SELECTION OF SIGNIFIC

Benchmark (Income before Taxes) 479,032

Overall Materiality 47,093.20 10%
Performance Materiality 35,927.40 75%

LINE ITEMS CURRENT PERIODQUANTITATIVE FACTOR

ASSET
Cash and Cash Equivalents 772,230 Significant

Receivables 445,293 Significant

Inventories 177,811 Significant

Financial Asset at FVPL 53,545 Significant

Other Current Asset 217,522 Significant

Property Plant and Equipment 2,621,189 Significant

Goodwill and Intangible Assets 1,040,876 Significant

Deferred Income Tax Assets 25,982 Not Significant

Other Noncurrent Assets 354,024 Significant
 LIABILIT
Accounts Payable and Accrued Expens 524,775 Significant

Dividends Payable 65,749 Significant

Income Tax Payable 22,243 Not Significant
Loans Payable 20,000 Not Significant

Current Portion:
Long-term Debts 444,265 Significant

Lease Liabilities 4,250 Not Significant

Derivative Liabilities 1,599 Not Significant

Long-term debts
Retirement and other Post- 1,480,029 Significant
Employment Benefits

Derivative Liabilities 52,040 Significant

Deferred Income Tax Liabilities 12,116 Not Significant

Other Noncurrent Liabilities 108,533 Significant

EQUIT
Redeemable Preferred Stock 85,667 Significant
Common Stock 75,123 Significant

Additional Paid-in Capital 1,311,961 Significant

CumulativeTranslation Adjustments -65,656 Significant

Accumulated Unrealized Gain on 726 Not Significant

Financial Assets at FVOCI
Equity Reserves -232,965 Significant

Retained Earnings 1,695,641 Significant

Redeemable Preferred Stock -403,407 Significant

Common Stock 43,609 Significant

Non-controlling Interest 532,570 Significant

NOTE:
Qualitative Factor: If the line item exceeds the performance materiality calc
is quantitatively significant account. If not, then it is not quantitatively signific

Scoped In/Out: If the line item exceeds the performance materiality calculati
is Scoped In. If it does not met the performance materiality calculation, it is S
Out.
CTION OF SIGNIFICANT ACCOUNTS

QUALITATIVE FACTOR BASIS

ASSETS
Significant A misstatement in cash and cash equivalents may result
into loss of income or vice versa, such as unauthorized
use, posting in a wrong account and/or incorrect
accounting period.

The level of sensitivity of the circumstances surrounding

the misstatements in cash and cash equivalents is high.
The implications of misstatements might involve fraud
and possible illegal acts, and conflict of interest.

Significant Receivables are qualitatively significant because of being

susceptible to misstatement due to the nature of the debt
is the inherent risk of the accounts receivable. It may badly
affect the company when the internal control system of
the client fails to prevent or detect material misstatement
in the accounts receivable.

Material misstatements can occur due to

error of recording the receivables correctly,
that may result to fraud.

Significant Inventory is qualitatively significant because there is a

substantial likelihood that any misstatement with First
Gen's inventories would affect its production and
profitability. Due to the dependence of the power
generation sector to fuel, any excess or shortage of fuel
will significantly affect its profits, liability and asset
value.
 There could be an error in counting due to obsolete spare
parts. Some spare parts are already rusty and cannot be
used but it could be included in the inventory count.
This will result in inventory misstatements.

Significant Financial assets at Fair Value through Profit or loss is

both quantitatively and qualititavely significant due to
the fact that it went beyond the performance materiality
and it has significant fluctuations in the notes to the
financial statement of First Gen thus frequent fluctuations
in amounts may result to material misstatement

Not Significant
Significant The Property, Plant and Equipment of First Gen Corp. are
significant for they are part of the many assets that
contributes to the future profitability of the company. If this
particular account concerns with possible illegal acts and
such, potential effect on misstatement of profitability will
likely occur.

There is also a high probability that material misstatements

will occur due to error in recording or recognition of
depreciation or valuation.

Significant Intangible Assets of First Gen Corp. are significant because

they're simply apart of the assets that helps the company
generate profit. Any misstatements from this account
may result to a negative effect to the statement of accounts,
and can also lead to a fraudulent activity.

Not Significant
Significant Other non-current assets such as the First Gen's long-term
receivables are exposed to credit risks where one party
might fail to meet its obligation and in such cases it might
end to a write off thus affecting total assets and eventually
revenues. Thus an error in assessing the recoverability of
such receivables might result to a misstatement or might
open opportunity for fraud.
LIABILITIES
Significant Accounts payable is considered a high-risk account in a
balance sheet regardless of what nature of business a
company has. In the case of Fgen Corp, accounts payable
can be a subjective area that leads to material misstatement
which either due to fraud or error. As employees might issue
fraudulent payments or by error fail to record the accrued
expenses, thus, such accounts are considered significant.

