PSAs

TABLE OF CONTENTS

TOPICS

PAGE NUMBER

1. THE THE COUN COUNCI CIL L & ITS PRONOUNCEMENTS

1

2. PSA UPDATES/HIGHLIGHTS

2 - 17

2.1 2.2

LIST OF PSAs PSA HIGHLIGHTS

3. FRAMEW FRAMEWORK ORK OF AUDI AUDITIN TING G & OTHER SERVICES

1

!. OB"ECTIVE OB"ECTIVE & GENER GENERAL AL PRINCIPLE PRINCIPLES S GOVERNING AN AUDIT OF FS

1#

$. OVERALL AUDIT PROCESS

2%

. PLANNING PROCESS

21 - 22

7. AUDIT ENGAGEMENT LETTER

22 - 2!

. UNDERSTAN UNDERSTANDING DING THE ENTIT' ENTIT' & ITS ENVIRONMENT

2! - 2#

#. RESPONSE TO ASSESSED RISKS

3% - 31

1%. AUDIT EVIDENCE

32 - 3!

1

11. SUBSTANTIVE AUDIT PROCEDURES

3$ - $1

(. CONSIDERA CONSIDERATIONS TIONS ON SPECIFIC SPECIFIC ITEMS ). E*TERN E*TERNAL AL CONFIRMA CONFIRMATIO TIONS NS +. INITIA INITIAL L ENGA ENGAGEME GEMENTS NTS-OPENING BALANCES ,. AUDIT AUDIT OF ACCOUNTIN ACCOUNTING G ESTIMAT ESTIMATES ES . AUDITI AUDITING NG FMV MEASU MEASUREM REMENT ENTS S . RELA RELATE TED D PART PARTIE IES S 12. COMPLETING THE AUDIT AND AND POST-AUDIT RESPONSIBILITIES !.1 !.2 !.3 !.3

$2  1

SUBSE0UENT EV EVENTS GOING CO CONCERN MANA MANAGE GEME MENT NT REPR REPRES ESEN ENTA TATI TION ONS S

13. THE INDEPENDENT AUDITORS REPORT

2  71

1!. MODIFICATIONS TO THE INDEPENDENT AUDITORS REPORT

72  7#

1$. AUDIT DOCUMENTATION

%  3

2

T C45+6 (5, I8s P9545+:58s  Auditing and and Assurance Standards Stan dards Council Coun cil Standards Council  The AASC was established by RA 9298 (Philippine  Accountancy Act of 200! 200!  The Council has "# $e$bers co$ing fro$ the following% The Council $e$bers fro$ P&CPA represent r epresent the following sectors

The Authority Attaching to Philippine Standards Standards contain basic principles and essential procedures together with related guidance in the for$ of e'planatory and other $aterial &n e'ce e'cept ptio iona nall circ circu$ u$st stan ance ces) s) and and audi audito torr $ay $ay *udg *udge e it nece necess ssar ary y to depa depart rt fro$ fro$ a Stan Standa dard rd in orde orderr to $ore $ore effecti+ely achie+e the ob*ecti+e of an audit) but the auditor should be prepared to *ustify the departure Standards need only be applied to $aterial $atters  Any li$itation of the applicability applicability of a specific standard is $ade clear in the Standard

The Authority Attaching to Practice State$ents Practice ice State$ents are issued to pro+ide ide practica ical assistance to auditors in i$ple$enting the Standards or to pro$ot pro$ote e good practi practice ce These These State$ State$ent ents s are not intended to ha+e the authority of the Standards

1

PSQCs, Framework, PSAs, PAPSs, PSREs, PSAEs, PSRSs in effect as of December 31, 2006 No !it"e –

Prefa reface ce to the the Int Inte ernat rnatiional onal Stand tandar ard ds on on Qua Quali litty Control, Auditing, Review, Other Assurance and Related Services and Preface to the Philippine Standards on Quality Control, Auditing, Review, Other Assurance and Related Services

–

Phi hili lipp ppiine Fra Fraew ewor or! ! for for As Ass suran uranc ce "ng "ngag age een ents ts

–

#lossary of of $e $ers %%& &ece'er () ())(* [amended by PSA 220 (Revised)]

P#i"i$$ine Stan%ar% on Q&a"it' Contro" (PSQC) +

Qual Qualit ity y Co Contro ntroll ffo or Fir Fir s $ha $hatt Per Perfo for r Audit udits s and and Reviews of istorical Financial Inforation, and Other Assurance and Related Services "ngageents

P#i"i$$ine Stan%ar%s on A&%itin* (PSAs) +() +( )

Fra Fraewo ewor! r! of of Phil Philip ippi pine ne Stan Standa dards rds on Aud Audit itin ing g

()) () )

O'-e O'-ecti ctive ve and and #ener #eneral al Prin Princi cipl ples es #ove #overni rning ng an an Audit Audit of Financial Stateents [amended [amended by PSA 700 (Revised)]

(+)

$er $ers s of of Aud Audit it "nga "ngage ge ents ents [amended [amended by PSA 700 (Revised)]

(() Quality Control for Audits of istorical Financial %Revise Inforation d* (.) Audit &ocuentation %Revise d* (/)

$he Auditor0s Responsi'ility to Consider Fraud in an

2

No %Revise d ())1*

!it"e Audit of Financial Stateents

(1)

Consideration of 2aws and Regulations in an Audit of Financial Stateents

(3)

Counications of Audit 4atters with $hose Charged with #overnance

.)) Planning an Audit of Financial Stateents %Revise d* .+1

5nderstanding the "ntity and Its "nvironent and Assessing the Ris!s of 4aterial 4isstateent

.()

Audit 4ateriality [amended by PSA 240 (Revised 2005)]

..)

$he Auditor0s Procedures in Response to Assessed Ris!s

/)(

Audit Considerations Relating to "ntities 5sing Service Organi6ations

1)) Audit "vidence %Revise d* 1)+

Audit "vidence 7 Additional Considerations on Specific Ites

1)1

"8ternal Confirations

1+)

Initial "ngageents77Opening 9alances

1()

Analytical Procedures

1.)

Audit Sapling and Other Selective $esting Procedures

1/)

Audit of Accounting "stiates

1/1

Auditing Fair :alue 4easureents and &isclosures

3

No 11)

!it"e Related Parties

13)

Su'se;uent "vents [amended by PSA 700 (Revised)]

1or! of Another Auditor

3+)

Considering the >or! of Internal Auditing

3()

5sing the >or! of an "8pert

was prior to the time we were initially engaged as auditors for the *ompany. Owing to the nature of the *ompany0s records$ we were unable to satisfy ourselves as to inventory +uantities by other audit  procedures. 77

In our opinion$ ecept for the effects of such ad3ustments$ if any$ as might have been determined to be necessary had we been able to satisfy ourselves as to physical inventory +uantities$ the financial state$ents present fairly) in all $aterial respects) (re$aining words are the sa$e as illustrated in the opinion paragraph @ paragraph L0 of PSA O00!= ,imitation on ScopeN;isclaimer of Opinion s responsibility paragraph @ see paragraph L0 of PSA O00! Omit the sentence stating the responsibility of the auditor.) The paragraph discussing the scope of the audit would either be omitted or amended according to the circumstances.) -dd a paragraph discussing the scope limitation as follows: We were not able to observe all physical inventories and confirm accounts receivable due to limitations  placed on the scope of our work by the *ompany.) 78

?ecause of the significance of the matters discussed in the preceding paragraph$ we do not epress an opinion on the financial statements.