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AUDITING PROBLEMS 1

COMPREHENSIVE PROBLEM

SRV & Co. CPAs accepted a new client, Global Home Depot, Inc., on November 2014. Your Senior
Auditor assigned you as the Audit Clerk for the new engagement for the calendar year 2014. On the
same month, you visited their principal address to obtain an understanding of the nature of their
business.

Global Home Depot, Inc. was incorporated in the Philippines and registered with the Philippine Securities and
Exchange Commission (SEC) on March 12, 2010. The Company is primarily engaged in the business of
retailing, merchandising, buying, selling, marketing, trading, or otherwise dealing household and builder
hardware.
Merchandising industry makes products in retail outlets available to customers, primarily by stocking shelves
and displays. Household and builder hardware product merchandisers occupy an intermediate market between
the manufacturers and the end users. The manufacturers typically focus on producing high volumes of their
product. The merchandisers purchase these finished products from the manufacturers. They distribute these
products through retail. This is very common because it somehow eliminates the manufacturers’ burden to
further market their product.
The Company’s main line of business is purchasing and selling household and builder hardware like keys,
locks, hinges, chains, tools, machine parts, doors, windows, bathrooms, etc. These are used by homeowners
and builders for residential and commercial purposes. The entity has several suppliers for the merchandise
within and outside Cebu and they are normally sold to walk-in customers, to the City Government of Cebu and
Mandaue, and to regular customers who are usually construction companies.

The registered business address of the Company is Ground Floor, The Columbia Tower, A.S. Fortuna Street
Mandaue City, Cebu (see attachment 1). The Company is situated near the national road which is very
accessible to the public. The Company location is also accessible to trucks and public utility vehicles. The
Company is under a lease agreement with The Columbia Tower Real Estate, Inc. for the space used by the
Company.
The Company is controlled by Ms. Cynthia D. Chungunco, who owns 78.21% of the Company’s outstanding
shares. The remaining 21.79% of the shares are publicly held. The Company has its primary listing on the
Philippine Stock Exchange. As of December 31, 2012 and 2013, the Company has 24 and 26 equity holders,
respectively (see attachment 2 for the organizational structure).
The Company has an internally-generated accounting system but manually processes pre-numbered source
documents. According to a survey, companies that do better than industry averages tend to use and

understand specialized computer software tools to manage specific aspects of merchandising. It has identified
forecasting as the most important tool. The system helps predict what goods customers might want and
stocking patterns to satisfy customer demand while minimizing the amount of capital invested in excess
inventory. Seventy-five percent of the retailers surveyed said that retail forecasting is extremely important to
financial success. In the past, forecasting systems were largely seen as supply chain management tools,
where the focus was on reducing operational costs. Now such systems and techniques have become
important to expand sales opportunities, moving from a strictly bottom-line focus to a top-line one. Almost
equally as important as demand forecasting is customer analytics. One cannot create a good demand forecast
without understanding the customers and what they might want.
The Company approximately has 43 regular customers, an average of 300 walk-in customers per day, and the
City Government of Cebu and Mandaue. The Company negotiates sales orders with the majority of their
customers. The Company does not have any long-term contract with any customer. Because of the nature the
Company’s products and the short lead time order cycle, backlog is not a significant factor of the business. The
Company believes that substantially all of the orders existing as of December 31 will be shipped prior to the
end of the first quarter of the next year. In general, the Company competes in the home and builder hardware
products with the other companies in within Cebu and Mandaue City. A few of the Company’s competitors may
be larger, have greater financial resources or have less financial leverage than the Company does. As a result,
the competitors may be better positioned to respond to any downward pricing pressure or other adverse
economic or industry conditions or to identify and acquire companies or product lines compatible with their
business.

The primary goal of the company is to sustain itself in the long run of competition and to increase its market
share in the future. The management continuously gives good service to its customers by availing quality
products from its suppliers. It hopes that by putting up branches on strategic locations, it will be able to
increase profitability and at the same time satisfying the needs of the customers. It is currently advertising on
media, specifically on radio stations and print, to make the business known to the public. As a corporate social
responsibility, it actively participates on the preservation of the natural environment. The management says
that their strategies do not contribute much to the overall success of the Company and they admit that they are
not that aggressive in terms of promotion.

The Company sees itself as a growing entity. The management believes that it will be able to expand its
operations especially because they are yet starting. Ms. Chungunco is pressuring the management to expand
sooner in order to also get fully the market share for the City Government of Cebu and because the opportunity
revenue is high.
As of the date, the company has no investments in associate, subsidiary or joint venture. For now, the
management has no plans of entering into acquisition of companies under its name or disposing its equity
interest. However, the company has planned initially in 2013 to open a branch in Cebu City in order to get a

wider share in the market. The Company has also planned to obtain loans from the bank to finance its
expansion plans.

The preparation of the financial statements in conformity with accounting principles generally accepted in the
Philippines requires the management of the Company to make decisions based upon estimates, assumptions,
and factors it considers relevant to the circumstances. Such decisions include the selection of applicable
principles and the use of judgment in their application, the results of which could differ from those anticipated.

The Company has considered the following as their most critical accounting policies:
1. Accounts receivable valuation
2. Inventory Valuation
3. Revenue recognition

The management reviews the estimates on a regular basis but believes that these estimates are reasonable,
but actual results could differ from these estimates.

Valuation of accounts receivable
The accounts receivable of the Company represent those amounts that have been billed to the Company’s
regular customers and to the City Government of Cebu and Mandaue but not yet collected. The Company
records an allowance for doubtful accounts based on the portion of those accounts receivable that the
Company believes are potentially uncollectible based on various factors, including historical experience and
creditworthiness of customers. If the financial condition of customers were to deteriorate, resulting in
impairment of their ability to make payments, additional allowances may be required. Changes in judgments on
these factors could impact the timing of costs recognized.

Valuation of inventories
The company states their inventories at the lower of cost or market. The Company determines the cost basis
their inventory on a first-in-first-out basis using actual costs. Changes in product demand and their customer
base may affect the value of inventory on hand, which may require provisions for obsolescence.

Revenue recognition
The Company recognizes revenue at the point of sale. The Company treats sales returns and allowances as
reductions to sales.

ORGANIZATIONAL CHART

BOARD OF DIRECTORS

CYNTHIA D. CHUNGUNCO
President

JOHN F. GO
General Manager

MANOLO F. CHUA
Purchaser

GERRY S. VELORA
Inventory Clerk

MIMI L. GARCIA
Sales Manager

CHRISTINE D. LAPINID
Cashier

CHARLOTE R. AGUILAR
Chief Accountant

MARLON S. YU
Accountant 1

ARMANDO G. SUICO
Support Head

ANNIE T. DALON
Accountant 2

GEOGRAPHICAL LOCATION

Another accounting staff will update the general and subsidiary ledger of Accounts Receivable. you performed a test on the following controls: A. Inc. For two weeks. The President will review the accuracy and authenticity of the documents prior to the approval of the vouchers for payment. Purchase orders were properly authorized. . The President will be the approving officer for any write-off of receivables. The Inventory Clerk will move out the inventory to be shipped from the warehouse and will update the perpetual inventory records.” The Accounting Office will then update the Accounts Payable general and subsidiary ledger. you went back to the Global Home Depot. On the first week of December 2014. c. The goods will be sent to the carrier and shall be evidenced by a bill of lading. to the Accounting Office and to the one who will receive the goods (a copy with no details as to the quantity). The cashier will prepare the deposit slip of the collections for the day. Copies of the approved sales order will be sent to the warehouse (c/o the Inventory Clerk) and to the Accounting Office. Revenue / Receipts Cycle Credit will never be granted to walk-in customers. to examine their control manual in order for you to document your understanding of the design of the internal control and assess the control risk. The Accounting Office will send the necessary documents for payment to the President. The amounts appearing on the checks made are the same with the supplier’s invoice. the one who receives will count them and will notify the Accounting Office of such receipt by providing a receiving report. For regular customers and the City Government of Cebu and Mandaue. Inc. The Accounting Office will compare the bill of lading with the sales order and will prepare the invoice to be sent to the customer. Upon receipt of the goods. d. Goods were received and reconciled to the purchase order. after documenting your understanding of the design of the internal control and assessing the control risk. Checks were signed by authorized persons. b. Then the check will be prepared and mailed to the supplier and the source documents will be stamped “PAID. One accounting staff shall receive the check and will immediately send such to the President for the necessary endorsement. Purchasing / Disbursement Cycle Whenever a certain inventory level goes below the reorder point. you went back to the Global Home Depot. and will record the related liability. All collections shall be made by means of check. the Inventory Clerk will report to the Purchaser for requisitioning. The Accounting Office will compare the receiving report with the purchase order and the supplier’s invoice.Prior to the end of November 2014. Disbursement Cycle a. The Purchaser will determine the supplier and will send copy of the purchase order to the supplier (via e-mail or by fax). the approval of the Sales Manager must be obtained before credit sales will be granted.