Not Significant
Not Significant
Significant Loans Payable is qualitatively significant because of the
potential effect of any loans misstatement on the company's
compliance with loan covenants, other contractual
agreements, and regulatory provisions. Also, the sensitivity
of the circumstances surrounding loans payables, the
implications of misstatements involving fraud and
possible illegal acts, and violations of contractual
provisions.

Significant Apart from equity, debt is usually regarded as one of the

company's primary sources of funds. In this instance,
the balance is generally material, thus requiring the
implementation of proper audit methods for debt audits.
In the audit of debt, the completeness is the most relevant
audit assertion which we have more concern comparing to
other audit assertions. This is due to the material
misstatement that usually happens on debt account tend
to related to understatement which is the issue of
completeness in the debt balances.

Not Significant
Significant First gen enters into derivative, hedging transaction,
it also includes foreign currency forwards, interest rate
swaps and cross-currency swaps this exposes the company
to risk for material misstatement due to error due to the
nature of the account for complex transactions.

Significant The lifetime obligation and valuation of long-term debt

 are heavily dependent on market rate changes and whether
or not a long term debt issuance has floating or fixed
interest rate terms this increases the likelihood for material
mistatement due to either fraud or error.

Significant
In the year 2020, the amount of post-employee benefits
increased due to pandemic response where the company
has given significance to its employees. On the distribution
of financial capital, human resources (e.g. compensation,
benefits, training) have been invested with large amount,
hence, the act of fraud or error will materially misstate the
account.

Significant If the contracts have an intention of trying to make money

by forecasting the driection of the value of the asset through
fraudulent act there is a potential effect of misstatement on
the computation of the purchase price in transfer of interests
(buy/sell agreement). Entering into derivative includes
interest swaps, cross-currency swaps, and foreign currency
forwards which are primarily needed for the purpose of
managing the risks with its borrowing activities. These are
financial contracts used for a variety of purposes whose
prices are taken from underlying asset or security

Not Significant
Significant Other Non-Current Liabilities is qualitatively significant
because there is a high probability that an illegal payment of
non-current liabilities may be material if there is a reasonable
possibility that it will result in a material contingent liability
or revenue loss. In addition, even if the amount is small, a
deliberate misstatement on non-current liabilities can be
material for qualitative reasons.

EQUITY
Not Significant Redeemable preferred stocks are at risk of fluctuations
of interest and as the interest rate increases the value of the
stocks falls however due to the call option embedded in the
stock the entity can mitigate such risk and hence its
 immateriality.

sheila

Not Significant
Significant The likelihood that a misstatement that is currently
immaterial may have a material effect in future periods
because of a cumulative effect, for example, that builds
over several periods.

Not Significant

Not Significant Although the amount is beyond the performance materiality,

equity reserves are not significant due to its movement in the
financial statements which did not fluctuates for 2 years and
is only a fund reserves for contingencies.

Significant All adjusted amounts are transferred to retained earnings

when books are closed. Most errors committed, retained
earnings are affected. Thus, the amount of which will
decrease if assets are understated, and will increase if
overstated. The opposite with misstatements on liabilities
and expenses.account
significant In the case of Fgen
because Corp,
of the retained
reason that ifearnings
materialis a

misstatement occurs in its PPE, which they consider as their

major assets, huge amount will differ on its retained earnings
as well.

Not Significant Redeemable preferred stocks are at risk of fluctuations of

interest and as the interest rate increases the value of the
stocks falls however due to the call option embedded in the
stock the entity can mitigate such risk and hence its
immateriality.
 michelle

e materiality calculation, it
ntitatively significant.

teriality calculation, then it

alculation, it is Scoped
 SCOPED IN/OUT

Scoped In

Scoped In

may badly

Scoped In
 Scoped In

uctuations

Scoped In
Scoped In

any. If this
l acts and
bility will

statements

Scoped In

f accounts,

Scoped Out
Scoped In

s it might
eventually

or might
 Scoped In

s payable
sstatement
might issue
e accrued

Scoped In
Scoped Out
Scoped Out
company's

sensitivity

Scoped In

t relevant
mparing to

Scoped Out
Scoped Out

company

Scoped In
nd whether

or material

Scoped In

istribution
ensation,
e amount,
isstate the

Scoped In
set through
tement on
of interests

n currency

These are

Scoped Out
Scoped In
payment of
reasonable
ent liability
s small, a

Scoped In
alue of the
dded in the
 Scoped In

Scoped In
Scoped In

Scoped Out

Scoped In
ment in the
2 years and

Scoped In

earnings is a

der as their
ed earnings

Scoped In

dded in the

Scoped Out
Scoped In