Terms of Reference for Consultancy to Carry Out Due Diligence and Asset Valuation for Cycle Investment Cooperative Sacco (CIC SACCO)

TERMS OF REFERENCE: CONSULTANCY TO CARRY OUT DUE DILIGENCE AND ASSET VALUATION FOR CYCLE INVESTMENT COOPERATIVE SACCO (CIC SACCO)

I. Background

Cycle Investment Cooperative is a saving and credit cooperative located in GISOZI Sector, GASABO District in Kigali City (MVK). It operate under the national Bank of Rwanda (BNR) license obtained on 17^th June 2014 and the RCA license obtained on 30 May 2014. Cycle Investment Cooperative SACCO (CIC SACCO) was created by young entrepreneurs who at that time were students at Kigali Independent University (ULK).

VISION: The mission of CIC is to allow young people in general, students from local and regional Universities and other institutions in particular as well as the active Rwandan population access to inclusive financial services.

MISSION: The mission of CIC is to provide inclusive finacial services to young people in general, students from local and regional Universities and other institutions in particular as well as the active Rwandan population.

II. Scope of the consultancy service

CIC SACCO intends to recruit a strong and experienced audit firm (referred as “Consultant” in this ToR) to conduct the financial and non-financial due diligence. The consultant’s work will mainly focus, but will not be limited to the following:

II.1 Due diligence

For the completeness of this assignment, the consultant will carry out a financial and non-financial due diligence.

II.1.1 Financial due diligence

The purpose of the financial due diligence is to evaluate the financial status of CIC SACCO’s assets, liabilities, and equity to determine its Net Book Value.

The scope of financial due diligence includes a detailed review and analysis of the following: assets, liabilities, shareholding structure and capital adequacy, off balance sheet, liquidity, cash flow, income & expenses, and business valuation (net worth).

The detailed checks will focus but are not limited to the following:

