Client Acceptance Policy

Company’s Client Acceptance Policy (hereinafter the “CAP”), in

accordance with the principles and guidelines described in Generally
Accepted Auditing Standards and the IRR of the Republic Act of 1989,
Code of Ethics, and IRR set by any regulating body defines the
criteria for accepting new Clients and stipulates the Client
categorization criteria which shall be adhered to by the Company and
especially by the employees who are involved in the Audit of the
Financial Statements Process.

I. GENERAL PRINCIPLE
a) the Company shall classify Clients into various risk
categories and based on the client acceptance evaluation
tool;
b) decide on the acceptance criteria for each category of
Client;
c) where the Client is a new Client, an account can be
activated only after the relevant due diligence;
d) all documents and data required to be obtained pursuant
to the Company’s Client Acceptance Policy must be
collected before accepting a new Client;
e) no client shall be accepted in anonymous or fictitious
names(s);

II. GAINING KNOWLEDGE ABOUT THE ENTITY

The purpose of this assessment is to gain knowledge on the
risk of material misstatement in the financial statements due
to the answers on the following questions:
1. What is the nature of the business?
2. What is the industry in which it operates?
3. What is the level of competition within its industry?
4. Who are the client’s customers and suppliers?
5. How is the regulatory environment in which the client
operates?

III. GAINING KNOWLEDGE ABOUT THE MANAGEMENT

The purpose of this assessment is to evaluate the risk of
material misstatements in the financial statements and the
likelihood that Fraud may occur due to the practices and
controls set with in the organization like:
1. Remuneration Packages
2. Complex Business Structure
3. Internal Auditing Practices
4. Training Programs (optional)
 5. Turnover of Auditors
6. Internal Controls

IV. CRITERIA FOR ACCEPTING NEW CLIENTS (BASED ON RISK)

Clients shall be evaluated through the Client Acceptance
Evaluation Tool and the preliminary assessment guidelines set
in Sections II to III by which each parameter shall be rated
on the its riskiness (Rating from 1-5, with 1 the least
risky). Based from the General Weighted Average, the client
shall be categorized into different riskiness as follows:
1. Low Risk Clients (85% Above)
The Company shall accept Clients who are categorized
as low risk Clients as long as the general principles
set forth in this CAP are implemented.

2. Normal Risk Clients (76% - 85%)

The Company shall accept Clients who are categorized
as normal risk Clients as long as the general
principles set forth hereinafter are implemented.

3. High Risk Clients (60%- 76%)

The Company shall not accept Clients who are
categorized as high risk Clients as long as the
general principles set forth hereinafter are
implemented. However, the company may offer
consultancy services and if necessary arrangements be
made should the client request for reconsideration
provided these arrangements will not by all means
violate the Implementing Rules and Regulations and the
Code of Ethics, the company shall re-evaluate the
client and decide accordingly.

4. Unacceptable Clients (59% below)

These clients shall by all means should not be accepted
for any engagements.

NOTE:
1. For first-time client, strict compliance in all the areas
shall be observed.
2. For continuing client, Section II may be omitted.