PRELIMINARY PLANNING MEMORANDUM

The preliminary planning memorandum refers to establishing parameters to achieve

efficient management of audit human resources and allows the effective achievement of

its objectives, for the application of effective work, which can be improved

and adapted to the specific circumstances of each exam.

1. Background

The financial operations of the General Public Hospital Luis G. Dávila, in the

scope period, have been examined by the State Comptroller General's Office and by

the Internal Audit Directorate of the Ministry, the items analyzed correspond

to:

CONTROL UNIT PERIOD ITEM

AVAILABILITY AND THEIR

INCOME CORRELATIVES

COMING FROM THE

BUDGET ALLOCATION December 2004 INTERNAL AUDIT

LONG-DURATION GOODS –

FIXED ASSETS

1/01/2004-

31/12/2004

INTERNAL AUDIT 2. Reason for audit

In the audit of the financial statements, the Cash and Cash account will be examined.

Long-term goods, corresponding from January 1, 2004 to January 31

December 2004.

3. Objective of the audit

The objective of the audit of the Luis G. General Hospital. Dávila, is to dictate the

Cash and Long-Lived Assets accounts of the financial statements

prepared as of December 31, 2004, in accordance with the Auditing Standards

Generally Accepted Applicable to the Public Sector.

4. Scope of the audit

The audit of the Cash and Long-Life Assets accounts in the states

financials of the General Hospital Luis G. Dávila, will be carried out by the exercise

financial year ended December 31, 2004.

5. Knowledge of the entity and its legal basis

5.1 Legal basis

By Supreme Decree of February 12, 1924, published in the Registry

Officially on May 8, 1924, the Luis G Hospital was created. Dávila.

5.2 Main legal provisions

The activities and operations of the Luis G. General Hospital. Dávila, more than

The legal provisions cited are governed by the following

specific provisions, such as:

• Functional Organic Regulation of Hospitals

• Budget Law and Regulations

• Public Procurement and its regulations

• Civil Service and Administrative Career Law • Labor Code

5.3 Organic structure

To fulfill its objectives, the Luis G. Hospital Dávila is

made up of the following administrative levels:

• Director: Dr. Francisco Rivadeneira

• Deputy director: Dr. Gustavo Delgado

• Administrator: Mr. Jaime Rosero

• HR Management: Mrs. Carmen Guerrón

• Financial Management: Ms. Germania Obando

• Nursing Management: Mrs. Ligia Gonzáles

• Institutional Services Management: Econ. Miguel Yepez

Number of employees and plant workers: 106

Assigned: 3

Hired: 12

Sisters of Charity Agreement 4

Scholarship recipients 2

Total employees 127

5.4 Objectives of the entity

Among the main objectives of the entity, determined in its Regulations

Organic Functional consist:

• Strengthen the Hospital in its management and leadership capacity, which promotes

change processes aimed at promoting strengthening and optimal

operation of each process, which guarantee total coverage of the

health benefits with quality, equity, efficiency and solidarity.

• Implement service hours in statistics on weekends and days

holidays

• Carry out analysis of hospital production and establish management guidelines. • Train staff at
all hospital levels.

• Reorganize hospital committees

• Improve the supply system

5.5 Main activities, operations

The Luis G. hospital Dávila, provides care to the user, family and community, with

services of scientific, technical and human quality, permanently

contributing to the technical and managerial development of the Institution in coordination with

the members of the health team, in accordance with the economic, cultural,
political and epidemiological, plans, executes and evaluates processes within its competence in

based on the policies of the Ministry of Public Health and thereby guarantees

quality, efficient and fair.

5.6 Main institutional policies and strategies

As the main policies established to achieve their objectives, they have been

determined the following:

• Improve the quality of care for external users who come to the Hospital

Luis G. Davila

• Promote the scientific and technological development of personnel

• Support the Director in the exercise of his Authority, for the application of the

different processes.

• Coordinate between the different processes for timely attention to the user

• Ensure that all processes have the resources and capacity to

adequate management, to offer quality service to the user.

• Promote periodic monitoring and evaluation among staff that allows

Identify strengths and weaknesses to improve actions.

• Promote, build and deploy competencies to execute programs of the

Ministry of Public Health.

• Hire and retain human talent 5.7 Financial resources

To fulfill its administrative-financial activities, the Luis Hospital

g. Dávila had the financial resources subject to budget

institutional details by item. (Annex attached in working papers)

6. Main accounting policies

The accounting control of financial and material resources is based on the

General Government Accounting Manual, issued by the Comptroller's Office

General of the State.

7. Degree of reliability of the information

The functional organic regulations of the Luis G. Hospital. Dávila defines the

responsibilities of the Financial Department and its operating units Accounting,

and Treasury, these units have few personnel, therefore they maintain a

heavy workload.

The entity generates a monthly average of 200 financial operations, whose

documentation is in the file of the Financial Directorate.

The accounting system used issues the following information quarterly:

• Integrated General Journal

• Checking balance

• Major General

• Assistant Major

• Statement of Financial Position

• Statement of income

• Cash Flow Statement

• Budget Execution Status

• Annexes to the Statement of Financial Situation • Budgetary records of income and expenses

The last audit report carried out on this institution was in July 2003 by

of the Ministry of Public Health and to date the opinion has not been presented by

written to the public entity.

8. Points of interest for the audit

In the preliminary analysis carried out, the following aspects have been observed that should

considered when focusing our audit tests:

• Verification of the management of availability, its management and procedures

• Verification of the acquisition process for the purchase of long-term goods

duration, its control, registration and verification of depreciation calculations.

9. Important transactions identified

A relevant movement is identified in the Availability and Assets accounts.

Long Term subject to analysis within the financial statements with a cut-off date of 3

December 2004

10. Current status of problems observed in previous audits

In the special examination report carried out by the Ministry of Health

Public to the Luis G. Hospital. Dávila, regarding the verification, study and

analysis carried out in July 2003 has not yet been sent to the institution,

situation that should be corrected by means of a written request to the

ministry so that the entity can carry out follow-up tests on the

observations made in the audit process. 11. Identification of the important components to be
examined in the

specific planning.

The preliminary evaluation has determined the need for the

components detailed below are considered for your

detailed analysis of which the lifting of the

information, evaluating its controls and determining the combined risks

inherent and control:

• Available: Includes petty cash, banks, checking account deposits

unique, revolving funds. The movement of your debits and credits is

significant, and representative balances are maintained.

• Long-Term Assets: Asset acquisition processes

fixed, coding. Control and arithmetic verifications in the

depreciation-

12. Preliminary audit risk assessment matrix.

The risk matrix will be prepared based on the internal control developed in the
institution in order to determine the main deficiencies that exist, to

choose to develop the relevant corrective measures (attached annex).

13. Determination of materiality

Materiality is the magnitude of the accounts in the institution.

The estimate of materiality that the significant accounts

correspond to Availability and Long-Term Assets.

March 10, 2005

Prepared by: Soraya Mejía

Supervisor: Dr. Francisco Quisigüiña

Deputy Director of Audit Director of Audit