I.

Specialized Industry

(Nature and Background)

The physical verification of assets is known as fixed asset auditing. There are primarily two
types of audits: internal audits and external audits, which are each described here. It is utilized
to keep an organization's accuracy and transparency.

The goal of asset auditing is straightforward. This evaluates the sufficiency and efficiency of the
internal controls over the management of assets. The financial balance sheet will be accurate if
the asset record is accurate. For efficient business operation, Fixed will also be present.

(Overview and, Statistics of the specialized Industry in the

Philippines)
The asset management market in the Philippines is a little-discussed but crucial and expanding
one. Participants think it has enormous potential, but are also prevented from realizing it by a
number of issues.

In the Philippines, unit investment trust funds (UITFs) are the most common type of retail
collective investment plan. According to the Fund Managers Association of the Philippines, the
aggregate AUM of the schemes is presently PHP2.68 trillion (US$60.5 billion). The schemes are
governed by the Bangko Sentral Ng Pilipinas (BSP), the central bank of the Philippines.

(Key Updates)
The FIST Act or Republic Act No. 11523 took effect last Feb. 18, 2021. It allowed banks to
easily dispose of their NPAs via asset management companies to free up bank liquidity and
to boost lending to critical sectors needed for economic recovery.

According to the BSP's projection, between 2021 and 2025, the average non-performing loan
ratio in the banking industry will drop by 0.6 to 5.8 percentage points as a result of the FIST Act.
Additionally, it will lower NPAs by at least P150 billion.

Five FISTCs that will aid BSFIs in offloading distressed assets and bad loans have already
received approval from the Securities and Exchange Commission.
(Key Players)
A 2018 PwC study shows that the global asset and wealth management industry has
encountered a rapid growth in assets brought by the regulatory support, digitization, and
jurisdiction-wide utilities that change the way investment products are bought and sold in the
region (Asset and Wealth Management Research Digest, 2018).

In the Philippines, the trust industry experienced an asset growth in 2017, reaching a total of
PHP3.42 trillion, up 15.9% from 2016 as reported by Central Bank of the Philippines. e growth
was attributed to the strong macroeconomic fundamentals and favorable investment climate.
However, in the same year, unit investment trust funds (UITF) dropped by 8.2% or PHP768
billion. Central Bank of the Philippines claimed that the decrease was not a result of investors
losing interest in the product but rather of the decline in the market value of the total assets of
UITF (Business World Online 2018).

II. Accounting Standards Applicable to

Industry

The process begins with the organization providing a list of its assets, after which the actual
physical assets are examined. Basically, the goal of an asset audit is to double-check if an asset
genuinely exists or not.

Additionally, it gives the actual asset value while also taking into account other elements like
asset condition, remaining asset life, and the whole life cycle of a fixed asset. Additionally, it is
essential to audit fixed assets to make sure that depreciation is in line with asset management
objectives.

Depending on the size of the firm, a manual audit might be a time-consuming operation.
However, auditing doesn't have to be a strenuous activity that takes a lot of time and effort. You
are able to with the asset management software to keep track of your assets, to give you real-
time information that helps with the audit process, and to make it easier, quicker, more efficient,
and less painful.
 III. Audit Considerations

(Risk Considerations)
Internal Audit

It evaluates how well an organization's internal controls and accounting procedures are working.
As internal personnel, internal auditors work for the company. The improvement of
organizational operations is one of the internal auditor's goals.

External Audit

External entities carry out the external audit. The external auditor is crucial in certifying &
assessing the resources of the organization. An external audit offers a useful review of an
organization's accounting to both business and government.

(Audit Procedure)

A thorough understanding of the various sale and assignment agreements was attained by
evaluating the meeting records from the Group's and Parent's associated parties Board of
Directors and Related Party Committee of the Company; familiarity with essential concepts and
terms; evaluated whether transactions comply with the arm's-length principle. regulations set
forth by the Securities and Exchange Commission (SEC) and the Bangko Sentral ng Pilipinas
(BSP); Verified our understanding with management; looked over third-party report issued the
Parent Company hired a consultant to assess whether the transactions are in fact, arm's length;

Validated and compared the sale and transfer transactions to make sure they were complete.
The management listings and timetables that management developed outside of its accounting
software, in comparison with pertinent financial reporting software, selling, and assignment
contracts and other accounting documents;

Verified the underlying sale and assignment listings and schedules for accuracy deciding on the
selling price and carrying amounts of representative samples of the underlying assets and
liabilities as of the date of disposal or assignment, according to the accompanying
documentation made, and the integrity of any appraisal reports or other supporting
documentation was confirmed. And the recalculation of the gain or loss to ensure mathematical
accuracy of the computations gained from these trades;
(Key Audit Matters)
Description of the Matter In relation to restructuring of BDO Unibank Group’s leasing business
and alongside with addressing the widening liquidity gap during community lockdown due to
COVID-19 pandemic, in various dates in 2020, the Parent Company disposed of and irrevocably
and absolutely assigned substantially all of its assets and liabilities including its 100% ownership
interest in its subsidiary to various related parties including BDO Unibank. Such matter is
significant to our audit because the transaction and related accounting is non-routine and the
amounts involved are material since the Parent Company has disposed and assigned
substantially all of its assets and liabilities to its related parties. Total assets of the Parent
Company decreased from P30,947.9 million as of December 31, 2019 to P5,996.0 million as of
December 31, 2020. The disclosures in relation to this matter are included in Notes 1, 8, 9, 10,
11, 13, 16, 17, 20, and 21 to the financial statements.

IV. Reflection and Learning Points

The goal of the audit is to preserve correct asset data. As a result, auditing is an extremely
important procedure for your company. An organization will develop and function more
efficiently with the implementation of an asset tracking system that also makes the asset
auditing process easier, as well as a comprehensive audit report.

Additionally, it will maintain your asset history records so that you can always access all asset-
related information. The item can be used with a laptop, desktop, tablet, mobile device, etc.

V. References
https://www.assetinfinity.com/blog/asset-auditing-objectives-and-benefits

https://hubbis.com/article/evolving-the-asset-management-industry-in-the-philippines

https://mb.com.ph/2022/06/16/bsp-limits-iuis-in-asset-management-firms/

https://www.bdo.com.ph/sites/default/files/pdf/2020-AFS.pdf