I.
COMPANY BACKGROUND
PROFOOD INTERNATIONAL CORP.
Profood International Corporation is the largest Philippine based dried fruit producer and the standard
bearer of world class processed fruit products from the Philippine Islands.
From the small company that once catered only to the local market, Profood International Corporation
has grown to become the leading producer of various dried fruit, preserves, purees, concentrates, and
juices. Its products are available all over the Philippines and exported to many countries in Asia, the
Middle East, Europe, North, Central, and South America, the Caribbean, and Oceania.
An ISO 9001:2008, HACCP, KOSHER, HALAL, and NSF certified company, their main headquarters are
based in Cebu, Central Philippines. This makes it strategically accessible to source mangoes year round
from throughout the country. At present, the company has four manufacturing sites located in the
north, central, southern, and western parts of the Philippines to be close to the sources of various
regionally grown fruits.
With our sophisticated automated systems, fruit is processed efficiently in a highly sanitized
environment. In the aseptic process, the fruit puree is heated to sterilizing temperatures then
immediately cooled to room temperature within the system before it is packaged into sterile containers.
This technique allows retention of the fruit's natural flavor, color and aroma while prolonging shelf life.
Since its inception in 1980. Profood International Corporation has remained steadfast in its commitment
to product excellence. This strict adherence to superior quality has earned not only satisfaction from
discerning Filipino and foreign customers but also recognition from industry partners world wide.
Profood international corporation is committed to consequently provide high quality and a wide variety
of processed tropical fruit products while protecting the environment in which its product are grown
and processed. Its production practices are solidly built around environmental consciousness and eco-
friendly programs. It is astonished advocate of re-greening the barred Philippine hillsides by covering
them with mango trees. Its factories are even 80% independent of crude oil, using instead coconut
shells burning boilers for steam generation. Profood is aiming zero waste by its residues to value added
products such as feeds from peels, fuel from seeds to help preserve the environment.
Profoods dedication to quality is firmly bathed by quality stringed quality control measures, state of the
art production technologies and continuous improvement through research and innovation.
The company is also very aware to its social responsibility to the welfare of the farming communities
that it relies on with its dedication of helping the small farmer and fruit growing communities in the
country side. It lands a hand to small scaled fruit growers by buying straight from them, instead of using
larger operations for purchasing fresh mangoes and other Philippine fruits. Through the years it has
helped a lot of young students finishing schooling with its summer employment programs and its plants.
Profood International Corporation continues to maintain market leadership driven by the passion for
quality and professionalism that its global customers have come to rely on.
UNIVERSAL FEEDMILL CORPORATION
Universal Feed Mill Corporation is one of the leading feed miller in the Philippines that provides hog
feeds, poultry feeds and fighting cock (gamefowl) feeds at a very affordable and competitive price
nationwide.
Universal Feed Mill Corporation or Unifeeds is a company engaged in the manufacturing of hog and
poultry feeds. Its products include the famous Nutri-grow and Pit Fighter Sabong Feeds. These and other
labels are directly marketed and distributed by its sister company called JM Poultry and Livestock Supply
(Cebu), Inc.
Unifeeds establishment can be described as a spill-over effect of JMs success in the local agrivet scene.
Started in 1984 by Dr. Avelino and Elenita De Manuel ( a veterinarian and animal nutritionist couple), JM
was engaged into selling branded feeds and veterinary products, with customer base made up largely of
backyard raisers.
Vision:
The FEED OF CHOICE of all livestock raisers.
Mission Statements:
To provide hogs, poultry and aqua raisers excellent and complete line of quality feeds at very
affordable prices nationwide.
To serve as a catalyst in the Philippine livestock industrys endeavour to be globally competitive,
through technology transfer and continuous research and development.
To encourage Filipinos to engage in livestock raising as a viable industry to achieve financial
independence.
To adapt innovative and eco-friendly manufacturing practices for sustainable environment.
To provide employees stable and safe working environment with equal opportunity for learning
and personal growth.
GREENCOIL INDUSTRIES, INC.
Greencoil Industries, Inc. is the maker of Lion-Tiger Mosquito coils and Insect Sprays in the Philippines.
Greencoil Industries is the most trusted mosquito killer for more than 50, years.
Vision
To make this world a much better place to live. A nice resting place free from dreaded diseases.
Mission
To provide everyone quality products that will enhance a much better and healthier life
throughout generations.
Greencoil industries Inc. produce two categories of products, which are Lion-Tiger mosquito coils and
Lion- Tiger Aerosol insect Spray.
Under Lion-Tiger mosquito Coils, the company produces the following:
Lion Tiger Lavender Scented Mosquito Coils, providing not only protection against mosquito
bites but also provide an aromatic lavender scent.