d. You randomly selected 5 purchase transactions for nine-month period ending September 30. Collection receipt amounts are the same with the billings per sales invoice. b. . Sales invoice amounts are the same with the approved sales order. You also randomly selected 5 sales transactions for nine-month period ending September 30. 2014 and asked the client to provide you the source documents to substantiate the sales (see attachments). You asked the client to provide you all the source documents for these transactions and any cancelled checks made as payments to the suppliers (see attachments).e. Supporting documents are cancelled. 2014 and performed a walkthrough on these transactions. Collections for the day were deposited to the bank on the same day. B. Sales were properly authorized. c. You obtained a sample of a deposit slip to ascertain that collections are deposited on the same day they are received. Receipts Cycle a.

00 17.L.00 Amount 49.500. No.S. Fortuna Street. 000-2-45986 A. Mandaue Ci ty. Cebu VENDOR ` SHIP TO HJR Builders Requisition Date Global Home Depot Required by Date Instructions Budget Code 02/15/14 Item No. VELORA PRICE 165. Quantity 300 200 Description Angle Iron Abrasive blades G. Account No. RECEIVING REPORT Purchase Order No.500. INC.00 AMOUNT 49. INC. VELORA Requested by Date MANOLO F.00 85. PURCHASE REQUISITION Ground Fl oor.000. CHUA Approved by Date GLOBAL HOME DEPOT.000.500. Unit Price 165.00 TOTAL AMOUNT 66.00 SPECIAL INSTRUCTIONS GERRY S. : 00-2-134 From: UNIVERSAL HOME BUILDERS QUANTITY 300 200 DESCRIPTION Angle Iron Abrasive blades Freight Charge: TOTALS: RECEIVED By: GERRY S. The Col umbi a Tower.500.00 66.DISBURSEMENTS TEST OF CONTROLS GLOBAL HOME DEPOT.00 17.00 Date Received: 02/18/14 02/15/14 02/15/14 .00 85.

500. Ground Floor.O. INC.375. Mandaue City. Quantity 300 Angle Iron 200 Abrasive blades Unit Price 165.00 TOTAL DUE 66.00 .00 TOTAL AMOUNT Amount 49. NUMBER DATE SHIPPED 00-2-134 Quantity 300 200 Description Angle Iron Abrasive blades SHIPPED VIA F.500.S.000. Cebu City (032) 567-7890 INVOICE NO.00 OTHER INSTRUCTIONS MANOLO F. Mandaue City. POINT TERMS Unit Price 165.00 17. Bill To: GLOBAL HOME DEPOT.00 Amount 49. A. The Columbia Tower. Cebu A.GLOBAL HOME DEPOT.00 85.S. INC. INC. Fortuna Street.B. Mandaue City.O. PURCHASE ORDER Ground Fl oor.000. The Columbia Tower. CHUA Purchasing Officer Date: 02/16/14 HJR BUILDERS INVOICE Osmena Blvd. NO. Budget Code 02/15/14 Description Item No. Fortuna Street.00 SUB TOTAL TAX 59.S.00 66.00 85.B.00 17. The Columbia Tower.500. Cebu SALESPERSON P. Cebu VENDOR ` SHIP TO HJR Builders Date of Order Global Home Depot Required by Date Requisition Date Terms 02/16/14 F.500.00 7..125. 00-2-134 A. Ground Floor. 454589-54445 DATE:02/18/2014 Ship To: GLOBAL HOME DEPOT. Fortuna Street.O.

00 25. VELORA Requested by Date 04/26/14 MANOLO F.00 Amount 3.L. CHUA Approved by Date 04/26/14 .GLOBAL HOME DEPOT. Cebu VENDOR ` SHIP TO SOUTH HOME DEPOT Requisition Date Required by Date Global Home Depot Instructions Budget Code 04/26/14 Item No.500. Mandaue City.000.00 7.500.00 1.S. No. Fortuna Street. The Columbia Tower. 000-4-87236 A. Quantity Description 100 Float Pans 300 Rebar Clutter 20 Plastic high chair G. Account No. PURCHASE REQUISITION Ground Floor.500. Unit Price 30.00 30.00 SPECIAL INSTRUCTIONS GERRY S. INC.000.00 TOTAL AMOUNT 40.

500.00 40. RECEIVING REPORT Purchase Order No. NO. Quantity 100 Float Pans 300 Rebar Clutter 20 Plastic high chair Unit Price 30.500.B.000.00 1500.GLOBAL HOME DEPOT. PURCHASE ORDER Ground Floor.00 AMOUNT 3.00 30.00 7. INC.00 25.500. 00-4-134 A.00 7.00 Amount 3. Budget Code 04/26/14 Description Item No.00 1500.500. The Columbia Tower.00 TOTAL AMOUNT OTHER INSTRUCTIONS MANOLO F.000. Mandaue City. Cebu VENDOR ` SHIP TO SOUTH HOME DEPOT Global Home Depot Date of Order Required by Date Requisition Date Terms 04/27/14 F. : 00-4-134 From: UNIVERSAL HOME BUILDERS QUANTITY 100 300 20 DESCRIPTION Float Pans Rebar Clutter Plastic high chair Freight Charge: TOTALS: RECEIVED By: GERRY S. VELORA PRICE 30.00 .00 Date Received: 04/28/14 40. Fortuna Street.S.00 30.000.00 25. INC. CHUA Purchasing Officer Date: 04/27/14 GLOBAL HOME DEPOT.O.000.

00 SUB TOTAL 36. INC.29 TOTAL DUE 40.000.00 .500.00 7.160. Cebu (032) 431-5609 INVOICE NO. Mandaue City.71 TAX 4. INC.00 30. Bill To: GLOBAL HOME DEPOT. Talisay.O.S. Cebu SALESPERSON P. POINT Unit Price 30.00 1. Ground Floor.S. Ground Floor. Mandaue City.000. NUMBER DATE SHIPPED SHIPPED VIA 00-4-134 Quantity 100 300 20 Description Float Pans Rebar Clutter Plastic high chair F. Cebu A.B. Fortuna Street. A.500. 3457-441952 DATE:04/30/2014 Ship To: GLOBAL HOME DEPOT.339.SOUTH HOME DEPOT INVOICE Poblacion.O. The Columbia Tower. The Columbia Tower.00 25.00 TERMS Amount 3. Fortuna Street.500.

