NAME: ANNA MAE A.

ORCIO YEAR AND SECTION: BSA 4-A

PROPRIETARY EDUCATIONAL INSTITUTIONS

 REVENUES

o Revenues arising from I educational and related activities such as tuition and

other school fees; income from the sale of books and other merchandise; rental

income from school buildings and food stalls; and (ii) investment-related

transactions such as investment income, dividend income from subsidiaries,

interest income, and others are primarily the focus of an audit of proprietary

educational institutions. Furthermore, while auditing tuition and other school

earnings, Fees aside, auditors must confirm that the organization followed the

five-step methodology. Auditors must examine whether the company properly

recognized and classified revenue in accordance with Philippine Financial

Reporting Standard (PFRS) 15, which states that revenue should be recognized

only when the entity fulfills a performance obligation, which can be accomplished

by transferring control of the promised goods or services to a customer.

 RECEIVABLES

o Tuition payments and other school receivables, rental receivables, and other

miscellaneous receivables comprise the majority of proprietary educational

institutions' receivables. When auditing proprietary educational institutions'

receivables, auditors must examine the internal control of recording receivables

by monitoring how the registrar assesses and records students' fees. Substantive

processes may also be performed by auditors by tracing the receivable report to

the general ledger. Furthermore, auditors may test invoices listed in the receivable
 report by selecting some invoices from the accounts receivable aging report and

comparing them to supporting documentation to determine whether they were

billed in the correct amounts, to the correct customers, and on the correct dates.

 EXPECTED CREDIT LOSS (ECL)

o Because of the vast variety of proprietary educational institutions receivable, the

auditor must additionally evaluate the company's calculation of the ECL. Auditors

may specifically: (a) assess the entity's segmentation of its homogeneity credit

risk exposure, (b) test the definition of default of accounts and credit risk

management policies and practices in place, (c) test the historical loss rates, (d)

check the classification of outstanding exposures to their corresponding aging

buckets, and (e) check the forward-looking information used for overlay via

statistical tests and corroboration. Additionally, auditors may examine the data

utilized in the ECL models using historical aging analysis as well as default and

recovery data.