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SEC. 143 OF THE CORPORATION CODE
Rule-making power of the Securities and
Exchange Commission
SECTION 68 OF THE SRC
SEC is empowered to issue rules and regulations
on the preparation of financial statements
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COVER SHEET
AUDITORS REPORT
FINANCIAL STATEMENTS
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A. SRC RULE 68
1. TECHNICAL REQUIREMENTS
Auditors Report shall:
be dated;
be signed by the certifying external auditor (in the case of
auditing firm, the certifying partner shall sign his/her own
signature and shall indicate that he/she is signing for the firm,
the name of which is printed the report);
identify the financial statements covered by the report;
state the signing auditors:
PRC License;
Tax Identification Number;
PTR Number;
BOA/PRC Registration Number including expiration date;
SEC Accreditation Number including category and
expiration date;
mailing address of the client and the auditor
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2. REPRESENTATIONS AS TO THE AUDIT
3. OPINION TO BE EXPRESSED
4. EXCEPTIONS
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B. PHILIPPINE STANDARDS ON AUDITING (PSA) NO. 700
(as redrafted)
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INDEPENDENT AUDITORS REPORT
[Appropriate Addressee]
We have audited the accompanying financial statements of ABC Company, which comprise the
balance sheet as at December 31, 20X1, and the income statement, statement of changes in equity
and cash flow statement for the year then ended, and a summary of significant accounting policies
and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with Philippine Financial Reporting Standards, and for such
internal control as management determines is necessary to enable the preparation of financial
statements that are free from material misstatement, whether due to fraud or error.
Auditors Responsibility
Our responsibility is to express an opinion on these financial statements based on our audit. We
conducted our audit in accordance with Philippine Standards on Auditing. Those standards require
that we comply with ethical requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material misstatement.
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An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial statements. The procedures selected depend on the auditors judgment, including the
assessment of the risks of material misstatement of the financial statements, whether due to fraud or
error. In making those risk assessments, the auditor considers internal control relevant to the entitys
preparation and fair presentation of the financial statements in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the entitys internal control. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting estimates made by management, as
well as evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our audit opinion.
Opinion
In our opinion, the financial statements present fairly, in all material respects, the financial position of
ABC Company as at December 31, 20X1, and (of) its financial performance and its cash flows for the
year then ended in accordance with Philippine Financial Reporting Standards.
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Report on the Supplementary Information Required Under Revenue Regulations 15-2010 of
the Bureau of Internal Revenue
Our audit was conducted for the purpose of forming an opinion on the basic (separate) financial
statements taken as a whole. The supplementary information on taxes and licenses in Note X to the
(separate) financial statements is presented for purposes of filing with the Bureau of Internal
Revenue and is not a required part of the basic (separate) financial statements. Such information has
been subjected to the auditing procedures applied in our audit of the basic (separate) financial
statements and, in our opinion, is fairly stated in all material respects in relation to the basic
(separate) financial statements taken as a whole.
[Auditors signature]
[Date of the auditors report]
[Auditors address]
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Report on other legal and regulatory requirements
Our audit was conducted for the purpose of forming an opinion on the basic financial
statements as a whole. The supplementary information shown on Schedules A, B, C, D, E,
F, G, H and I is presented for purposes of additional analysis and is not a required part of
the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial statements taken as a
whole
i. The financial statements of the following corporations
shall be audited by an Independent Certified Public
Accountant registered with the Board of Accountancy:
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i. The financial statements of the following corporations
shall be audited by an Independent Certified Public
Accountant accredited by the SEC:
Group A
Issuers of registered securities which have sold a class of
securities pursuant to a registration under section 12 of the
Securities Regulation Code (SRC) except those issuers of
registered timeshares, proprietary and non-proprietary
membership certificates which are covered in Group B.
Issuers with a class of securities listed for trading in an
Exchange;
Public companies or those Companies which have total
assets of at least fifty million pesos (PhP50,000,000.00) or
such other amount as the Commission shall prescribe and
having two hundred (200) or more holders each holding at
least one hundred (100) share of a class of its equity
securities.
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Group B
Issuers of Registered timeshares, proprietary and non-
proprietary membership certificates;
Investment houses;
Brokers and dealers of securities;
Investment companies;
Government securities eligible dealers;
Universal Bank Registered as underwriters of securities;
Investment Company advisers;
Clearing agency and clearing agency as depository;
Stock and securities exchanges;
Special Purpose Vehicles registered under the Special
Purpose Vehicle Act of 2002;
Special Purpose Corporations registered under the
Securitization Act of 2004 and its implementing rules;
Such other corporations which may be required by law to
be supervised by the Commission.
