Sample Long-Form Audit Report

, C.P.A.

_________ St., BF Homes Paranaque City

Contact nos. _______________________

March 7, 2018

The Board of Directors and Stockholders

ABC CORPORATION

Valerio St. Gatchalian Subd.

Brgy. Manuyo Dos, Las Pinas City

Gentlemen:

In compliance with your request, I submit this informative report in connection with my audit of the financial statements of ABC Corp. (the Company) as of and for the year ended December 31, 2017, on which I have rendered my report dated March 7, 2018. I understand that this informative report will be submitted to the Securities and Exchange Commission in connection with the Company’s application for the decrease in the authorized capital stock of the Company.

In this connection, we enclosed the following:

Part I – Financial Statements as of December 31, 2017 and 2016 and Independent Auditor’s Report for the years ended December 31, 2017 and 2016; and

Part II – Supplementary Information and Comments on the Statement of Financial Position and Statement of Comprehensive Income Accounts as of and for the year ended December 31, 2017, and Summary of Principal Auditing Procedures Performed.

This report is intended solely for the information and use of the Stockholders, the Board of Directors, and management of the Company and for filing with the SEC for the sole purpose mentioned in the first paragraph and is not to be used or referred to in whole or in part or quoted by excerpt or reference in any manner without my written consent.

Very truly yours,

CPA License No. ________

SEC Accreditation No. _______, Group C; valid until May 01, 2019

Tax Identification No. ____________

BIR Accreditation No. ____________

  Issued December 18, 2015; valid until December 17, 2018

BOA Accreditation No. ______

  Issued December 01, 2015; valid until November 30, 2018

PTR No. ________

Makati City, January 09, 2018

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____ CORPORATION

SUPPLEMENTARY INFORMATION AND COMMENTS ON THE

STATEMENT OF FINANCIAL POSITION

AND STATEMENT OF COMPREHENSIVE INCOME ACCOUNTS

AND SUMMARY OF PRINCIPAL AUDITING PROCEDURES PERFORMED

AS OF AND FOR THE YEAR ENDED DECEMBER 31, 2017

STATEMENT OF FINANCIAL POSITION ACCOUNTS

Cash – P7,294

Information about this account is discussed in Note 4 to the financial statements.

I examined the Company’s bank reconciliation statements for all its bank accounts as of December 31, 2017 to verify the reconciliation of bank statements and general ledger accounts. I checked the mathematical accuracy of the bank reconciliation statements. I agreed the amounts per bank reconciliation statements to the bank statements and general ledger. I reviewed material reconciling items for each bank reconciliation statement by reference to supporting documents such as official receipts, bank validated deposit slips, and bank statements.

There were no significant exceptions noted.

Property and Equipment – P283,406

Information about this account is discussed in Note 5 to the financial statements.

I tested the reasonableness of the Company’s depreciation expense for the year ended December 31, 2017 by reference to the Company’s accounting policy and the Philippine Financial Reporting Standards (PFRS)

There were no significant exceptions noted.

Advances from Officers – P25,000

I verified creditor’s balances through circularization. I compared the amount per books and per reply. I reviewed the reconciliation of the significant difference noted.

There were no significant exceptions noted.

Common Stock – P312,500

I obtained and examined the amended articles of incorporation and verified the correct capital structure of the Company as reported and disclosed in the notes to the financial statements.

I obtained a certification from the Company’s Corporate Secretary through sending confirmation request as to the number of shares issued and outstanding and the names of the corresponding stockholders of the Company as of December 31, 2017 and compared these with those recorded in the books.

I obtained and reviewed the Company’s General Information Sheet for the calendar year 2017 filed with the Securities and Exchange Commission and compared the number of shares issued and outstanding and the names of the corresponding stockholders as of December 31, 2017, and compared these with those recorded in the books.

There were no significant exceptions noted.

Deficit – P46,800

I obtained a reconciliation of retained earnings, agreed to general ledger accounts and evaluated movements from prior year end to current period end to verify proper accounting for changes in this account.

I reviewed the Board of Directors and Stockholders’ minutes of the meeting to verify if there were dividend payments made in 2017 and whether those payments are appropriately approved and declared.

There were no significant exceptions noted.

  

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STATEMENT OF COMPREHENSIVE INCOME ACCOUNTS

I performed analytical review of the statement of comprehensive income accounts, obtained explanations for items with significant variances and substantiated such explanations by reference to underlying records and supporting documents. I also performed other substantive procedures (such as vouching and test of reasonableness) on details of certain significant income and expense accounts to the extent I deemed necessary. For certain income and expense accounts with related statement of financial position accounts (e.g. provision for income tax and depreciation), I carried out substantive procedures on a test basis in connection with our examination of the related statement of financial position accounts.

Below are the procedures I performed on certain income and expense accounts.

For the cost of goods sold and expenses incurred by the Company, I checked the Company’s cost and expense recognition policy and evaluated the proper recognition based on the Company’s policy and the PFRS.

I performed analytical procedures to understand the components and movements of general and administrative, and other expenses. I reviewed underlying documentation for reasonableness and business purpose of expense incurred.

I obtained and reviewed the income tax computation provided by the Company.

There were no significant exceptions noted.