Audit Procedure And Opinion

Procedures Followed on the Audit of Financial Statements Cash 1. Prepare schedule of cash balances and agree to the general ledger. 2. Review cash balance throughout the year and obtain explanations for unusual fluctuations. 3. Ensure that any post-dated checks included in cash have been deposited after the year-end. Trade receivables
1. 2. 3. 4.

Obtain a debtors listing and reconcile to the accounts. Investigate large, unusual and credit balances in debtors listing. Compare collections subsequent to yearend to debtor listing. Where any amount has been estimated, assess the reasonableness of any estimations made by management. 5. Compare the number of days sales in trade debtors for the period (or debtor days) with that of the previous periods and explain variations. Other receivables and prepayments 1. 2. 3. 4. Compare balances to previous years and obtain explanations for major changes Give a broad description of the various items Confirm the calculation of prepayments Where any amount has been estimated, assess the reasonableness of any estimations made by management.

Inventories 1. Obtain a physical stock summary and agree to stock figure in financial statements 2. Test check costing of a sample of raw material, a sample of work in progress and a sample of finished goods stock lines by reference to invoices and other price sources for individual items. 3. For a sample of stock items check that final selling price is greater than book value. Where this is not the case determine the net realizable value adjustment required. 4. Assess reasonableness of management's estimation in relation to obsolete and slow moving stock. Property, plant and equipment 1. Prepare a fixed asset register schedule showing the cost, accumulated depreciation and net book value for each asset. 2. Perform analytical review and obtain explanations for significant movements compared to last year. 3. Obtain purchase invoices or other corroborative evidence of acquisition for all material additions. 4. In respect of disposals or items scrapped compute profit or loss on disposal 5. Obtain evidence that depreciation charge is properly calculated in accordance with policy in financial statements.

6. Perform a proof in total of the depreciation charge by class of material fixed assets. Obtain the cost of the property plant and equipment making broad adjustments in respect of the timing of additions and disposals and multiply by the annual depreciation charge. Investigate any significant differences between your expectations and the actual charge recorded. Intangible assets 1. Prepare a schedule reconciling opening and closing balances. Agree opening balances to prior year financial statements and closing balances to trial balance. 2. For sale of intangible assets, agree postings to sale agreement and consider tax position. 3. Review accounting policy for intangibles and assess its reasonableness. 4. Recalculate the amortisation charge for the period. 5. Consider whether there are any indications of impairment. If there is calculate the amount. Trade Payables
1. 2. 3. 4.

Obtain and verify explanations for changes in supplier base Calculate creditor days and obtain explanations for significant changes. Obtain a creditors listing and reconcile to the accounts Review prior period list of trade creditors for potentially significant omissions in the current period. 5. Where any amount has been estimated, assess the reasonableness of any estimations made by management. Share Capital 1. Obtain documentary evidence that share issues in the year have been; -properly authorized, -registered with the Registrar, -properly disclosed in the notes to FS and directors report. 2. Confirm the amount and treatment of the proceeds of any issue of shares in the period. 3. Confirm that any dividends paid and payable are: -Authorized, -Paid from distributable reserves, -Declared in GM before the year-end to be accounted for in the year, -If proposed or declared after the year end are simply disclosed in the financial statements and directors report. Revenues 1. Check sales invoices from both sides of the balance sheet date and ensure that: They are allocated to appropriate accounting periods, The goods have been reflected consistently in stock. 2. Obtain and verify an analysis of all profit and loss account headings down to operating profit, analyzed between discontinued, acquired and other continuing activities. 3. Consider disclosures in respect of differing business sectors in accordance with IAS14 for listed companies only. 4. Compare other income sources with prior period and enquire as to reasons for discrepancies.

Cost of Sales and Expenses Undertake analytical review procedures for other expenses including: Expense comparison with previous periods, Extrapolation from previous periods, Comparison with entity budgets. Investigate any significant movements. 1. Undertake appropriate analytical procedures to obtain audit assurance concerning purchases, to include: Gross margin analysis for five periods, Extrapolation from previous periods, Comparison with entity budgets. 2. Where any expense has been estimated, assess the reasonableness of any estimations made by management. 3. Ensure that the basis of allocation between expense accounts is consistent with previous periods. Opinion In my opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of San Miguel Corporation and Subsidiaries as at December 31, 2010 and 2009, and its consolidated financial performance and its consolidated cash flows for each of the three years in the period ended December 31, 2010, in accordance with the Philippine Financial Reporting Standards.