)
  • Other assurance services (ISAE 3000)
  • Review services (ISRE 2400)
  • Services of agreed-upon procedures (ISRS 4400)

Additionally, other standards may be applied to services of this nature. 

An audit or other service performed in accordance with the donor’s requirements and the selected audit standard is a comprehensive process aimed at ensuring the transparency and reliability of grant reporting.

This process generally includes review of source documents, interviews, site visits, analysis of internal controls, cost allocation and timekeeping, and other procedures to ensure that the reporting meets donor requirements. 
 

Audit of BDO in Ukraine focuses on three aspects:


1.    Financial audit is a review of financial statements to ensure that they meet the donor’s requirements or the terms of the grant agreement. A financial audit generally includes the following:
  • Verification of the correctness and accuracy of expenditures recorded, as well as their correspondence to budget items, by reviewing source documents and conducting site visits to partners.
  • Analysis of disclosures in the reporting generally disclosed in the Narrative report, if required by the donor, for their correctness, relevance, and accuracy.
  • Certifying that transactions have been executed and that the reported project results align with the actual situation.
  • Verifying the allocation of costs between projects as it relates to cost sharing in the reporting.
  • Obtaining evidence that a rigorous timekeeping system is in place.
  • Reviewing the effectiveness of control procedures that ensure proper segregation of duties and protection of the partner’s assets.
  • Analysis of the partner’s IT systems to assess their suitability for reporting purposes.
  • Other aspects of the review related to the accuracy, completeness, and compliance of the reporting with the donor’s requirements or the grant agreement.
2.    Performance audit refers to the assessment of the economy, efficiency and effectiveness (3E) of the use of project funds and covers:
  • Economy audit, which analyzes administrative activities from the standpoint of the rational use of resources in accordance with well-grounded principles, leading practices and management policies. Including limited reviews of the prices applied.
  • Efficiency audit, which focuses on assessing the use of human, financial and other allocated resources, including an analysis of monitoring mechanisms, information systems and procedures used by the partners to address identified issues and ensure proper governance.
  • Effectiveness audit, which determines the extent to which the partner has achieved the set goals, and compares the actual impact of activities with the expected result defined at the project planning stage.
3.    Compliance audit refers to the verification of compliance with applicable laws, internal policies and regulations and covers:
  • Verification of the partner’s compliance with the organization’s internal policies, procedures and instructions, as well as the policies and requirements set forth in the grantor’s governing documents, including the Procurement Rules and other procedures, for compliance with the stated policies.

These procedures provide reasonable assurance that the project financial statements are, in all material respects, consistent with or prepared in accordance with the funding agreement or other donor requirements.
BDO in Ukraine and our professionals adhere to high standards of independence in accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional Accountants (IESBA Code) and other ethical standards applicable in Ukraine and internationally.

We provide high quality audit services for donors and partners, providing comprehensive support and professional approach. Our team of experienced auditors uses the latest methodologies and cutting-edge technologies to ensure the accuracy and reliability of financial statements. 

Please, contact us for a comprehensive consultancy and our experts will help you determine the best audit and advisory services for your needs.

 

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Key Contacts

Sergiy Shtantsel

Sergiy Shtantsel

Audit Partner, Deputy Director of BDO in Ukraine
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FAQ (Frequently Asked Questions)

  • What is an audit of grant project reporting?

An audit of grant project reporting is an independent review that determines whether the financial statements are, in all material respects, prepared in accordance with the terms of the grant agreement and donor requirements.

  • Why is an audit of grant funds necessary?

The audit is intended to build trust among donors and partners, confirm the accuracy of financial data, ensure compliance with grant conditions, and help reduce the risk of fund mismanagement.

  • Who conducts audits of grant projects?

Independent audit firms such as BDO in Ukraine, with relevant qualifications and experience working with international donors, are authorised to perform such audits.

  • What types of audits are used in grant project reviews?

Depending on donor requirements, the following types of audits may be conducted:

•    Financial audit — a review of financial data accuracy and budget compliance

•    Performance audit — an assessment of the economy, efficiency, and effectiveness of fund utilisation

•    Compliance audit — a review of compliance with laws, policies, and donor regulations.

  • Which international standards are applied in grant audits?

The following standards are commonly used:

•    ISA 800/805: audit of the special purpose financial statements

•    ISAE 3000: assurance services other than financial statement audits

•    ISRE 2400: financial statement overview services

•    ISRS 4400: agreed-upon procedures

  • Which organisations provide funding for the grant projects audited by BDO in Ukraine?

BDO in Ukraine works with a wide range of donors, including the following:

World Bank, European Investment Bank, European Bank for Reconstruction and Development, German Federal Foreign Office, Aktion Deutschland Hilft e.V., Ministry of Foreign and European Affairs Luxembourg, Danish International Development Agency, International Committee of the Red Cross, and others.

  • What is reviewed during a financial audit of a grant project?

The audit covers primary documents, cost allocation accuracy, budget line compliance, time tracking, effectiveness of internal controls and the compliance of IT systems with reporting requirements.

  • What does a performance audit involve?

A performance audit evaluates the efficiency and effectiveness with which project resources were used, whether the objectives were achieved and the actual impact made compared to the expected results.

  • What is checked during a compliance audit?

The audit assesses compliance with internal policies and procedures, procurement rules, donor instructions and relevant legislation.

Glossary

Performance audit — an evaluation of the economy, efficiency and effectiveness of the use of grant funds to assess whether project goals were achieved.

Compliance audit — a review of compliance with legislation, internal organisational policies and donor requirements.

Audit of grant project reporting — an independent review of a grantee’s financial reporting and documentation to confirm the proper use of funds.

Financial audit — a review of financial statements in terms of accuracy, completeness and compliance with the grant agreement.

ISAE 3000 — the international standard for assurance engagements other than audits or reviews of historical financial information.

ISRE 2400 — the international standard for historical financial statement review engagements.

ISRS 4400 — the international standard for agreed-upon procedures engagements.

ISA 800/805 — international standards for auditing special purpose financial statements, which are applied to audits of individual elements or reports.

Donor — an organisation or institution that provides grant funding for humanitarian, social or economic projects.

Grant reporting — a set of financial and narrative documents that confirm compliance with the grant terms and proper use of funds.

IESBA Code — the Code of International Ethics Standards Board for Accountants, setting standards for auditor independence and professional conduct.

Primary documents — accounting records that support financial transactions related to the implementation of a grant project.

Grant project — an initiative funded by a donor aimed at achieving specific social, humanitarian or economic objectives.

Financial statements — a collection of documents reflecting the movement and use of grant funds within a project.