Questions and Answers
What is the primary function of the banking and finance sector in the Philippine economy?
Which type of banks dominate the Philippine banking industry based on total deposits?
What is one of the key objectives for the banking sector to promote economic growth?
In which sector are the needs for financing capital equipment primarily found?
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What classification is NOT mentioned as part of the Philippine banking system?
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One of the objectives in the module is to learn about which of the following?
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What is a critical role of financial institutions in the economy?
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What is a major challenge faced by the banking sector in encouraging savings?
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What primary function do property management firms serve for real estate owners?
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Which of the following professionals is NOT typically involved in the real estate industry?
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What significant project is part of the Philippine government's infrastructure development plan?
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Which department is responsible for managing the majority of the 100 infrastructure flagship projects in the Philippines?
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What initiative is aimed at promoting construction and infrastructure in the Philippines?
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By 2018, approximately how many permits were issued for general engineering contractors in the Philippines?
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Which project is NOT listed as part of the upcoming infrastructure developments in the Philippines?
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The targeted completion year for the Metro Manila Subway Project is set for which year?
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What should be done regarding legal matters when preparing financial statements?
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Which change is most important to document in internal control narratives?
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What is a key preparation step for upcoming audit requests?
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What should be discussed regarding going concern considerations?
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How do rent concessions differ in reporting between ITB and GAAP?
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What is a primary concern when evaluating the ability to continue as a going concern?
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What should management verify during planning discussions with auditors?
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What is typically required for changes in major transactions?
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What is the primary purpose of conducting payroll audits in transportation companies?
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Which aspect of safety audits is critical for improving safety policies within transportation companies?
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What can physical equipment audits help transportation companies evaluate?
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Why is revenue recognition considered important in the transportation industry?
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What potential issues can arise if payroll audits reveal major discrepancies?
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What role do disaster response plans play in safety audits for transportation companies?
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In the context of revenue recognition, what must transportation companies focus on primarily?
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Which component is NOT commonly evaluated during safety audits in transportation companies?
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How should an entity account for rent deferrals under ITB?
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What must an entity evaluate regarding tenant-related accounts receivable under ITB?
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What is the treatment of uncollectible accounts receivable under ITB?
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What should an entity do with existing deferred financing costs when debt is extinguished?
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How should new costs incurred during the modification of a loan be treated?
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Which of the following is true regarding tenant improvements for vacated tenants under ITB and GAAP?
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What should be done with deferred leasing costs associated with vacated tenants under both ITB and GAAP?
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What is the primary difference between GAAP and ITB in relation to accounts receivable?
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Study Notes
Overview of Auditing in Specialized Industries
- Critical function of the banking and finance sector in the Philippine economy involves mobilizing domestic savings into investments.
- Essential for supporting firms in raising productive capacities, expanding factories, and increasing job creation.
- Philippines has three bank types: universal/commercial, rural/cooperative, and thrift banking, with universal/commercial banks holding roughly 12 trillion Philippine pesos in deposits.
Module Objectives
- Understand the nature and background of specialized industries.
- Learn about relevant statistics and updates in the Philippine context.
- Identify audit considerations and trends specific to the industry.
Property Management
- Property management firms assist real estate owners in renting units, managing repairs, and handling tenant interactions, charging a fee based on rent.
Construction Sector
- Significant focus on construction since 2016 with 100 infrastructure flagship projects initiated to enhance connectivity and traffic flow.
- Major projects include Metro Manila Subway costing approximately 357 billion pesos, with completion targeted for 2025.
- The "Build Build Build" program led to a rise in building contractor licenses, with around 4.8 thousand permits issued for general engineering contractors in 2018.
Audit Considerations
- Monitor legal or regulatory issues, including potential legal communications and tenant vacancies that might affect financial statements.
- Adjust internal control narratives for changes due to remote work and staff turnover, supported with legal documentation for all significant transactions.
- Prepare for changes in audit requests, shifting towards remote processes, including virtual meetings and general ledger access.
Going Concern Considerations
- Evaluate pandemic effects on an entity's ability to continue as a going concern, including cash flow issues or tenant losses.
Technical Accounting Considerations
- Rent Concessions: Under ITB, they offset revenue. For GAAP, rent concessions may be accounted as included in the original lease agreement.
- Rent Deferrals: ITB impacts cash collection timing, while GAAP allows for two accounting methods regarding deferrals during COVID-19.
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Tenant-Related Assets:
- Perform evaluations of accounts receivable for collectability.
- For ITB, uncollectible accounts are written off; GAAP allows for an allowance for doubtful accounts.
- Identify tenant improvements and deferred leasing costs for vacated units and potentially write these off.
Financing Costs
- Deferred Financing Costs: Extinguishment requires writing off existing costs. New costs are capitalized and amortized over the new loan's term.
Auditing in the Transportation Industry
- Revenue recognition involves understanding the principles that dictate when and how revenue is recorded.
- Payroll audits ensure accurate payments, especially for non-salaried employees, by analyzing mileage records and time sheets.
- Safety policy audits assess the effectiveness of safety protocols and their implementation based on incident reports.
- Physical equipment audits ensure that assets generating income are in good condition and properly documented.
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Description
Explore the essential roles and responsibilities of property management firms in the real estate industry. This quiz covers tasks such as rent collection, maintenance, tenant management, and the fee structures involved. Test your knowledge on how property management contributes to successful real estate operations.
