GRACE CORPORATIONSummary of Interest Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to accounts payable and interest expense exist at year-end in the ordinary course of business >To deterrmine whetherinterest expense are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Obtain from client a lisitng of accounts payable as of year end.2. Reconcile to general ledger.3. Vouch recorded accounts payable to vendors' statements.4. Recalculate the interest expense from the accounts payables.

Findings:

Summary of Interest for the Month of December:

Beginning balance Php 66,565.00 N8 2,805.00 Ending balance Php 69,370.00

Unadjusted Balance Adjusted Balance30-Nov-11 Php 45,500.00 Php 45,500.00 31-Dec-11 66,565.00 69,370.00

Balance Php 112,065.00 Php 114,870.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to accounts payable and interest expense exist at year-end in the ordinary course of business

Adjusted Balance Php 45,500.00 69,370.00 Php 114,870.00

GRACE CORPORATIONSummary of Miscellaneous Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded miscellaneous expenses.

Findings:

Summary of Miscellaneous Expense for the Month of December:

Beginning balance Php 400.00 C2 150.00 C3 2,500.00 Ending balance Php 3,050.00

Unadjusted Balance Adjusted Balance30-Nov-11 Php 397,538.00 Php 397,538.00 31-Dec-11 400.00 3,050.00

Balance Php 397,938.00 Php 400,588.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business

Adjusted Balance Php 397,538.00 3,050.00 Php 400,588.00

GRACE CORPORATIONSummary of Insurance Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business >To deterrmine whether miscellaneous expense are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded miscellaneous expenses.4. Recalculate the insurance expense.

Findings:

Unadjusted Balance Remarks30-Nov-11 Php 550,000.00 31-Dec-11 #

Balance Php 550,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

# No additional transactions made during the month of December.

> To determine whether all transactions relative miscellaneous expense exist at year-end in the ordinary course of business

GRACE CORPORATIONInsurance

For the Year Ended December 31, 2011

DATE CV # PAYEE PARTICULARS AMOUNT

1/2/2011 360,000.00

3/12/2011 240,000.00

600,000.00

Cardinal Insurance Corporation

Premium on insurance of delivery vans for one year

effective 1/1/2011

Filipino Insurance Corporation

Premium in insurance of building and equipment and fixture for one year effective

3/15/2011 (Pol. # 279825)

GRACE CORPORATIONAdvertising Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded advertisings expenses.

Findings:

Unadjusted Balance30-Nov-11 Php 257,195.00 31-Dec-11 550,000.00

13,325.00 Balance 820,520.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business

GRACE CORPORATIONAdvertising

For the Year Ended December 31, 2011

DATE CV # PAYEE PARTICULARS2/15/2010 Cathy Ads, Inc. Advertising in Bulletin Today

Published 1/15/20116/15/2011 Cathy Ads, Inc. Retainer fee for seven months effective

7/1/2011TOTAL

8/20/2011 PhilAD Advertisement-Times Journal8/21/2011

12/31/2011 Franks Digital BrochuresTOTAL

* Not included.

GRACE CORPORATIONAdvertising

For the Year Ended December 31, 2011

AMOUNT Remarks 250,000.00 *

350,000.00

600,000.00

257,195.00

100,000.00 957,195.00

GRACE CORPORATIONRepresentation Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative representation expense exist at year-end in the ordinary course of business >To deterrmine whether representation expense are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence

Audit Procedures:1. Reconciled to general ledger.2. Vouch recorded representation expenses.

Findings:

Summary of Representative Expense for the Month of December:

Beginning balance Php 2,000.00 C2 2,000.00 Ending balance Php 4,000.00

Unadjusted Balance Adjusted Balance30-Nov-11 Php 118,000.00 Php 118,000.00 31-Dec-11 2,000.00 4,000.00

Balance 118,000.00 Php 122,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative representation expense exist at year-end in the ordinary course of business

Adjusted Balance Php 118,000.00 4,000.00 Php 122,000.00

GRACE CORPORATIONSummary of Bad Debt Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to accounts receivable and bad debt expense exist at year-end in the ordinary course of business >To deterrmine whether bad debt expense are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Obtain from client a lisitng of accounts receivable as of year end.2. Reconcile to general ledger.3. Vouch recorded accounts receivable to vendors' statements.4. Recalculate the bad debt expense from the accounts receivables.

