A – On Top Auditing Firm

“Not just an easy way up..but a classy way to A – On Top”

Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

April 12, 2012

Jollibee Foods Corporation

Act City Mall
L/G ACT Cyber Tower, Leon Kilat cor., N.Bacalso St., Cebu City

Attention: John Dale Velasco

VP Controller

Dear Sir Velasco:

In regards to our examination of your company's financial statements for the year ended March 31,
2012, we have enclosed a list of the schedules and analyses of accounts that we request your
accounting staff to prepare using the format that we have indicated on the attachment.

The cooperation and extended effort of your staff on the following will definitely be of great help in the
early completion of the audited financial statements:
 Prompt submission of the requested schedules and analyses of accounts on the required dates.
 Typing of confirmation requests.
 Investigation of exceptions reported by debtors and creditors.
 Performance of other clerical work that may be requested from time to time.

Complete reference should be indicated in the preparations of the schedules/analyses so as to guide our
tracing and examination of source documents. The balance of the schedules/analyses should be of the
same amount with the balance of the corresponding accounts in the general and subsidiary ledgers.
Reconciliation statements should accompany balances which have been found to have discrepancies.

We also request to have a copy as soon as time enables you to do so with the following:
 Minutes of meetings of the stockholders, board of directors, and executive committee held
during the period from April 1, 2011 to date.
 Contracts and other agreements with accounting significance held/entered into during the year.
If you have any questions on the foregoing enclosure, please do not hesitate to contact us.
Thank you for your continuous cooperation.

Very truly yours,

Ava V. Alegado
Partner, A – On Top Auditing Firm

Request for Audit Schedules

 Jo llibee Foods Corporation
Act City Mall
L/G ACT Cyber Tower, Leon Kilat cor., N.Bacalso St., Cebu City

March 12, 2012

Ric Johniño Solijon

VP for Marketing and Promotions
R&A Telecommunications

Dear Mr. Solijon:

Our chosen audit firm, A-On Top, are auditing our financial statements and they aim to obtain direct
confirmation of your accounts payable as of February 28, 2012 to our company incurred during your
feeding program event. Please compare the information below with your records on that date and
signify that this information agrees with your records on that date or note the details of any
discrepancies in the space provided below. Right after, please sign this request and return it in the
enclosed reply envelope directly to our auditors.

Our records on February 28, 2012 showed P2,000,000.00 as receivable from you. Please take note that
this is not a request for payment and remittances should not be sent to A-On Top Auditing Firm.

Your immediate action towards this request will be appreciated.

Sincerely Yours,

John Dale Velasco

VP Controller
(Please fill up the next page)
 CONFIRMATION

The information as stipulated above by Jollibee Foods Corporation is correct except as noted below.
Our company have also been charged with a transportation expense worth P500.00 for the delivery of
our order and we have not yet paid.

Company: R&A Telecommunications

Signed: Ric Johniño Solijon Date: March 14, 2012
Title: Accounts Receivable Confirmation by VP Conf #: 1
for Marketing and Promotions

Please return this form directly to our auditors:

A-On Top Auditing Firm
Kindly send this form in advance through fax or Don Ramon Abooitiz Street
e-mail the scanned copy to: Cebu City, Philippines
Fax No.: (02)99348-774
Email address:
aontop@yahoo.com

Accounts Receivable Confirmation Request

 ROGER COMPANY
Financial Statement Audit - For Financial Year Ended December 31, 2012

Memorandum – Cash Collection and Accounts Receivable Procedures

Prepared by: Ava V. Alegado Date: March 12, 2012

Reviewed by: Ric Solijon Date: March 12, 2012

OBJECTIVES:

To review documentation of cash collection procedures observing invoice processing related

documents throughout the cash collection cycle.

WORK PERFORMED:

1. Obtained and reviewed the written accounts receivable data for the year 2012.

2. Determined the time period in which transactions occurred.

3. Determined designated clerks assigned to various activities in the cycle.

4. Checked the authorization of the transaction.

5. Made a reconciliation of the invoice amount and the credit limit.

6. Prepared an Aging of the Accounts Receivable to determine the outstanding days of

the accounts.

