No.

4
After learning the overview of auditing, reading the articles found in the Self-Help,
and using other resources, discuss nature and characteristics of the framework
for full PFRS, PFRS for SMEs, and PFRS for Small Entities?
For publicly accountable entities and large entities with assets of more than 350M and
liabilities of more than 250M, PFRS full is the required framework.
On the other hand, if the entity has greater than 100M up to 350M worth of assets and
greater than 100M-250M liabilities it is considered as medium-sized entities and PFRS
for SME’s applied. Then if the entity has 3M-100M worth of asset and 3M-100M
liabilities it is under the bracket of small entities and PFRS for small entities is the
framework adopted.
When it comes to its qualitative characteristics: PFRS full is more detailed, SME’s is
less detailed and none for the Small Entities.

No. 5
Charmaine Flowers, a small grower of tropical flowers in Davao City is planning
to expand its business to other parts in the Philippines. Sales for the past five
years of operation has been steadily growing with all the innovations introduce
by Charmaine, the owner, to the business. So far, the company has no debt. The
expansion requires a huge amount of capital through loans. The expansion will
also limit the involvement of Charmaine to the day-to-day operations of the
business especially in areas far from Davao City.
In the given situation wherein the business expansion of Charmaine requires a huge
amount of capital, she can opt to apply for a loan to meet the needed capital. And as I
understood based on the previous discussion, when a company is trying to get a loan, a
bank may require an audited financial statement of the said company applicant before
the loan can be granted. The bank will rely on the auditor’s opinion or attestation
towards the FS of the company whether they will approve or disapprove the loan. They
need verify if the information stated in the FS was free from error or fraud, and it will
lead to the demand for audit.
Aside from that in order for Charmaine, the owner of the business to make a firm and
right decision whether to pursue the expansion and the loan she needs to get her FS
audited to make sure herself that the information available to her is not misleading.