Findings:

Summary of Bad Debts Expense for the Month of December:

Beginning balance Php 497,811.00 E1 242,771.80 Ending balance Php 255,039.20

Unadjusted Balance Adjusted Balance31-Dec-11 Php 497,811.00 Php 255,039.20

Balance Php 497,811.00 Php 255,039.20

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to accounts receivable and bad debt expense exist at year-end in the ordinary course of business

Adjusted Balance Php 255,039.20 Php 255,039.20

GRACE CORPORATIONOrganization Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded organization expenses.

Findings:

Unadjusted Balance31-Dec-11 Php 200,000.00

Balance Php 200,000.00

Adjusting journal entry:

Retained Earnings 1,000,000.00Amortization Expense 200,000.00Organization Cost 800,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative advertising expense exist at year-end in the ordinary course of business

Adusted Balance - -

GRACE CORPORATIONOrganization Cost

December 31, 2004

Date ReferenceMay 2 Securities and Exchange Commission CV# 2002 5-2April 3 Atty. Arthur Cruz CV#2002 4-3April 15 Century park Sheraton CV# 2002 4-6

July 30 Officers and Employees Cv# 2002 6-4

GRACE CORPORATIONOrganization Cost

December 31, 2004

Amount registration fee for the corporation 100,000.00 professional fee for incorporation papers 200,000.00

280,000.00

420,000.00

1,000,000.00

food served for meetings on the establishment of the corporation

salaries for the 1st month of the corporation's existence

GRACE CORPORATIONSummary of Depreciation Expense - Office Equipment

December 31, 2011

Audit Objective:

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

Audit Assertions Affected> Occurrence>Completeness>Measurement

Audit Procedures:1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.2. Check footing, and reconcile with general ledger.3. Conduct physical inspection of major acquisition of plant and equipment.4. Vouch additions to property and equipment during the year.5. Investigate disposals and retirements of property and equipment during the year.6. Test client's computation of depreciation.7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Findings:

Summary of Depreciation Expense for the Month of December:

Beginning balanceK1 Depreciation Expense-Office EquipmentEnding balance

31-Dec-11Balance

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether the property, plant and equipment included in the statement of financial position exist.

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.

8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Php 426,000.00 (5,000.00) Php 421,000.00

Unadjusted Balance Adjusted Balance Php 426,000.00 Php 421,000.00 Php 426,000.00 Php 421,000.00

To determine whether the property, plant and equipment included in the statement of financial position exist.

GRACE CORPORATIONSummary of Depreciation Expense - Transportation Equipment

December 31, 2011

Audit Objective:

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

Audit Assertions Affected> Occurrence>Completeness>Measurement

Audit Procedures:1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.2. Check footing, and reconcile with general ledger.3. Conduct physical inspection of major acquisition of plant and equipment.4. Vouch additions to property and equipment during the year.5. Investigate disposals and retirements of property and equipment during the year.6. Test client's computation of depreciation.7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Findings:

Summary of Depreciation Expense for the Month of December:

Beginning balanceK1 Depreciation Expense-Transportation EquipmentEnding balance

Unadjusted Balance31-Dec-11 1,200,000.00

Balance Php 1,200,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether the property, plant and equipment included in the statement of financial position exist.

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.

8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Php 1,200,000.00 (600,000.00) Php 600,000.00

Adjusted Balance Php 600,000.00 Php 600,000.00

To determine whether the property, plant and equipment included in the statement of financial position exist.