Area/ Accounts	Key points to check
1. Cash	Check the cash control book to ascertain the cash balances at a given date (on the cut-off date), identify the origin of difference, if any, and propose immediate corrections. Check if the totals of auxiliary journals have been recorded in cash book control. Push and pull: confirm the balance on MTN push and pull and check if transaction on that account are supported.
2. Bank	Confirm that the book balance for bank balances has been reconciled to the bank statement at the cut-off date; Check that the bank statement is in the names of the CIC SACCO; Confirm the balances of inventory with the Banks; Ghost Vault-Bank transfers: examine the cash control book to ascertain funds transferred, check the corresponding bank statement to examine if the funds from vault reached the bank, examine the cheques signed, amount withdrawn as per bank statement, auxiliary journals and cash control book and confirm the accuracy of the balances. Term deposit: ensure all fixed term deposits have appropriate documentation (contracts, certificate of term deposit or bank’s confirmation letter) and confirm the accuracy of balances; Review the reconciliation statement for any anomalies – long outstanding amounts, amounts that are not duly supported, etc
3. Financial investments	Confirm the balance of financial investments in inventory. Confirm that there are no impaired investments; Confirm that the interest income has been recognized correctly in the books of account; Confirm that title deeds of such investments are intact and legally enforceable.
4. Loan portfolio	Confirm the detailed list of all loan’s outstanding balances as of the cut-off date produced by CIC SACCO and its accuracy.; Review documentation (contract) to confirm the amounts and dates of all loans disbursed as well as the terms (disbursement date, disbursement amount, interest rate, maturity date, collateral details, etc.) and their conformity with internal rules and regulations; Confirm if the loans were disbursed only to members of the CIC SACCO ; Confirm if the repayments deducted from the principal loan balance were actually repaid; Confirm if interests have been computed correctly and recorded in the books of account: (Confirm the interest rate calculation method used by the CIC SACCO: reducing balance or flat, test if interests are calculated and recorded correctly in the books of account); Confirm that the collaterals provided exists and appropriate documentation (title documents, etc) are duly registered with the institution in charge, and in safe custody; Examine enforceability for recovery in case the loans become non-performing; Examine whether the loan classification is as per Central Bank regulations and prudential norms; Determine the right level of non-performing loans and that the provisions against NPLs are correctly computed in accordance with the Central Bank regulations and well recorded in books of account; Review the list of all written off loans and identify any related party loans included therein; On the basis of the dates of loan writen off, discuss with management to determine whether or not any recovery efforts have been made to recover the written off loans; Identify issues or potential threats that might lead to the degradation of quality assets; Assess the CIC SACCO’s exposure on Single Obligor (within the meaning of Central Bank guidelines) and form opinion on the risk potential of such exposure; Verify the loan recovery files in courts and their status.
5. Fixed assets	Review and verify all fixed assets to confirm that they exist and are in a functional state; Review invoices to confirm the historical cost of the assets; Confirm that the assets are properly capitalized in accordance with the capitalization policy; Confirm that the assets are legally owned by the CIC SACCO (Check invoices, land title, transfer of ownership, etc) Review depreciation method used and re-compute the depreciation charge to confirm that the Net Book Value of the fixed assets in the books of account is correct; Determine the tax and insurance liabilities, if any, associated with the assets;
6. Receivables, and other assets	Review and confirm the list of all debtors/ receivables/ prepayment and related supporting documents; Ascertain real accounting of stock (see whether no accounting duplication was made in stock and expenses) and check physical stock; Review suspense accounts, propose their treatment and establish responsibility if the suspense amount is not explained by CIC SACCO management; For long outstanding receivables, ensure that adequate provisions have been made;
7. Deposits	Verify and confirm a detailed list of all depositors indicating customer’s names, identification, membership number, account balance and any other information as may be deemed necessary; Term Deposits: check on contracts, amount contracted, interest, terms, etc; Saving account (Epargne capital): confirm the existence and accuracy of the amount on Savings especially epargne capital Dormant and closed accounts: confirm the list and balances of dormant and closed accounts;
8. Payables and other liabilities	Review and confirm the entire list of liabilities and supporting documents for the CIC SACCO; Review employees’ tax computation and payment to ensure that there are no future liabilities; Review employees’ social security computation and payment to ensure that there are no future liabilities; Review any other liability of the CIC SACCO and their supporting documents.
10. Paid up capital	Share capital Confirm the actual number of members, the subscribed and paid-up capital (shares); if the share is partially paid indicate the remaining part of the share. Verify and confirm the list/inventory of all shareholders indicating their membership number, National ID number, and telephone contact, subscribed shares, paid up share and remaining part of the shares, if any. Verify and confirm the list of users (non-members): members with current account/savings or term deposits without any share paid so far. Quantify the amounts received for share capital for which members are not identified. Additional capital Confirm the actual additional amounts of contributions received from members, the purpose for which the additional funds were received and that they are properly recorded; Capital adequacy Confirm that the capital adequacy ratio has been correctly computed as per the Central Bank regulations; Advise on whether or not the capital is adequate to fund the activities of CIC SACCO and determine the CIC SACCO’s value and share price to be considered for members.
11.Subsidies and Donations	Ascertain who provided the subsidy if any, how much, what are their supporting documents; If an asset was provided, what are the supporting documents and how that asset was given the value and check on its physical existence and transfer of ownership; Ascertain whether the funds received have reached the CIC SACCO’s account; Differentiate subsidies entered directly in the balance sheet and donations entered in the income statement. Compute all subsidies and their amortization.
12. Retained earnings & Income statement	Verify and confirm the computation and classification of income and expenses for at least five consecutive years to cut-off date; as well as the resulting profit or loss; Confirm the retained earnings up to the cut-off date; Carry out the historical analysis of retained earnings up to the cut-off date; Verify respect for the cut-off accounting policy. Transfer of profit/loss of the year to retained earnings or accumulated losses; Monthly historical analysis of income statement.

Other tasks to be performed

Business valuations:

The basic aim of the valuation is to determine the CIC SACCO value and share price to determine the market value of CIC SACCO.

