Accepting and Engagement

ENGAGEMENT LETTER FOR THE CONDUCT OF AN AUDIT OF FINANCIAL

STATEMENTS

[Firm’s letterhead]

[Date]
[The Board of Directors]

BDO Unibank, Inc.
BDO Corporate Center, 7899
Makati Avenue, Makati City
Objective and scope of the audit

You have requested that we audit the financial statements of BDO Unibank, Inc, which
comprise the balance sheet as at [....], and the income statement, statement of changes in equity
and cash flow statement for the year then ended, and a summary of significant accounting
policies and other explanatory notes. We are pleased to confirm our acceptance and our
understanding of this engagement by means of this letter. Our audit will be conducted with the
objective of our expressing an opinion on the financial statements.
The objectives of our audit are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with Philippine Standards
on Auditing (PSAs) will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
Our responsibilities
We will conduct our audit in accordance with Philippine Standards on Auditing (PSAs).
Those standards require that we comply with the ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from
material misstatement. An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures selected depend on the
auditor’s judgment, including the assessment of the risks of material misstatement of the
financial statements, whether due to fraud or error. An audit also includes evaluating the
appropriateness of accounting policies used and the reasonableness of accounting estimates made
by the management, as well as evaluating the overall presentation of the financial statements.
Because of the test nature and other inherent limitations of an audit, together with the
inherent limitations of any accounting and internal control system, there is an unavoidable risk
that even some material misstatements may remain undiscovered. even though the audit is
properly planned and performed in accordance with PSA.
In making our risk assessments, we consider internal control relevant to the entity’s
preparation of the financial statements in order to design audit procedures that are appropriate in
the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. However, we expect to provide you with a separate letter concerning any
material weaknesses in the design or implementation of internal control over financial reporting
that come to our attention during the audit of the financial statements.
Responsibilities of Management
Management is responsible for the preparation and fair presentation of the financial
statements in accordance with PFRS, and for such internal control as management determines is
necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, management is responsible for assessing the
Company’s ability to continue as a 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 operations, or has no realistic alternative but to do so.
Responsibilities of Those Charged with Governance
Our audit will be conducted on the basis that the directors and those charged with governance
acknowledge and understand that they have responsibility:
 For the preparation and fair presentation of the financial statements in accordance with
the company's requirements as well as Philippine Financial Reporting Standards.
 For such internal control as management determines is necessary to enable the

preparation of financial statements that are free from material misstatement, whether due
to fraud or error; and
To provide us with:
 Access to all information of which you are aware that is relevant to the preparation of the
financial statements such as records, documentation and other matters;
 Additional information that we may request from you for the purpose of the audit; and
 Unrestricted access to persons within the company from whom we determine it necessary
to obtain audit evidence.
The directors are responsible for safeguarding the company’s assets and for the prevention
and detection of fraud, error and non-compliance with regulatory requirements.
Our objectives are to obtain reasonable assurance about whether the financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but
is not a guarantee that an audit conducted in accordance with PSA will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered
material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
As part of our audit process, we will request from management and, where appropriate,
those charged with governance, written confirmation concerning representations made to us in
connection with the audit.
We look forward to full cooperation from your staff during our audit.
Requirements regarding other information
The PSA define “other information” as “financial or non-financial information (other
than financial statements and the auditor’s report thereon) included in an entity’s annual report”.
We are required by the PSA to obtain the other information, to read and consider it, to respond
when a material inconsistency appears to exist or other information appears to be materially
misstated and to report on the other information. Our audit opinion, however, does not cover the
other information and we do not express an audit opinion or any form of assurance conclusion
thereon.
Our responsibilities relating to other information apply regardless of whether the other
information is obtained by us prior to, or after, the date of our auditor’s report. In order to assist
us in completing the procedures required by the PSA, we expect to obtain the final version of the
annual report in a timely manner prior to the date of the auditor’s report, or if that is not possible,
as soon as practicable and in any case prior to your issuance of such information.
Subsequent events
Except for our responsibilities regarding other information which are set out in the
“Requirements regarding other information” section of the engagement letter, we have no
obligation to perform any audit procedures regarding the financial statements after the financial
statements have been issued. However, we expect that you will inform us of any facts that may
affect the financial statements of which you may become aware during the period from the date
of our report to the date the financial statements are issued.
Quality Control
The conduct of our audit in accordance with Philippine Standards on Auditing means that
information acquired by us in the course of our audit is subject to strict confidentiality
requirements. Information will not be disclosed by us to other parties except as required or
allowed for by law or professional standards, or with your express consent. Nonetheless, a
review of our audit files may be required as part of the quality control review program.
We advise you that by signing this letter you acknowledge that, if requested, our audit
files relating to the audit will be made available under the review programs outlined above. The
same strict confidentiality requirements apply under these programs as those that apply to us as
your auditor.
Regulatory Requirements
We reserve the right to disclose our files to regulatory bodies in the exercise of their
powers. The regulatory bodies include, The Bangko Sentral ng Pilipinas, Security and Exchange
Commission, Commission on Audit etc.
Billing Arrangement
Our fees, which will be billed as work progresses, are based on the time required by the
individuals assigned to the engagement plus out-of-pocket expenses. Individual hourly rates vary
according to the degree of responsibility involved and the experience and skill required.
Reporting
At the conclusion of the audit, we shall issue a report that contains our opinion about
whether the financial statements are fairly presented in accordance with the PFRS. In addition to
our report on the financial statements, we expect to provide you with a separate letter concerning
any material weaknesses in accounting and internal control systems which come to our notice.
The form and content of our report may be amended in the light of our audit findings.
This letter will be effective for future years unless it is terminated, amended or
superseded.
Please sign and return the attached copy of this letter to indicate your acknowledgement
of, and agreement with, the arrangements for our audit of the financial statements including our
respective responsibilities.
Acknowledged on behalf of BDO Unibank, Inc by
(signature)
......................
(Name)
(Partner)
(Date)

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ENGAGEMENT LETTER FOR THE CONDUCT OF AN AUDIT OF FINANCIAL

[The Board of Directors]

Objective and scope of the audit

 For such internal control as management determines is necessary to enable the

Acknowledged on behalf of BDO Unibank, Inc by

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