GRACE CORPORATIONSummary of Depreciation Expense -Furniture and Fixture

December 31, 2011

Audit Objective:

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

Audit Assertions Affected> Occurrence>Completeness>Measurement

Audit Procedures:1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.2. Check footing, and reconcile with general ledger.3. Conduct physical inspection of major acquisition of plant and equipment.4. Vouch additions to property and equipment during the year.5. Investigate disposals and retirements of property and equipment during the year.6. Test client's computation of depreciation.7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Findings:

Summary of Depreciation Expense for the Month of December:

Beginning balanceK1 Depreciation Expense-Furniture and FixtureEnding balance

Unadjusted Balance31-Dec-11 Php 355,000.00

Balance Php 355,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether the property, plant and equipment included in the statement of financial position exist.

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.

8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Php 355,000.00 285,000.00 Php 640,000.00

Adjusted Balannce Php 640,000.00 Php 640,000.00

To determine whether the property, plant and equipment included in the statement of financial position exist.

GRACE CORPORATIONSummary of Depreciation Expense -Building

December 31, 2011

Audit Objective:

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

Audit Assertions Affected> Occurrence>Completeness>Measurement

Audit Procedures:1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.2. Check footing, and reconcile with general ledger.3. Conduct physical inspection of major acquisition of plant and equipment.4. Vouch additions to property and equipment during the year.5. Investigate disposals and retirements of property and equipment during the year.6. Test client's computation of depreciation.7. Perform analytical procedures for property and equipment. 8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Findings:

Summary of Depreciation Expense for the Month of December:

Beginning balanceK1 Depreciation Expense-BuildingEnding balance

Unadjusted Balance31-Dec-11 Php 650,000.00

Balance Php 650,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether the property, plant and equipment included in the statement of financial position exist.

>To determine if the furniture and fixtures includes all capitalizable cost and that capitalizable cost were not expensed.>To determine that property is stated at cost and allowances for depreciation are acceptable and computed on the basis of acceptable and consistent methods.>To determine that the property is described and classified in the statement of financial position and related disclosures are adequate.

1. Obtain or prepare a summary of the property and equipment and analysis of the accumulated depreciation during the year.

8. Review financial statement presentation and disclosure for property and equipment and for related revenuue and expense.

Php 650,000.00 1,986,301.37 Php 2,636,301.37

Adjusted Balance Php 2,636,301.37 Php 2,636,301.37

To determine whether the property, plant and equipment included in the statement of financial position exist.

GRACE CORPORATIONSummary of Light, Water and Telephone

December 31, 2011

Audit Objective:> To determine whether all transactions relative to light, water and telephone exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of Utilites Expense for the Month of December:

Beginning balance Php 14,550.00 C2 800.00 C2 500.00 N7 148,500.00 Ending balance Php 164,350.00

Unadjusted Balance30-Nov-11 Php 1,208,450.00 31-Dec-11 1,300.00

13,250.00 Balance Php 1,223,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to light, water and telephone exist at year-end in the ordinary course of business

Adjusted Balance Php 1,208,450.00 164,350.00

Php 1,372,800.00

GRACE CORPORATIONTransportation Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to transportation expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of Transportation Expense for the Month of December:

Beginning balance Php - C2 250.00 Ending balance Php 250.00

Unadjusted Balance Adjusted Balance30-Nov-11 Php - Php - 31-Dec-11 250.00

Balance Php - Php 250.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to transportation expense exist at year-end in the ordinary course of business

Adjusted Balance Php - 250.00 Php 250.00

GRACE CORPORATIONGasoline Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to gasoline expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of Gas Expense for the Month of December:

Beginning balance Php 18,600.00 C2 2,050.00 C2 2,550.00 Ending balance Php 23,200.00

Unadjusted Balance Adjusted Balance30-Nov-11 Php 1,127,400.00 Php 1,127,400.00 31-Dec-11 4,600.00 23,200.00

14,000.00 Balance Php 1,146,000.00 Php 1,150,600.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to gasoline expense exist at year-end in the ordinary course of business

Adjusted Balance Php 1,127,400.00 23,200.00

Php 1,150,600.00

GRACE CORPORATIONSummary of HDMF Premium Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to HDMF expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of HDMF for the Month of December:

