July __, 2018

Crispy Crust

Dear Mr. Yu:

We are pleased to confirm our understanding of the internal audit that we will be conducting in
relation to the daily operations occuring in your establishment, specifically in the food processing at the
kitchen.

Objectives

The activity will only be limited to internal auditing which will chiefly rest on inquiry, interview
and observation. The auditors do not have the intention of expressing an opinion about the food
processing nor to perform any control and substantive audit testing as we are only limited to internal
auditing. Specifically, the auditors aim to achieve the following four (4) objectives in relation to the
proposed internal auditing:

1. To determine the current practices in the food processing of Crispy Crust specifically in the
kitchen though inquiry, interview and observation;
2. To verify whether such current practices are being followed in the daily processing of food
through inquiry, interview and observation;
3. To determine whether or not your current practices are in consonance with the Good
Manufacturing and Distribution Practices; and
4. To identify areas of the food processing operation for improvement should there be any gap
between the Good Manufacturing and Distribution Practices and your current practices.

Scope of Audit

The scope of the entire food processing audit will be limited to the following:

1. Management and Personnel

2. Company Environment
3. Environment of Buildings
4. Layout and Product Flow
5. Layout of Premises (handling of raw materials, processing, packing, packaging and storage
rooms)
6. Equipment, Facilities and Utensils
7. Maintenance
8. Social Areas
 9. Risk of Physical, Chemical and Microbiological Contamination of the Product
10. Separation and Cross-contamination
11. Stock Management (rotation)
12. Housekeeping, Cleaning and Hygiene
13. Water Quality Management
14. Waste Management
15. Pest Control
16. Use of Pesticides, Herbicides and Fungicides
17. Transport
18. Personal Hygiene, Protective Clothing and Medical Examination
19. Checks on behalf of Other Third Parties

Resource Assignment and Timeline

The following table is the proposed timeline of our audit planning.

Auditors
Objective Procedure Subject Date
Assigned
1. To determine Data gathering about 1. Management and 1. Pia Mae P.  July 7, 2018
and document the current practices Personnel Bote (Saturday)
the current of your company 2. Company 2. Annah Jane
practices in the  Inquire Environment L. Cabato  July 11,
food processing  Interview 3. Environment of 3. Francis Miko 2018
of Crispy Crust  Observe Buildings Ilagan (Wednesday)
specifically in 4. Layout and
the kitchen Product Flow
5. Layout of
Premises
(handling of raw
materials,
processing,
packing,
packaging and
storage rooms)
6. Equipment,
Facilities and
Utensils
7. Maintenance
8. Social Areas
9. Risk of Physical,
Chemical and
Microbiological
Contamination of
the Product
 10. Separation and
Cross-
contamination
11. Stock
Management
(rotation)
12. Housekeeping,
Cleaning and
Hygiene
13. Water Quality
Management
14. Waste
Management
15. Pest Control
16. Use of Pesticides,
Herbicides and
Fungicides
17. Transport
18. Personal Hygiene,
Protective
Clothing and
Medical
Examination
19. Checks on behalf
of Other Third
Parties
2. To verify
whether such
current practices
are being 1. Charizia
 Inquire
followed in the Khea G. Caila July 14, 2018
 Interview (same as above)
daily processing 2. Lady Arianne (Saturday)
 Observe
of food through Candelario
inquiry,
interview and
observation
3. To determine
whether or not 1. Annah Jane
your current L. Cabato
 Inquire
practices are in 2. Lady Arianne
 Interview (same as above)
consonance with Candelario
 Observe
the Good 3. Ronamarie C.
Manufacturing Olvis
and Distribution
Practices
4. To identify
areas of the food
1. Pia Mae P.
processing
Bote
operation for
2. Annah Jane
improvement
L. Cabato
should there be Discussion between
3. Charizia
any gap between the auditors about the Findings
Khea G. Caila
the Good findings
4. Francis Miko
Manufacturing
Ilagan
and Distribution
5. Ronamarie C.
Practices and
Olvis
your current
practices.
5. Drafting the 1. Pia Mae P.
audit report Bote
2. Annah Jane
L. Cabato
1. Organizing all the
3. Charizia
findings Findings
Khea G. Caila
2. Summarizing
4. Francis Miko
Ilagan
5. Ronamarie C.
Olvis
6. Submission to 1. Pia Mae P.
the Management Bote
of the Audit 2. Annah Jane
Report for L. Cabato
review 3. Charizia
Reporting Audit Report
Khea G. Caila
4. Francis Miko
Ilagan
5. Ronamarie C.
Olvis
7. Finalization of 1. Pia Mae P.
Audit Report Bote
2. Annah Jane
L. Cabato
Reviewed Audit 3. Charizia
Editing/Revising
Report Khea G. Caila
4. Francis Miko
Ilagan
5. Ronamarie C.
Olvis
8. Submission to 1. Pia Mae P.
the subject Bote
Adviser in our 2. Annah Jane
Undergraduate L. Cabato
1. For Adviser’s
Studies Finalized Audit 3. Charizia
Review/Comments
Report Khea G. Caila
2. Printing
4. Francis Miko
Ilagan
5. Ronamarie C.
Olvis