Lion Tiger Citrus Scented Mosquito Coils, giving out a refreshing citrus scent.
Flying Tiger Lavender Scented Mosquito Coil
Lion-Tiger Katol in regular, junior and king size
Lion Katol, is the most potent against dengue carrying mosquitoes.
Lion Katol Gold Premium, one of the best products in giving utmost protection against deadly
mosquitoes during rainy season.
Lion King
Tiger Katol, in a pitcher, and lunch box
Under Lion-Tiger Aerosol Insect Spray, the compay produces the Lion Tiger Insect Spray and Lion Tiger
Aerosol with mild scent.
Contact Information
Office Address:
Greencoil Industries, Inc.
Tingub cor Pagsabungan Road
Mandaue City, Cebu Philippines 6014
Telephone Numbers:
+63 32 4221413
+63 32 4221414
+63 32 4221422
Fax Numbers:
+63 32 4221424
Email Address: info@[Link]
II. OBSERVATIONS
PROFOOD INTERNATIONAL CORP.
A. General
Profood International Corp. is an ISO 9001:2008, HACCP, KOSHER, HALAL, and NSF certified company,
and their main headquarters and processing plant is strategically located in the central region of the
Philippines, specifically in A. S. Fortuna Street, Mandaue City, Cebu. The plant site is just a few
kilometers away from the sea and air ports in Cebu, giving way for a convenient access to a continuous
supply of premium, quality fruits from all over the country. Their environment is highly sanitized, making
sure that their products are processed efficiently. The company hires numerous amounts of male and
female employees who are highly and thoroughly trained to do specific tasks on which they are assigned
in the production process. Not only that, the company equips sophisticated, state-of-the-art-facilities
which proved the companys objective to achieve product excellence and superior quality.
B. Production/Process
Although the company produces various juices, purees, preserves, concentrates and dried fruit, what we
only saw was the production process of the dried mango and some juices. The production starts with
acquiring the fruit from the suppliers, and storing them in the warehouse. Practicing the FIFO method,
the mangoes are brought into the production area where they are manually peeled, cleansed, sliced to
different sizes, pasteurized, heated in the oven until they dry. They are then coated with sugar and
cooled to room temperature before they are packed into the sterile containers. The containers then are
weighed to ensure that each pack of dried mango has the desired weight and then distributed to the
different market. As to the production of the juices, the same process applies except that the fruits are
converted into their liquid form and they are mixed with water and other ingredients. They are then
heated to sterilizing temperatures then immediately cooled to room temperature within the system
before it is packaged into sterile containers. The whole process allows retention of the fruits natural
flavor, color, and aroma while prolonging their shelf life.
C. Inventory Management
The raw materials they acquire from the suppliers are stored in specific warehouses, e.g. a specific
warehouse for mangoes, another for coconut, etc. They apply the FIFO method in their inventory
especially with the fruits to avoid over ripeness. The same goes to the finished goods inventory. As to
both raw materials and finished goods, they are placed in containers that are labeled with numbers
which show the should-be amount of raw material/finished good in each container.
D. Property, Plant, and Equipment
The plant site is equipped with the following state-of-the-art facilities:
Four Dried Fruit Processing Plants
Canned Juice Plant
Aseptic Fruit Puree Plant
Stand-Up-Pouch (SUP) Line for Purees, Juices, Sauces and Preserves
Canned and Bottled Preserves Line
Pudding & Jelly Cups Line
Frozen Fruit Line
The aforementioned equipments are cleaned and checked daily to ensure the quality and sanitation of
their products. The equipments may be used for exactly 8 hours, or more or less than 8 hours depending
on the production demand.
UNIVERSAL FEEDMILL CORPORATION
A. General
Universal Feed Mill Corporation or Unifeeds is a company engaged in the manufacturing of hog and
poultry feeds. Its plant site is located in Don Suico St., Riverside, Canduman Mandaue City, Cebu. They
employ highly skilled staff and workers for their production, the plant site is fully automated and their
products are laboratory tested to bring the best in animal nutrition.
B. Production/Process
The company constantly purchases raw materials directly from suppliers. The raw materials are then
fortified with organic trace materials, prebiotics, probiotics, and natural feed supplements to ensure the
safety of the consumers and the environment. Various feeds are produced, namely hog feeds, poultry
feeds, and gamefowl feeds.
C. Inventory Management
There is only one warehouse for the raw materials and finished goods inventory. One side of the
warehouse is for the raw materials, while the other is the finished goods inventory. They constantly buy
raw materials from suppliers so there were many raw materials stored in the warehouse. Based on our
understanding, their production is not based on demand or a quota in their days produce. From what
we have seen, there were many sacks of feeds produced so production was temporarily stopped.