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Group C
Financing Companies;
Lending Companies;
Transfer Agents.
Group D
Registered Corporations which are mandated by other
regulatory agencies to have an external auditor accredited by
the Commission.
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REQUIREMENT ON EXTERNAL AUDITOR
FOR LARGE OR PUBLICLY ACCOUNTABLE ENTITIES
COVERED BY FULL PFRS
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REQUIREMENT ON EXTERNAL AUDITOR
FOR SMALL AND MEDIUM ENTITIES AND MICRO
ENTITIES
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Independent Auditors or in the case of an
audit firm, the signing partner, of the
regulated entities shall be rotated every after
(5) years of engagement. Two-year cooling
off period shall be observed.
FINANCIAL STATEMENTS SUBMITTED WITH THE
COMMISSION ARE PRIMARILY THE
RESPONSIBILITY OF THE MANAGEMENT OF THE
REPORTING COMPANY
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SMR Should be signed by the following:
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The financial statements have been prepared in conformity
with PFRS/other framework
Management maintains a system of accounting and reporting
which provides for necessary internal controls
Board of Directors has reviewed the financial statements
Independent auditors were appointed by the stockholders.
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Statement of Managements Responsibility of
Ordinary Corporations are not required to be
notarized.
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The management of (name of reporting company) is responsible for all information and
representations contained in the financial statements for the year (s) ended (date), in accordance
with the prescribed financial reporting framework indicated therein. This responsibility includes
designing and implementing internal controls relevant to the preparation and fair presentation of
financial statements that are free from material misstatement, whether du to fraud or error, selecting
and applying appropriate accounting policies, and making accounting estimates that are reasonable
in the circumstances.
The Board of Directors or Trustees reviews and approves the financial statements and submit the
same to the stockholders or members.
(name of auditing firm), the independent auditors and appointed by the stockholders, has examined
the financial statements of the company in accordance with Philippine Standards on Auditing and
has expressed its opinion on the fairness of presentation upon completion of such examination.
Signature______________________
Name of the Chairman of the Board ___________________
Signature ______________________
Name of Chief Executive Officer ______________________
Signature ______________________
Name of Chief Financial Officer ______________________
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FS SHOULD BE IN ACCORDANCE WITH THE
PHILIPPINE FINANCIAL REPORTING
FRAMEWORK
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Other
PFRS for
Full PFRS Acceptable
SMEs
Basis
Small and
Large medium-sized Micro entities
Corporations
entities
Publicly Micro
Accountable
Entities Entities that
opted to adopt
this framework
SMEs
exempted
from PFRS for
SMEs
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Large or publicly accountable entities are:
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SMALL AND MEDIUM ENTITIES
Small and medium-sized entities (SMEs) are those that meet ALL of the
following criteria:
Are not in the process of filing their financial statements for the
purpose of issuing any class of instruments in a public market;
and
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MICRO ENTITIES
Micro entities are those that meet ALL of the following criteria:
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A set of financial reporting framework other
than the full PFRS may be allowed by the
Commission for certain sub-class (e.g.,
banks, insurance companies) of publicly
accountable entities upon consideration of
the pronouncements or interpretations of
the Bangko Sentral ng Pilipinas, Insurance
Commission, Financial Reporting Standards
Council
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EXEMPTIONS FROM THE MANDATORY
PFRS FOR SMES
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Exemptions from PFRS for SMEs
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BY REASON OF STATUS
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APPLICABLE FINANCIAL REPORTING FRAMEWORK
Section 2 Concepts and Pervasive Principles Framework for the Preparation and
Presentation of Financial Statements
Section 3 Financial Statement Presentation PAS 1 Presentation of Financial Statements
Section 5 Statement of Comprehensive Income and Income PAS 1 Presentation of Financial Statements
Statement
Section 6 Statement of Changes in Equity and Statement of PAS 1 Presentation of Financial Statements
Income and Retained Earnings
Section 7 Statement of Cash Flows PAS 7 Statement of Cash Flows
Section 10 Accounting Policies, Estimates and Errors PAS 8 Accounting Policies, Changes in Accounting
Estimates and Errors
Section 32 Events After the End of Reporting Period PAS 10 Events After the Reporting Period
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As to Business Combinations
and Group Financial Statements
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As to Elements of Financial Position
PFRS FOR SMES Full PFRS
Section 17 Property, Plant and Equipment PAS 16 Property, Plant and Equipment
Section 11 Basic Financial Instruments PAS 39 Financial Instruments: Recognition and Measurement
Section 12 Other Financial Instruments Issues PAS 32
PFRS 7
Section 21 Provisions and Contingencies PAS 37 Provisions , Contingent Liabilities and Contingent Assets
Sufficiency of Disclosures
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Transition to PFRS for SMEs
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Accounting period begins on a date other that
January 1, 2010
Size criteria AFS for the immediately preceding fiscal
year
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Management Judgment taking into consideration
the quantitative and qualitative impact
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Subsidiaries that qualify as SME may use PFRS
for SMEs even if the parent company use full
PFRS;
Appropriate adjustments should be made in the
preparation of consolidated financial statements;
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Discussion of the facts supporting the
Companys adoption of Full PFRS instead of
PFRS for SMEs in the notes to Financial
Statements should be made
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A schedule showing the nature and amount
of each items comprising the total receipts
and disbursements according to sources and
activities
A sworn statement of the foundations
President and Treasurer on the following:
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An external auditor of a company which has incurred a capital
deficiency, shall provide in the audit report an emphasis
paragraph indicating the following information:
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CAPITAL DEFICIENCY occurs when the amount
of accumulated deficit of a company is greater
that the amount of its paid-in capital stock.
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The requirement shall not apply to a company that incurred a capital
deficiency due to any of the following reasons:
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The provisions regarding capital deficiency,
shall not be applicable to non-stock and
non-profit organizations with negative fund
balance.
Any company with a capital deficiency shall
provide in Note 1 of its audited financial
statements a discussion on its going
concern issue and concrete plan to address
the same.
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Conditions for Recognition as an Equity &
Consequence of Non-Compliance
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Insufficiency of unissued authorized capital stock
to cover the amount of deposit
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The amount received should be treated as
mere advances and should be recorded under
liabilities
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Applicable if listed company or the
corporation has excess RE over Paid-in capital
stock
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Companies with no
operation but are covered
under SRC Rule 68
If no operation only for one (1) year: a complete set
of audited financial statements must be submitted
by the company despite its non-operation
Micro entities that continue to use full PFRS are not required
to file the tabular schedule of all the effective standards and
interpretations under the PFRS as of year-end as required
under Part I (4)(J) of the Rule.
Revised Guidelines on
Implementation of PFRS 9
Mandatory effective date of PFRS 9
01/01/15
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All information required to be disclosed under
the applicable financial reporting framework
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All material information are disclosed in
the financial report
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The auditor should undertake the audit procedures deem
necessary, such as the following:
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Statement Required by Rule 68, Section 3.d,
Securities Regulation Code (SRC), as amended on October 25, 2005
We have audited the financial statements of __________ (the Company) for the four month period
ended December 31, 2010, on which we have rendered the attached report dated ________. In
connection with our audit, we obtained a certification from the Companys corporate secretary on the
number of stockholders and their corresponding shareholdings, performed reasonableness tests of
the capital stock balance as of December 31, 2010 in relation to the certification issued by the
corporate secretary, and conducted certain tests necessary to validate the Companys related entries
and balances.
In compliance with SRC Rule 68 and based on the certification received from the Companys
corporate secretary and the results of our work done, the Company has ______ (_) stockholders
owning 100 or more shares as of December 31, 2010.
[Auditors signature]
[Date of the auditors report]
[Auditors address]
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The auditor shall represent that:
HE/SHE IS IN THE ACTIVE PRACTICE OF THE ACCOUNTING
PROFESSION AND DULY REGISTERED WITH THE BOARD OF
ACCOUNTANCY (BOA);
THE FINANCIAL STATEMENTS ARE PRESENTED IN
CONFORMITY WITH GENERALLY ACCEPTED ACCOUNTING
PRINCIPLE;
HE/SHE SHALL FULLY MEET THE REQUIREMENTS OF
INDEPENDENCE AS PROVIDED UNDER THE CODE OF
PROFESSIONAL ETHICS FOR CPAS;
IN THE CONDUCT OF THE AUDIT, HE/SHE SHALL COMPLY
WITH THE GENERALLY ACCEPTED AUDITING STANDARDS
PROMULGATED BY THE BOARD OF ACCOUNTANCY;
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The auditor shall represent that:
HE/SHE SHALL COMPLY WITH THE APPLICABLE RULES AND
REGULATIONS OF THE SECURITIES AND EXCHANGE
COMMISSIONS IN THE PREPARATION AND SUBMISSION OF
FINANCIAL STATEMENT
THAT RELATIVE TO THE EXPRESSION OF MY OPINION ON
THE SAID FINANCIAL STATEMENTS, HE/SHE SHALL NOT
COMMIT ANY ACTS DISCREDITABLE TO THE PROFESSION AS
PROVIDED UNDER THE CODE OF PROFESSIONAL ETHICS FOR
CPAS
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PAPER SIZE: A4
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