MEK & ASSOCIATES Contact: +256 772 431 353

Certified Public Accountants +256 703 431 353

Plot 934, Floor 1, Room 101, Bombo Road

Opposite Kolping Hotel, Makerere - Kavule

P.O.Box 11237, Kampala (U) Firm No. AF 0332

AUDIT ENGAGEMENT LETTER

Date: 16th Sept, 2021

The Diocesan Secretary,

Central Busoga Diocese,
P.O. Box 19,
Iganga – Uganda.
E-mail: [email protected]

Attn: Rev. Canon Charles Wamukolo

Dear Sir;

RE: ENGAGEMENT TO CONDUCT EXTERNAL AUDIT OF BUSULUMBA CDC

We are pleased to accept your instructions to act as external auditors and hereby confirm
our acceptance of the appointment. The services we are expected to provide are described
under the terms of this engagement.

Audit Scope:
The Audit will cover the financial periods for Busulumba CDC for 3 years to 30th June 2021.
The scope of work shall include the audit of program activities, procurement, CPC oversight
and financial operations & processes undertaken by management staff during the period
under audit.

Audit Objectives:
The overall objective of the audit is to express an opinion as to whether the financial
statements are fairly presented, in all material respects, and in conformity with International
Financial Reporting Standards (IFRSs) for small and medium sized entities (SMEs), this
overall objective also includes reporting on:
(a) Observance of Internal controls related to the financial statements and compliance
with laws, regulations, and the provisions of partnership and grant agreements, non-
compliance with which could have a material effect on the financial statements, in
accordance with International Auditing Standards.
(b) The effectiveness of existing internal control procedures related to program
management, human resource management, procurement management and
partnership relationship management.
(c) The utilization of financial resources entrusted to the CDC management for the
benefit of the beneficiary children.
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Management’s Responsibilities
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with International Financial Reporting Standards (IFRS) for
SME’s and for such Internal Controls as management determines necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to
fraud or error.

In preparing the financial statements, management is responsible for assessing the

organization’s ability to continue as a going concern, disclosing, as applicable, matters related
to going concern and using the going concern basis of accounting unless management either
intends to liquidate the organization or to cease operations, or has no realistic alternative but
to do so.

The management is also responsible for overseeing the effectiveness of financial

management and the entire financial reporting process.

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue
an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always
detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in
the aggregate, they could reasonably be expected to influence the economic decisions of
users taken on the basis of these financial statements. As part of an audit in accordance
with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
I. Identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to
those risks, and obtain audit evidence that is sufficient and appropriate to provide a
basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or the override of internal control.
II. Obtain an understanding of internal control relevant to the audit in order to design
audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company’s internal control.
III. Evaluate the appropriateness of accounting policies used and the reasonableness
of accounting estimates and related disclosures made by management.
IV. Conclude on the appropriateness of management’s use of the going concern basis
of accounting and, based on the audit evidence obtained, whether a material
uncertainty exists related to events or conditions that may cast significant doubt on
the Company’s ability to continue as a going concern. If we conclude that a material
uncertainty exists, we are required to draw attention in our auditor’s report to the
related disclosures in the financial statements or, if such disclosures are inadequate,
to modify our opinion. Our conclusions are based on the audit evidence obtained up
to the date of our auditor’s

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 report. However, future events or conditions may cause the organization to cease to
continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements,
including the disclosures, and whether the financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.

Audit Procedures
An audit includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements; therefore, our audit will involve judgment about the
number of transactions to be examined and the areas to be tested. We will plan and
perform the audit to obtain reasonable rather than absolute assurance about whether the
financial statements are free of material misstatement, whether from (1) errors, (2) fraudulent
financial reporting, (3) misappropriation of assets, or (4) violations of laws or governmental
regulations that are attributable to the organization or to acts by management or employees
acting on behalf of the organization. Because the determination of abuse is subjective,
International Auditing Standards (ISAs) do not expect auditors to provide reasonable
assurance of detecting abuse.
Because an audit is designed to provide reasonable, but not absolute assurance, and
because we will not perform a detailed examination of all transactions, there is a risk that
material misstatements or non-compliance may exist and not be detected by us. In
addition, an audit is not designed to detect immaterial misstatements or violations of laws or
governmental regulations that do not have a direct and material effect on the financial
statements or major programs. However, if during the course of our audit we become
aware of such errors, fraud, or illegal acts, we will bring them to your attention and also
notify the appropriate legislative organ in writing as required by legislation. Furthermore,
should we become aware of fraud or illegal acts; we shall also notify the appropriate
enforcement agency. Our responsibility as auditors is limited to the period covered by our
audit and does not extend to any periods for which we are not engaged as auditors.

