[COMPANY LETTERHEAD]

JOMARI JESS ABELLAR, CPA

F. Mendoza Complex, Sto. Nino Street
Tacloban City

March 6, 2023

Dear Sir:

A. Management’s Representation on the Basic Financial Statements

This representation letter is provided in connection with your audits of the financial statements of
KAMMPIL, Inc. (the “Company”) as at and for the years ended December 31, 2022 and 2021 for the
purpose of expressing an opinion as to whether the financial statements are presented fairly, in all
material respects in accordance with Philippine Financial Reporting Standards (PFRS).

Certain representations in this letter are described as being limited to those matters that are material.
Items are considered material, regardless of size, if they involve an omission or misstatement of
accounting information that, in the light of surrounding circumstances, makes it probable that the
judgement of a reasonable person relying on the information would have been changed or influenced by
the omission or misstatement.

The financial statements have been approved and authorised for issue in accordance with a resolution of
the Board of Directors on [date].

We confirm that, to the best of our knowledge and belief, having made such inquiries as we considered
necessary for the purpose of appropriately informing ourselves:

Financial Statements

1. We have fulfilled our responsibilities, as set out in the terms of the audit engagement letter dated
[date] for the preparation of the financial statements in accordance with PFRS; in particular the
financial statements are fairly presented in accordance therewith.

PFRS in general includes all applicable PFRS, Philippine Accounting Standards (PAS),
interpretations of the Philippine Interpretations Committee (PIC), Standing Interpretations
Committee (SIC) and International Financial Reporting Interpretations Committee (IFRIC) which
have been approved by the Financial Reporting Standards Council (FRSC) and adopted by the
Securities and Exchange Commission (SEC).

We confirm our acknowledgment and understanding of our responsibilities in the terms of the
audit engagement letter and subsequent amendments as stated above.

2. All transactions have been recorded in the accounting records and are reflected in the financial
statements
3. Significant assumptions used by us in making accounting estimates, including those surrounding
measurement at fair value, are reasonable.

4. All events subsequent to the date of the financial statements and for which PFRS require adjustment
or disclosure have been adjusted or disclosed.

5. The financial statements are free of material misstatements, including omissions, and out of period
adjustments. The effects of uncorrected misstatements are immaterial, both individually and in the
aggregate, to the financial statements as a whole. A summary of uncorrected misstatements in 2022
is presented in Appendix A.

6. The financial statements disclose all matters of which we are aware that are relevant to the
Company’s ability to continue as a going concern, including all significant conditions and events,
mitigating factors and the Company’s plans. The Company also has the intent and ability to take
actions necessary to continue as a going concern.

Fraud and non-compliance with laws and regulations

The term fraud refers to an intentional act by one or more individuals among management, those charged
with governance, employees, or third parties, involving the use of deception to obtain an unjust or illegal
advantage. Fraud also includes misstatements resulting from fraudulent financial reporting and
misstatements resulting from misappropriation of assets. Misstatements resulting from fraudulent
financial reporting involve intentional misstatements or omissions of amounts or disclosures in financial
statements to deceive financial statements users.

7. We acknowledge our responsibility for the design, implementation and maintenance of internal
control to prevent and detect fraud.

8. We have disclosed to you the results of our assessment of the risk that the financial statements may
be materially misstated as a result of fraud.

9. We have disclosed to you all information in relation to fraud or suspected fraud that we are aware of
and that affects the entity and involves:
● Management;

● Employees who have significant roles in internal control; or

● Others where the fraud could have a material effect on the financial statements.

10. We have disclosed to you all information in relation to allegations of fraud, or suspected fraud,
affecting the Company’s financial statements communicated by employees, former employees,
analysts, regulators or others.

11. We have disclosed to you all known instances of non-compliance or suspected non-compliance with
laws and regulations whose effects should be considered when preparing separate financial
statements.
Related party transactions

12. We have disclosed to you the identity of the Company’s related parties and all the related party
relationships and transactions of which we are aware.