00 SPECIAL INSTRUCTIONS GERRY S. Budget Code 05/10/14 Description Item No.000. PURCHASE REQUISITION Ground Floor.00 TOTAL AMOUNT OTHER INSTRUCTIONS MANOLO F.00 Amount 12. Unit Price 60. INC.000. Fortuna Street. CHUA Purchasing Officer Date: 05/11/14 Amount 12. Quantity 200 Felker Diamond Blades 300 Abrasive Blades 50 Cup Stones Unit Price 60.00 50. PURCHASE ORDER Ground Floor. No.O.S. NO.00 12. Mandaue City.00 50. G.00 26.00 TOTAL AMOUNT 26.S.00 . The Columbia Tower.000. Mandaue City.500. VELORA Requested by Date MANOLO F.500. INC.L.00 2. Fortuna Street.500. Cebu VENDOR ` SHIP TO UNIVERSAL HOME BUILDERS Global Home Depot Date of Order Required by Date Requisition Date Terms 05/11/14 F.000.500.00 12.00 40. 000-5-97236 A.00 2. Account No.00 40. Cebu VENDOR ` SHIP TO UNIVERSAL HOME BUILDERS Global Home Depot Requisition Date Required by Date Instructions Budget Code 05/10/14 Quantity Description 200 Felker Diamond Blades 300 Abrasive Blades 50 Cup Stones Item No. 00-5-131 A. The Columbia Tower.GLOBAL HOME DEPOT.B. CHUA Approved by Date 05/10/14 05/10/14 GLOBAL HOME DEPOT.

00 GERRY S. A.000. INC.839.00 40.500.00 2. NUMBER DATE SHIPPED 00-5-131 Quantity 200 300 50 Description Felker Diamond Blades Abrasive Blades Cup Stones SHIPPED VIA F. Fortuna Street.000..O.B. Mandaue City.S. Cebu A.000. The Columbia Tower.00 12.660.O. INC.000.00 2. 852122-12455 DATE:05/15/2014 Ship To: GLOBAL HOME DEPOT. RECEIVING REPORT Purchase Order No. Ground Floor.00 23.00 40.500.00 50. : 00-5-131 From: UNIVERSAL HOME BUILDERS QUANTITY 200 300 50 DESCRIPTION Felker Diamond Blades Abrasive Blades Cup Stones Freight Charge: TOTALS: RECEIVED By: PRICE AMOUNT 60. Bill To: GLOBAL HOME DEPOT.00 50.71 2. POINT Unit Price 60.S.00 26. INC.500.00 SUB TOTAL TAX TOTAL DUE TERMS Amount 12. VELORA Date Received: 05/14/14 UNIVERSAL HOME BUILDERS INVOICE Borromeo St. Mandaue City.00 12.500.GLOBAL HOME DEPOT.00 12. Fortuna Street. Cebu SALESPERSON P. Ground Floor.00 . Cebu City (032) 555-5555 INVOICE NO. The Columbia Tower.29 26.

00 6. 000-8-97136 A.00 SPECIAL INSTRUCTIONS GERRY S.00 TOTAL AMOUNT 78. INC.500.00 25. CHUA Approved by Date 08/03/14 .00 Amount 4. The Columbia Tower. Cebu VENDOR ` SHIP TO SOUTH HOME DEPOT Requisition Date Required by Date Global Home Depot Instructions Budget Code 08/03/14 Item No.S.L.00 67. VELORA Requested by 08/03/14 Date MANOLO F.250. Account No. PURCHASE REQUISITION Ground Floor.GLOBAL HOME DEPOT. Quantity Description 150 Float Pans 250 Rebar Clutter 45 Plastic high chair G.00 1. Fortuna Street.500. Unit Price 30.250.500. Mandaue City. No.

00 25.00 TOTAL AMOUNT OTHER INSTRUCTIONS MANOLO F.00 .500.00 67. NO. Budget Code 08/03/14 Description Item No.500.00 Date Received: 08/10/14 78. Quantity 150 Float Pans 250 Rebar Clutter 45 Plastic high chair Unit Price 30.250.00 6. The Columbia Tower. 00-8-831 A. INC.00 6. Fortuna Street.250.500. : 00-8-831 From: UNIVERSAL HOME BUILDERS QUANTITY 150 250 45 DESCRIPTION Float Pans Rebar Clutter Plastic high chair Freight Charge: TOTALS: RECEIVED By: GERRY S.00 78. RECEIVING REPORT Purchase Order No. CHUA Purchasing Officer Date: 08/04/14 GLOBAL HOME DEPOT.S.00 AMOUNT 4.250. INC.500.00 1500.B.O.GLOBAL HOME DEPOT.00 67. Mandaue City.00 1500.00 25. VELORA PRICE 30.00 Amount 4.250. PURCHASE ORDER Ground Floor. Cebu VENDOR ` SHIP TO SOUTH HOME DEPOT Global Home Depot Date of Order Required by Date Requisition Date Terms 08/04/14 F.

Mandaue City.S.00 1. Ground Floor.93 78.250.SOUTH HOME DEPOT INVOICE Poblacion. Talisay.500.500. 852122-12411 DATE:09/09/2014 Ship To: GLOBAL HOME DEPOT. Cebu SALESPERSON P. Bill To: GLOBAL HOME DEPOT.250. NUMBER DATE SHIPPED SHIPPED VIA 00-8-831 Quantity 150 250 45 Description Float Pans Rebar Clutter Plastic high chair F.O. POINT Unit Price 30.00 6. The Columbia Tower. The Columbia Tower. Ground Floor.00 SUB TOTAL TAX TOTAL DUE TERMS Amount 4. Fortuna Street.00 67.00 25.00 69.500. INC.O.866.07 8. Cebu (032) 431-5609 INVOICE NO. INC. Fortuna Street. Cebu A.383. Mandaue City.B.00 . A.S.

Fortuna Street.00 85.00 TOTAL AMOUNT OTHER INSTRUCTIONS MANOLO F. PURCHASE ORDER Ground Floor. 000-9-24134 A.000. No. Unit Price 165.500.S. Account No.00 TOTAL AMOUNT 33. CHUA Approved by Date 09/24/14 09/24/14 GLOBAL HOME DEPOT. CHUA Purchasing Officer Date: 09/25/14 Amount 16. Quantity 100 Angle Iron 200 Abrasive blades Unit Price 165.00 17. VELORA Requested by Date MANOLO F.500. PURCHASE REQUISITION Ground Floor. The Columbia Tower.00 . Mandaue City. Budget Code 09/24/14 Description Item No.L.000.00 SPECIAL INSTRUCTIONS GERRY S. INC. INC. NO. Fortuna Street. Cebu VENDOR ` SHIP TO HJR BUILDERS Global Home Depot Requisition Date Required by Date Instructions Budget Code 09/24/14 Item No. Quantity Description 100 Angle Iron 200 Abrasive blades G.00 17.S.500.00 33.B.00 85.500.O. 00-9-241 A.GLOBAL HOME DEPOT. Mandaue City.00 Amount 16. The Columbia Tower. Cebu VENDOR ` SHIP TO HJR BUILDERS Global Home Depot Date of Order Required by Date Requisition Date Terms 09/25/14 F.

000.00 .O.GLOBAL HOME DEPOT. Cebu City (032) 567-7890 INVOICE NO.00 SUB TOTAL TAX TOTAL DUE TERMS Amount 16. POINT Unit Price 165.29 33.B. Mandaue City. INC.00 85. INC.S.500.00 85.00 33.500.00 17. INC.500. VELORA Date Received: 09/30/14 HJR BUILDERS INVOICE Osmena Blvd. A.000. Fortuna Street.910. RECEIVING REPORT Purchase Order No.589.00 29. Fortuna Street.71 3.00 17.00 16. The Columbia Tower. Ground Floor. Cebu A. Bill To: GLOBAL HOME DEPOT. The Columbia Tower. Ground Floor.00 GERRY S. Cebu SALESPERSON P. 454589-54434 DATE:09/09/2014 Ship To: GLOBAL HOME DEPOT. Mandaue City.O.500..S. NUMBER DATE SHIPPED 00-9-241 Quantity 100 200 Description Angle Iron Abrasive blades SHIPPED VIA F. : 00-9-241 From: UNIVERSAL HOME BUILDERS QUANTITY 100 200 DESCRIPTION Angle Iron Abrasive blades Freight Charge: TOTALS: RECEIVED By: PRICE AMOUNT 165.

