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    Adverse Audit Report

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    Joody Catacutan
    The auditor issued an adverse opinion on Sky Shopping Plaza Inc.'s 2021 financial statements because the company did not disclose required information about a debenture agreement that restricted future dividend payments. Specifically, the debenture agreement issued on January 15, 2021 for $1,000,000 to finance expansion prohibited dividend payments from earnings prior to December 31, 2020. The auditor believes this information is required to be disclosed under PFRS 9. The auditor was unable to obtain sufficient evidence to issue an opinion on whether the financial statements fairly represented the company's financial position and performance due to this omitted disclosure.

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    Adverse Audit Report

    Uploaded by

    Joody Catacutan
    245 views2 pages
    The auditor issued an adverse opinion on Sky Shopping Plaza Inc.'s 2021 financial statements because the company did not disclose required information about a debenture agreement that restricted future dividend payments. Specifically, the debenture agreement issued on January 15, 2021 for $1,000,000 to finance expansion prohibited dividend payments from earnings prior to December 31, 2020. The auditor believes this information is required to be disclosed under PFRS 9. The auditor was unable to obtain sufficient evidence to issue an opinion on whether the financial statements fairly represented the company's financial position and performance due to this omitted disclosure.

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    The auditor issued an adverse opinion on Sky Shopping Plaza Inc.'s 2021 financial statements because the company did not disclose required information about a debenture agreement that restricted future dividend payments. Specifically, the debenture agreement issued on January 15, 2021 for $1,000,000 to finance expansion prohibited dividend payments from earnings prior to December 31, 2020. The auditor believes this information is required to be disclosed under PFRS 9. The auditor was unable to obtain sufficient evidence to issue an opinion on whether the financial statements fairly represented the company's financial position and performance due to this omitted disclosure.

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    Download as DOCX, PDF, TXT or read online from Scribd
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    245 views2 pages

    Adverse Audit Report

    Uploaded by

    Joody Catacutan
    The auditor issued an adverse opinion on Sky Shopping Plaza Inc.'s 2021 financial statements because the company did not disclose required information about a debenture agreement that restricted future dividend payments. Specifically, the debenture agreement issued on January 15, 2021 for $1,000,000 to finance expansion prohibited dividend payments from earnings prior to December 31, 2020. The auditor believes this information is required to be disclosed under PFRS 9. The auditor was unable to obtain sufficient evidence to issue an opinion on whether the financial statements fairly represented the company's financial position and performance due to this omitted disclosure.

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    INDEPENDENT AUDITOR’S REPORT

    To the Shareholders of Sky Shopping Plaza Inc.


    Report on the Audit of the Financial Statements
    Adverse Opinion
    We were engaged to audit the financial statements of Sky Shopping Plaza Inc. which
    compromise the statements of financial position as of December 31, 2021 and 2020, and the
    related statements of income, changes in stockholders’ equity and cash flows for the years then
    ended, and notes related to the financial statements, including a summary of significant
    accounting policies and other explanatory information.
    In our opinion, because of the significance of the matter described in the Basis for Adverse
    Opinion section of our report, the accompanying financial statements do not present fairly the
    financial position of the Company as at December 31, 2021 and its financial performance and
    cash flows for the year then ended in accordance with the Philippine Financial Reporting
    Standards.
    Basis for Adverse Opinion
    On January 15, 2021, the Company issued debentures in the amount of ₱1,000,000 for the
    purpose of financing plan expansion. The debenture agreement restricts the payment of future
    cash dividends to earnings after December 31, 2020. In our opinion, disclosure of this
    information is required by PFRS 9.
    We have conducted our audits in accordance with Philippine Standards on Auditing. 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 form
    material misstatements. We believe that we have fulfilled our ethical responsibilities in
    accordance with these requirements and he Code of Ethics. We also believe that audit evidence
    we have obtained is sufficient and appropriate to provide a basis for our adverse opinion.
    Responsibilities of Management and Those Charged with Governance for the Financial
    Statements
    Management is responsible for the preparation and fair presentation of these financial
    statements in accordance with Philippine Financial Reporting Standards, and for such internal
    control as management determine is necessary to enable the preparation of financial
    statements that are free from material misstatement, whether due to fraud or error.
    Those charged with governance are responsible for overseeing the Sky Shopping Plaza Inc.
    financial reporting process.
    Auditor’s Responsibility for the Audit of the Financial Statements
    Our responsibility is to conduct an audit of the Company’s financial statements in accordance
    with the Philippine Standards on Auditing and to issue an auditor’s report. However, because of
    the matter described in the Basis for Adverse Opinion section of our report, we were not able to
    obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on the
    financial statements.
    We are independent of the Company in accordance with the ethical requirements that are
    relevant to our audit of the financial statements in the Philippines, and we have fulfilled our
    ethical responsibilities in accordance with these requirements.
    Report on Other Legal and Regulatory Requirements
    Our audit was conducted for the purpose of forming an opinion on the basic financial
    statements taken as a whole. The supplementary information for the year ended December 31,
    2021 required by the Bureau of Internal Revenue is presented for the purposes of additional
    analysis and is not a required part of the basic financial statements prepared in accordance with
    PFRS. Such supplementary information has been subjected to the auditing procedures applied
    in the audit of the basic financial statements and, in our opinion, is fairly stated in all material
    aspects in relation to the basic financial statements taken as a whole.

    Joody S. Catacutan, CPA


    The Angel Law Firm
    Pampanga, Philippines
    January 31, 2022

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