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GRACE CORPORATION Interest Expense December 31, 2011

Audit Objective: > To determine whether all transactions relative to accounts payable and interest expense exist at year-end in the ordinary course >To deterrmine whetherinterest expense are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence >Measurement Audit Procedures: 1. Obtain from client a lisitng of accounts payable as of year end. 2. Reconcile to general ledger. 3. Vouch recorded accounts payable to vendors' statements. 4. Recalculate the interest expense from the accounts payables. Findings: Unadjusted Balance Php 45,500.00 66,565.00 Php 112,065.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

t expense exist at year-end in the ordinary course of business

GRACE CORPORATION Miscellaneous Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded miscellaneous expenses. Findings: Unadjusted Balance Php 397,538.00 400.00 Php 397,938.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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ear-end in the ordinary course of business

GRACE CORPORATION Insurance Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business >To deterrmine whether miscellaneous expense are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence >Measurement Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded miscellaneous expenses. 4. Recalculate the insurance expense. Findings: Unadjusted Balance Php 550,000.00 Php 550,000.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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ear-end in the ordinary course of business

GRACE CORPORATION Insurance For the Year Ended December 31, 2011 DATE 1/2/2011 CV # PAYEE Cardinal Insurance Corporation PARTICULARS Premium on insurance of delivery vans for one year effective 1/1/2011 Premium in insurance of building and equipment and fixture for one year effective 3/15/2011 (Pol. # 279825) AMOUNT 360,000.00

3/12/2011

Filipino Insurance Corporation

240,000.00

600,000.00

GRACE CORPORATION Advertising Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded advertisings expenses. Findings: Unadjusted Balance Php 257,195.00 550,000.00 13,325.00 820,520.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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-end in the ordinary course of business

GRACE CORPORATION Advertising For the Year Ended December 31, 2011 DATE CV # 2/15/2010 6/15/2011 PAYEE Cathy Ads, Inc. Cathy Ads, Inc. PARTICULARS AMOUNT Advertising in Bulletin Today 250,000.00 Published 1/15/2011 Retainer fee for seven months effective 350,000.00 7/1/2011 TOTAL 600,000.00 Advertisement-Times Journal 8/21/2011 Brochures TOTAL 257,195.00

8/20/2011

PhilAD

12/31/2011

Franks Digital

100,000.00 957,195.00

*not included

GRACE CORPORATION Representation Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative representation expense exist at year-end in the ordinary course of business >To deterrmine whether representation expense are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence Audit Procedures: 1. Reconciled to general ledger. 2. Vouch recorded representation expenses. Findings: Unadjusted Balance Php 118,000.00 2,000.00 118,000.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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year-end in the ordinary course of business

GRACE CORPORATION Bad Debt Expense December 31, 2011

Audit Objective: > To determine whether all transactions relative to accounts receivable and bad debt expense exist at year-end in the ordinary cou >To deterrmine whether bad debt expense are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence >Measurement Audit Procedures: 1. Obtain from client a lisitng of accounts receivable as of year end. 2. Reconcile to general ledger. 3. Vouch recorded accounts receivable to vendors' statements. 4. Recalculate the bad debt expense from the accounts receivables. Findings: Unadjusted Balance 497,811.00 Php 497,811.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

debt expense exist at year-end in the ordinary course of business

GRACE CORPORATION Organization Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded organization expenses. Findings: Unadjusted Balance Php 200,000.00 200,000.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

-end in the ordinary course of business

GRACE CORPORATION Depreciation Expense - Office Equipment December 31, 2011

Audit Objective: > To determine whether the property, plant and equipment included in the statement of financial position exist. >To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed. >To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of accept >To determine that the property is described and classified in the statement of financial position and related disclosures are adequ Audit Assertions Affected > Occurrence >Completeness >Measurement Audit Procedures: 1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year. 2. Check footing, and reconcile with general ledger. 3. Conduct physical inspection of major acquisition of plant and equipment. 4. Vouch additions to property and equipment during the year. 5. Investigate disposals and retirements of property and equipment during the year. 6. Test client's computation of depreciation. 7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense. Findings: Unadjusted Balance 426,000.00 Php 426,000.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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ment of financial position exist. capitalizable cost were not expensed. e acceptable and computed on the basis of acceptable and consistent methods. nancial position and related disclosures are adequate.

he accumulated depreciation during the year.

ment and for related revenuue and expense.