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05/28/14 Acct Kind of Package Description of Articles Special Marks. Mandaue City. INC.S.392.000.14 15.RECEIPTS TEST OF CONTROLS Sales Order Customer Name Address City Ship to Address City Special Instructions Item Number Cebu City Government Date 05/26/14 Phone State ZIP State ZIP Description Tissue Holder Bathroom Sink Quantity 200 215 Unit Price 45.00 27.91 Gross Total Tax Shipping Labor Total Due Extended Price 9.000. Cebu No.000.00 13. and Exceptions Tissue Holder Bathroom Sink Name Company Street City. 00005284 Name Date Dept Number of Packages FROM GLOBAL HOME DEPOT.00 6. State Zip Code Weight (Subject to Change) TO Cebu City Government Serial Numbers .86 1. The Columbia Tower.00 Order Taken by GLOBAL HOME DEPOT. Bill of Lading Ground Floor. A.607. Fortuna Street. INC.

INC.000. Ground Floor.607.00 SUB TOTAL TAX 13.00 GLOBAL HOME DEPOT.00 042-114 04/21/14 Received from Cebu City Government Address the sum of Fifteen thousand pesos only (P 15. Number Unit Price 45. 10005284 P 15.S.O.91 Amount 9.2. Cebu City Christine D.00 Terms Description P.000.S.00 27.500 SUB-TOTAL P TAX TOTAL DUE P NO. INVOICE No. 001. Permit No.000.000. 10005284 Ground Floor.GLOBAL HOME DEPOT. Cebu Sold To: Bill To: Customer Cebu City Government Date 03/21/14 Quantity 200 Tissue Holder 215 Bathroom Sink In payment of Invoice(s) Amount No. Fortuna Street. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press Tagudin. Lapinid Signature . The Columbia Tower.00 15. 50 Bklts.392.14 15. A. Fortuna Street. Mandaue City.000. The Columbia Tower.607.000.000. Date GLOBAL HOME DEPOT.00 13. INC. INC.14 TOTAL DUE 15.86 1.86 1.392. Mandaue City.00 ) in full/partial of merchandise ordered.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO 15. Cebu TIN . A.000.00 6.

00 16. State Zip Code Weight (Subject to Change) TO Mandaue City Serial Numbers .00 4.000.00 8.000. INC.00 Gross Total Tax Shipping Labor Total Due Extended Price 6.00 Order Taken by GLOBAL HOME DEPOT.928.000.43 10. INC. Fortuna Street.57 1.Sales Order Customer Name Address City Ship to Address City Special Instructions Item Number Mandaue City Date 01/15/14 Phone State ZIP State ZIP Description Angle Iron (Rolled Angles) Angle Iron (Flat Angles) Quantity 300 250 Unit Price 20. 01/17/14 Acct Kind of Package Description of Articles Special Marks. The Columbia Tower. A. Mandaue City. 00001291 Name Date Dept Number of Packages FROM GLOBAL HOME DEPOT. and Exceptions Angle Iron (Rolled Angles) Angle Iron (Flat Angles) Name Company Street City. Cebu No.071. Bill of Lading Ground Floor.S.

2.000.57 1. Lapinid Signature .928.000.000.57 1.00 SUB TOTAL TAX 8.43 10.00 SUB-TOTAL P TAX TOTAL DUE P 8.00 4.00 16.00 GLOBAL HOME DEPOT. Mandaue City.500 GLOBAL HOME DEPOT.O.071.00 NO.00 10. Cebu TIN . Ground Floor.000.071.00 Amount 6.000. Fortuna Street.S. The Columbia Tower.00 P. 001. Permit No.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO 10.000.Sold To: Bill To: Customer Mandaue City Date 01/19/14 Terms Description Quantity 300 Angle Iron (Rolled Angles) 250 Angle Iron (Flat Angles) In payment of Invoice(s) Amount No. A. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press Tagudin.000.928. 50 Bklts. Number Unit Price 20. Date 021-914 02/19/14 Received from Mandaue City Address the sum of Ten thousand pesos only (P 10. INC. INC. Cebu City Christine D. 10001291 P 10.00 ) in full/partial of merchandise ordered.000.43 TOTAL DUE 10.

72 47.000.85 Gross Total Tax Shipping Labor Total Due Extended Price 15.00 Order Taken by GLOBAL HOME DEPOT.Poli Void Backer Rod . Fortuna Street.321.000.00 10.Poli Void Backer Rod . 06/05/14 Acct Kind of Package Description of Articles Special Marks.000. INC. INC.57 25. Cebu No. Mandaue City.00 22. 00006054 Name Date Dept Number of Packages FROM GLOBAL HOME DEPOT. State Zip Code Weight (Subject to Change) TO Global Holidays Serial Numbers .S. Bill of Lading Ground Floor.Denver Foam Name Company Street City.43 2.Sales Order Customer Name Address City Ship to Address City Special Instructions Item Number Global Holidays Date 06/03/14 Phone State ZIP State ZIP Description Backer Rod . The Columbia Tower.678.Denver Foam Quantity 193 209 Unit Price 77. A. and Exceptions Backer Rod .

000. Number Unit Price 77.57 25.321. INC.321.00 SUB TOTAL TAX 22.00 25.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO 25.00 070-714 07/07/14 Received from Global Holidays Address the sum of Twenty thousand pesos only (P 25. INC.85 Amount 15.00 P. 10006054 P 25.000.678.000.678. The Columbia Tower.Denver Foam In payment of Invoice(s) Amount No. Cebu City Christine D.000.000.S. Date GLOBAL HOME DEPOT.43 2.72 47. Lapinid Signature .57 TOTAL DUE 25.S.00 ) in full/partial of merchandise ordered. Ground Floor.O.00 22.00 GLOBAL HOME DEPOT.00 10.43 2. INVOICE No. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press Tagudin. Mandaue City. Mandaue City.2. INC.Poli Void 209 Backer Rod . Fortuna Street. Permit No. A.500 SUB-TOTAL P TAX TOTAL DUE P NO. The Columbia Tower. Cebu Sold To: Bill To: Customer Global Holidays Date 06/07/14 Terms Description Quantity 193 Backer Rod .000. 10006054 Ground Floor. 50 Bklts.000.000.GLOBAL HOME DEPOT. A. Fortuna Street. Cebu TIN . 001.

000. The Columbia Tower.34 24. 00008154 Name Date Dept Number of Packages FROM GLOBAL HOME DEPOT.00 8. Bill of Lading Ground Floor.000. and Exceptions Cup Stones Penn Sand (White) Name Company Street City.S.Sales Order Customer Name Address City Ship to Address City Special Instructions Item Number Edana Costruction Date 08/13/14 Phone State ZIP State ZIP Description Cup Stones Penn Sand (White) Quantity 213 321 Unit Price 56. A. Fortuna Street.857. 08/15/14 Acct Kind of Package Description of Articles Special Marks.86 20.92 Gross Total Tax Shipping Labor Total Due Extended Price 12. Mandaue City. Cebu No.00 17. State Zip Code Weight (Subject to Change) TO Edana Costruction Serial Numbers . INC.000. INC.142.14 2.00 Order Taken by GLOBAL HOME DEPOT.

142.142. Mandaue City. INVOICE No. Fortuna Street.14 2.000. Cebu City Christine D.000.00 091-714 09/17/14 Received from Edana Costruction Address the sum of Twenty thousand pesos only (P 20.000.2. Cebu Sold To: Bill To: Customer Edana Costruction Date 08/17/14 Terms Description Quantity 213 Cup Stones 321 Penn Sand (White) In payment of Invoice(s) Amount No. Cebu TIN .86 TOTAL DUE 20.500 SUB-TOTAL P TAX TOTAL DUE P NO. Date GLOBAL HOME DEPOT.00 SUB TOTAL TAX 17.00 8. 001.S.857. 10008154 P 20. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press Tagudin.14 2.00 ) in full/partial of merchandise ordered.000.00 17.000. INC.86 20.00 20.34 24. INC. A. The Columbia Tower. Ground Floor. Number Unit Price 56. 50 Bklts. A.92 Amount 12. INC.000.GLOBAL HOME DEPOT. Fortuna Street.S. The Columbia Tower.000.00 P. Permit No. 10008154 Ground Floor.00 GLOBAL HOME DEPOT.000.O.857.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO 20. Lapinid Signature . Mandaue City.

