LIPI Employees Coop Proposal

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MORA, LUMARDA AND ASSOCIATES No. 2 Don J. Llorente St.,Certified Public Accountants Capitol Site, Cebu City, Philippines

Telefax : 255-4960Cell Nos.: 0905-2630557 (alex)

: 0917-6259527 (jun/oyang): 0927-5728150 (rheneir)

November 23, 2007

LIPI EMPLOYEES MULTI-PURPOSE COOPERATIVE

c/o Lexmark Intl. Philippines, