Auditor's report

Document prepared by the auditors appointed to examine and certify the accounting records and financial position of a firm. It must be filed every year by an incorporated or registered firm (along with its audited financial statements) with the appropriate regulatory authority.

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AUDIT MEANS – type of service (not review)Subject matter - with complete FS ( BS/SI- SCI/SCF/SCE) - with Accounting Policies - Other Explanatory Info such as

……Individual schedule per line item on the face of the FS ….. Explanatory information ( (Based on Materiality Concept

as per SRC Ruling 68/68.1)

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Report on the Financial Statements

We have audited the accompanying financial statements of RESIDENCIAS 8888 CORP, which comprise the Statements of Financial Position, as at December 31, 2014 and 2013, Statements of Income, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flow for the years then ended, and a summary of significant accounting policies and other explanatory information.

INDEPENDENT AUDITOR’S REPORTand Audit Process

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Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards/PFRS for SME, and for such internal control as management determines is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatements, whether due to fraud or error.

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PHILIPPINE FINANCIAL REPORTING STANDARDS ( PFRS)–

MANAGEMENT RESPONSIBLITY

PHILIPPINE STANDARDS ON AUDITING (PSA) – AUDITOR’S RESPONSIBILITY

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Auditor’s 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 whether the financial statements are free from material misstatements.

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Scope:

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risk of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design the audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s 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

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Audit Execution

We utilize our process-focused methodology in improving current processes and developing recommendations to address the business risks at the process level and/or source the root causes of known performance gaps.

Understand The Process

Analyze Root Causes of Process Operating & Control Deficiencies

Identify ProcessPerformanceGaps

ValidateProcessControls

Monitor Implementation & Compliance

· Understand“as is” process

· Gaugeopportunitiesfor processimprovement

· Determinerelevant keyexistingcontrols totarget forvalidation

· Compliancetest targetedbusinesscontrols

· Testaccuracy andreliability ofrelevantperformancemeasuresandmanagementinformation

· Targetinvestigation/informationgathering tounderstandmoreprecisely whyprocessproblemsoccur anddefinepossiblesolutions, etc.

4 Sequencingof activities

4 ProcessBoundaries

4 ProcessMapping

· PeriodicTesting and Validation of Control Implementation& Effectiveness

· Assess Risks In the Process

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Value / Benefits

Alignment of audit process and methodology to deliver

expectation of stakeholders with regard to:

Risk Identification and Assessment

Process control assurances (financial and operational)

Compliance with governance requirements

Compliance with policies, laws and regulations

Enables delivery of more value-adding recommendations

to management

Better audit coverage through prioritization of key risk

and processes

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Opinion

In our opinion the financial statements present fairly, in all material respects, the financial position of RESIDENCIAS 8888 CORP. as of December 31, 2014 and 2013, and its financial performance and its cash flow for the years then ended in accordance with Philippine Financial Reporting Standards/PFRS Small and Medium Sized Entities (PFRS for SMEs) .

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EMPHASIS OF MATTER PARAGRAPHS IN AUDITORS REPORT

“If the auditor considers it necessary to draw users’ attention to a matter presented or disclosed in the financial report that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial report, the auditor shall include an Emphasis of Matter paragraph in the auditor’s report provided the auditor has obtained sufficient appropriate audit evidence that the matter is not materially misstated in the financial report. Such a paragraph shall refer only to information presented or disclosed in the financial report.”

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“In addition to the requirements, the auditor shall include an Emphasis of Matter paragraph in the auditor’s report where required by other Auditing Standards.”“When the auditor includes an Emphasis of Matter paragraph in the auditor’s report, the auditor shall:Include it immediately after the Opinion paragraph in the auditor’s report;a. Use the heading “Emphasis of Matter,” or other appropriate heading;b. Include in the paragraph a clear reference to the matter being emphasised and toc. where relevant disclosures that fully describe the matter can be found in the financial report; andIndicate that the auditor’s opinion is not modified in respect of the matter emphasised.”

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Report on the Supplementary Information Required Under Revenue Regulations (RR) 15-2010 and RR 19-2011 of the Bureau of Internal Revenue.

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In compliance with the requirements set forth by the revenue regulation No.15-2010 and revenue regulation no. 19-2011, the information on taxes and licenses in notes to financial statements is presented for the purposes of filing with the Bureau of Internal Revenue and is not required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in my audit of the basic financial statements and, my opinion, is fairly, stated in all material respects in relation to the basic financial statements taken as a whole.

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NAME OF AUDITORCPA LICENSE NO. xxxxxxxxPRC ID EXPIRY DATE __XXX_____TIN NO. XXX-XXX-XXX-XXX_BIR ACCREDITATION NO. XXXXXXXISSUED ON ___________________EXPIRY DATE XXX_________________PTR NO. XXXXXXXXXISSUED ON ____________________BOA ACCREDITATION NO. XXXXXXISSUED ON _XXX___________________

EXPIRT DATE:_XXX_________________

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BE CAREFULL ON RED MARK ALWAYS CHECK ON THE DATE OF EXPIRY OF YOUR LICENSES

Date of Issuance by the auditor Place issue

It should not be earlier than SMR

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2013 2014 Auditor(1) AUDITED

(2) AUDITED

(3) AUDITED

√

x

√

X

√

√

PREDECESSOR

SUCCESSOR

CONTINUING

(1) Successor auditor does not assume the full responsibility for 2 years

(2) With division of responsibility(3) No reliance on the work of the predecessor auditor

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The prior years balances were audited by another auditor, who has issued _______ opinion on ________. The prior years balances were only presented for comparative purposes and not part of current years balances.

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REPORTED BY: NORY N. LAMBOT

VILMA P. BORLAZA

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