Property, Plant, and Equipment
The whole production is interrupted if one part of their PPE is damaged because all their PPEs are
connected with one another.
GREENCOIL INDUSTRIES, INC.
A. General
Greencoil Industries, Inc. office and processing plant is located in Tingub corner Pagsabungan Road,
Mandaue City, Cebu. The location is quite surprising because the plant site is not secluded by many
people. Nevertheless, the company is the maker of the well-known Lion-Tiger Mosquito Coils and Insect
Sprays, which protect us from the dreaded diseases like Dengue and Malaria. The company focuses its
workforce on manual labor, thus employing many men and women to perform their manufacturing
process. There is not much to focus on sanitation due to the nature and type of the raw materials used,
and the type of work done during the process.
B. Production/Process
The raw materials needed to make mosquito coils are coffee pulp, coco shells, dried ipil-ipil, mango and
mahogany leaves, sawdust, gum resin powder, and cassava starch. They are screened, chopped to fine
pieces, and put to a rotary dryer to reduce moisture content. They are the pulverized through a
pulverizing machine until they become a fine powder. All the material powder will then be poured into a
rotary mixing machine to mix them thoroughly. The mixed powder is transferred to the kneader.
Actives, cassava starch and coloring matter are also added in the kneader. The coils are formed through
a stamping machine. Wet coils are put on screen trays, and then placed in the push carts for drying.
These push carts are engaged in a chain pusher to go inside a tunnel dryer for 5 hours, and they are
harvested and will undergo the final quality control. Lastly, they are transferred to the packing machine
to be ready for shipment. Each coil guarantees 8.5 hours of continuous protection against mosquitoes.
C. Inventory Management
With regards to the inventory management of Greencoil Industries Inc., the ingredients (in sacks) are all
stacked and placed in a warehouse. Based on our understanding and observation, FIFO method is not
applied to their raw material inventory, but applied to finished goods inventory. During the stamping
and drying process there may be breakage of coils but it is not a problem since those that were broken
are brought back to the pulverizing machine to turn them again to fine powder and processed further
again. From the interview of our guide, they usually produce 9,000 or more coils each day but there
really is no quota with regards as to amount of finished goods done each day since amount of
production depends on the willingness of the employees as to the number of hours theyd work each
day. The finished goods are then placed in boxes, stored in the finished goods area awaiting shipment.
D. Property, Plant, and Equipment
The plant site is equipped with the pulverizing machine, rotary mixing machine, kneader, stamping
machine, and tunnel dryer. The machines they equip are already quite old, and there is much
maintenance needed.
III. INVENTORY
PRO FOOD INTERNATIONAL CORP.
WHAT COULD GO WRONG
ASSERTIONS
INTERNAL CONTROL
1. Employees may bring the fresh
fruits or finished products home
without management being able
to detect them.
Existence The company should invest in full body
scanners so that they could detect
employees engaging in theft of finished
products.
2. The quantities indicated in their
inventory listings do not
coincide with what the company
really has currently.
Completeness The company must continually review its
final inventory listing. Another employee
should check on the clerical accuracy of
the companys software regarding their
inventory listing.
3. Consigned products are included
as part of the companys
inventories.
Rights and Obligations Consigned products should be clearly
segregated from the companys actual
products. Aside from the labels which
allow employees to recognize which
products are consigned and which are not,
someone must also check the recording of
such inventories.
4. Spoiled items might have been
overlooked.
Valuation The companys accountant should always
be informed of the number of defective
and obsolete items so that he can
appropriately record its cost.
5. Billed products ready for
shipment have not yet been
excluded in the inventory.
Rights and Obligations Separate them from the rest of the group.
UNIVERSAL FEEDMILL CORP.
WHAT COULD GO WRONG
ASSERTIONS
INTERNAL CONTROL
1. Excessive Purchase of Raw Materials Existence Too many purchases can increase cost of
storage. Purchases should be regulated
by top management. They should
strengthen their cash disbursement cycle.
2. The spoiled feeds may not be
detected.
Valuation Final Review of Products before
packaging should be done.
3. Items in their other site may be
excluded from inventory
Rights and Obligations Indicate in the inventory listing that there
are also items in the other site which are
not physically present but still are
includible in the companys inventory.
4. Raw Material Obsolescence Valuation Update Depreciation policies.
5. Excessive Production Existence Production Manager should set a limit
regarding their daily production.
GREEN COIL INDUSTRIES
WHAT COULD GO WRONG
ASSERTIONS
INTERNAL CONTROL
1. Unsuccessful drying of coils Existence Buy another tunnel dryer that could fit all
processed wet coils so as not to rely on the
weather
2. Not all coils might be included
in the count at year-end
Completeness Production Manager should also take note on
the number of coils they currently have
whether there are too much excess or not.