FINDINGS/CONCLUSIONS: COMMENTS/REMARKS

Missing sales invoices were
discovered (invoice # 832306 and
1. invoice # 832218)
Duplicate invoices were also
discovered (invoice # 832305 and
invoice # 832219)
 All charges should have invoices and
issued on a timely basis.
 Issuances of invoices should be
sequenced
 Accounts Receivable transactions
should be properly documented.

 The verification of the processing and

2. Some customers were authorized to
avail credit though they already
exceeded their credit limit.
recording of transactions will determine
some of the transactions that are invalid
and/or not properly authorized.
 The credit limit was not followed since
customers were still allowed to

The data reflects that HMK,
Accounts Receivable Clerk also acts
3. as Cash Receipts clerk and
sometimes reconciles receivable
records to the general ledger. This
situation reflects a conflict of
segregation of duties.
4. A significant amount of accounts
with unusual characteristic. Invoice
and due dates do not reconcile.
5. The aged trial balance shows that the
number of days the accounts are
outstanding is not uniform. Some are
30 days, 90 days, and even 180 days.
While aging the accounts receivable,
6. a significant amount resulted in a
negative number of outstanding
days.
Memo Summarizing Findings, Conclusions and Recommendations
purchase though they exceeded the
credit limit.
.
 Management should assign
responsibilities to ensure a crosscheck
of duties. There should be segregation
of duties in which no single individual
should have control over two or more
phases of a transaction or operation.
 Responsiblities that should be held by
different people: (1) billing and
maintaining accounts receivable records
(2) receiving or handling incoming
payments, and (3) reconciling
receivable records to the general ledger.
 This indicates that these accounts were
long past due and there is fraud in
recording in the general ledger.
 The receivable reports should include
aged listings of all amounts due, should
be reviewed at least monthly. They
should be balanced to the related
accounts.
 The delinquent account balances
identified must be examined and
follow-up with customers should be
initiated on a timely basis to facilitate
payment.
 There must be an established and
follow a specific set of procedures for
determining bad debts and collection
actions.
 A – On Top Auditing Firm
“Not just an easy way up..but a classy way to A – On Top”
Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

MEMORANDUM

To: All employees qualifying for rank promotions

From: Board of Directors
Date: March 12, 2012
Re: Leadership Training Seminar 2012

It is known by every employee of this company that chosen individuals for rank promotions
undergo strenuous examinations, personality- development trainings and seminars to test their abilities
and improve their skills at the same time. Last month, the list of qualified employees have been posted
and it is our great honor to bring you the most awaited annual event, the Leadership Training Seminar
2012.

This will be held at the Teacher's Camp, Baguio City and will run for one week. Inclusive dates
are April 7-14, 2012. Expenses will be shouldered by the company and everyone is required to bring
the following:

 A copy of the Company Profile

 Resume
 Letter of Intent
 Personal and hygiene necessities

As presented and discussed during our board meetings, we wish to continue this legacy because
over the years it has proven to be an effective and efficient way to improve officer-employee
relationship and understanding towards the fulfillment of our company's vission mission.

This event is a pre-requisite of a promotion and it is imperative for desiring employees to

attend. Be it noted that the company is not held liable for any fortuitous event and losses of personal
belongings during the whole seminar.

We all hope to see and know more of you and your capabilities that would bring our company
on top. More Power!

Inter-Office Memorandum
 A – On Top Auditing Firm
“Not just an easy way up..but a classy way to A – On Top”
Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

March 12, 2012

John Dale Velasco

VP Controller
Jollibee Foods Corporation
Act City Mall
L/G ACT Cyber Tower, Leon Kilat cor., N.Bacalso St., Cebu City

Dear Sir Velasco:

This will confirm our understanding of the arrangements for our audit of the financial statements of
Jollibee Foods Corporation, for the year ending December 31, 2011.

We will audit the Company's balance sheet as of December 31, 2011, and the related statements of
income, retained earnings, and especially cash flows for the year then ended, for the purpose of
expressing an opinion on them. The financial statements are the responsibility of the Company
management. Our responsibility is to express an opinion on the financial statements based on our
audit.