Assets, Liabilities Gap, and Liquidity details

Thoroughly review of the liquidity status of the CIC SACCO in accordance with Central Bank directives, prudential norms, and practices as follows:

Examine that sufficient liquidity is maintained, and no major gap is found in the assets and liabilities profile;
Examine that the liquidity level is kept in accordance with Central Bank requirements and suggest adjustments/provisions if any.

Off-Balance Sheet

Thoroughly review off-balance sheet exposure as follows:

Review/Evaluate if there are potential contingent liabilities associated with CIC SACCO Customers;
Assess whether or not off-balance sheet exposure is duly and correctly accounted for and settlements are done in accordance with Central Bank directives and prudent norms and estimate adjustments/ provisions if any;
Assess whether or not contingent liabilities (if any) are duly and correctly accounted for and provided adequately and estimate adjustments/ provisions if any;
To understand the non-funded exposure ratio to a single person/ institutions and associated risk.

II.1.2 Non-financial due diligence

a. Legal due diligence

The legal due diligence will find out if the CIC SACCO was compliant to the regulatory environment that govern Deposit-taking Microfinance Cooperatives in Rwanda. The scope of the legal due diligence includes the review and analysis of litigation, employment issues, legal status, contracts, assets and liabilities, and tax compliance to evaluate whether there are any hidden legal hazards or lawsuits with employees, customers or any other third parties.

b. Operational due diligence

The operational due diligence will focus but is not limited to the following:

Review details of CIC SACCO, its location, number of members and non-members, deposit and loan balances, number of staff, number of outlets, etc.
Review internal control and external audit reports (at least 2 recent years) and identify weaknesses that may cause risks to the new investors/stakeholders and advise accordingly.

c. Human resource due diligence/Governance effectiveness

The human resource due diligence will focus but is not limited to the following:

List of board members & their qualifications/ experience; board minutes showing regularity of meetings. Check that at least some members have a high school education or higher;
Check that there is an organizational structure with the board reporting to the AGM and management reporting to the board; and that there are an audit committee, credit committee, and other necessary committees in place. Check if members of committees are not placed in any actual, perceived/apparent, or potential conflict of interest;
Examine a copy of the business plan and enquire on the activities therein so far accomplished;
Review the file of members of CIC SACCO’s staff with regard to gender, qualifications, experience, type, and details of the contract;
Identify vacant positions of staff that need urgent recruitment;
Document the remuneration package for each staff;
Determine whether or not there is any unpaid leave outstanding;

III. Expected Deliverables

Under this, the consultant will deliver the following:

Inception report indicating the approach/methodology and a plan of Activities/tasks as distributed among the audit team but with a shared responsibility spirit; (To be submitted alongside the Technical & Financial evaluation);
Final audit report (due diligence report) showing the financial position and performance of the (CIC SACCO) . The audit report should include but not limited to the following:

Trial balance;
Balance sheet;
Income statement;
Member share and current account balances report;
Loan report and corresponding security savings;
Term deposits report;
Savings accounts balances;
Zero share report with or without current accounts;
Payables report;
Receivables report.

Asset (Tangible assets, Intangible assets, financial assets, etc) and Equity Valuation report indicating the Net book value, and member share value;
A non-financial due diligence report containing the issues from the CIC SACCO;

IV. Timeframe

It is estimated that the assignment will be conducted within a maximum of 30 working days starting from the date of signing the contract. This period includes the validation process and approval of the work done by the consultant:

Below is the timeline for the accomplishment of the assignment:

Activity	Deliverable	Timeline
Kick off meeting and agreement on approach and methodology	Inception Report	2 days
Onsite due diligence (financial, non-financial due diligence)	Interim report on the progress on both due diligence activities	15 days
Report writing and consolidation of insights gathered during the on-site due diligence	Financial due diligence report Presentation of the due diligence reports to relevant stakeholders	10 days
Incorporation of comments and finalization of the reports	Final reports	3 days

V. Remuneration and payment terms

The amount of remuneration and the terms of payment will be specified in the contract for the provision of services. The payment terms are listed below:

An advance of 30%, upon request of the consultant after signing the contract and providing the inception report.
70% once the due diligence reports are received and approved.

