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CALESI Auditing Services

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AUDIT PROGRAM FOR PROPERTY, PLANT AND EQUIPMENT


Index Reference ___________
Client Name: Grace Corporation Date of Audit: ____________
Staff In-Charge:
Audit In-Charge:
Year-End Audit Date:

AUDIT OBJECTIVES AND AUDIT ASSERTIONS


AUDIT OBJECTIVES AUDIT ASSERTIONS
To determine that property, plant, and Existence, Completeness, Rights and
equipment reflected in the accounts represent a Obligations
complete listing of capitalizable cost of assets
purchased, constructed or leased by the
company, and such assets are physically on
hand.
To determine that property, plant, and Valuation and Allocation
equipment are valued at cost in accordance
with GAAP.
To determine that the costs and related Existence, Completeness, Valuation and
depreciation applicable to all sold, abandoned, Allocation
damaged, or obsolete property have been
properly removed from the accounts.
To determine that depreciation charged to Valuation and Allocation
income during the period is adequate but not
excessive and has been computed on an
acceptable basis consistent with that used in
prior years.
To determine that the balances in the Valuation and Allocation
depreciation allowance accounts are
reasonable, considering the expected useful
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lives of the property units and estimated


salvage value.
To determine that property is properly Presentation and Disclosure
classified in the balance sheet, and liens,
significant fully depreciated assets, idle
property, and property held for investment
purposes are properly disclosed.

Audit Procedures Done By Date Done Reviewed By

Perform analytical procedures.

Obtained a list of property, plant, and


equipment from the client.

Vouch purchases of property, plant


and equipment and investigate
disposals.

Examine evidences of legal


ownership.

Examine any lease agreements and


the lease terms of agreements.
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Conduct physical inspection and


reconcile with the list of property,
plant and equipment.

Obtain an analysis of the depreciation


for the year.
a. Perform analytical procedures to
test the reasonableness.
b. Perform Recalculations

Analyze maintenance and repairs


accounts.

Prepare depreciation schedule records


and reconcile with the record
provided by the entity.

Test for impairment of property, plant


and equipment.
a. Determine if the management
properly identified indicators of
impairments.
b. Determine the assumptions made
by the entity regarding impairments.
c. Determine if impairments are
properly recognized and recorded.
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Review of minutes of the meetings


and other documents related to the
property, plant and equipment to
determine ownership and other
relevant information.

Identify idle property and obsolete


plant and equipment and determine
proper accounting application.

Determine the insurance coverage.


a. Note the contracts of insurance.

Determine that property, plant and


equipment are carried at proper
amounts.

Determine if property, plant and


equipment are properly classified in
the financial statements and relevant
disclosures as required by PFRS are
followed.
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a/p
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sales
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AUDIT PROGRAM FOR COST OF SALES


Index Reference ___________
Client Name: Grace Corporation__ Date of Audit: _________
Staff In-Charge:
Audit In-Charge:
Year-End Audit Date:
AUDIT OBJECTIVES AND AUDIT ASSERTIONS
AUDIT OBJECTIVES AUDIT ASSERTIONS
Determine that all transactions related to cost Completeness
of sales have occurred for the period and
represent reductions from inventory in the
ordinary course of business.

To determine that all transactions relative to Occurrence


cost of sales have been recorded in the proper
accounting period.

To determine whether the cost of sales are Presentation


properly stated with respect to cost determined
by an acceptable method consistently applied
and slow – moving, excess, defective, and
obsolete items identified and reduced to
replacement cost or net realizable value if
lower than cost.

To determine whether disclosures concerning Disclosure


cost of sales are adequate and in accordance
with PAS/PFRS and generally accepted
accounting principles.
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Audit Procedures Done By Date Done Reviewed By


Confirm inventories in public
warehouse and with consignees.
Obtain a final inventory listing from
the client.
Trace test counts made during the
inventory observation into inventory
listing.
Test the clerical accuracy of the final
inventory listing
Obtain an analysis of the balance of
cost of goods sold from client and
reconcile with reductions in inventory
balances.
Review the year – end cutoff of
purchases and sales transactions.
Review entries to cost of goods sold.
Perform analytical review related to
cost of goods sold.
Evaluate the bases and methods of
inventory pricing.
Vouch and test inventory pricing.
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Board of Directors
Grace Corporation

This letter confirms our arrangements for the audit of Grace Corporation for the year
ending December 31, 2019.

Objective and Scope of the Audit


The purpose of our engagement is to examine the company’s financial statements for the
year ending December 31, 2019 and to evaluate the fairness of presentation of the statements in
conformity with Philippine Financial Reporting Standards. Upon completion of our audit, we
will provide you with our auditor’s report on the financial statements referred to above and
report separately any significant deficiencies relating to the internal controls noted in our audit.

Responsibilities of the Auditor


Our examination will be conducted in accordance with Philippine Standards on Auditing
which will include a review of the internal control structure and tests of controls to the extent we
believe necessary. Accordingly, it will not include a detailed audit of transactions to the extent
which would be required if the examination was intended to disclose defalcations or other
irregularities that are not material to the financial statements, although their discovery may
result.
Our engagement will also include assistance in the preparation of your annual income tax
return. Any additional services that you may request, and that we agree to provide, will be
subject of separate written arrangement.

Responsibilities of Management
The financial statements referred to above are the responsibility of the management of the
company. In this regard, management is responsible for the proper recording of transactions in
the books of accounts, for safeguarding of assets, and for substantial accuracy of the financial
statements. Generally accepted auditing standards also require that we obtain a representation
letter covering the financial statements from certain members of management.
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Other Relevant Information


Our professional fees are based on the time required at various levels of responsibility,
plus actual out-of-pocket expenses (travel, typing, supplies, etc) payable upon presentation of our
invoices. We estimate our fees for the audit to be about P 150,000.00.
We propose to bill you in accordance with the following schedule:
- a monthly retainer of P 10,000.00 plus out-of-pocket expenses incurred to date; and,
- the balance of the fees and out-of-pocket expenses at the completion of the audit.

This letter will be effective for future years unless it is terminated, amended or superseded.
If the foregoing is in accordance with your understanding, please sign and return to us the
duplicate copy of this letter.

Christian T. Saavedra
Managing Partner
CALESI Auditing Services

Agreed and acknowledged on behalf


Of Grace Corporation

By: JT Peron
Joselito T. Peron
Corporate Secretary

Date January X, 2019