The above table presents the timeline of the internal auditing phase which are spread throughout
the First Semester of SY 2018-2019 (July-September). The above schedule may be changed subject to the
approval and availability of the persons concerned. Should there be any changes, we will surely inform
you of the reasons for such changes.

Auditors’ Standards/Practices

The auditors, in conducting the audit planning, will strictly abide to the provisions of the
International Standards for the Professional Practice of Internal Auditing (Standards) and the Code of
Ethics for Internal Auditors. The Standards require that the internal audit activity must be independent
and that the internal auditors must be objective in gathering relevant and sufficient information. The Code
of Ethics for Internal Auditors, on the other hand, expects the auditors to apply and uphold integrity,
objectivity, confidentiality and competency in all cases relating to the conduct of an internal audit
activity.

To ensure confidentiality and professionalism, the following are the only persons to engage as
auditors in conducting the food processing audit in your establishment:
1. Pia Mae P. Bote
2. Annah Jane L. Cabato
3. Charizia Khea G. Caila
4. Francis Miko Ilagan
5. Ronamarie C. Olvis

In connection with the data gathering procedures, we would like to obtain and/or have access with
the following documents, records, system, offices and persons:
1. Vision and Mission statements, Strategic Plans, Goals and Objectives
2. Organizational Structures of relevant offices, most especially in the ITSD
3. ITSD – environment, written control policies and procedures, department goal and objectives,
detailed system process flowchart, including application systems
4. Data Administration Office
5. Registrar’s Office
 6. Cashier’s Office
7. Finance Office
8. Comptroller’s Office
9. Human Resource and Management Department
10. Other relevant documents, records, offices and persons

Relevance, in this case, means to describe anything (document, record, office and/or persons)
which may be considered significant in the information system audit planning. It is to reiterate, however,
that the auditors shall maintain a high degree of confidentiality, independence and objectivity during the
data gathering procedures, and the auditors shall bear the consequences for any violation thereof.

The role of the internal audit is an independent, objective assurance and consulting activity
designed to add value and improve an organization’s operation. It helps an organization accomplish its
objectives by bringing a systematic, disciplined approach to evaluate and improve the effectiveness of
risk management, control, and governance process.

This letter serves as our engagement agreement pertaining to the conduct of the audit planning as
we are partners throughout the whole duration. If you have further questions and clarifications, please do
not hesitate to call us at 0917-8149477 or e-mail us at jisrylraz@gmail.com.

Very truly yours,

JISRYL H. RAZ, CPA

Auditor

LYNDON P. REGODON, CPA

Auditor

RESPONSE:
This letter correctly sets forth the understanding of

By : REV. FR. JOHN CHRISTIAN U. YOUNG________

Title : University President, Father Saturnino Urios University
Date : _____________________________________________