FORTUNE SACCO REQUEST FOR PROPOSAL FOR PROVISION OF AUDIT SERVICES FOR THE FINANCIAL YEAR CLOSING DATE: MONDAY 20 th, MARCH 2017, TIME: 11:30AM

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1 FORTUNE SACCO REQUEST FOR PROPOSAL FOR PROVISION OF AUDIT SERVICES FOR THE FINANCIAL YEAR 2017 CLOSING DATE: MONDAY 20 th, MARCH 2017, TIME: 11:30AM

2 SECTION I -LETTER OF INVITATION TO: Interested, eligible candidates Date: 22 nd February, 2017 Dear Sir/Madam RE: Provision of audit services year Fortune Sacco seeks the services of an audit firm to provide external audit services for the financial year We therefore invite you to send us sealed proposals for the provision of audit Services for year Proposals are to be received by Monday 20th March am. Fortune SACCO reserves the right to accept or reject any tender in whole or in part without giving reasons for its decision. Yours Faithfully, CHAIRMAN TENDER COMMITTEE

3 SECTION II: - INFORMATION TO THE AUDITOR (ITA) 2.1 Introduction Fortune SACCO will select a firm among those interested firms who will submit a proposal, in accordance with the method of selection detailed in Section II The firms are invited to submit a Technical Proposal and a Financial Proposal in separate envelops, as specified in the Appendix ITA. The proposal will be the basis for Contract negotiations and ultimately for a signed Contract with the selected firm The Auditor must familiarize themselves with local conditions and take them into account in preparing their proposals. To obtain first hand information on the assignment and on the local conditions, Auditors are encouraged to liaise with Fortune SACCO regarding any information that they may require before submitting a proposal. Auditor should contact the officials named in the Appendix ITA to obtain any additional information Please note that; a) The costs of preparing the proposal and of negotiating the Contract, including any visit to Fortune SACCO are not reimbursable as a direct cost of the assignment. b) Fortune SACCO is not bound to accept any of the proposals submitted Fortune SACCO s employees, committee members, board members and their relatives (spouse and children) are not eligible to participate. 2.3 Preparation of Technical Proposal The proposal shall be written in English language While preparing the Technical Proposal, Auditor must give particular attention to the following: a) If a firm considers that it does not have all the expertise for the assignment, it may obtain a full range of expertise by associating with individual consultant(s) and/or other firms or entities in a joint venture or sub-consultancy as appropriate. Auditor shall not associate with the other Auditor who have or intend to submit a bid for this assignment. b) It is desirable that the majority of the key professional staff proposed be permanent employees of the firm or has an extended and stable working relationship with it. c) Proposed professional staff must have a minimum qualification and experience indicated in Appendix ITA

4 2.3.4 The Technical Proposal shall provide the following information; a. A brief description of the firm s organization and an outline of recent experience on assignments of a similar nature, the profiles of the staff proposed, contract amount and firm s involvement. b. Any comments or suggestions on the Terms of Reference, a list of services and facilities to be provided by Fortune SACCO. c. A description of the methodology and work plan for performing the assignment. d. CVs recently signed by the proposed professional staff and the authorized partner/representative submitting the proposal. Key information should include number of years working for the firm/entity and degree of responsibility held in various assignments during the last three years The Technical Proposal shall not include any financial information. 2.4 Preparation of Financial Proposal The Financial Proposal should list all costs associated with the assignment including reimbursable expenses such as subsistence (per diem, accommodation), transportation, services and equipment (vehicles, office equipment, furniture, and supplies), e.t.c The costs should be separate for the interim audit and for final comprehensive audit The Financial Proposal should clearly identify as a separate amount, the taxes, duties, fees, levies and other charges imposed under the law on the Auditor, the sub-auditor and their personnel The costs should be expressed in Kenya Shillings. 2.5 Submission, Receipt, and Opening of Proposals The original proposal (Technical Proposal and, Financial Proposal) shall be prepared in indelible ink. It shall contain no interlineations or overwriting, except as necessary to correct errors made by the firm itself. Any such corrections must be initialed by the persons or person authorized to sign the proposals After the deadline for submission of proposals, the Technical Proposal shall be opened immediately by the opening committee. The Financial Proposal shall remain sealed and deposited with a responsible officer of Fortune SACCO department up to the time for public opening of financial proposals. 2.6 Proposal Evaluation General From the time the bids are opened to the time the Contract is awarded, if any consultant wishes to contact Fortune SACCO on any matter related to his proposal, he should do so in writing at the address indicated in the Appendix ITA. Any effort by

