Keating Manufacturing Inc.

[1] Fixed Assets Movement Analysis

As of December 31, 2015

Objective:
To obtain reasonable assurance that PPE movements are properly reconciled.

Procedures:
1. Obtained PPE lapsing schedule as of December 31, 2015 from Ms. Laurel Castillo
2. Tie-up beginning and ending balances with the audited balance of PY and recorded amounts per books.
3. Reviewed reconciling items (additions and disposals) and determined if classified properly in the lapsing schedule.
4. Investigated any inappropriate classifications and discussed resolution with the client.
5. Evaluated results and drew conclusion based on the procedures performed.

Materiality 7,500,000.00
Performance Materiality 6,000,000.00
Clearly Trivial Mistatement 3,750,000.00

Testing:

[1.1] COST

Opening Balance
Code Description Ref Additions
1.1.2015

a b
13 EDP Hardware PY AFS
14 Transportation Equipment
15 Machinery & Equipment
16 Office Furniture & Fixtures
17 Leasehold Improvement
19 EDP Software
20 Land
21 Building

- -

[1.2] ACCUMULATED DEPRECIATION

Opening Balance Current

Code Description Ref
1.1.2015 Depreciation

h i
13 EDP Hardware PY AFS
14 Transportation Equipment
15 Machinery & Equipment
16 Office Furniture & Fixtures
17 Leasehold Improvement
19 EDP Software
20 Land
21 Building
- -
 [1.3] NET BOOK VALUE
Opening NBV Closing NBV
Items of PPE Ref
1.1.2015 12.31.2015

o=a+h p=e+l
13 EDP Hardware PY AFS - -
14 Transportation Equipment - -
15 Machinery & Equipment - -
16 Office Furniture & Fixtures - -
17 Leasehold Improvement - -
19 EDP Software - -
20 Land - -
21 Building - -
TOTAL - -

Conclusion:
 COST

Other Closing Balance Balance

Disposals Difference t/m
Adjustments 12.31.2015 12.31.2015

c d e = a + b + c+ d f g=e f
- -
- -
- -
- -
- -
- -
- -
- -

- - - - -

ACCUMULATED DEPRECIATION

Other Closing Balance Balance

Disposals Difference t/m
Adjustments 12.31.2015 12.31.2015

j k l=h+I+j+k m n=l-m
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - -
- - - - -
Balance (TB)
Difference
12.31.2015

q=f+m r=p-q
- -
- -
- -
- -
- -
- -
- -
- -
- -
 Keating Manufacturing Inc.
[2] Additions Testing
As of December 31, 2015

Objective:
To address the risk of inclusion of non capitalizable items and inexistence or improper valuation of PPE additions.

Procedures:
1. Obtained Schedule of Disposal and Acquisition as of December 31, 2015 from Ms. Laurel Castillo
2. Computed for sample size based on the total amount of additions, excluding reclassifications from CIP, and selected samples randomly from t
3. Vouched to supporting documents and assessed whether PPE additions consist only of capitalizable items.
4. Evaluated results and drew conclusion based on the procedures performed.

Testing:

[2.1] Sample Size Computation

Sample Design
Population 19,894,438.15
Performance Materiality 6,000,000.00
Risk Based Approach No Significant Risk but No Control Reliance or
otherwise
Sample Size 6

Manner of Selection
Samples are selected using MUS in excel analytics.

Test of Details:

Sample Selected
# Fixed Asset
Fixed Asset Classification Asset Description
Code
BCL1415001 VEHICLES 2015 Toyota FJ Cruiser
BCL2115001 BUILDING STAFF HOUSE
BCL1615001 OFFICE FURNITURES AND FIXTURES 3TR CEILING MTD SPLIT TYPE A/C-CARRIER
BCL1715002 LEASEHOLD IMPROVEMENTS REPAINTING OF THE MACHINERY
BCL1315002 EDP HARDWARE LENOVO THINKPAD T440P
BCL1515005 MACHINERY & EQUIPMENT SOKKIA TOTAL STATION
Issue(s) noted:

Conclusion:
m CIP, and selected samples randomly from the schedule given.