We will conduct our audit in accordance with generally accepted auditing standards. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audit will provide a reasonable basis for
our opinion.

Our procedures will include tests of documentary evidence supporting the transactions recorded in the
accounts, and direct confirmation of receivables and certain other assets and liabilities by
correspondence with selected customers, creditors, legal counsel, and banks.
The Management is responsible for the preparation and fair presentation of the financial statements and
other information stated. Proper internal control is also the management’s responsibility and forming
policies and procedures especially with regards to the accounting of transactions. It is also their
responsibility to provide to us, on a timely basis, all of the company’s original accounting records and
related information. Assistance to be supplied by their personnel, including the preparation of schedules
and analyses of accounts, is described in a separate attachment. Timely completion of this work will
facilitate the completion of the audit. At the conclusion of our audit, we will request certain written
representations from the management about the financial statements and matters related thereto.

Although the audit is designed to provide reasonable assurance of detecting errors and irregularities
that are material to the financial statements, it is not designed and cannot be relied upon to disclose all
fraud, defalcations, or other irregularities. However, we will inform you of any material errors, and all
irregularities or illegal acts, unless they are clearly inconsequential, that come to our attention.

Our fees will be billed as work progresses and are based on the amount of time required plus out-of-
pocket expenses. Invoices are payable upon presentation. We will notify you immediately of any
circumstances we encounter that could significantly affect our initial estimate of total fees, which will
range from Php200,000 – Php500,000.

We give great value to the opportunity of bringing service to you and we pray for a fruitful and long-
lasting relationship.

Sincerely,

A – On Top Auditing Firm

By:

______________________________
Ava V. Alegado
Partner

______________________________
March 14, 2012
(Date)

Engagement Letter Proposal: Financial Statements Audit

 A – On Top Auditing Firm
“Not just an easy way up..but a classy way to A – On Top”
Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

March 12, 2012

John Dale Velasco

VP Controller
Jollibee Foods Corporation
Act City Mall
L/G ACT Cyber Tower, Leon Kilat cor., N.Bacalso St., Cebu City

Dear Sir Velasco:

This letter is to confirm your request that we provide management services to Jollibee Foods
Corporation. We have come to an understanding of the terms and objectives of our engagement and the
nature of the services that we will provide.

Our basic objectives are to: 1) ensure the continuous performance or quick renewal of essential
business operations during an emergency; 2) reduce or mitigate disruption of service; and 3) protect,
prevent loss, and minimize damage to life, property and other assets.

The scope of services covers the operational aspect of the business and the physical assets of the
company. The continuity plans be tested, exercised, and maintained.

We will be adapting existing plan guides and resources to create a process for use in the development
of business continuity management plans especially in the event of various types of emergencies, and
emergency response plans ready for implementation. Conducting an all-hazards threat analysis and a
business impact analysis, and making recommendations to an advisory board. Developing and
providing training to employees on how to effectively use the plans in operations. Oversee emergency
responses and facilitate planning interaction to assure coordination of efforts and effectiveness of all
plans.

The management is responsible for the establishment of existing plans and policies with regards to
business operations. They are to insure proper implementation of new developed plans. They are also to
provide us with all the necessary information needed for the completion of the engagement.
The procedures that we will perform do not provide one hundred percent assurance to completely
eliminate disruption of operations or completely prevent loss and damage. It will only improve
performance and minimize disturbances and loss.

We estimate that our fees will be Php 20,000 per week until the engagement is completed. Prices are
negotiable once our contract is renewed. Other fees will also be billed as work progresses.

Thank you for your trust and cooperation.

Sincerely,

A-On Top Auditing Firm

By:

_______________________
Ava V. Alegado
Accountant-in-charge

_______________________
March 12, 2012
(Date)

Engagement Letter Proposal: Management Consultancy

 A – On Top Auditing Firm
“Not just an easy way up..but a classy way to A – On Top”
Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

March 12, 2012

John Dale velasco

Jollibee Foods Corporation
Act City Mall
L/G ACT Cyber Tower, Leon Kilat cor., N.Bacalso St., Cebu City

Dear Sir Velasco:

Thank you for selecting A-On Top Auditing Firm to assist the Jollibee Foods and corporation with tax
compliance for 2011. The purpose of this letter is to confirm the terms of our engagement and the
services we will provide. You received this letter because we understand you are the person responsible
for the tax matters of the corporation. If that is not correct, please tell us who that person is so that we
can coordinate return preparation work with the right party.

