GERALD L.

MADAMBA, CPA
#194 Brgy. 43 Cavit, Laoag City 2900

January 24, 2022

The Board of Directors

Bacarra Multi-Purpose Cooperative
Bacarra, Ilocos Norte, Philippines

S i r/Madam:

I am pleased to submit my proposal for the audit of the financial statements of the Bacarra Multi-Purpose
Cooperative as of and for the year ended December 31, 2021.

Audit Responsibilities and Limitations

The objective of my audit is to provide you with my auditor’s report expressing an opinion on the financial
statements referred to above. I will conduct my audit in accordance with auditing standards generally
accepted in the Philippines. Accordingly, I will examine, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assess the accounting principles used and significant estimates made by
management and evaluate the overall financial statement presentation.

Auditing standards generally accepted in the Philippines require that I obtain reasonable, rather than absolute,
assurance that the financial statements are free of material misstatement, whether caused by error or fraud.
Accordingly, a material misstatement may remain undetected. Also, an audit is not designed to detect error or
fraud that is immaterial to the financial statements. However, I will bring to my attention immaterial
misstatements and any fraudulent or illegal acts of which I become aware during my audit. Pursuant to
professional standards, in the unusual event that I am unable to complete the audit or unable to form or have
not formed an opinion, I may decline to express an opinion or decline to issue a report.

While an audit includes obtaining an understanding of internal control sufficient to plan the audit and to
determine the nature, timing and extent of audit procedures to be performed, it is not designed to provide
assurance on internal control or to identify significant deficiencies in internal control. However, I am
responsible for ensuring that senior management is aware of any such deficiencies that come to my attention.

The working papers prepared in conjunction with my work are the property of the auditor, constitute
confidential and proprietary information and will be retained by me in accordance with my policies and
procedures.

Management’s Responsibilities and Representations

The Cooperative’s management is responsible for the financial statements and for adjusting those statements
to correct material misstatements. Management is also responsible for (1) maintaining effective internal
control over financial reporting, (2) identifying and ensuring that the Cooperative complies with the laws and
regulations applicable to its activities and (3) making available to us all financial records and related
information and personnel with information of relevance to my work.
GERALD L. MADAMBA, CPA
#194 Brgy. 43 Cavit, Laoag City 2900

As required by auditing standards generally accepted in the Philippines, I will make specific inquiries of
management and others about the representations embodied in the financial statements and the effectiveness
of internal control. Those standards also require that I obtain from certain members of management a
representation letter which covers the financial statements and which affirms that the effects of any
uncorrected misstatements are, both individually and in the aggregate, immaterial to the financial statements
taken as a whole. The results of my audit tests, the responses to my inquiries and the written representations
constitute the evidential matter I intend to rely upon in forming an opinion on the financial statements.
Because of the importance of management’s representations to an effective audit, the Cooperative hereby
releases and will indemnify, defend and hold harmless the auditor and his personnel from any claims,
liabilities, costs and expenses resulting from misrepresentations by management.

If you intend to publish or otherwise reproduce the financial statements together with my report (or
otherwise make reference to the auditor) in a document that contains other information, you agree to provide
us with a draft of the document to read and comment on before it is printed and distributed. Furthermore,
you agree that the terms of this Agreement do not encompass an undertaking by us (1) to consent, by means
of a separate letter or otherwise, to the inclusion of my auditors’ report referred to above in a filing with any
regulatory agency or otherwise reissue my report for purposes of a securities offering or other financing
transaction, or (2) to acknowledge reliance on my report by others.

Other Services

In addition, I shall also assist the Cooperative in preparing the annual income tax return. Such assistance,
however, will not include a detailed verification of the accuracy and completeness of the reported taxable,
nontaxable and tax-paid income and the reported deductible and nondeductible costs and expenses. My
responsibility is simply to ascertain that these items agree with the Cooperative’s books of accounts. I
therefore encourage you to consult with us in writing should you have any questions on the tax treatment of
certain specific items and transactions. Like the financial statements, the income tax return, including all the
information contained therein, is the responsibility of the Cooperative’s management. Accordingly,
management is responsible for its completeness and compliance with the tax laws and applicable regulations.
The Cooperative, therefore, releases and will hold harmless the auditor and his personnel from any claims,
liabilities, costs and expenses arising for any reason, including any future tax assessments, relative to such
income tax return.

My audit services will likewise not involve a detailed verification of the accuracy and completeness of the
Cooperative’s withholding tax returns and payments of local government taxes, licenses and fees. Under
generally accepted auditing standards, the auditor is only required to perform a high-level reasonableness test
of the affected accounts in the financial statements with appropriate consideration for materiality. These
procedures are not sufficient nor are they designed to identify all errors and mistakes in these tax returns.

Any additional services that you may request, and that I agree to provide, will be the subject of separate
written arrangements. Such services may include, but are not limited to the issuance of a Certificate of
Taxpayer Compliance, tax compliance review, contesting tax assessments, special consultations which will
require research and/or written opinions, representations before regulatory agencies (e.g., CDA, BIR), and
systems work.
GERALD L. MADAMBA, CPA
#194 Brgy. 43 Cavit, Laoag City 2900

Fees and Other Arrangements

I quote my fee, exclusive of out of pocket expenses at Php 15,000.00 for the year 2021.

Except to the extent finally determined to have resulted from the auditor’s fraudulent behavior or willful
misconduct, the auditor’s maximum liability to the Cooperative for any reason, including the auditor’s
negligence, relating to the services under this Agreement shall be limited to the fees paid to the auditor for the
services or work product giving rise to liability.

Interim billings will be submitted as the work progresses, and a final bill will be submitted following the
delivery of my report. Billings are payable upon receipt.

Furthermore, if the Cooperative become subject to the reporting requirements of a regulatory body either
here or abroad, such that any provision in the letter would impair the independence of the auditor under the
regulatory body’s rule, such provision shall, to the extent, be of no effect.

Neither party to this Agreement will directly or indirectly agree to assign, transfer or sell to anyone any claim
against the other party arising out of this engagement letter.

This arrangement letter reflects the entire agreement between the Cooperative and the auditor relating to the
services described herein and supersedes any previous proposals, correspondence and understandings,
whether written or oral. The agreements of the Cooperative and the auditor contained herein shall survive the
completion or termination of this arrangement letter.
GERALD L. MADAMBA, CPA
#194 Brgy. 43 Cavit, Laoag City 2900

Acknowledgment

Please confirm your agreement with the above terms by signing a copy of this letter on the space provided for
therein and returning it to us.

I am pleased to have this opportunity to be of service to you and assure you that this engagement will be
given my close attention.

GERALD L. MADAMBA

I confirm that I have read and understood the contents of this letter and the related terms and conditions
and agree that it accurately reflect our fair understanding of the services that I require you to undertake.

BACARRA MULTI-PURPOSE COOPERATIVE

By Date

Chairman