Supporting Document

PO # Delivery Receipt Amount Per Book Ref Particulars Date

538 ₱ 1,798,000.00 Doc. No 1034-2 Deed of Sale 12/23/2015

₱ 5,610,000.00 Proj. no. 142 Arch. and Contractor's comp 7/27/2011
445 40 ₱ 116,964.28 OR. 000-2000421 Officia Receipt 2/14/2015
₱ 55,000.00 OR. 560012 Officia Receipt 7/25/2015
₱ 43,906.48
575 20 ₱ 74,508.66 00-1000428 Invoice 8/1/2015
ent Properly
Existence
Amount Difference classified as With rights to t/m
Verified?
excluding VAT PPE? PPE?
₱1,605,357.71 ₱ 192,642.29 yes yes yes
₱5,610,000.00 ₱ -
₱104,432.39 ₱12,531.89 yes yes yes
₱55,000.00 ₱ - no no yes
₱ 43,906.48
₱ 74,508.66
 Keating Manufacturing Inc.
[3] Fixed Asset Verification
As of December 31, 2015

Objective
To verify the existence and assess the physical condition of the Property and Equipment of the company.

Procedure
1. Compute the number the samples to be verified.
2. Select samples haphazardly based on auditor's professional judgment taking into consideration the materiality of amount of the assets.
3. Physically inspect items of PPE selected as samples to ascertain its existence.
4. Evaluate the results of test performed and conclude.

Testing
[3.1] Sample Computation
Sample Design
Population Insert Population
Performance Materiality 6,000,000.00
Risk Based Approach No Significant Risk but No Control Reliance or otherwise

Sample Size #VALUE!

Manner of Selection
Samples are selected using MUS in excel analytics.

[3.2] Verification Testing

No. Asset No. Asset Class Asset Description

1 BCL1211003 Machinery and Equipment Water filter/reverse osmosis water purification system
2 BCL1311009 EDP Hardware EPSON LQ-300 PLUS PRINTER
3 BCL1312009 EDP Hardware HP LASERJET 1300 PRINTER
4 BCL1312010 EDP Hardware IBM x205 Server PentiumIV
5 BCL1312015 EDP Hardware Fume Hood
6 BCL1312034 EDP Hardware Personal Computers and Peripherals
7 BCL1412004 Transportation Equipment Isuzu Npr 12ft Refrigerated Box Truck F
8 BCL1413003 Transportation Equipment 2012 Jaguar XF-R 5.0 Supercharged
9 BCL1511001 Machinery and Equipment Chemical reactors equipment distillation kettle
10 BCL1511002 Machinery and Equipment Copper Distillation Column
11 BCL1311005 EDP Hardware IBM NETVISTA COMP SYS 4
12 BCL1312003 EDP Hardware IBM NETVISTA M42 COMP SYS
13 BCL1312005 EDP Hardware Projector - Epson EMP-61 Multimedia Projector
14 BCL1313006 EDP Hardware PC 2.4 Ghz Core 2 Duo
15 BCL1314006 EDP Hardware Offficejet 7500a A10 Printer - C
16 BCL1314023 EDP Hardware 2 Units AOC 16198W 15.6 Wide LCD Monitor (Black)
17 BCL1511006 Machinery and Equipment Vacuum concentration crystallizing equipment
18 BCL1411002 Transportation Equipment 2010 FORD ESCAPE 2.3L A/T
19 BCL1311001 EDP Hardware HP Laserjet 1200 Printer
Issue(s) Noted

Conclusion
eriality of amount of the assets.

Placed in Existence In Good Properly

Original Cost Addition Date Disposal Date Operational?
Service Verified? Condition? Tagged?