INC. Cebu No.00 60. INC. Fortuna Street.S. The Columbia Tower.29 30.000.00 Order Taken by GLOBAL HOME DEPOT. State Zip Code Weight (Subject to Change) TO AST Builders Serial Numbers . 03/19/14 Acct Kind of Package Description of Articles Special Marks.000.71 3.00 Gross Total Tax Shipping Labor Total Due Extended Price 18.00 12.00 26. Bill of Lading Ground Floor.000.214. A. Mandaue City.Sales Order Customer Name Address City Ship to Address City Special Instructions Item Number AST Builders Date 03/17/14 Phone State ZIP State ZIP Description Stainless Hinge (Ruby) Stainless Hinge (Gold) Quantity 225 200 Unit Price 80. 00003194 Name Date Dept Number of Packages FROM GLOBAL HOME DEPOT.785. and Exceptions Stainless Hinge (Ruby) Stainless Hinge (Gold) Name Company Street City.

020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO 30. INC.O. Cebu City Christine D.29 TOTAL DUE 30.00 30.00 ) in full/partial of merchandise ordered. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press Tagudin.00 P. INC.2. Mandaue City.00 Amount 18.214. 001. A.000.29 30.GLOBAL HOME DEPOT. Lapinid Signature .71 3.500 SUB-TOTAL P TAX TOTAL DUE P NO.000.214. The Columbia Tower.S.000.00 26.000. Fortuna Street.785.00 12.000. Fortuna Street. 50 Bklts. INVOICE No. 10003194 Ground Floor.000. A. Mandaue City.00 60. The Columbia Tower. Number Unit Price 80. Date GLOBAL HOME DEPOT.000.S. INC.000. Permit No.71 3.785. Ground Floor.00 042-114 04/21/14 Received from AST Builders Address the sum of Thirty thousand pesos only (P 30. 10006054 P 30.00 SUB TOTAL TAX 26.00 GLOBAL HOME DEPOT. Cebu TIN . Cebu Sold To: Bill To: Customer AST Builders Date 03/21/14 Terms Description Quantity 225 Stainless Hinge (Ruby) 200 Stainless Hinge (Gold) In payment of Invoice(s) Amount No.

TYPE OF DEPOSIT AMOUNTS CASH CHECK (S) TOTAL DEPOSITS 3 3 TELLER'S VALIDATION VALIDATED: Angel M. 1014 CURRENCY _X__ PESO ___ US DOLLAR 2 1 8 9 6 1 ___ OTHERS 4 GLOBAL HOME DEPOT. INC. Bucos VALIDATED: TELLER 1 DEPOSIT SLIP BPI (Bank's Copy) PLEASE CHECK THE APPROPRIATE BOXES DATE: ___X___ DEPOSIT ______ PAYMENT _______ SAVINGS _______ CURRENT ACCOUNT NUMBER DEPOSITOR'S NAME 1 5 7 March 21. Gio Teller 3 0 0 0 0 0 0 0 0 0 0 0 0 . 2014 CURRENCY __X_ PESO ___ US DOLLAR 2 1 8 9 6 1 ___ OTHERS 4 GLOBAL HOME DEPOT. INC. TYPE OF DEPOSIT AMOUNTS CASH CHECK (S) TOTAL DEPOSITS 1 1 5 5 0 0 0 0 0 0 0 0 0 0 TELLER'S VALIDATION Angie C.DEPOSIT SLIP DEPOSIT SLIP BPI (Bank's Copy) PLEASE CHECK THE APPROPRIATE BOXES DATE: ____X__ DEPOSIT ______ PAYMENT _______ SAVINGS _______ CURRENT ACCOUNT NUMBER DEPOSITOR'S NAME 1 5 7 April 21.

00 132.75 56.00 5. Inc.00 35.000.00 10.438.500.25 350.623.50 5.25 5.431.00 65.25 15.654.489.000.670.504.The clients provided you with s unadjusted trial balance for the year ended December 31.625.Office Furnitures and Fixtures Office Equipment Accumulated Depreciation .75 Credit 25.655.00 10.752.000.279.HJR Builders Accounts Payable .00 50.465.00 12.000.478.50 161.00 2.50 231.428.Universal Home Builders Accrued Expenses SSS Contributions Payable Pag-IBIG Contributions Payable Income Tax Payable PHIC Contributions Payable Loans Payable Bonds Payable Paid-up Capital Accumulated Earnings Sales Sales Return Purchases Purchase Returns Interest Income Miscellaneous Income Debit 885.000.50 6.Office Equipment Delivery Truck Accumulated Depreciation .50 9.50 85.00 544.248.50 23.75 105.248.000.00 43.963.458.Delivery Truck Leasehold Improvements Accumulated Depreciation .745.548.000.25 12.652.00 10.75 1.615.50 6.328. Trial Balance December 31.00 120.50 150.25 15.489. 2014 Cash in Bank Petty Cash Fund Change Fund BSP Treasury Bills BDO Time Deposit Trading Securities Accounts Receivable Allowance for Doubtful Accounts Advances to Suppliers Advances to Employees Inventory Prepaid Taxes Office Furnitures and Fixtures Accumulated Depreciation . 2014.50 145.75 20.723.245.00 150.00 650.75 102.000.Leasehold Improvements Bond Sinking Fund Building Construction Fund Accounts Payable .548.00 .000. Global Home Depot.426.South Home Depot Accounts Payable .00 125.50 8.764.00 89.482.200.000.426.

00 Cash in Bank – BPI Account # 1572-1896-14 14.200.389.75 24.079.25 36.75 16.75 3.50 13.000.00 30.000 Total 915.087.863.874.642.50 15. you sent confirmation letters requesting the banks for the balances of the cash account of the client.087.25 11.50 15.50 26.525.SSS Contributions Pag-IBIG Contributions Payable PHIC Contributions Rent Expense Interest Expense Salaries and Wages Advertising Depreciation 13th Month Pay Doubtful Accounts Expense Taxes and Licenses Supplies Expense Christmas Party Representations Meetings/Seminars Utilities Transportation Repairs and Maintenance Insurance Communications Income Tax Expense Audit Fees Miscellaneous Expenses 119.079.559.789.659.00 125.00 75.25 Savings Account – BDO Account # 1896-7589-24 125.50 30. Attached below are the replies of the bank.598.50 You started your substantive testing with the following accounts: CASH AND CASH EQUIVALENTS The following are composition of cash and cash equivalent: Cash in bank – Metrobank Account #1508-9456-15 256.00 5.75 18.000 Change Fund 10.00 32.569. .50 25.856.75 10.50 Cash in bank – BPI Account # 1647-9845-12 489.245.402.043.580.548.00 60.245.622.258.00 120.25 25.569.75 260.105.500.75 As your part of your audit procedure.000.50 24. You have obtained the following information upon performing necessary procedure.000 Petty Cash Fund 20.652.670.50 10.

1508-9456-15 Account No.000.169. Bank of the Philippine Islands did not reply to the confirmation letter. account # 1508-9456-16 pertains to a note collected by the bank. However.50 100. disclosed the balance of the savings account amounting to P 125. 1508-9456-16 P 272.00 Per audit. 2. . proceeds of which per company instruction is deposited under 90-day time deposit.000.00. BDO.1. As a part of your alternative audit procedure you have obtained the bank statement. per confirmation. you have inquired with the client regarding the Savings Account in BDO and you found out that this account was set aside for the future acquisition of land for building construction. 3. Metrobank per confirmation reply discloses the following balances: Account No.