3. Upon shipment, the coils may
break and will not be salable
anymore
Existence Secure the coils by storing them in a truck
container that has stoppers that could
protect the coils from the roughness of the
road upon travel.
4. Powdered raw materials could
easily be blown away by the wind
or spilled
Existence When not in use, cover the sacks of the
powdered raw materials. Provide a secure tie
on the sacks.
5. Breaking coils upon packing Completeness Quality Control must be maintained even in
its last phase of production. Only allow the
expert employees pack the good coils so they
wont damage them.
IV. PPE
PROFOODS INC.
Audit Program
Audit Objective:
1. To determine whether the machinery, equipment and others under property, plant and
equipment was included in the books or in the balance sheet.
2. To determine whether the capitalizable costs were added to cost of the property plant and were
not expensed.
3. To determine whether the Profoods Inc. has the legal right or equivalent ownership rights to
that PPE included.
4. To determine whether the methods used in depreciating the property , plant and equipment are
consistent and was properly computed.
5. To determine whether the balances in the depreciation allowance accounts are reasonable,
considering the expected useful lives of the property units and estimated salvage value.
6. To determine whether the property, plant and equipment was properly valued.
Audit Procedures:
1. Prepare the summary of the Profoods summary of its property, plant and equipment and
analysis on Accumulated Depreciation for the year.
2. Determine whether a listing of all assets owned is maintained.
Obtain a copy
Review for completeness
Determine date of latest compilation
3. Obtain copies of the invoices which adequately document the purchase.
4. Check the records in the minutes of meeting of the Stockholders if there was the plan of
acquisition.
5. Conduct physical investigation on the current acquisition of PPE.
6. Investigate the machines and equipment if there were retirement or disposal.
7. Make inquiries to executives and supervisors regarding retired assets.
8. Check the evidence of the legal ownership of the company on PPEs.
9. Examine the Clients computation on depreciation through recomputation.
10. Investigate the status of the idle property, plant and equipment.
11. Determine whether there is appropriate security over mission assets. This includes
documenting previous history of theft.
UNIFEEDS INC.
Audit Program
Audit Objective:
1. To determine whether the property, plant and equipment was properly recorded in the books.
2. To determine whether the specific machines or equipment reflected in the books exists.
3. To determine whether the valuation of the property, plant and equipment is correct.
4. To determine whether the cost directly attributable to the property, plant and equipment was
capitalized and was not expensed.
5. To determine whether the company has legal rights on that PPE.
Audit Procedures:
1. Prepare the property, plant and equipment transactions and analysis of Accumulated
Depreciation during the year.
2. Have a physical inspection on the newly acquired property, plant and equipment.
3. Inquire of the owner/manager if there are any major additions (purchased or constructed by the
company or capitalizable leases).
4. Obtain copies of the invoices which adequately document the purchase.
5. Inquire of the owner/manager if there has been any change in depreciation lives or methods,
and if there are significant amounts of fully depreciated assets.
6. Recompute the depreciation of the machines or equipment.
7. Examine significant invoices for repairs and maintenance expenses. Document the items tested.
8. Analyze repairs and maintenance expense account.
9. Check if those machines recorded in the books was still working and can still give economic
benefit to company.
10. Investigate the PPEs that was retired or disposed.
GREENCOIL INC.
Audit Program
Audit Objective:
1. To determine whether the property, plant and equipment was properly recorded in the books.
2. To determine whether the specific machines or equipment reflected in the books exists.
3. To determine whether the valuation of the property, plant and equipment is correct.
4. To determine whether the cost directly attributable to the property, plant and equipment was
capitalized and was not expensed.
5. To determine whether the company has legal rights on that PPE.
Audit Procedures:
1. Prepare the property, plant and equipment transactions and analysis of Accumulated
Depreciation during the year.
2. Determine whether a listing of all assets owned is maintained.
Obtain a copy
Review for completeness
Determine date of latest compilation
3. Test the cost by examining supporting documents such as purchase orders, paid checks,
vendors invoices, purchase contracts, receiving reports, etc.
4. Trace the original cost and acquisition date of the asset to prior period property records.
5. Determine that the disposition was properly authorized.
6. Consideration of depreciation methods and lives and reasonableness of accumulated
depreciation.
7. Recompute depreciation expense on selected assets.
8. Inquire of the owner/manager if there has been any change in depreciation lives or methods,
and if there are significant amounts of fully depreciated assets.
9. Inquire of the owner/manager if there are any major retirements, sales of property,
abandonments, or damages to property not reflected in the books.
10. Consider the independently testing the physical existence of and, if appropriate, the title to
property, plant and equipment.
V. DOCUMENTATION
PROFOODS INC.
UNIVERSAL FEEDMILL CORPORATION
