R.G. Manabat & Co.
The Medical City Iloilo
Hospital, Inc.
Audit Plan and Strategies for the Year Ending December 31, 2022
Kick-Off Meeting
December 19, 2022
This meeting mainly outlines our risk assessment and planned audit approach for the audit of the financial
statements of The Medical City Iloilo Hospital, Inc. as at and for the year ending December 31, 2022.
01
02
2022 Client Service Team
03
Audit Objective and Reporting
Responsibilities
04
05
Affirmation of Independence
Key Deliverables
Audit Approach
06
07
08
Audit Focus Area
09
Proposed Audit Timeline and Audit
Strategies
10
Communication Plan: PBC Escalation
Updates in the Company’s Operations
Prior Year Issues
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Engagement Partner
Warren R. Angeles
Engagement Assistant Manager
Eugene C. Balutoc II
Engagement Senior Analyst
Frances Jennarie C. Almodiel
Engagement Staff
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
RGM & Co.’s Affirmation of Independence
With our complementing functions, we are still
ultimately accountable to the management and
directors of the Company and this accountability
is anchored on INDEPEDENCE both actual and
perceived.
As your appointed external auditors, we affirm our
INDEPENDENCE - that is, INDEPENDENCE of both
our Firm and our Partners and Staff in respect to The
Medical City Iloilo Hospital, Inc.
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
4
Management’s
Responsibility
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Maintaining sound internal
controls;
Preparing and presenting financial
statements in accordance with the
applicable financial reporting
framework;
Assessing the Company’s ability to
continue as going concern,
disclosing, as applicable matters
related to going concern and using
the going concern basis of
accounting unless management
either intends to liquidate the
Company or to cease its
operations, or has no realistic
alternative but to do so; and
Adopting appropriate accounting
policies in accordance with the
PFRSs, where applicable.
Auditors’Responsibility
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Designing an audit to provide
reasonable, not absolute,
assurance that the financial
statements, taken as a whole,
are free from material
misstatements, whether due to
fraud or error;
Considering internal controls for
the purpose of designing audit
procedures, but not for the
purpose of expressing an opinion
on them;
Conducting an audit in
accordance with Philippine
Standards on Auditing (PSA);
and,
Evaluating management’s
assessment of going concern.
Objective of Audit
•
Form and express an opinion
on whether the financial
statements prepared by
management present fairly, in
all material respects, the
financial position as at
December 31, 2022 and the
financial performance and cash
flows for the year ending in
accordance with PFRSs.
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
5
Key Deliverables
Scope of work
Deliverables
01
02
03
04
05
To conduct an audit
in accordance with
PSA on the financial
statements of the
Company, prepared
in accordance with
PFRSs, as at and for
the year ending
December 31, 2022.
Auditor’s
Report
Accompanying
Statement
Accompanying
Statement
Internal Control
Communication
Auditor’s report to
the financial
statement as at and
for the year ended
December 31, 2022.
Signed written
statement to
accompany financial
statements for filing
with the Bureau of
Internal Revenue
(BIR) in compliance
with Revenue
Regulations, V-20.
Signed written
statement as to the
number of
stockholders owning
one hundred (100) or
more shares, as
required by Revised
SRC Rule 68, for
submission to the
Securities and
Exchange
Commission (SEC).
Provide our
recommendations
regarding internal
controls and
opportunities for
improvement or
efficiency based on
observations made
during the course of
our audit.
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Audit Approach
PLANNING
CONTROL EVALUATION
• Perform risk assessment procedures and
identify risk areas
• Understand accounting and reporting
activities
• Determine audit strategy
• Evaluate design and implementation of
selected controls
• Determine planned audit approach and
scope
• Test operating effectiveness of selected
financial controls
• Understand and evaluate the overall
control environment
Audit
approach
• Assess control risk and risk of significant
misstatement.
COMPLETION
• Perform completion procedures
• Perform overall evaluation of audit
differences
• Perform overall evaluation of internal control
deficiencies
• Perform final review of financial statements
SUBSTANTIVE TESTING
• Plan and perform substantive
procedures
• Consider if audit evidence is sufficient
and appropriate
• Form audit opinion
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited
by guarantee. All rights reserved.
Document Classification: KPMG Confidential
7
Audit Focus Area
Revenue Recognition (CEA)
KEY
FOCUS
AREAS
Valuation of Beginning
Balances (V)
Credit Risk and Valuation of
Receivables (V)
Related Party Transactions
(CEAP)
Inventory and Cost of Sales
(CEA)
Property and Equipment (EAV)
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International Limited, a private English company limited
by guarantee. All rights reserved.
Document Classification: KPMG Confidential
8
YTD Financial Results of operations
Major contracts entered into or closed
during the year (loan, lease, sales, etc.)
Significant transactions entered into
during the year
Significant resolution approved by the
Board of Directors
Changes in organizational structures,
key officers and manpower
complement
Related party transactions
Manpower - number of employees,
retirement, any additional benefits,
packages, increase in compensation,
etc.
