Will ECHO accept HQAI as a suitable audit organisation for FPAs?

Will ECHO accept HQAI as a suitable audit organisation for framework partnership agreements?

(not from the editor: see important addendum at the end of this article)

April 2020

ECHO invites statutory ex-ante auditors to take into account the results of HQAI audits. We have strong arguments to go one step further and have HQAI actually conduct ex-ante assessments: significant economies for the audited organisations and the sector, the proven robustness of our processes and the availability of significant amounts of audit evidence from the field. How will ECHO respond?

ECHO requirements

ECHO’s terms of reference for undertaking the ex-ante assessment for 2021 framework partnership agreements state that auditors can use the results of HQAI audits in support of their findings, provided they are satisfied with the robustness of HQAI’s work (ECHO ToR clause 4.4.7). Statutory auditors considered as “suitable” by ECHO have to respond to a standard applicable to financial auditing (ISAE3000) and be member of a national accountant association to demonstrate compliance with the requirements. HQAI is accredited within the European and international accreditation system under a standard applicable to auditing of products, processes and services (ISO17065). While diverging in details and format, the two standards are equivalent in terms of basic auditing principles and rigour. This is demonstrated by an analysis mandated by HQAI and available upon request.

HQAI responds to the required auditing principles and rigour and possesses the information needed for the ex-ante audit. Therefore, we have asked ECHO to accept our organisation to undertake their ex-ante assessments.

HQAI’s added value

HQAI’s arguments in favour of this request include the following:

• Cost reduction at organisational level: A CHS audit allows to respond directly to most of the questions asked for ECHO ex-ante assessments. Indicators that are not covered can easily be so with limited additional audit work and limited involvement of the audited organisation. This means that for organisations that are already covered by a CHS audit, the cost of the ex-ante audit would represent between 10 and 15% of the cost of a full audit.
• Savings for the sector: HQAI’s CHS audits cover 58 ECHO partners (this number is based on ECHO’s figures valid at the end of 2019 and counting national representations of international networks). Twenty of these are certified. Counting audit costs and human resources for certified organisations alone, savings in the magnitude of one million Euros could be achieved for the sector.
• Available audit evidence from the field: HQAI holds field level information related to 52 ECHO partners, for which no or little additional travel would be necessary to support audit findings. This fact is particularly relevant in the current COVID-19 crisis, with non essential travel being banned and/or impossible.

Stronger together

HQAI has approached ECHO to take this discussion further. We are now expecting a reply from ECHO. By using the CHS as the reference point to respond case by case to due diligence requirements of different donors, HQAI, in partnership with the CHS Alliance, is building strong pragmatic arguments in favour of an alignment of donors due diligence requirements around the CHS.

This discussion concerns the entire sector. Significant economies of scale are in sight if donor requirements are simplified and aligned around the CHS. We encourage HQAI partners and organisations that are sensitive about this topic to promote it with the donors they are in contact with. We also strongly encourage HQAI audited partners to approach ECHO to support our recognition by ECHO. Every voice counts.

Geneva, 21st April 2020 written by Pierre Hauselmann, Executive Director HQAI.

Addendum 18 April 2021:

A huge step further. In January 2021 the CHS audit helped Act Church of Sweden meet the requirements for ECHO funding. HQAI conducted the CHS certification audit of Church of Sweden and expanded the audit with ECHO-specific questions. In broad terms this means that HQAI has covered two sets of requirements in one audit. More about this new achievement for the CHS and independent quality assurance.