We expect to perform the following services:

 Prepare the income tax returns with supporting schedules.

 Perform a limited amount of bookkeeping and analysis necessary for preparation of the income
tax returns.

Our work does not include any procedures designed to discover defalcations or other irregularities.

We must use our judgment in resolving questions where the tax law is unclear, or where there may be
conflicts between the taxing authorities’ interpretations of the law and other supportable positions. We
will apply the “more likely than not” reliance standard to resolve such issues in order to avoid penalties
that might be assessed against us as return preparers. You agree to honor our decisions regarding
disclosure of return positions to avoid or mitigate penalties.

Penalties of as much as Php200,000 can be imposed on the corporation for failing to disclose
participation in “reportable transactions,” that is, certain arrangement the BIR has identified as
potentially abusive. We will insist that all such transactions be properly disclosed.
The law also includes penalties that may be imposed when taxpayers simply understate their tax
liability.

Management is responsible for proper recording of transactions in the accounts, safeguarding assets,
and for the substantial accuracy of the financial records. Because you have final responsibility for the
tax returns, you should review them carefully before you sign and file them.

Your returns may be audited by the taxing authorities. Any proposed adjustments are subject to certain
appeal. Should your returns be selected for examination, we can arrange to be available upon request to
represent you. Such representation would be a separate engagement, and we would render additional
invoices for fees and expenses incurred.

Our fee for preparing the tax returns described above will be based on the time required at standard
billing rates plus out-of-pocket expenses. All invoices are due and payable upon presentation.

Thank you for your confidence in us.

A-On Top Auditing Firm

By:

________________________
Ava V. Alegado
Chief Executive Officer

________________________
March 14, 2012
Date

Engagement Letter Proposal: Tax Engagement

 A – On Top Auditing Firm
“Not just an easy way up..but a classy way to A – On Top”
Don Ramon Aboitiz Street, Cebu City
Tel No.: (032)2723371; Mobile No. (0906)4773343
Fax No.: (02)99348-774

OBJECTIVES OF THE ENGAGEMENT

The objectives for the audit engagement are: to audit the financial statements of Jollibee Foods
Corporation for the year ended December 31, 2012 and to express an opinion on the statutory financial
statements of the company. It also aims to examine the company's compliance with the Philippine
Financial Reporting Standards and to highlight key issues that have been of relevance in the forming of
our audit opinions.

In addition to the above formal objectives, we aim to achieve the following:

 ƒ the highest quality of audit opinion and client service;
 provide timely warning of issues requiring management's attention;
 provide advice and support on the resolution of key issues/interpretation of new accounting
requirements;
 provide guidance and support to the Audit Committee;
 provide a constructive contribution to the corporation; and
 ƒcause a minimum of disruption to the operations of the corporation.

BACJGROUND INFORMANTION

Jollibee is a phenomenal success story: what began as a two-branch ice cream parlor in 1975 offering
hot meals and sandwiches became incorporated in 1978 with seven outlets to explore the possibilities
of a hamburger concept. Thus was born the company that revolutionized fast food in the Philippines.

In 1984, Jollibee hit the P500 million sales mark, landing in the Top 500 Philippine Corporations. In
1987, barely 10 years in the business, Jollibee landed into the country’s Top 100 Corporations. It
became the first Philippine fast food chain to break the P1 billion sales mark in 1989. In 1993, Jollibee
became the first food service company to be listed in the Philippine Stock Exchange; thus broadening
its capitalization and laying the groundwork for sustained expansion locally and beyond the
Philippines.