5 the firm to influence Fortune SACCO in the proposal evaluation, proposal comparison or Contract award decisions may result in the rejection of the consultant s proposal Evaluators of Technical Proposals shall have no access to the Financial Proposals until the technical evaluation is concluded. 2.7 Evaluation of Technical Proposal The evaluation committee appointed by Fortune SACCO shall evaluate the proposals on the basis of their responsiveness to the Terms of Reference, applying the TS 1 TS 2 evaluation criteria below; Evaluation Criteria Firms experience 5 years Experience in auditing prorated-5 points 5 At least 2 large clients in the Sacco sectorprorated-10 points TOTAL 15 Lead Auditor qualification & Experience Post graduate qualifications in accounting/management or related field Professional qualification/membership in any other bodies apart from accounting Maximum Weight (%) Experience in auditing Sacco s or similar clients 2.5 Experience in management 2.5 TOTAL 10 TS 3 Composition of other team members -2 Professional Certification and Membership 5 Justification/Comments and Section/Page Covered in the proposal Score 3 years Experience of individual in similar assignment TOTAL 10 Total Maximum (TS) 35 Each proposal will be given a technical score (TS) Evaluation of Financial Proposal The Financial Proposals shall be opened publicly in the presence of the Auditors representatives who choose to attend. The name of the Auditor, the technical Scores and the proposed prices shall be read aloud and recorded when the Financial Proposals are opened. Fortune SACCO shall prepare minutes of the public opening The formulae for determining the Financial Score (FS) shall, unless be as follows:- FS = 100 X FM /F where FS is the financial score; Fm is the lowest priced financial proposal and F is the price of the proposal under consideration. Financial Score Calculations

6 FS= 100X FM/F Fees Quotation guidelines Calculation Where Lowest Financial Proposal (FM) will be given 65 points 65 FM=Financial Minimum/ Lowest Financial Score Other Financial Scores (FS) under consideration 65XFM/F F=Amount Quoted in the will be Financial Proposal under consideration TOTAL Maximum (FS) 65 FS=Financial Score Combined Scores will be Calculation Where Combined Scores (CS) will be TS+FS TS=Technical Score FS=Financial Score TOTAL Maximum (CS) Proposals will be ranked according to their combined technical (TS) and financial (FS) scores. The firm achieving the highest combined technical and financial score will be invited for negotiations. The weighted Scores for Technical Evaluation (T) are 35 and that of the Financial Evaluation (P) is The tender evaluation committee shall evaluate the tender within 30 days of from the date of opening the tender Contract price variations shall not be allowed for contracts not exceeding one year (12 months) Where contract price variation is allowed, the variation shall not exceed 10% of the original contract price Price variation requests shall be processed by Fortune SACCO within 30 days of receiving the request. 2.9 Negotiations Negotiations will be held at the same address as address to send information to Fortune SACCO indicated in the Appendix ITA. The aim is to reach agreement on all points and sign a contract Negotiations will include a discussion of the Technical Proposal, the proposed methodology (work plan), staffing and any suggestions made by the firm to improve the Terms of Reference. Fortune SACCO and the firm will then work out final Terms of Reference, staffing and bar charts indicating activities, staff-months, logistics and reporting. The agreed work plan and final Terms of Reference will then be incorporated in the Description of Services and form part of the Contract. Special attention will be paid to getting the most the firm can offer within the available budget and to clearly defining the inputs required from Fortune SACCO to ensure satisfactory implementation of the assignment Unless there are exceptional reasons, the financial negotiations will not involve the remuneration rates for staff (no breakdown of fees).

7 2.9.4 The negotiations will conclude with a review of the draft form of the Contract. To complete negotiations Fortune SACCO and the selected firm will initial the agreed Contract. If negotiations fail, Fortune SACCO will invite the firm whose proposal received the second highest score to negotiate a contract Fortune SACCO shall appoint a team for the purpose of the negotiations Award of Contract The Contract will be awarded following negotiations. After negotiations are completed, Fortune SACCO will promptly notify other Auditor who have shown interest that they were unsuccessful and return the Financial Proposals of those Auditor who did not pass the technical evaluation The parties to the contract shall have it signed within 30 days from the date of notification of contract award unless there is an administrative review request Fortune SACCO may at any time terminate procurement proceedings before contract award and shall not be liable to any person for the termination Fortune SACCO shall give prompt notice of the termination to the tenderers and on request give its reasons for termination within 14 days of receiving the request from any tenderer To qualify for contract awards, the tenderer shall have the following: a) Necessary qualifications, capability experience, services, equipment and facilities to provide what is being procured. b) Legal capacity to enter into a contract for procurement c) Shall not be insolvent, in receivership, bankrupt or in the process of being wound up and is not the subject of legal proceedings relating to the foregoing. d) Shall not be debarred from participating in public procurement. e) Shall be in the SASRA list of authorized auditors.