Our procedures will include tests of documentary evidence supporting the transactions
recorded in the accounts, and may include tests of the physical existence of inventories,
and direct confirmation of receivables and certain other assets and liabilities by
correspondence with selected individuals, funding sources, creditors, and financial
institutions. We will request written representations from management as part of the
engagement.

Audit Procedures—Internal Controls: Our audit will include obtaining an understanding

of the organization and its environment, including internal control, sufficient to assess the
risks of material misstatement of the financial statements and to design the nature, timing,
and extent of further audit procedures. Tests of controls may be performed to test the
effectiveness of certain controls that we consider relevant to preventing and detecting
errors and fraud that are material to the financial statements, and to preventing and detecting
misstatements resulting from illegal acts and other non-compliance matters that have a direct
and material effect on the financial statements. Our tests, when performed, will be less in
scope than would be necessary to render an opinion on internal control and, accordingly, no
opinion will be expressed in our report on internal control pursuant to International Auditing
Standards. The audit will also include a test of Value for money on all procurements
conducted. Examination of compliance with program requirements will be conducted.

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Audit administration and other matters
Upon completion of the engagement, we shall send three copies of the report package to
you. The report package will consist of:
1. An opinion (or disclaimer of opinion) as to whether the financial statements are presented
fairly in all material respects in conformity with IFRSs.

2. A management letter to convey findings, possible causes of internal control

weaknesses, suggestions and recommendations suitable for the management to realize
improvements.
Our audit will include a review of any prior-year suggestions and recommendations and will
indicate the extent to which the summary schedule of any prior year audit findings is fairly
stated.

As to any current-year recommendations and suggestions, we will afford you the opportunity
to respond to such matters and will include your response(s) in management’s corrective
action plan.

Engagement Partner
CPA Edward Kizza Mutebi is the engagement partner responsible for the final review of
this engagement and signing the final reports.

Fees
Our fees for all services are related to our staff standard charge-out rates in effect at the
time services are performed. Our standard charge out rates vary according to the scope of
work, degree of responsibility involved and the experience level of the personnel assigned
to the engagement.

The audit fees charged for this assignment is UShs 3,540,000= Three million five hundred
forty Thousand Shillings Only (Inclusive of VAT).

Payment Plan
Our fee note shall be submitted to the CDC for payment processing upon inception of the
field audit exercise.
During the course of our audit, it is likely that we may observe opportunities for economies
of operation and for improved internal administrative and other project controls, or we may
observe variances with applicable laws and regulations or other matters that should be
brought to your attention. Our comments and recommendations concerning such matters,
if any, will be conveyed to you in writing through the management letter.

We appreciate the opportunity to be of service to you, and believe this letter accurately
summarizes the significant terms of our engagement. If these comments and
arrangements meet your approval, please sign below and return a copy of the agreement to
us.

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We look forward to a pleasant relationship and the opportunity to provide the Audit and
Assurance services included in this engagement. Should you have any concerns please
do not hesitate let us know.

Yours faithfully;

CPA Patrick Ogwang

Manager Audit & Assurance
MEK & Associates,
Certified Public Accountants
=====================================================================

Client Acknowledgement:

I confirm that I have read and understood the contents of this letter and the related terms and
conditions and do agree that it accurately reflects my/our fair understanding of the services
that I/we require your firm to undertake.

Names__________________________________________ Sign_______________
.

Title____________________________________________ Date______________

..

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