GRACE CORPORATION Depreciation Expense - Transportation Equipment December 31, 2011

Audit Objective: > To determine whether the property, plant and equipment included in the statement of financial position exist. >To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed. >To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of accept >To determine that the property is described and classified in the statement of financial position and related disclosures are adequ Audit Assertions Affected > Occurrence >Completeness >Measurement Audit Procedures: 1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year. 2. Check footing, and reconcile with general ledger. 3. Conduct physical inspection of major acquisition of plant and equipment. 4. Vouch additions to property and equipment during the year. 5. Investigate disposals and retirements of property and equipment during the year. 6. Test client's computation of depreciation. 7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense. Findings: Unadjusted Balance 1,200,000.00 Php 1,200,000.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

ment of financial position exist. capitalizable cost were not expensed. e acceptable and computed on the basis of acceptable and consistent methods. nancial position and related disclosures are adequate.

he accumulated depreciation during the year.

ment and for related revenuue and expense.

GRACE CORPORATION Depreciation Expense -Furniture and Fixture December 31, 2011

Audit Objective: > To determine whether the property, plant and equipment included in the statement of financial position exist. >To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed. >To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of accept >To determine that the property is described and classified in the statement of financial position and related disclosures are adequ Audit Assertions Affected > Occurrence >Completeness >Measurement Audit Procedures: 1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year. 2. Check footing, and reconcile with general ledger. 3. Conduct physical inspection of major acquisition of plant and equipment. 4. Vouch additions to property and equipment during the year. 5. Investigate disposals and retirements of property and equipment during the year. 6. Test client's computation of depreciation. 7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense. Findings: Unadjusted Balance 355,000.00 Php 355,000.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

ment of financial position exist. capitalizable cost were not expensed. e acceptable and computed on the basis of acceptable and consistent methods. nancial position and related disclosures are adequate.

he accumulated depreciation during the year.

ment and for related revenuue and expense.

GRACE CORPORATION Depreciation Expense -Building December 31, 2011

Audit Objective: > To determine whether the property, plant and equipment included in the statement of financial position exist. >To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed. >To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of accept >To determine that the property is described and classified in the statement of financial position and related disclosures are adequ Audit Assertions Affected > Occurrence >Completeness >Measurement Audit Procedures: 1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year. 2. Check footing, and reconcile with general ledger. 3. Conduct physical inspection of major acquisition of plant and equipment. 4. Vouch additions to property and equipment during the year. 5. Investigate disposals and retirements of property and equipment during the year. 6. Test client's computation of depreciation. 7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense. Findings: Unadjusted Balance 650,000.00 Php 650,000.00

31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

ment of financial position exist. capitalizable cost were not expensed. e acceptable and computed on the basis of acceptable and consistent methods. nancial position and related disclosures are adequate.

he accumulated depreciation during the year.

ment and for related revenuue and expense.

GRACE CORPORATION Light, Water and Telephone December 31, 2011 Audit Objective: > To determine whether all transactions relative to light, water and telephone exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Obtain from client a lisitng of expenses as of year end. 2. Reconcile to general ledger. 3. Vouch recorded expenses to vendors' statements. Findings: Unadjusted Balance Php 1,208,450.00 1,300.00 13,250.00 Php 1,223,000.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

ist at year-end in the ordinary course of business

GRACE CORPORATION Gasoline Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative to gasoline expense exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Obtain from client a lisitng of expenses as of year end. 2. Reconcile to general ledger. 3. Vouch recorded expenses to vendors' statements. Findings: Unadjusted Balance Php 1,127,400.00 4,600.00 14,000.00 Php 1,146,000.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

-end in the ordinary course of business

GRACE CORPORATION HDMF Premium Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative to HDMF expense exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Obtain from client a lisitng of expenses as of year end. 2. Reconcile to general ledger. 3. Vouch recorded expenses to vendors' statements. Findings: Unadjusted Balance Php 1,100.00 Php 1,100.00

30-Nov-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

nd in the ordinary course of business

GRACE CORPORATION SSS, Medicare Premiums Expense December 31, 2011

Audit Objective: > To determine whether all transactions relative to SSS, Medicare Premiums Expense exist at year-end in the ordinary course of bu Audit Assertions Affected > Occurrence Audit Procedures: 1. Obtain from client a lisitng of expenses as of year end. 2. Reconcile to general ledger. 3. Vouch recorded expenses to vendors' statements. Findings: Unadjusted Balance Php 1,270,500.00 Php 1,270,500.00