To achieve its long-term goal to be the country’s food service leader, Jollibee acquired Greenwich Pizza
in 1994. A year later, the company obtained the franchise of Delifrance, an international food company.
These moves expanded Jollibee’s penetration in the pizza-pasta and French cafe-bakery segments. In
2000, the strategic acquisition of Chowking solidified the company’s position as the dominant leader.
The move gave it leadership in the Oriental quick-service restaurant segment.
Jollibee’s rapid growth is due to its superior menu line-up, creative marketing programs, and efficient
manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture
of integrity and humility, fun and family-like. As a corporate citizen, Jollibee is also committed to give
back to its host communities through meaningful and lasting socio-civic projects.

Jollibee dedicated its continuous success to the Filipinos who have been there from the very start.
Jollibee is so well-loved everytime a new store opens, especially overseas, Filipinos always form long
lines to the store. It is more than home for them. It is a stronghold of heritage and monument of Filipino
victory.

WORK THAT WILL REQUIRE SPECIALIST

It has been properly assessed that the engagement will require the assistance of the following
professionals/specialists in achieving the objectives set forth by the two parties:

 Actuaries - to evaluate employee retirement benefits

 Engineers – to estimate useful lives of plant and equipment; Sanitary Engineers
 Attorneys – to interpret legal arrangements and regulations
 Farmers and livestock owners – to ensure safety in terms of health reasons caused by the
products and brought to the customers; proper valuation of biological assets.

RISK FACTORS

During the planning stage, certain risks have been assessed and duly noted by the two parties. Several
factors affect the risk of the engagement:

 Jollibee Foods Corporation is a heterogeneous company that serves and produces different
products and all of its business categories are highly competitive and thus making the
corporation sensitive to economic conditions.
 Over the years, the corporation have been expanding and getting into new ventures and is still
continuing to expand its operations not just within the Philippines but the whole world.
 Audited financial statements show huge amounts of increases in profits but net income trends of
percentages are not that stable.
 Though the corporation has been transparent to the public when it comes to financial matters, it
is difficult to assess the progress and details about the corporation's performance due to
increasing number of franchises.

These factors indicate that the engagement to audit Jollibee Foods Corporation has a high risk.
DELIVERABLES

The final output of the engagement to be submitted to Jollibee Foods Corporation as specified in the
engagement letter proposal:

 Audited Financial Statements

 Annual Income Tax Return
 Supplementary Report to SEC and other reporting requirements
 Management Letter

PROPOSED TIMETABLE, STAFFING AND ALLOCATION OF ROLES &

RESPONSIBILITIES

Based on the discussions with John Dale Velasco (VP Controller, Jollibee Foods Corporation), the
following are the tentative dates for the audit:

TASK DATE
Begin interim audit work 04/12/12
Complete interim audit work 04/22/12
Issue management letter on interim work 04/29/12
Observe physical inventory 05/30/12
Begin year-end audit work 06/09/12
Complete field work 06/21/12
Closing conference 07/19/12
Issue audit report 07/22/12
Issue annual income tax return 08/05/12
Issue supplementary report to SEC 08/05/12
Issue letter required by financing agreement 08/05/12
Issue updated management letter 08/16/12
Staffing time requirements for the engagement are described below:

ENGAGEMENT INTERIM FINAL TOTAL Labor Cost per hr Hours Needed Total Fee
TEAM MEMBER
Assistant 40 60 100 P200.00 30 P600,000.00
Senior 35 35 70 P300.00 25 P525,000.00
Manager 8 10 18 P350.00 25 P31,500.00
Partner 5 7 12 P700.00 15 P126,000.00
Total 88 112 200 P1,550.00 95 P1,282,500.00

ENGAGEMENT APPROACH

Jollibee Foods Corporation and the auditors of AVALEGADO &Bros., Co. have agreed to adopt
the Risk-Based Engagement Approach which identifies, categorize and prioritize risk; the highest
priority is allocated a greater proportion of the accounting professional's resources. Both parties believe
that this choice of approach will enable the objectives of the engagement be achieved in the most
effective and efficient way.

Engagement Planning Memorandum

 University of San Carlos
School of Business and Economics
Department of Accountancy

AC521 Portfolio

Submitted by:
Ava V. Alegado
TTH 7:30 – 9:00 am

Date Submitted:
September 23, 2011