000 BSC-Bank Service Charge #636.839. 2014 is a payment of account for other company charged in the company’s account.  The only reconciling item for November 2014 is the note collected in November amounting to P1.50 18 16.000 277.000 on December 1.240 520 (BSC) 11 1.630 (DM) 272.119.50 65.P 1.630.50 1 2 20.) Bank Statement December 31.679.000 182. .799. 30 Dec.000 235.450 275. 2014 is a collection from other Company credited in the Company’s account.000 19.300 238.50 235.Debit Memo A deposit of P 20.50 10.Bank Error  #634.550 on December 11.50 25 2.550 (BE) 15 150 (DM) 172.50 28 8.560 60. Balances 162.529. Inc.169.249.379.50 31 3.P 1.50 24 21. 2014 Date Charges Deposits Nov.  A charge of P 1.50 NSF checks: BE.500 DM.870 10.Metrobank Account # 1508-9456-15 (Global Home Depot.839.079.000 284.

00 5 32.628.128.25 100.75 BSC 249.25 13 9.00 25 50.000.628.00 2.347.000 216.000 270. 2014 Date Dec.25 15 18 5.628.000 471.00 7 253.000 2 218.378.00 3 1.BPI Account # 1647-9845-12 (Global Home Depot.000 279.25 10 21.000 421.000.) Bank Statement December 31.374.00 374.500 371.00 .128.00 2.374.628.378 217. Deposit 1 Withdrawal Amount 218. Inc.250 249.246.00 28 50.000 20 NSF 274.

000.00 8.00 543.500.456.00 12.769.259.50 12.769.) Bank Statement December 31.00 15 3.50 26 31 Balances DM 10. 2 Charges 15.369. Inc.00 3.825.231.75 6 16.369.325.600.340.00 BSC 11. 2014 Date Deposits Nov.BPI Account #1572-1896-24 (Global Home Depot.00 .50 2.00 BSC 9.25 1.00 24 1. 30 Dec.00 8.500.50 29 600.

50 December 11 65.000.00 4 635 10.500.240.630.00 31 640 3.000.00 28 639 8.The following are receipts and disbursement recorded by the client during for the month of December 2014.000.000. Amount Dec 2 634 1.00 18 637 16.469.450. Metrobank Account #1508-9456-15 Cash Receipts Book Date Amount November 31 164.00 .560.300.000.00 Cash Disbursements Book Date Check No.00 25 10.00 24 60.00 18 19.00 14 636 1.00 18 638 21.

406 8 25.284.000.500.00 390.000 2.906 100.000 4 5.00 489.000.622 .406 10 21.000.156.00 2 Balances 218.906 50.406 11 18 8.906 1.00 299.156 5 32.000. Receipts 1 Disbursement 218.00 440.000.000.00 216.00 278.00 221.906 50.00 490.250.BPI Account #1647-9845-12 CASH RECEIPTS AND DISBURSEMENTS JOURNAL Date Dec.000.00 290.00 253.

25 .500.259.259.259.25 Dec.BPI Account # 1572-1896-14 BOOK RECEIPTS AND DISBURSEMENT Date Receipts Disbursement Balances Nov.00 BSC 3. 2 3.000.00 10.500.00 12.000.25 24 1.25 9 5.759.259.25 14.00 12.000. 30 15.659.00 11.25 29 31 600.00 7.659.25 15 3.

000.000 BSP Treasury Bill 2 11/21/14 05/21/15 15.500. 2015. The following were found in the petty cash box upon conducting a cash count of the petty cash fund at 10:00am on January 17.970.000 BDO Time Deposit 12/31/14 03/31/15 65.000.00 John F.00 29 #111 Miscellaneous expense 500. Manager 12-21-14 3.000 Total 50. checks.CASH EQUIVALENT Date Acquired Maturity Date Amount BSP Treasury Bill 1 12/10/14 01/10/15 25. advances and unreplenished petty cash vouchers.00 31 #112 Advances to employees 2.000 You also conducted a surprise count on the cash on hand of the client. Angelica Tampos.000 BSP Treasury Bill 3 12/31/14 03/31/15 10. The custodian made available to you the bills. BILLS: 15 hundreds.180 as shown by the sales records while the Cash Receipts Books and the Bank Deposit Slip showed only 980 was deposited in the . coins. Go.00 Global Holidays 12-20-14 1.00 Further investigation also disclosed that the cash sales of January 2.00 Cebu Bionic Builders 12-22-14 5. 2015 amounted to 1.25 - 50 rolls and 16 loose (12 pieces to a roll) 154 0.50 - 20 rolls and 10 loose (10 pieces to a roll) 105 1 - 15 rolls and 16 loose (10 pieces to a roll) 166 5 - 12 rolls and 5 loose (10 pieces to a roll) 625 10 - 1 rolls and 28 loose (20 pieces to a roll) 480 CHECKS: Maker Date Amount AST Builders 12-24-14 1.350.500.00 UNUSED STAMPS: 50 three-peso stamps UNREPLENISHED PETTY CASH VOUCHER December 11 #110 Freight bill on merchandise purchased 1. 20 fifties COINS: P 0. The client was represented by its custodian.

00. 2015. opened and empty.500. Del Rosario - 500. The petty cash fund has an imprest balance of 20.00 B.000.bank of January 3.000. . You also found that the pay envelopes of the following were marked “Unclaimed”. Lozano - 1.00 The company has also established a change fund amounting to P 10. A.

000.50 1508-9456-16 Checking Account P 100.000. 2015 Reply: Account Number Type of Account Account Balance 1896-7589-24 Savings Account P 125. 2015 Reply: Account Number Type of Account Account Balance 1508-9456-15 Checking Account P 272. Cebu City January 22.. _________________ The Manager Banco de Oro Jakosalem St.BANK CONFIRMATION LETTER AND BANK REPLY January 21.00 Remarks To the best of our knowledge and belief the information set out above is complete and must be treated as strictly private and confidential and is furnished without responsibility on the part of the Bank or its officers.00 Remarks To the best of our knowledge and belief the information set out above is complete and must be treated as strictly private and confidential and is furnished without responsibility on the part of the Bank or its officers..169. Cebu City . _________________ The Manager Metrobank Magallanes St.

000.00 206.694.00 84.038.261.00 31.50 56.50 106.00 105.000.00 You sent confirmation letters to the following customers: Mandaue City Government.220. Cebu Bionic Builders and Global Holidays.25 100.000.539.668.539.000.50 110. 3.500. Global Holidays returned merchandise amounted to P 5.000.50 Cebu Bionic Builders Beginning Balance Credit Sales Payments 246.474.249. The term is FOB Shipping Point.261.223. 2014 and received on January 6.00 AST Builders Beginning Balance Credit Sales Payments 122. A provision of 5% of the adjusted Accounts Receivable balance is to be made at year-end. AST Builders.ACCOUNTS RECEIVABLE The Accounts Receivable subsidiary ledger of Global Home Depot. 2014 because it was not the item ordered.049.50 Cebu City Government Beginning Balance Credit Sales Payments 35. shows the beginning balances with the total debits and credits for the year ended December 31.249.561.00 on December 31. Mandaue City Debit Beginning Balance Credit Sales Payments Credit 140.50 Global Holidays Beginning Balance Credit Sales Payments 67.227. 2014.00 44.00 36.00 156.50 65.00 75.561.25 168. The client failed to record the returned merchandise.418.694. You have gathered the official receipt and the source documents for these transactions (shown on the next page).000. 2015.00 38. 2.00 101.00 was shipped on December 27. Inc.00 347.00 100.00 235. .00 65.00 Balance 112. Audit Findings: 1. AST Builders did not reply on the confirmation letter sent. In order to ascertain the existence of the receivable from AST Builders.750.50 30.512. you vouched the subsequent payments made by AST Builders early in 2015.596.25 Edana Construction Beginning Balance Credit Sales Payments 112.943.00 278.000. Merchandise ordered by Mandaue City Government amounting to P 8.418.022.50 207.