30-Nov-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

ense exist at year-end in the ordinary course of business

GRACE CORPORATION Taxes and Licenses December 31, 2011 Audit Objective: > To determine whether all transactions relative to taxes and licenses exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Obtain from client a lisitng of expenses as of year end. 2. Reconcile to general ledger. 3. Vouch recorded expenses to vendors' statements. Findings: Unadjusted Balance Php 910,000.00 Php 910,000.00

30-Nov-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

r-end in the ordinary course of business

GRACE CORPORATION Taxes and Licenses For the Year Ended December 31, 2011 Date 2/15/2011 2/15/2011 2/18/2011 2/28/2011 Payee Real Estate Tax Municipal Tax Residence Certificate C & C1 Registration for Delivery Vans OR# A-72925 S-842782 F-231475 W-24687

Amount 240,000.00 500,000.00 30,000.00 140,000.00 910,000.00

GRACE CORPORATION Supplies Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative tooffice supplies exist at year-end in the ordinary course of business Audit Assertions Affected > Occurrence Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded purchases of office suppiles on a test basis to vendors' statements. 3. Con duct physical count of supplies inventory on a test basis. Findings: Unadjusted Balance Php 1,406,862.00 Php 5,000.00 Php 1,411,862.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

d in the ordinary course of business

GRACE CORPORATION Insurance Expense December 31, 2011 Audit Objective: > To determine whether all transactions relative salaries expense exist at year-end in the ordinary course of business >To deterrmine whether salaries expense are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence >Measurement Audit Procedures: 1. Reconcile to general ledger. 2. Vouch recorded salaries expenses. 4. Recalculate the salaries expense. Findings: Unadjusted Balance Php 21,682,480.00 1,238,760.00 1,101,600.00 Php 24,022,840.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

d in the ordinary course of business

GRACE CORPORATION Salaries Expense For the Year Ended December 31, 2011

Name of Employee Eric Gaston Joan Gaston Amy Josef Sarah Tuason Other Employees

Particulars Salary for the year @ 80,000/month Salary for the year @ 42,000/month Salary for the year @ 50,000/month Salary for the year @ 48,320/month

Amount 960,000.00 504,000.00 600,000.00 579,840.00 21,379,000.00 24,022,840.00

2011

GRACE CORPORATION Insurance Expense December 31, 2011

Audit Objective: >To determine whether inventories exist and represent items which are for sale in ordinary course of business. >To determine whether all transactions regarding inventory are recorded properly. >To determine whether inventory included in the inventory list are accurate and inventory quantities includes both inventory on h >To determine whether inventories are properly stated at its cost. >To determine that merchandise inventory and cost of goods sold are properly presented and classified in the balance sheet in acc Audit Assertions Affected > Occurrence >Completeness >Measurement >Presentation and Disclosue Audit Procedures: 1. Obtain list of inventory and reconcile to ledgers. 2. Observe the taking of physical inventory and conduct test counts. 3. Obtain final list of inventory based from the test counts during inventory observation. 4. Review cutoff of purchases and sales transactions. 5. Review the computation and entries to cost of goods sold. 6. Perform analytical review related to inventories and cost of goods sold. 7. Vouch and test inventory pricing. 8. Evaluate financial statement presentation and disclosure of merchandise inventory. Findings: Unadjusted Balance Php 54,785,500.00 1,861,387.00 Php 56,646,887.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

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n ordinary course of business.

inventory quantities includes both inventory on hand and in transit.

resented and classified in the balance sheet in accordance with PAS/PFRS.

GRACE CORPORATION Cost of Sales 2011

Month January February March April May June July August September October November December Total

Amount 5,342,356.00 5,266,997.00 4,792,627.00 6,127,495.00 6,803,923.00 4,770,269.00 4,857,439.00 3,581,742.00 4,922,788.00 4,151,050.00 4,168,814.00 1,861,387.00 56,646,887.00

GRACE CORPORATION Interest Income December 31, 2011

Audit Objective: > To determine whether all transactions relative to accounts receivable and interest income exist at year-end in the ordinary cours >To deterrmine whether interest income are recorded and presented at proper amounts. Audit Assertions Affected > Occurrence >Measurement Audit Procedures: 1. Obtain from client a lisitng of accountsreceivable as of year end. 2. Reconcile to general ledger. 3. Vouch recorded accounts receivableble to vendors' statements. 4. Recalculate the interest incomee from the accounts payables. Findings: Unadjusted Balance Php 210,000.00 38,853.00 Php 248,853.00

30-Nov-11 31-Dec-11 Balance

Conclusion: No exceptions noted. Prepared by: Initial Reviewed by: Initial Date

Date 3/1/2013

MJFV

est income exist at year-end in the ordinary course of business