Major customers and suppliers during
the year
Regulatory and legal issues (Noncompliance with applicable laws or
regulations, litigations and claims, BIR
assessments, SEC and other regulatory
bodies investigations) if any
Others
Fraud considerations and internal
control
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
9
Prior Year Issues
Align the Company’s policy for the assessment of estimated credit losses with the
Group’s assessment policy
Observation
The audit performed recomputation of Allowance for Doubtful Accounts. For the recomputation for receivables
from Philhealth, the following were considered:
• Provisioned full allowance on claims in 2019 and prior years
• Remaining receivables were provisioned based on 2021 denied claims over 2021 PHIC revenues after
deducting 2022 collections
The results of the procedure performed resulted to an adjustment to the Provision for Estimated Credit Losses
amounting to P6.38 million and Miscellaneous Income amounting to P6.14 million.
Management’s response
Management agreed to align their ECL Policy with its Parent Company. Audit adjustments were approved and
adjusted by Management.
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Activity
Responsible
Date/ Period
KPMG/TMCI
KPMG/TMCI
TMCI
December 19, 2022
December 27 – 28, 2022
January 20, 2023
TMCI/KPMG
January 19 - 20, 2023
Process updates and walkthrough procedures
Year-end audit procedures
Presentation of year-end audit results
Submission of initial draft of FS and ITR
KPMG
KPMG/TMCI
KPMG/TMCI
TMCI
January 23 - 27, 2023
January 30 – February 17, 2023
February 24, 2023
February 28, 2023
Finalization of FS and BOD Approval of the Financial
Statements
KPMG/TMCI
March 2023
Release and issuance of financial statements
KPMG/TMCI
March 2023
Kick off and Planning Meeting
Year-end Inventory Count Observation
Submission of year end trial balance and account schedules
Receipt of year end audit requirements and sample selections
including sending out request for supporting documents
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
Initial Audit Requirements
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Trial Balance as at December 31, 2022
Approved SEC Confirmation for Valuation for Issuance of Capital Stock
Signed Engagement Letter
Detailed audit schedules on the related accounts on key focus areas
Note: Additional accounts will be requested upon receipt of trial balance as at
December 31, 2022
Minutes of meetings of the Company’s Board of Directors and Stockholders
Copies of major contracts, agreements and other documents entered into by the Company during the
year which may have an impact on our audit (lease, rental, loans, etc.)
Journal entry register for 2022
Correspondences received during the year from the Securities and Exchange Commission (“SEC”) and
the Bureau of Internal Revenue (“BIR”), if any
Copy of quarterly income tax returns and other reports filed with the BIR during the year
2022 Actuarial Valuation Report (AVR), if applicable.
List of mortgaged properties
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
01
Process
Understanding
02 Test of Controls
03 Substantive
Testing
Walkthroughs, inquiries with management and process owners are to
be conducted virtually via:
• Microsoft Teams
• Zoom, Google Meet and other apps, provided the Company is the
party sending meeting invite
E-signature will be utilized in Legal and Corporate confirmation letters. In
line with this, we will be requesting a list of e-mail addresses and contact
persons for each confirmation. As such, we request the Company to inform
its legal counsels regarding our use of e-mail for the confirmations.
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
13
01
Process
Understanding
02 Test of Controls
PBCs and supporting documents are to
be provided in the following hierarchy:
• Email
• Collab Site (KPMG Clara Client
Collaboration) to be set by KPMG
• Cloud drives to be set by Client
• Hard copies of confidential files for
scanning during fieldwork (access to
scanner to be provided by the
Company)
• Strictly for viewing only
03 Substantive
Testing
Fieldwork schedules shall be on
agreed dates only. Files by batches
shall be ready for scanning/viewing.
Primarily, Confirmation Letters will be
sent through email and e-signature will
be utilized. (legal counsel, banks,
receivables, related parties,
corporate secretary, etc.)
© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG global organization of independent member
firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved.
14
Escalation Policy
Any pertinent issues and outstanding prepared-by-client (PBC) items arising from the audit shall be escalated as follows:
Heading here
2nd Level
1st Level
Escalation Timeframe:
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If issue is still not resolved after 2 days
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2 days delay in receipt of PBC
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Start of day 3 without receiving
feedback from point of contact
Escalation Timeframe:
•
If issue is still not resolved after 3 days
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3 days delay in receipt of PBC
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Start of day 4 without receiving
feedback from point of contact
3rd Level
Escalation Timeframe:
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If issue is still not resolved after 5 days
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5 days delay in receipt of PBC
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Start of day 6 without receiving
feedback from point of contact
KPMG Point of Contact: Partner
KPMG Point of Contact: Manager
KPMG Point of Contact: Supervisor
Notes:
•
Escalation of any pertinent issues and outstanding PBC will be more frequent, as necessary, as we get closer to the deadline.
•
Time charges incurred by the staff as a result of any delay on the part of Group in submitting schedules and other required
documents will be charged as overruns by RGM&Co.
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Confidential
15
Questions?
© [year] [legal member firm name], a [jurisdiction] [legal structure] and a member firm of the KPMG global organization of independent member firms affiliated with KPMG International
Limited, a private English company limited by guarantee. All rights reserved.
Document Classification: KPMG Public
16
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© 2022 R.G. Manabat & Co., a Philippine partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative
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Document Classification: KPMG Public