Republic of the Philippines

BATANGAS STATE UNIVERSITY

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS
AND INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas City

November 22, 2018

Mr. Timoteo H. Ilagan Jr.

Metallica Tire Trading
#56 San Antonio, San Pascual
Batangas, Philippines, 4204

Dear Mr. Ilagan:

This Engagement Letter confirms the terms and conditions upon which Boombayah CPAs (“we”)
has been engaged to audit and report on the financial statements of Metallica Tire Trading (the
“Firm”) for the year ending December 31, 2017.

We will conduct our audit in accordance with Philippine Standards on Auditing (PSAs), as
promulgated by the Auditing and Assurance Standards Council. Those standards require that we
are independent and that we fulfil our other ethical responsibilities that are relevant to our audit.
The objectives of our audit are to obtain reasonable assurance about whether the financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
express an opinion on whether the financial statements present fairly, in all material respects, the
financial position, financial performance, and cash flows for the year then ended of Metallica Tire
Trading in accordance with Philippine Financial Reporting Standards for Small and Medium
Entities (PFRS for SMEs).

Although the audit is designed to provide reasonable assurance of detecting errors and irregularities
that are material to the financial statements, it is not designed and cannot be relied upon to disclose
all fraud, theft, embezzlements or other illegal and dishonest acts. As part of an audit in accordance
with the PSAs, we exercise professional judgment and maintain professional scepticism throughout
the audit. We also identify and assess the risks of material misstatement of the financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.

Our procedures will include obtaining an understanding of the management’s internal control
structure and testing those controls to the extent we believe necessary. We will consider, solely for
the purpose of planning our audit and determining the nature, timing, and extent of our audit
procedures, the management’s internal control over financial reporting. We will also evaluate the
overall presentation, structure, and content of the financial statements, including the disclosures,
and whether the financial statements represent the underlying transactions in a manner that achieves
fair presentation. We will communicate significant deficiencies in internal control identified during
the audit of financial statements, if any.

Our audit will be conducted on the basis that management acknowledge and understand that they
have the responsibility for the preparation and fair presentation of the financial statements in
accordance with PFRS for SMEs, and for such internal control as management determines is
necessary to enable the preparation of the financial statements that are free from material
misstatement, whether due to fraud or error.

It is also the responsibility of management to provide us with access, on a timely basis, to all
information of which management is aware that is relevant to the preparation of the financial
statements and related disclosures, such as records, documentation, and other matters, and
additional information that we may request from management for the purpose of the audit.
Management is expected to make available to the audit a draft of financial statements and any
accompanying other information in time to allow us to facilitate the timely conclusion of the audit.
 Republic of the Philippines
BATANGAS STATE UNIVERSITY
COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS
AND INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas City

We will make specific inquiries of management about the representations contained in the financial
statements. At the conclusion of the audit, we will also obtain written representation from
management about these matters, and that management has fulfilled its responsibility for the
preparation and fair presentation of the financial statements in accordance with PFRS for SMEs
and that all transactions have been recorded and are reflected in the financial statements, and has
provided us with all relevant information and access contemplated in this agreement.

Our responsibility is to express an opinion on the financial statements based on our audit and is
limited to the period covered by our audit. If circumstances preclude us from issuing an unqualified
opinion, we will discuss the reasons with the management in advance. If, for any reason, we are
unable to complete the audit or are unable to form or have not formed an opinion, we may decline
to express an opinion or decline to issue a report as a result of the engagement.

We look forward to the full cooperation of management and we trust that they will make available
to us whatever records, documentation and other information are requested in connection with our
audit. There will be no fees and billing arrangements included in this audit unless stated otherwise.

We appreciate the opportunity to be of assistance to the Firm. Please sign below if this agreement
accurately reflects the terms on which the Firm has agreed to engage us.

Sincerely,

____________________ __________________________
Christine Ann M. Geron Daniel John F. Falo, CPA, MBA
Senior Auditor Partner
For and on behalf of Boombayah CPAs

Agreed and accepted by:

Metallica Tire Trading

_____________________
Mr. Timoteo H. Ilagan Jr.
Owner

_____________________
Date