Beginning balance Php - N9 43,200.00 Ending balance Php 43,200.00

Unadjusted Balance30-Nov-11 Php 1,100.00 31-Dec-11

Balance Php 1,100.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to HDMF expense exist at year-end in the ordinary course of business

Adjusted Balance Php 1,100.00 43,200.00 Php 44,300.00

GRACE CORPORATIONSummary of SSS, Medicare Premiums Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative to SSS, Medicare Premiums Expense exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of SSS for the Month of December:

Beginning balance Php - N9 87,500.00 Ending balance Php 87,500.00

Unadjusted Balance30-Nov-11 Php 1,270,500.00 31-Dec-11

Balance Php 1,270,500.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to SSS, Medicare Premiums Expense exist at year-end in the ordinary course of business

Adjusted Balance Php 1,270,500.00 87,500.00 Php 1,358,000.00

GRACE CORPORATIONTaxes and Licenses

December 31, 2011

Audit Objective:> To determine whether all transactions relative to taxes and licenses exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Obtain from client a lisitng of expenses as of year end.2. Reconcile to general ledger.3. Vouch recorded expenses to vendors' statements.

Findings:

Summary of SSS for the Month of December:

Beginning balance Php - N9 34,200.00

70,000.00 Ending balance Php 104,200.00

Unadjusted Balance30-Nov-11 Php 910,000.00 31-Dec-11

Balance Php 910,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to taxes and licenses exist at year-end in the ordinary course of business

Adjusred Balance Php 910,000.00 104,200.00 Php 1,014,200.00

GRACE CORPORATIONTaxes and Licenses

For the Year Ended December 31, 2011

Date Payee OR#2/15/2011 Real Estate Tax A-729252/15/2011 Municipal Tax S-8427822/18/2011 Residence Certificate C & C1 F-2314752/28/2011 Registration for Delivery Vans W-24687

12/31/2011 Witholding Tax N912/31/2011 Property Taxes Expense N9

Amount 240,000.00 500,000.00 30,000.00 140,000.00 34,200.00 70,000.00 1,014,200.00

GRACE CORPORATIONSummary of Supplies ExpenseDecember 31, 2011

Audit Objective:> To determine whether all transactions relative tooffice supplies exist at year-end in the ordinary course of business

Audit Assertions Affected> Occurrence

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded purchases of office suppiles on a test basis to vendors' statements.3. Con duct physical count of supplies inventory on a test basis.

Findings:

Unadjusted Balance30-Nov-11 Php 1,406,862.00 31-Dec-11 5,000.00

Balance Php 1,411,862.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

* No additional transaction.

> To determine whether all transactions relative tooffice supplies exist at year-end in the ordinary course of business

Adjusted Balance Remarks Php 1,406,862.00 5,000.00 * Php 1,411,862.00

GRACE CORPORATIONInsurance Expense

December 31, 2011

Audit Objective:> To determine whether all transactions relative salaries expense exist at year-end in the ordinary course of business >To deterrmine whether salaries expense are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Reconcile to general ledger.2. Vouch recorded salaries expenses.4. Recalculate the salaries expense.

Findings:

Unadjusted Balance30-Nov-11 Php 21,682,480.00 31-Dec-11 1,238,760.00

1,101,600.00 Balance Php 24,022,840.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

* No additional transactions.

> To determine whether all transactions relative salaries expense exist at year-end in the ordinary course of business

Adjusted Balance Remarks Php 21,682,480.00 1,238,760.00 * 1,101,600.00 * Php 24,022,840.00

GRACE CORPORATIONSalaries Expense

For the Year Ended December 31, 2011

Name of Employee Particulars Amount Eric Gaston Salary for the year @ 80,000/month 960,000.00 Joan Gaston Salary for the year @ 42,000/month 504,000.00 Amy Josef Salary for the year @ 50,000/month 600,000.00 Sarah Tuason Salary for the year @ 48,320/month 579,840.00 Other Employees 21,379,000.00

24,022,840.00

GRACE CORPORATIONSalaries Expense

For the Year Ended December 31, 2011

GRACE CORPORATIONInsurance Expense

December 31, 2011

Audit Objective:>To determine whether inventories exist and represent items which are for sale in ordinary course of business.>To determine whether all transactions regarding inventory are recorded properly.>To determine whether inventory included in the inventory list are accurate and inventory quantities includes both inventory on hand and in transit.>To determine whether inventories are properly stated at its cost.>To determine that merchandise inventory and cost of goods sold are properly presented and classified in the balance sheet in accordance with PAS/PFRS.

