AUDIT CONTRACT
KNOWN ALL MEN BY THESE PRESENT:
This Audit contract (Agreement) entered into on this
by and between
: herein referred to as
AUDITOR
-andrepresentative of
herein referred to as CLIENT
WITNESSETH: thatWHEREAS, the AUDITOR possesses substantial knowledge and capital in the form of
tools, equipment and work premises.
WHEREAS, the CLIENT has signified his intent to be engaged with the AUDITOR for
purposes of being audited the financial records, accounts and financial statements
as of
and for the one month period ended
Now, therefore, for and in cooperation of the foregoing premises, the Auditor hereby
engages the services to be performed under the following terms and conditions:
A. SCOPE OF SERVICES
1. We will conduct our audit in accordance with the Philippine Standards
on Auditing. Those standards require that we comply with ethical
requirements and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from
material misstatements. An audit involves performing procedures to
obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditors
judgment including the assessment of the risks of material
misstatements of the financial statements, whether due to fraud or
error. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of accounting
estimates made by management, as well as evaluating the overall
presentation of financial statements.
2. Because of the inherent limitations of an audit, together with the
inherent limitations of internal control, there is an avoidable risk that
some material misstatements may not be detected, even though the
audit is properly planned and performed in accordance with PSAs.
3. In making our risk assessments, we consider internal control relevant
to the entitys preparation of the financial statements in order to
design audit procedures that are appropriate in the circumstances, but
not for the purpose of expressing an opinion on the effectiveness of the
entities internal control relevant. However, we will communicate to you
in writing any significant deficiencies in internal control relevant to the
audit of the financial statements that we have identified during the
audit.
4. The audit will include tests of accounting records and such other audit
procedures necessary to express an independent opinion on the
financial statements and reports on Compliance with Laws and
Regulations and Internal Control Structure.
5. The Contractor will deliver to the client:
a. Two copies of the final Audit Report at the end of the one-month
cycle.
6. Auditor shall not be held responsible for delay or default caused by fire,
riot, acts of God or war if the event is beyond the Contractors
reasonable control and the Contractor gives notice to the Audit Adviser
immediately upon occurrence of the event causing the delay or default
which is reasonably expected to cause a delay or default.
7. Auditor shall perform as an independent entity under this contract and
not as an employee of the client for any purpose. Auditor will retain
sole and absolute discretion in the manner and means of carrying out
the Auditors activities and responsibilities under this contract, except
to the extent specified in this contract.
B. STATUTORY RESPONSIBILITIES
8. As directors of the company, you are responsible for ensuring that the
company maintains proper books and records and for preparing
accounts (financial statements) for each financial year, which give true
and fair view of the state of affairs of the company and of its profit or
loss for that period. In preparing those accounts, you must:
a. Select suitable accounting policies and then apply them
consistently.
b. Make judgments and estimates that are reasonable and prudent.
c. Prepare the accounts on the going concern basis unless it is not
appropriate to presume that the company will continue in business.
9. It is your responsibility to keep proper accounting records that disclose
with reasonable accuracy at any particular time the financial position
of the company. It is also your responsibility to safeguard the assets of
the company and for taking reasonable steps for the prevention of and
detection of fraud and other irregularities with an appropriate system
of internal control.
10.You are also responsible for making available to us, as and when
required, all the companys accounting records and all other relevant
records and related information, including minutes of all management
meetings. We are entitled to require from the companys officers such
other information and explanations as we think necessary for the
performance of our duties as auditor.
11.As independent auditor, we will report to you whether, in our opinion,
the accounts of the company, which we have audited, give a true and
fair view of the state of the companys affairs, and of the profit or loss
for the year. In arriving at our opinion we are required to consider the
following matters, and to report on any in respect of which we are not
satisfied:
a. Whether the company has kept proper accounting records,
b. Whether the companys balance sheet and profit and loss account
are in agreement with the accounting records and returns.
c. Whether we have obtained all the information and explanations that
we think necessary for the purpose of our audit.
d. Whether the information in the directors report is consistent with
that in the audited accounts.
C. FEES
A Php 500 for every cycle that will serve as the professional fee of the
auditor plus out-of-pocket expenses (e.g. transportation, load, etc.) not
exceeding Php 200 and additional Php 100 for one day of delay of
submitting documents (e.g. receipts and financial statement).
D. NOTICE
All notices or other communications which are required under this contract
must be given by registered or certified mail and are complete on the date
mailed when addressed to the parties at the following addresses:
Contact person:
Address:
Email Address:
Contact Number:
Purpose:
E. ADDITIONAL TERMS AND CONDITIONS
1. The contractor can use any recording devices when both parties have a
meeting or appointment. The submission of Business plan, financial
statement, receipts and etc., must be on time as requested by the
auditor.
2. In case of delay, the client agrees to be solely responsible for the delay
of audit report and explanation to the Professor in charge. The client
should make an incident report and sign for the acknowledgement for
delay. The client can only be delayed once (one day after the date of
the submission of documents plus payment of penalty) otherwise the
auditor has the right to refuse the documents.
3. Consultation must be at time of business hours, in case the client is
late, and the contractor can wait for 30 minutes only.
4. Auditors reserve the right to terminate the services performed on their
client at any time for any of the causes provided by the law.
5. These are the following documents that are deemed necessary as a basis in expressing an
auditor's opinion. The client is required to submit the complete set of hard copy documents before
August 10, 2016. In case of delay, the auditor has the discretion to accept it or not
a. Income Statement for the 1st cycle
b.Statement of Financial Position for the 1st cycle
c. Statement of changes in equity
d. Statement of Cash flow
e.Original receipts
f.Production schedule for manufacturing
e.Photocopy of passbook
f.General Journal
g. Weekly sales report
g. Attendance sheet
F. BASIS OF OPINION
1. Unmodified Opinion (Unqualified)
- The auditor shall express an unmodified opinion when the auditor
concludes that the financial statements are prepared, in all material
respects, in accordance with the applicable financial reporting
framework.
2. Modified Opinion (Qualified)
- The auditor shall express a qualified opinion when:
a. The auditor, having obtained sufficient appropriate evidence,
concludes that misstatements, individually or in aggregate, are
material, but not pervasive, to the financial statements; or
b. The auditor is unable to obtain sufficient appropriate audit
evidence on which to base the opinion, but the auditor
concludes that the possible effects on the financial statements
of undetected misstatements, if any, could be material but not
pervasive.
3. Adverse Opinion
- The auditor shall express adverse opinion when the auditor, having
obtained
sufficient
appropriate
evidence,
concludes
that
misstatements, individually or in the aggregate, are both pervasive
to the financial statements.
4. Disclaimer of Opinion
- The auditor shall disclaim an opinion when the auditor is unable to
obtain sufficient appropriate audit evidence on which to base the
opinion, and the auditor concludes that the possible effects on the
financial statements of undetected misstatements, if any, are both
material and pervasive.
I confirm that I have read and understood the contents of the letter and the related
terms and conditions and agree that it accurately reflects my fair understanding of
the services that I am require to undertake.
Client Signature over Printed Name
For and on behalf of
Signature over Printed Name
Auditor
