Auditor's report Document prepared by the auditors appointed to examine and certify the accounting records and financial position of a firm. It must be filed every year by an incorporated or registered firm (along with its audited financial statements) with the appropriate regulatory authority. 1

AUDIT MEANS – type of service (not review) Subject matter - with complete FS ( BS/SI- SCI/SCF/SCE) - with Accounting Policies - Other Explanatory Info such as ……Individual schedule per line item on the face of the FS ….. Explanatory information ( (Based on Materiality Concept as per SRC Ruling 68/68.1) 2

Report on the Financial Statements We have audited the accompanying financial statements of RESIDENCIAS 8888 CORP, which comprise the Statements of Financial Position, as at December 31, 2014 and 2013, Statements of Income, Statements of Comprehensive Income, Statements of Changes in Equity and Statements of Cash Flow for the years then ended, and a summary of significant accounting policies and other explanatory information. INDEPENDENT AUDITOR’S REPORT and Audit Process 3

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Philippine Financial Reporting Standards/PFRS for SME, and for such internal control as management determines is necessary to enable the preparation and fair presentation of the financial statements that are free from material misstatements, whether due to fraud or error. 4

PHILIPPINE FINANCIAL REPORTING STANDARDS ( PFRS)– MANAGEMENT RESPONSIBLITY PHILIPPINE STANDARDS ON AUDITING (PSA) – AUDITOR’S RESPONSIBILITY 5

Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements. 6

Scope: 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 risk of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditors consider internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design the 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. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion 7

Audit Execution We utilize our process-focused methodology in improving current processes and developing recommendations to address the business risks at the process level and/or source the root causes of known performance gaps. Understand The Process Analyze Root Causes of Process Operating & Control Deficiencies Identify Process Performance Gaps Validate Process Controls Monitor Implementation & Compliance  Understand “as is” process  Gauge opportunities for process improvement  Determine relevant key existing controls to target for validation  Compliance test targeted business controls  Test accuracy and reliability of relevant performance measures and management information  Target investigation/ information gathering to understand more precisely why process problems occur and define possible solutions, etc.  Sequencing of activities  Process Boundaries  Process Mapping  Periodic Testing and Validation of Control Implementation & Effectiveness  Assess Risks In the Process 8

Value / Benefits  Alignment of audit process and methodology to deliver expectation of stakeholders with regard to:  Risk Identification and Assessment  Process control assurances (financial and operational)  Compliance with governance requirements  Compliance with policies, laws and regulations  Enables delivery of more value-adding recommendations to management  Better audit coverage through prioritization of key risk and processes 9

Opinion In our opinion the financial statements present fairly, in all material respects, the financial position of RESIDENCIAS 8888 CORP. as of December 31, 2014 and 2013, and its financial performance and its cash flow for the years then ended in accordance with Philippine Financial Reporting Standards/PFRS Small and Medium Sized Entities (PFRS for SMEs). 10

EMPHASIS OF MATTER PARAGRAPHS IN AUDITORS REPORT “If the auditor considers it necessary to draw users’ attention to a matter presented or disclosed in the financial report that, in the auditor’s judgment, is of such importance that it is fundamental to users’ understanding of the financial report, the auditor shall include an Emphasis of Matter paragraph in the auditor’s report provided the auditor has obtained sufficient appropriate audit evidence that the matter is not materially misstated in the financial report. Such a paragraph shall refer only to information presented or disclosed in the financial report.” 11

“In addition to the requirements, the auditor shall include an Emphasis of Matter paragraph in the auditor’s report where required by other Auditing Standards.” “When the auditor includes an Emphasis of Matter paragraph in the auditor’s report, the auditor shall: Include it immediately after the Opinion paragraph in the auditor’s report; a. Use the heading “Emphasis of Matter,” or other appropriate heading; b. Include in the paragraph a clear reference to the matter being emphasised and to c. where relevant disclosures that fully describe the matter can be found in the financial report; and Indicate that the auditor’s opinion is not modified in respect of the matter emphasised.” 12

Report on the Supplementary Information Required Under Revenue Regulations (RR) and RR of the Bureau of Internal Revenue. 13

In compliance with the requirements set forth by the revenue regulation No and revenue regulation no , the information on taxes and licenses in notes to financial statements is presented for the purposes of filing with the Bureau of Internal Revenue and is not required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in my audit of the basic financial statements and, my opinion, is fairly, stated in all material respects in relation to the basic financial statements taken as a whole. 14

NAME OF AUDITOR CPA LICENSE NO. xxxxxxxx PRC ID EXPIRY DATE __XXX_____ TIN NO. XXX-XXX-XXX-XXX_ BIR ACCREDITATION NO. XXXXXXX ISSUED ON ___________________ EXPIRY DATE XXX_________________ PTR NO. XXXXXXXXX ISSUED ON ____________________ BOA ACCREDITATION NO. XXXXXX ISSUED ON _XXX___________________ EXPIRT DATE:_XXX____ _____________ 15 BE CAREFULL ON RED MARK ALWAYS CHECK ON THE DATE OF EXPIRY OF YOUR LICENSES

It should not be earlier than SMR 16

Auditor (1)AUDITED (2)AUDITED (3)AUDITED √x√√x√ X√√X√√ PREDECESSOR SUCCESSOR CONTINUING (1)Successor auditor does not assume the full responsibility for 2 years (2)With division of responsibility (3)No reliance on the work of the predecessor auditor 17

The prior years balances were audited by another auditor, who has issued _______ opinion on ________. The prior years balances were only presented for comparative purposes and not part of current years balances. 18

REPORTED BY: NORY N. LAMBOT VILMA P. BORLAZA 19