March 9, 2020

Chris Silvano
First Vice President/Chief Financial Officer
Silvano Insurance Company, Inc.
BGC Building, Samal Island of Davao City
Davao, Philippines

Dear Mr. Silvano:

1.) This Engagement Letter, together with attached General Terms and Conditions, (collectively, this
“Agreement”), confirms the terms and conditions upon which TalaidBRSB & Corp. has been
engaged to audit and report on the financial statements of Silvano Insurance Company, Inc. For
the year ending December 31, 2020. The services described in this Agreement may hereafter be i
referred to as either the “Audit Services” or “the services.”

2.) Should conditions not now anticipated preclude us from completing our audit and issuing our
auditor’s report as contemplated by this agreement, we will advise you and those charged with
governance promptly and take such action as we deem appropriate.

Audit Responsibilities and Limitations

3.) We will conduct the audit of the financial statements in accordance with Philippine Standards on
Auditing (PSA’s), as promulgated by the Auditing and Assurance Standard Council. The standard
council requires that we are independent and that we comply with the ethical responsibilities
which is relevant to our audit.

4.) The objectives of our audit are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatements, and express an opinion whether
the financial statements present fairly, in all material respects, the financial performance,
financial position and financial cash flows of the company in accordance with Philippine Financial
Reporting Standards (PFRS)

In relation to our audit of the financial statements of the Company taken as a whole, we shall
report on:

a.) the supplementary information required under Revenue Regulations 15-2010 as prepared
by management;
b.) information with regard to the internal control of the Company that the financial
statements are free from material misstatements, whether due in fraud or error.
c.) if the financial statements are prepared, in all material respect, in accordance with
Philippine Financial Reporting Standards.

5.) The existence of inherent limitations of an audit may affect the audit itself, thus, there is an
unavoidable risk that some material misstatements may not be detected even though the audit
is properly planned and performed in accordance in PSAs. Reasonable assurance is a high level
of assurance, but will not guarantee that the financial statements will absolutely free from
misstatements.

6.) As the requirements of the Philippine Standard on Auditing, we exercise professional judgement
and maintain professional skepticism throughout the audit.

7.) For practical purposes, we do not examine all of the evidences provided by the Company, only
the sample of it. Thus, there is always possibility that our audit’s conclusion, based on the
sample, may be different from the conclusion that would have been reached if we examine the
entire population.
8.) As part of the audit, we will also:
a.) Consider, solely for the purpose of planning our audit and determining the nature, timing,
and extent of our audit procedures, the Company’s internal control over financial reporting.
The consideration will not be sufficient to enable us to express an opinion on the
effectiveness of internal control or to identify all significant deficiencies.
b.) Conclude on the appropriateness of management’s use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty
exists related to events or conditions that may cast significant doubt on the Company’s
ability to continue as a going concern.
c.) Evaluate the overall presentation, structure and content of the financial
statements,including the disclosures, and whether the financial statements represent the
underlying transactions in manner that achieves fair presentation.

Management’s Responsibilities and Representations

9.) For the benefits of fairly presentation and to avoid “long-term” conflict of between the auditor
and management, those charged with governance should acknowledge and understand their
responsibility:

a.) the management is responsible for preparing and presenting the financial
statements in accordance with the Philippine financial reporting framework.

An audit of financial statement does not relieve management of its responsibilities.

b.) to provide us with: 1.) access, on timely basis, to all in formation of economic actions
and events, such as documents and records and etc.; 2.) additional information that
we may request in indefinite time as we process the audit; 3.) inquiry to the
employees or/and those authorized governance to obtain the relevant information for
fairly presentation.

Failure to provide us with the information referred above or access to persons within the
company will cause the report to be delay, modify our procedures, or even terminate our
engagement.

10.) When we identified the misstatements, whether due to fraud or error, the management is
responsible to adjust the financial statements to correct it and for affirming to us in its
representation letter that they believe in affects of unrecorded misstatements are immaterial,
individually and aggregate, to the financial statements as a whole.

11. ) The management is responsible for determining that the Company’s business activities are
conducted in accordance with laws and regulations.

Fees and Billing

12.) Our fees is P100,000 exclusive of 10% out of pocket expenses and 12% value added tax (VAT).
However our actual fees may be differ based on the nature of business or out-of-scope work.

12. ) The insurance commission(IC) issued Circular Letter (CL) 2016-69 dated December 28, 2016
wherein the implementation requirements of Financial Reporting Framework (CL 2016-65), Valuation
Standards for Insurance Policy Reserves (CL 2016-66 and CL 2016-67), and amend Risk-Based Capital
(RBC2) Framework (IC 2016-68) shall take effect January 1, 2017. The new valuation standards are to
be accounted for as change in accounting policy which would require the restatement of January 1,
2016 and December 31, 2016 balances.
Our schedule of performance and periodic invoices are outlined in the table below and payment is
due upon receipt:
Audit Fee Circular Fee OPE VAT Total
January 15, P90,000 P81,000 P17,100 P58,000 P246,100
2020
April 13, 2020 P10,000 P9,000 P1,900 P6,500 P85,900
Total P100,000 P90,000 P19,000 P65,000 P332,000

We appreciate the opportunity to be of assistance of the Company. If this Agreement accurately

Yours very truly,

Talaid, Razel B.
Partner
For and behalf of TalaidBRSB & Corp.

Agreed and Accepted by:

Silvano Insurance Company, Inc.

By:______________________
Chris Silvano
First Vice President/Chief Financial Officer

Date:___________________