5,000,940 16-May-11 N/A P P P P P

7,709 17-Oct-11 03-Nov-15
18,909 11-Nov-12 02-Aug-15
183,045 15-Apr-12 14-Feb-15
79,380 27-Apr-12 N/A P P P P P
34,464 28-Nov-12 N/A P P P P P
4,160,000 23-Aug-12 N/A P P P P P
3,800,000 29-Mar-13 N/A P P P P P
1,102,500 28-Apr-11 N/A P P P P P
2,222,640 28-Apr-11 N/A P P P P P
46,818
52,659
75,450 10-Jan-12
44,643 13-Apr-13
19,467 24-Jun-14
13,304 15-Sep-14
2,084,607 16-May-11
1,048,214
13,318 22-Nov-11
t/m

Senior-in-Charge
(Open)
w/o/e
:
w/o/e- without exception
[4]
[4]
[4]
w/o/e
w/o/e
w/o/e Senior-in-Charge:
w/o/e These samples were
w/o/e already tested. Please
w/o/e proceed with the
remaining items.
 Keating Manufacturing Inc.
[4] Disposal Testing
As of December 31, 2015

Objective:
To obtain reasonable assurance that PPE disposals are duly authorized by appropriate independent persons, that gain or loss on disposal are accu

Procedures:
1. Obtained Schedule of Disposal and Acquisition as of December 31, 2015 from Ms. Laurel Castillo.
2. Computed for sample size based on the total amount of disposals and selected samples randomly from the schedule given.
3. Vouched to supporting documents and assessed whether PPE disposals are duly authorized and properly excluded from the books of the compa
4. Computed gain/loss based on any proof of payment documents given and compared computed gain/loss per audit with the gain/loss recorded pe
5. Evaluated results and drew conclusion based on the procedures performed.

Testing:
Test of details:
The following items were unlocated during asset verification but identified as included in the list of disposal as of 12/31/2015.

# Fixed Asset Code Fixed Asset Classification Asset Description Ref

1 BCL1311009 EDP Hardware EPSON LQ-300 PLUS PRINTER 62341A

2 BCL1312009 EDP Hardware HP LASERJET 1300 PRINTER 62371A
3 BCL1312010 EDP Hardware IBM x205 Server PentiumIV 62373A

Conclusion:
 nt persons, that gain or loss on disposal are accurately recorded, and that PPE's disposed are excluded from the books of the company.

mly from the schedule given.

nd properly excluded from the books of the company.
gain/loss per audit with the gain/loss recorded per books.

disposal as of 12/31/2015.

Per Books

Disposal Date Carrying Gain (Loss) on

Cost Accum. Dep. Proceeds Cost
Value Disposal

a b

3-Nov-15 7,709.09 6,167.27 1,541.82 388.00 (1,153.82) 7,709.09

2-Aug-15 18,909.09 10,084.85 8,824.24 3,287.00 (5,537.24) 18,909.09
14-Feb-15 183,045.45 103,725.76 79,319.70 48,078.00 (31,241.70) 183,045.45
 Per Audit Attributes

Carrying Gain (Loss) t/m Disposal properly

Accum. Dep. Proceeds Difference
Value on Disposal authorized?

c d=b-c e f=e-d g=a-f

6,167.27 1,541.82 388.00 (1,153.82) - {c} P

10,084.85 8,824.24 3,287.00 (5,537.24) - P
103,725.76 79,319.70 48,078.00 (31,241.70) - P
 Attributes

Gain (Loss) properly Properly excluded t/m

recorded? from PPE?

P P w/o/e
Senior-in-Charge:
P P
These samples were
P P
already tested. Please
proceed with the
remaining items
 Keating Manufacturing Inc.
[5] Depreciation Testing
For the year ended December 31, 2015

Objective:
To obtain reasonable assurance that depreciation expense of existing PPE's is accurately recorded

Procedures:
1. Obtained the Company policy in depreciating its property and equipement by Ms. Laurel Castillo.
2. Obtained the fixed asset register and lapsing schedule and check if the Company used the correct useful life.
3. Performed recomputation of depreciation expenses.
4. Investigated differences exceeding the threshold.
5. Evaluated results and drew conclusion based on the procedures performed.

Testing:

[5.1] Recalculation

Office Furnitures & Fixtures Service Tag Acquisition Date

Issues Noted:

Conclusion:
 Months
Depreciation
Depr/Mo. Elapsed
Expense
Cost EUL (Jan to Dec)
a b c=a/b d e=c*d
Life (in months) as of Accumulated Depreciation as
12/31/2015 of 12/31/2015

f g=c*f
 Tickmarks

{a}

{b}

{c}

{d}