13. Related party relationships and transactions have been appropriately accounted for and disclosed in
accordance with the requirements of PFRS.

Litigation and claims

14. We have disclosed to you all known actual or possible litigation and claims whose effects should be
considered when preparing the financial statements and such matters have been appropriately
accounted for and disclosed in accordance with PFRS.

Information Provided

15. We have provided you with:

● Access to all information of which we are aware that is relevant to the preparation of the financial
statements such as financial records, data, documentation and other matters;
● Additional information that you have requested from us for the purpose of the audit;

● Unrestricted access to persons within the entity from whom you determined it necessary to obtain
audit evidence; and
● All minutes of the meetings of stockholders, directors, and audit or other committees of directors
in 2022 and as of the date of this letter. The most recent meetings held were on [date] for the
approval and authorization for issuance of the separate financial statements by the Board of
Directors on [date].

Deficiencies in internal control

16. We have communicated to you all deficiencies in internal control of which we are aware.

Use of scanned or photographed documents

17. As original copies of documents were not readily available to you due to the community quarantine
implemented by the Philippine government, we affirm the authenticity of the scanned or other
electronic copies of documents provided to you as audit evidence to support the recorded
transactions, balances and disclosures in our financial accounts. We have implemented controls to
check the adequacy and reliability of scanned or electronic copies provided to you and we are not
aware of any issues in relation to the scanning process. In accordance with your sampling
methodology, original copies were provided to you physically during your onsite fieldwork and
through a video call, so that relevant details can be agreed to the electronic version.
Additional written representations about the financial statements

18. The selection and application of accounting policies are appropriate.

19. The following have been recognised, measured, presented or disclosed in accordance with PFRS:
● Plans or intentions that may affect the carrying value or classification of assets and liabilities;

● Liabilities, both actual and contingent;

● Title to, or control over assets, liens or encumbrances on assets, and assets pledged as collateral;
and
● Aspects of laws, regulations and contractual agreements that may affect the financial statements,
including non-compliance.

20. We completed the process of evaluating the impact that will result from the adoption of standards,
amendments to existing standards and interpretations. Such impact is disclosed in Note 28.

Cash and cash equivalents

21. All cash and deposit accounts and all other properties and assets of the Company are included in the
financial statements. There are no arrangements with financial institutions involving compensating
balances or other arrangements involving restrictions on cash balances, lines of credit, collateral
posted or similar arrangements.

22. We consistently applied our policy regarding classification of cash and cash equivalents, which are
short-term, highly liquid investments that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.

Receivables

23. Receivables recorded in the financial statements represent bona fide claims against debtors for sales
or other charges arising on or before the balance sheet dates and are not subject to discount except
for normal cash discounts. Receivables classified as current do not include any material amounts
which are collectible after one year. All receivables have been appropriately reduced to their
estimated net realizable value.

24. Information regarding the financial risks exposure and the Company’s financial risk management
objectives and policies and hedging activities have been adequately disclosed in the financial
statements as required by PFRS 7, Financial Instruments: Disclosure.

Long-Lived Assets

25. The Company has satisfactory title to all owned assets, and there are no liens or encumbrances on
such assets nor has any asset been pledged as collateral

26. We reviewed long-lived assets for impairment in accordance with PAS 36, Impairment, and
determined no adjustment was necessary. Further, we confirm that we have conducted an
 appropriate assessment of whether or not there was any indication that an item may be impaired.
Our assessment did not reveal any impairment indicators.

27. The Company has no plans or intentions that may materially affect the carrying value or
classification of assets and liabilities.

Financial instruments (PFRS 9)

28. The Company has classified debt instruments that are held by the Company for collection of
contractual cash flows where those cash flows represent solely payments of principal and interest as
financial assets at amortized cost.

29. Factors considered by the Company in determining the business model for a group of assets include
past experience on how the cash flows for these assets were collected, how the asset’s performance is
evaluated and reported to key management personnel, how risks are assessed and managed and how
managers are compensated.