The Columbia Tower. The Columbia Tower.07 19.85 NO.62 Signature Tagudin.S.In payment of Invoice(s) Amount No. Fortuna Street...50 merchandise ordered. 50 Bklts.500 Permit No.2..85 GLOBAL HOME DEPOT.500 GLOBAL HOME DEPOT.035.547. 50 Bklts. INC.20 In payment of Invoice(s) Amount No. Cebu TIN .20 ) in full/partial of 21. 5670 Date 11/1/2014 Received from AST Builders Address Magallanes St.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH P BANK/CHECK NO NO. Amount Ground Floor.70 24. Cebu TIN . No.69 ) in full/partial of merchandise ordered. 50 Bklts. 001.684. Permit No. INC. INC.575.62 2. Fortuna Street. Cebu TIN . A.50 and 20/100 pesos (P 24. INC. Cebu City Signature .684. Mandaue City. Fortuna Street.547.30 6. GLOBAL HOME DEPOT.62 17. Cebu City GLOBAL HOME DEPOT. INC.575.50 A. INC. 001-500-15 P 21.547. Cebu City the sum of Six thousand thirty-five and 85/100 pesos (P 6. The Columbia Tower. Ground Floor. Date 5678 10/25/2014 Received from AST Builders Address Magallanes St.760. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press SUB-TOTAL P TAX TOTAL DUE P 21. Mandaue City. Mandaue City. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press SUB-TOTAL P TAX TOTAL DUE P 6. 001. 5673 Date 8/14/2014 Received from AST Builders Address Magallanes St.85 6.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH BANK/CHECK NO BPI 000568 P 17.575.035.69 Tagudin.020-156-885-736 NV OFFICIAL RECEIPT TOTAL P CASH P BANK/CHECK NO 6. Cebu City the Twenty-four sum of one hundred thirty-three 21.133.109.85 ) in full/partial of the merchandise ordered GLOBAL HOME DEPOT.133.S. 001-500-06 P 6.035. A. 001. Cebu City the sum of Nineteen thousand six hundred eighty-four and 69/100 (P 19.585.035.S.85 724. 001-500-25 P 17.2. RD2-02-093 NV 2-3-99 Printed by: Lacosta Printing Press SUB-TOTAL P TAX TOTAL DUE P 17.15 Signature Tagudin.035.547.62 NO. Ground Floor.575.50 2. Cebu City In payment of Invoice(s) GLOBAL HOME DEPOT.2.500 Permit No.

22 Order Taken by Sales Order Form Customer Name AST Builders Address City Cebu City State Ship to Address City Cebu City State Special Instructions Item Number Description 100009 Angle Iron 100021 Backer Rod-Poli Void Order Taken by Date 8/31/2014 Phone Magallanes St.815.035.433.38 146.52 34.92 Gross Total Tax Shipping Labor Total Due Extended Price 21. ZIP Quantity 1 3 (032)253-7902 Unit Price 7.006.54 Gross Total Tax Shipping Labor Total Due 6000 6000 Extended Price 7.62 25.046. ZIP Magallanes St. ZIP Magallanes St.30 6.362.Sales Order Form Customer Name AST Builders Address City Cebu City State Ship to Address City Cebu City State Special Instructions Date 6/14/2014 Phone Magallanes St.85 Gross Total Tax Shipping Labor Total Due 6.44 .811.44 28.70 3.811.38 17.15 Order Taken by Sales Order Form Customer Name AST Builders Address City Cebu City State Ship to Address City Cebu City State Special Instructions Item Number 100015 100001 Description Rebar Cutter Plastic High Chair Date 8/25/2014 Phone Magallanes St.387. ZIP Magallanes St.39 Extended Price 6.760.035.575.38 5858.50 8.85 724.00 3.20 30.547. ZIP Item Number 100010 Quantity 15 Description Hinges (032)253-7902 6000 6000 Unit Price 402.643. ZIP Quantity 125 60 (032)253-7902 6000 6000 Unit Price 172.

The Columbia Tower. Inc. Fortuna Street. Inc. The Columbia Tower. Fortuna Street. 90025 Name Date Dept Number of Packages 1 3 FROM Global Home Depot.S. A. Cebu City 6000 Serial Numbers Bill of Lading Ground Floor. State Zip Code Weight (Subject to Change) GLOBAL HOME DEPOT. Mandaue City. Inc. 70001 Name Date Dept Number of Packages 15 FROM Global Home Depot. INC. Mandaue City. 7/14/2014 Acct Kind of Package Description of Articles Special Marks. 9/25/2014 Acct Kind of Package Description of Articles Special Marks. Mandaue City. and Exceptions Rebar Cutter Plastic High Chair Company Street City. Bill of Lading Ground Floor. INC. Cebu City 6000 Serial Numbers . Cebu No.S. State Zip Code Weight (Subject to Change) GLOBAL HOME DEPOT.S. TO AST Builders Magallanes St. TO AST Builders Magallanes St. 90001 Name Date Dept Number of Packages 125 60 FROM Global Home Depot. and Exceptions Hinges Company Street City. Cebu No. INC. and Exceptions Angle Iron Backer Rod-Poli Void Company Street City. Cebu No. Fortuna Street.GLOBAL HOME DEPOT. State Zip Code Weight (Subject to Change) TO AST Builders Magallanes St. A. The Columbia Tower. 9/25/2014 Acct Kind of Package Description of Articles Special Marks. A. Cebu City 6000 Serial Numbers Bill of Lading Ground Floor.

Fortuna Street. INVOICE No. 001-500-15 Ground Fl oor.433.035. Mandaue Ci ty. Number Unit Price 402.811.815.O.20 SUB TOTAL TAX 30.Poli Void Terms SP P. Cebu Sold To: Bill To: AST Builders AST Builders Date 9/25/2014 Quantity Description 1 Angle Iron 3 Backer Rod . A. Mandaue Ci ty.62 SUB TOTAL TAX 25.70 3.22 GLOBAL HOME DEPOT.S.O. The Col umbi a Tower. INC.S. Cebu Sold To: Bill To: AST Builders AST Builders Date 7/14/2014 Quantity 15 Hinges Description Terms SP P. The Col umbi a Tower.54 Amount 7.811. Fortuna Street.362.39 Amount 6. INC.547.44 TOTAL DUE 28.035. 001-500-25 Ground Fl oor.52 TOTAL DUE 34.GLOBAL HOME DEPOT.92 Amount 21. Number Unit Price 7. Mandaue Ci ty.85 724.760.38 5. A.44 .046.50 8. INVOICE No.00 3.858.O.38 17. 001-500-06 Ground Fl oor. Cebu Sold To: Bill To: AST Builders AST Builders Date 9/25/2014 Quantity Description 125 Rebar Cutter 60 Plastic High Chair Terms SP P. Fortuna Street.38 146.S.006.85 SUB TOTAL TAX 6.643. Number Unit Price 172.30 TOTAL DUE 6. A.575.15 GLOBAL HOME DEPOT. INVOICE No. The Col umbi a Tower. INC.387.

Inc.CONFIRMATION LETTER REPLY January 15.25. 2014 is P 70.00. shown above. CPAs Global Home Depot. Name: Marcelo Ramirez Position: A/P Supervisor Company: Global Holdings . 2015 To : Pili. CPA SRV & Co.061. Inc. 2014 is correct. per our records as of December 31.’s amount receivable from us per our records as of December 31. Name: Lindcy Erasan Position: Treasurer Company: Mandaue City Government January 17. Inc.249. CPAs The amount due to Global Home Depot.539.50. 2015 To : Pili. CPA SRV & Co. CPAs The amount payable to Global Home Depot. CPA SRV & Co. as of December 31. 2015 To : Pili. Name: Victor Rama Position: A/P Supervisor Company: Cebu Bionic Builders January 18. P 168. 2014 amounted to P 199.