Audit Assertions Affected> Occurrence>Completeness>Measurement>Presentation and Disclosue

Audit Procedures:1. Obtain list of inventory and reconcile to ledgers.2. Observe the taking of physical inventory and conduct test counts.

5. Review the computation and entries to cost of goods sold.6. Perform analytical review related to inventories and cost of goods sold.7. Vouch and test inventory pricing.

Findings:

Summary ofCOS for the Month of December:

Beginning balance Php 1,861,387.00 F1 597,792.11 N1 (1,181,770.00)Ending balance Php 1,277,409.11

Unadjusted Balance30-Nov-11 Php 54,785,500.00 31-Dec-11 1,861,387.00

Balance Php 56,646,887.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:

3. Obtain final list of inventory based from the test counts during inventory observation.4. Review cutoff of purchases and sales transactions.

8. Evaluate financial statement presentation and disclosure of merchandise inventory.

Initial Date Initial Date

MJFV 3/1/2013

>To determine whether inventories exist and represent items which are for sale in ordinary course of business.

>To determine whether inventory included in the inventory list are accurate and inventory quantities includes both inventory on hand and in transit.

>To determine that merchandise inventory and cost of goods sold are properly presented and classified in the balance sheet in accordance with PAS/PFRS.

Adjusted Balance Php 54,785,500.00 1,277,409.11 Php 56,062,909.11

GRACE CORPORATIONCost of Sales

2011

Month Amount January 5,342,356.00 February 5,266,997.00 March 4,792,627.00 April 6,127,495.00 May 6,803,923.00 June 4,770,269.00 July 4,857,439.00 August 3,581,742.00 September 4,922,788.00 October 4,151,050.00 November 4,168,814.00 December 1,861,387.00 Total 56,646,887.00

54,785,500.00 Total Amount From January to November

GRACE CORPORATIONInterest IncomeDecember 31, 2011

Audit Objective:> To determine whether all transactions relative to accounts receivable and interest income exist at year-end in the ordinary course of business >To deterrmine whether interest income are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Obtain from client a lisitng of accountsreceivable as of year end.2. Reconcile to general ledger.3. Vouch recorded accounts Rceivable to vendors' statements.4. Recalculate the interest incomee from the accounts Receivables.

Findings:

Unadjusted Balance30-Nov-11 Php 210,000.00 31-Dec-11 38,853.00

Balance Php 248,853.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to accounts receivable and interest income exist at year-end in the ordinary course of business

GRACE CORPORATIONInterest IncomeDecember 31, 2011

Audit Objective:> To determine whether all transactions relative to dividend receivable and dividend income exist at year-end in the ordinary course of business >To deterrmine whether dividend income are recorded and presented at proper amounts.

Audit Assertions Affected> Occurrence>Measurement

Audit Procedures:1. Obtain from client a lisitng of accounts receivable as of year end.2. Reconcile to general ledger.3. Vouch recorded accounts receivableble to vendors' statements.

Findings:

Unadjusted Balance Adjusted Balance30-Nov-11 Php - 31-Dec-11 - Php 40,000.00

Balance Php - Php 40,000.00

Conclusion:No exceptions noted.

Prepared by: Reviewed by:Initial Date Initial Date

MJFV 3/1/2013

> To determine whether all transactions relative to dividend receivable and dividend income exist at year-end in the ordinary course of business

Adjusted Balance

Php 40,000.00 Php 40,000.00