INTERNAL AND EXTERNAL AUDIT


ARTICLE V

Audit and Compliance

1. Internal Audit

1. The Internal Audit Group shall provide independent and objective assurance and advisory services to the Corporation designed to add value and improve on the organization’s operations. It shall provide the Board, Management and the stockholders with reasonable assurance that the Corporation’s key organizational and procedural controls are effective, appropriate, and complied with. It shall review, audit and report on, among others, the effectiveness of the system of organizational controls, taking into account the nature and complexity of the business and the business culture; the volume, size and complexity of transactions; the degree of risk; the degree of centralization and delegation of authority; the extent and effectiveness of information technology; and the extent of regulatory compliance.
2. It shall perform its auditing functions faithfully by maintaining independence from the management and controlling shareholders.
3. The Internal Audit Group shall be headed by a Chief Audit Executive. The Chief Audit Executive shall preferably be a Certified Public Accountant and/or a Chief Internal Auditor and shall report to the Audit Committee of the Board of Directors.
4. The Internal Auditors shall report that their activities are conducted in accordance with the Standards for the Professional Practice of Internal Auditing. Otherwise, the Chief Audit Executive shall disclose to the Board and Management that it has not yet achieved full compliance with the standards for the professional practice of internal auditing.

1. The Board, through the Audit Committee, shall recommend to the stockholders a duly accredited external auditor who shall undertake an independent audit and shall provide an objective assurance on the way in which the financial statements shall have been prepared and presented.
2. The External Auditor shall –
   1. perform fair audits independently from the Corporation, its management and controlling shareholders, so that shareholders and other users may maintain confidence in the Corporation’s accounting information;
   2. check whether any fact conflicts with the audit results in the information disclosed regularly with the audited financial statements, and demand correction, if necessary;
   3. attend the annual stockholders meeting and answer any questions on audit reports and on themselves, their work and their remuneration;
   4. perform such other functions as may be approved by the Board in its engagement of the auditor, provided, however, that non-audit work shall not be in conflict with the functions of the auditor as external auditor.
3. The External Auditor shall be rotated every five (5) years or earlier, or the handling partner shall be changed.
4. The reason/s for the resignation, dismissal or cessation from service and the date thereof of an external auditor shall be reported in the Corporation’s annual and current reports. Said report shall include a discussion of any disagreement with said former external auditor on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which if not resolved to the satisfaction of the former auditor, would have caused making reference to the subject matter of the disagreement in connection with its report.
5. If an external auditor believes that the statements made in an annual report, information statement or proxy statement filed during his engagement are incorrect or incomplete, he shall also present his views in said reports.

1. Operationalize this Manual, and monitor compliance with the provisions and requirements of this Manual;
2. Appear before the Securities and Exchange Commission upon summon on similar matters that need to be clarified by the same;
3. Determine violation/s of the Manual and recommend penalty for violation thereof for further review and approval of the Board;
4. Issue a certification every January 30th of the year on the extent of the Corporation’s compliance with this Manual for the completed year, explaining the reason/s of the latter’s deviation from the same;
5. Provide the Commission at the end of every fiscal year with a sworn certification that the requirement for independent directors and their attendance at meetings in accordance with Sec. II(7) of SEC Memorandum Circular No. 2 has been complied with. The said certification may be submitted with the Corporation’s current report (SEC Form 17-1) or on a separate filing;
6. Identify, monitor and control compliance risks;
7. Determine violations of this Manual and create a system for according due notice, hearing, and due process for dealing with violations of the Manual; viii. Recommend the penalties for violations of the manual, for further review and approval of the Board. The appointment of the Compliance Officer shall be immediately disclosed to the Securities and Exchange Commission on SEC Form 17-C. All correspondence relative to his functions as such shall be addressed to said Officer.