HJR Builders Universal Home Builders HJR Builders CUSTOMER Edana Construction Global Holidays AST Builders Global Holidays .000 DATE SHIPPED 12/23/2014 12/29/2014 12/25/2014 01/01/2015 DATE SHIPPED 12/22/2014 12/31/2014 12/25/2014 01/01/2015 Note: Gross profit is 20% based on sale DATE RECEIVED 12/19/14 (11:02 AM) 01/02/15 (1:25 PM) 01/01/15 (7:20 AM) 01/05/15 (5:00 PM) DATE RECEIVED 12/30/14 (10:35 AM) 01/03/15 (2:30 PM) 01/02/15 (9:45 AM) 01/03/2015(4:00 PM) VENDOR South Home Depot.000. in search for possible unrecorded and misstated amounts for any accounts affected by transactions involving inventories. Observe and note the client’s practices and Obsolete inventories found at the warehouse procedures regarding segregation and department are properly set aside from the identification of slow-moving. As part of your audit procedure.00 4. Tour the shipping and receiving areas and The inventories that are still at the shipping obtain information about inventory items department on hold upon the request of the therein. for the period.000.75 AMOUNT 25.00 30. Inc. damaged.INVENTORIES INVENTORY COUNT PROCEDURES Ascertain that receiving and OBSERVATIONS shipping It was ascertained that the receiving and departments are informed about appropriate shipping department are informed with the cutoff procedures. DECEMBER Purchases DECEMBER Sales FOB D D S S FOB D D S S COST 1.00 9.00 7.209.00 8. Determine whether they should be customer are properly excluded as inventory counted in or excluded from the inventory. Observe count teams and determine whether The inventory count was strictly observed and the client’s instructions and procedures are it was also ascertained that the client’s being properly followed. appropriate cutoff procedures.070.100 40. you conducted a cut-off test. In the course of your audit. obsolete inventory. or count and was properly valued.769. you noted the following unresolved issues as they may lead to additional adjustments to any possible accounts that they may affect.000. instructions and procedures are being properly followed.

00 . These inventories were subjected to weather changes.S.  Inventories costing P 102. Ground Fl oor.B. These were included in the physical count. Fortuna Street.550. INC. The Col umbi a Tower. Fortuna Street.  Inventories costing P 480.007. These were not yet taken into account. POINT Unit Price 1.00 SUB TOTAL TAX 16.00 520. 2015.00 6. These were not counted during the previous physical count. the result of the test count is as follows: ITEM NAME UNITS PER COUNT UNIT COST UNIT PER INVENTORY LIST 12/31/14 Float Plans 72 270. Ground Fl oor.00 95 Angle Iron (Cut to Size) 55 1. Cebu SALESPERSON P. Bill To: GLOBAL HOME DEPOT.00.S. A unit of inventory costs P 80. A. The sale was recorded and inventories were excluded per books.00 93 Plastic High Chair 74 455. making them unfit for sale. Cebu Ci ty (032) 567-7890 INVOICE NO.O.00 TERMS Amount 12.25 were found outside the warehouse of Global Home Depot.00 47 Angle Iron (Rolled Angles) 73 520.550.A surprise and thorough inspection was conducted and revealed the following information.400. 2014 on FOB Shipping Point Terms. NUMBER DATE SHIPPED Quantity 8 12 Description Angle Iron (Cut to Size) Angle Iron (Rolled Angles) SHIPPED VIA F.O. They were shipped on December 30.997.00 where on its way to Edana Construction. INC.. The Col umbi a Tower.86 1.00 61 You have gathered these source documents to reconcile the difference: HJR BUILDERS INVOICE Os mena Bl vd. 11-24961-3 DATE: 02/14/14 Ship To: GLOBAL HOME DEPOT. but excluded in the books. Mandaue Ci ty.00 82 Rebar Clutter 95 200.240. The audit team observed the inventory count on January 5. Cebu A.14 TOTAL DUE 18.642. 980.  Five boxes containing 50 pieces of inventories per box were found in the locker of an employee. Mandaue Ci ty.640.

00 Angle Iron 90 40 2.GLOBAL HOME DEPOT.50 997.00 Damaged glass bricks that are considered obsolete are valued at P 2. Mandaue Ci ty.00 3.310. INVOICE No.890. Date Quantity Description 21 Float Plans 8 Plastic High Chair Terms P. . the client prepared the summary presented below and gave it for verification.670. Number Unit Price 270.50 TOTAL DUE 9.00 SUB TOTAL TAX 8.00 70 59 3.O. Cebu Sold To: Bill To: North Home Depot. These items are still included in the inventory list but were omitted from the physical count pending their write off. The Col umbi a Tower. A.950. Fortuna Street. Inc. 2014 were discovered during the physical count.640. ITEM NAME QUANTITY COST PER UNIT NRV Rebar Clutter Plastic High Chair 160 55 7.S. Ground Fl oor. North Home Depot.00 ACCRUALS You examined the disbursements journal for any payments made by the company in early 2015 for possible unrecorded liabilities for the year ended December 31.312. Furthermore.00 Amount 5. Inc.550. INC.355. 2014.00 per December 31.00 455. You have gathered the following vouchers paid (shown on the next page).

INC. Journal entry : Utilities expense Cash in bank 12.00 CHECK VOUCHER No.876.200. Journal entry : Accrued expenses Cash in bank 850. 2015 : 850. : 001-0012 Payee Date Amount : South Pharmacy : January 08. 2015 : 12. : Payee Date Amount : GHJ Custodial Services : January 03.200.876.876.00 Description : Payment for purchases of medicines on January 3. 2015. : Payee Date Amount : VECO.75 Description : 001-0009 Payment of electric bill for the month of December 2014. : January 05.CHECK VOUCHER No.200.75 CHECK VOUCHER No. Journal entry : Miscellaneous expense Cash in bank 1.00 850. 2015 : 1.00 .00 1.75 12.00 Description : 001-0008 Payment for one-time custodial service in Novermber 2014.

: 001-0010 Payee Date Amount : : : Description : Largo and Co.478.000.00 CHECK VOUCHER No. 2015 Amount : 001-0016 125.478.00 Cash in bank 125. Agusto Enterprises Date : January 15.CHECK VOUCHER No.000. Journal entry : Christmas party 10.00 . Description : Payment for stubs. : Payee : June J.00 CHECK VOUCHER No. Journal entry : Legal expenses Cash in bank 5. Journal entry : Miscellaneous expense 125.00 Payment for legal services in 2014.00 Cash in bank 10.000.478. Lawyers January 6.00 Description : 001-0014 Payment for rental of chairs used in the Christmas party for 2014.00 .2015 5.00 5. : Payee Date Amount : Ocampo and Cabrera Properties : January 11. 2015 : 10.

Journal entry : Miscellaneous expense Cash in bank 2. 2015 250.310.50 2.00 2.150.25 250.00 CHECK VOUCHER No. : 001-0015 Payee Date Amount : : : Description : Condrado Valiks January 12. 2015 2.310. Journal entry : Travel Expenses Cash in bank 2.150.CHECK VOUCHER No.310.00 Payment for snacks. : 001-0013 Payee Date Amount : : : Description : 7-Eleven January 09. 2015 2.50 CHECK VOUCHER No.25 Payment for purchases of cleaning materials in December 2014. Journal entry : Utilities expense Cash in bank 250. : 001-0011 Payee Date Amount : : : Description : CVB Travel and Tours January 07.50 Payment for travel expenses on January 5. 2015.25 .150.

CHECK VOUCHER No. : Payee : Victory Supplies Date : January 25. Journal entry : Miscellaneous expense Cash in bank 50. Description : Payment for pencils purchased.00 . 2015 Amount : 001-0022 50.00 .00 50.