30. In making the assessment of whether the financial instruments’ cash flows represent solely payments
of principal and interest (the ‘SPPI’ test), the Company considered whether the contractual cash
flows are consistent with a basic lending arrangement i.e. interest includes only consideration for the
time value of money, credit risk, other basic lending risks and a profit margin that is consistent with
a basic lending arrangement. Where the contractual terms introduce exposure to risk or volatility
that are inconsistent with a basic lending arrangement, the related financial asset is classified and
measured at fair value through profit or loss.

31. The Company recognized loss allowance for expected credit losses on its financial assets measured at
amortized according to the simplified approach in measuring expected credit losses using a lifetime
expected loss allowance for all trade receivables. To measure the expected credit losses, trade
receivables have been grouped based on shared credit risk characteristics and the days past due. The
carrying amount of the asset is reduced through the use of an allowance account, and the amount of
the loss is recognized within the statement of total comprehensive income through profit or loss.
When a receivable remains uncollectible after the Company has exerted all legal remedies, it is
written-off against the allowance account for receivables. Subsequent recoveries of amounts
previously written-off are credited within the statement of total comprehensive income through
profit or loss.

32. The expected loss rates are based on the payment profiles of historical sales and the corresponding
historical credit losses experienced within this period. The historical loss rates are adjusted to reflect
current and forward-looking information on macroeconomic factors affecting the ability of the
customers to settle the receivables. The Company has identified the bank interest rates to be the
most relevant factor, and accordingly adjusts the historical loss rates based on expected changes in
this factor.

Provisions and contingencies

33. All liabilities of the Company of which we are aware are included in the financial statements at the
balance sheet dates. There are no other liabilities or gain or loss contingencies that are required to
be accrued or disclosed and no unasserted claims or assessments that our legal counsel has advised
us are probable of assertion and required to be disclosed in accordance with PFRS.
20. There are no:
● Guarantees, whether written or oral, under which the Company is contingently liable.

● Losses arising from sale and purchase commitments.

● Agreements and options to buy back assets previously sold

21. The Company has requested its legal advisors to provide you with all required information and has
requested them to disclose to you any matters you may request in this respect.

Revenue

22. We recognize revenue when performance obligations are satisfied by transferring control of a
promised good or service to a customer. We disclosed to you all sales terms (whether written or
oral), including all customer-acceptance provisions

23. We did not enter into any side letters or agreements (written or oral) in connection with sales
agreements.

24. We disclosed to you separate arrangements (either written or oral) with the same entity and have
determined to account for the arrangements as a single arrangement or as separate arrangements
based on guidance in PFRS 15.17. Contract assets and liabilities have been properly accounted for
and disclosed, including the related movements.

25. We did not amend any sales agreements, whether in the form of any side letters or otherwise, that
have not been properly disclosed or reported in the financial statements.

26. We provided you with complete customer contract files for all customers for which you requested
such documentation.

27. We appropriately evaluated and accounted for all forms of consideration paid to customers in
accordance with PFRS 15, Revenue from Contracts with Customers, PFRS 15.70 through 72.

28. We have included disclosures in the financial statements to comply with the required
disclosures in accordance with PFRS 15, Revenue from Contracts with Customers.

Fair value measurements

29. Presentation and disclosure of the fair value measurements of material assets, liabilities and
components of equity are in accordance with PFRS. The amounts disclosed represent our best
estimate of fair value of assets and liabilities required to be disclosed by these standards. The
measurement methods and significant assumptions used in determining fair value have been applied
on a consistent basis, are reasonable and are reflective of our intent and ability to carry out specific
courses of action on behalf of the Company where relevant to the fair value measurement or
disclosures.
Financial risk management

30. Information regarding the financial risks exposure and the Company’s financial risk management
objectives and policies and hedging activities have been adequately disclosed in the financial
statements as required by PFRS 7, Financial Instruments: Disclosure.

31. We disclosed a significant concentration of credit risk arising from all financial instruments in
accordance with PFRS 7, Financial Instruments: Disclosures.

