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June 1, 2015

Carmela Smith

Chantal Goods, Inc.

Highlands Hills Street

Cebu City

Dear s. Smith!

"ou ha#e re$uested that %e audit the &inancial statements o& Chantal Goods,Inc. 'the

Com(any), %hich com(rise the statement o& &inancial (osition as at December *1, 2015, and

statement o& com(rehensi#e income, statement o& changes in e$uity and statement o& cash

&lo%s &or the year ended, and notes com(rising a summary o& signi&icant accounting (olicies andother e+(lanatory in&ormation, &or the (ur(ose o& e+(ressing an o(inion on them. he ob-ecti#es

o& this letter, together %ith the attached terms and conditions, are to set out our terms &or

carrying out the %or, to clari&y res(ecti#e res(onsibilities, and to con&irm our acce(tance.

/e %ill conduct our audit in accordance %ith hili((ine Standards on uditing 'Ss). hose

standards re$uire that %e (lan and (er&orm the audit to obtain reasonable assurance about

%hether the &inancial statements are &ree o& material misstatement. n audit includes

e+amining, on a test basis, e#idence su((orting the amounts and disclosures in the &inancial

statements. n audit also includes assessing the accounting (rinci(les used and signi&icant

estimates made by management, as %ell as e#aluating the o#erall &inancial statement

(resentation. ecause o& the test nature and other inherent limitations o& an audit, together %ith

the inherent limitations o& any accounting and internal control system, there is an una#oidable

ris that e#en some material misstatements may remain undisco#ered.

In maing our ris assessments, %e consider internal control rele#ant to the entity3s (re(aration

and &air (resentation o& the &inancial statements in order to design audit (rocedures that are

a((ro(riate in the circumstances, but not &or the (ur(ose o& e+(ressing an o(inion on the

e&&ecti#eness o& the entity3s internal control. Ho%e#er, %e %ill communicate to you in %riting

concerning any signi&icant de&iciencies in internal control rele#ant to the audit o& the &inancial

statements that %e ha#e identi&ied during the audit.

lthough the audit is designed to (ro#ide reasonable assurance o& detecting errors andirregularities that are material to the &inancial statements, it is not designed and cannot be relied

u(on to disclose all &raud, de&alcations, or other irregularities. Ho%e#er, %e %ill in&orm you o&

any material errors, and all irregularities or illegal acts, unless they are clearly inconse$uential,

that come to our attention.

anagement is res(onsible &or the basic &inancial statements and all accom(anying in&ormation,

as %ell as all re(resentations contained therein. "ou are res(onsible &or establishing and

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maintaining internal controls, including monitoring ongoing acti#ities and &or the selection and

a((lication o& accounting (rinci(les.

anagement is res(onsible &or maing all &inancial records and related in&ormation a#ailable to

us on a timely basis. "our res(onsibilities include ad-usting the &inancial statements to correct

material misstatements and con&irming to us in the re(resentation letter that the e&&ects o& any

uncorrected misstatements aggregated by us during the current engagement and (ertaining to

the latest (eriod (resented are immaterial, both indi#idually and in the aggregate, to the

&inancial statements taen as a %hole.

he (rocedures that %e %ill (er&orm are solely to (ro#ide assurance regarding accuracy o&

assertions or in sim(le %ords %hether &inancial statements re&lect true state o& a&&airs o& the

entity. 4+ternal auditor3s o(inion in no %ay hel(s users to deri#e conclusions regarding

managerial e&&ecti#eness or &uture #iability o& the entity and thus limited only to (ro#ide

assurance regarding (re(aration and (resentation o& &inancial statements according to s(eci&ic

accounting &rame%or.

/e estimate our &ees %ill be &rom 100,000120,000. 6ur &ees, %ith additional outo& (ocet

e+(enses, %ill be billed as %or (rogresses. /e %ill address our in#oices to John Smith, 7

Controller.

Sincerely "ours,

7ianca earl mores, C

he ser#ices and terms as set in this letter are agreed to.

Chantal Goods, Inc.

y!

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Chantal Styles, C9

C46

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