VI. Required competences and qualifications.

Proposals are invited from suitably qualified firms. Applicants are required to provide profiles for all proposed team members, clearly stating their roles and responsibilities, level of effort, and including their technical expertise and practical experience (Detailed CVs required). Key qualifications for this work include:

Consultant competences and qualifications (Specific experience of the firm related to the assignment)

At least 5 years’ experience in audit of financial institutions, due diligence, asset valuation and related field preferably in Banks or MFIs (unjustified experience will not be considered);
Strong understanding of the Microfinance Sector in Rwanda and strong experience (at least 5 years) carrying out audit and consultancy assignment in this sector;
Demonstrated experience and ability to deliver in this area (evidenced by previous assignments);
Being certified as an External Auditor of Microfinance Institutions by the National Bank of Rwanda (will be proven by the list of certified external auditors of MFIs published by BNR).
References of at least three (3) similar assignments in Rwanda for the last 5 years (proven by certificate for good completion);
Good communication and facilitation skills, including Kinyarwanda and English.

Team Composition (Indicative)

Key Personnel	Qualifications & experience
Audit Manager of the Assignment/TL	Having at least a bachelor's degree in accounting or finance with a minimum of 10 years’ experience in the audit of Microfinance Institutions. Professional qualifications such as CPA/ACCA/CIA is a must;Excellent report writing skills and fluency in English and Kinyarwanda is required.Having participated or led (5) similar assignments in Rwanda for the last 5 years (proven by team composition in those assignments).
Audit team members	Strong dedicated team with proven subject matter expertise on topics in this assignment and understanding of the local context,Possessing at least a bachelor's degree in accounting or finance with a minimum of 5 years’ experience in the Audit of Microfinance Institutions having achieved at least intermediate level of professional qualification such as CPA/ACCA/CIA;

VII. How to apply

Interested and qualified firms should submit their technical and financial proposals as well as any supporting documents to CIC SACCO ’s email. Any other communications regarding this ToRs should be addressed to the same email.

1. Technical Proposals: Technical proposals should contain the following documents and information:

Certificate of Incorporation or Trading License /Certificate of Registration.
Evidence of statutory compliance such as a valid tax clearance certificate
RSSB contribution clearance certificate.
An approach and methodology for performing the services.
A detailed work plan, showing the inputs of all key staff and the achievement of deliverables.
CVs of team (each CV should be max. 4 pages)
A summary of the firm’s experience on similar assignments.
The consultant’s comments or suggestions on the TORs and appreciation of the assignment, the objectives, tasks and deliverables.

2. Financial Proposals: Financial proposals should contain the breakdown of the team and related cost units per unit daily, tax inclusive.

Proposals (both technical and financial separately in a Pdf document) must be submitted electronically to: cycleinvestmentcooperative@yahoo.com with clear subject line: “Consultancy to carry out due diligence and asset valuation of CIC SACCO and submitted by 23^rdSeptember 2026 at 4pm.

Late bids

(CIC SACCO) shall not consider any bid that arrives after the deadline for submission of bids. Any bid received by (CIC SACCO) after the deadline for submission of bids shall be declared late, rejected.

VIII. Evaluation process

The selection of candidates will be performed as follow:

Basing on the quality of the technical offer and on the financial offer submitted by the firms. The technical offer will be evaluated based the following criteria:

Technical Evaluation

Weighting

Qualifications and experience of the proposed team

Quality of the Audit Manager/Head of the Assignment

Quality of the audit team.

Sub total

Methodology & Approach

Understanding of the ToR

Adequacy and quality of the proposed technical approach, methodology and work plan in responding to these Terms of Reference.

Subtotal

FinancialEvaluation

Value for money (based on fee rates, inputs and total costs of the assignment)