8 APPENDIX TO INFORMATION TO AUDITOR Clause Reference 2.1 The name of the Client is: Fortune SACCO The method of selection is: QCBS-Lowest evaluated proposal/tender-quality of proposal and price taken into consideration as a combination.-qcbs-quality of proposal and price shall be taken into consideration as a combination Technical and Financial Proposals are requested: Yes- in separate envelopes The name, objectives, and description of the assignment are: Provision for audit services for the financial year A pre-proposal conference will not be held The name(s), address (es) and telephone numbers of Fortune SACCO s official(s) is Chairman tender committee P.o. Box , KERUGOYA Tel Office: The estimated number of professional staff required for the assignment is; Firm to propose The minimum required experience of proposed lead consultant is: Post graduate qualification in accounting related field, Professional accounting/auditing Certification and Membership, 5 years experience in audit work in similar assignment Taxes: [Specify firm s liability: nature, sources of information]: Auditor must submit one original and one additional copy of each proposal Proposals must be submitted not later than the following date and time: Monday 20th March, 2017 at 11:30am Alternative formulae for determining the financial scores is the following- The weights given to the Technical and Financial Proposals are: T=0.35 F= The assignment is expected to commence on, date indicated in the signed contract.

9 SECTION III: - TERMS OF REFERENCE 3.0 Introduction and Background Fortune Sacco Limited is a Savings and Credit Co-operative Society established by Kirinyaga District Farmers Co-operative Society in 1998, after transformation of Kirinyaga district cooperative union to an independent Sacco society with a banking section. The banking section was created to offer services such as leasing farm inputs and farm equipment. As a coffee farmers Co-operative, it was owned and controlled by farmers. Overtime, it has increased its scope of membership to include all types of farmers, civil servants, pensioners, business people and employees from other institutions operating in Kirinyaga County. In November 2011, the Sacco undertook a rebranding exercise in which it changed its name to Fortune Sacco. Since its inception, the Sacco recognizes the critical role it plays in the provision of financial services and ensuring the financial freedom of its members. In line with its mandate, Fortune Sacco offers a wide range of different types of financial services including savings products. In addition, the Sacco offers non-financial services to its members. To enhance customer service and also remain competitive, the Sacco continues to embrace new technologies, processes, products and services that will ensure efficient and effective service provision to its members. The Sacco was formed under the Cooperative Societies Act (Cap 490) and hence its operations are guided by the Co-operative principles. Subsequently, SACCO Societies Act 2008 (Cap 490B) was enacted and Sacco Societies Regulatory Authority (SASRA) formed to administer the provisions of the Act in providing prudential supervision of deposit-taking Sacco Societies (DT-SACCOs). Fortune Sacco is currently licensed by SASRA as Deposit Taking Sacco.

10 Statistical Information as at 31 st December, 2015 FINANCIAL AND STATISTICAL INFORMATION 2016(un audited) Numbers Numbers Numbers Membership Active 72, ,532 92,782 Dormant 48,784 3,975 3,452 Number of branches Number of employees (un audited) Financial Shs Shs Shs As restated* Total assets 2,335,590,750 1,826,461,519 1,639,046,136 Core capital 806,743, ,800, ,712,541 Institutional capital 628,109, ,958, ,355,972 Members' deposits 1,270,574, ,824, ,089,187 Loans and advance to members 1,278,253,455 1,166,168,524 1,186,004,276 Provision for loan losses 200,743, ,072, ,665,801 Investments 32,364,460 30,782,680 29,754,320 Total revenue 378,148, ,294, ,817,081 Total interest income 319,087, ,944, ,513,026 Total expenses 297,151, ,642, ,789,289 Investment shares 178,633, ,841, ,055,463 Statutory reserve 129,262,928 99,610,719 77,680,256 Appropriation reserve 390,895, ,513, ,339,024 Loan loss reserve 28,825,449 28,825,449 80,281,461 Key ratios: % % % Capital adequacy ratios Core capital/total assets 35% 37% 34% Minimum ratio 10% 10% 10% Core capital/total deposits 63% 72% 66% Minimum ratio 8% 8% 8% Liquidity ratio Liquid assets/total deposits and short-term liabilities 70% 51% 38% Minimum ratio 15% 15% 15%

11 Operating efficiency/loan quality ratios Total expenses/total revenue 79% 68% 65% Interest to members deposits/total revenue 5% 4% 3% Interest rate on members' deposits 8% 8% 6% Dividend rate on members share capital 12% 12% 12% Total delinquent loans/gross loan portfolio 13.50% 19.30% 18.90% The broad objectives of the audit assignment are: To carry out a statutory end of year audit as required by law. To carry out a mid year interim audit to:- 1. Enable the Sacco detects early problems in the accounting and internal control systems and get a chance to correct them before year end. 2. Reduce the work load of and speed up the comprehensive statutory year end audit to enable the Sacco table the financial statements in the Annual General Meeting in the month of February Get information about the performance position of interim period