Functional currency

32. Items included in the financial statements of the Company, are measured using the Company’s
functional currency that best reflects the economic substance of the underlying events and
circumstances relevant to that entity. The financial statements are presented in Philippines Peso,
which is the functional currency of the Company.

Using the work of experts

33. We agree with the findings of Institutional Synergy, Inc., experts in evaluating the reasonableness of
the retirement benefit obligation and have adequately considered the competence and capabilities of
the expert in determining the amounts and disclosures used in the preparation of the financial
statements and underlying accounting records. We did not give or cause any instructions to be given
to experts with respect to the values or amounts derived in an attempt to bias their work, and we are
not otherwise aware of any matters that have had an impact on the objectivity of the experts.

The actuarial assumptions and methods used to measure assets, liabilities and costs for pension and
other postretirement benefits are in accordance with PFRS.

Financial Records

34. We have appropriately reconciled our books and records underlying the financial statements to their
related supporting information. All related reconciling items considered to be material were
identified and included in the reconciliations and were appropriately adjusted in the financial
statements, as necessary. There were no material unreconciled differences or material general ledger
suspense account items that should have been adjusted or reclassified to another account balance.
There were no material general ledger suspense account items written off to a balance sheet account,
which should have been written off to an income statement account and vice versa. All consolidating
entries have been properly recorded. All intra-accounts have been eliminated or appropriately
measured and considered for disclosure in the financial statements.

Events after the reporting date

34. To the best of our knowledge and belief, no events have occurred subsequent to the balance sheet
date and through the date of this letter that would require adjustment to or disclosure in the
aforementioned financial statements.
Coronavirus disease (COVID-19) assessment

35. We have communicated with you other significant and relevant COVID-19 assessments we have
performed. These have been properly disclosed in the financial statements.

36. On January 20, 2021, the Company announced temporary closure of its hotel in Makati beginning
February 1, 2021 as a result of low business levels and a prolonged recovery timeline due to
COVID-19 pandemic. In 2021, the situation continued to remain unstable due to rapid increase in
cases caused by various viral mutations. Measures taken by the national and various local
government units to contain the virus have affected economic activity. Vaccination program showed
a gradual pace due to scarce availability of vaccines which weakened the local market confidence.
Borders remained closed in 2021. The Makati branch remains to be closed and will be re-opened at a
later date when business conditions have improved. Meanwhile, its Boracay branch reopened last
September 2021 and continues to operate. The Company has implemented series of measures to
monitor and mitigate the effects of COVID-19. Health and safety protocols for colleagues and
employees have been treated with utmost priority such as implementation of social distancing
guidelines, deployment of skeletal workforce and working from home arrangements. Further, the
Company introduced strategies to mitigate incurring further losses both in terms of revenue
generation and cost management. Despite all initial actions, the revenue generated was insufficient
to cover operating expenses of the Company. Hence, management has implemented measures to
steer the Company towards business sustainability through extensive efforts to minimize losses and
obtaining funds from its related parties.
B. Management’s Representation on the Supplementary Information required by the
Bureau of Internal Revenue (BIR)

The supplementary information on taxes and licenses in Note 29 to the financial statements is
presented for purposes of filing with the BIR and is not a required part of the basic financial
statements.

We acknowledge our responsibility for the fair presentation in all material respects, in relation to the
basic financial statements taken as a whole and confirm the completeness of the supplementary
information as required by BIR Revenue Regulations (RR) No. 15-2010. The amounts in the
supplementary schedules of sales/receipts/fees, costs of sales/services, non-operating and taxable
other income, itemized, taxes and licenses, and other information disclosed in the notes to separate
financial statements agree or can be traced with the books of accounts and the corresponding returns.

The Company is not covered by the requirements and procedures for related party transactions
provided under RR No. 34-2020 as it does not meet any criteria of taxpayers prescribed in Section 2
of the RR.

The Company has no outstanding tax cases as at December 31, 2022.

* * * *

Yours very truly,

[Name of signatory]
Position
[COMPANY LETTERHEAD]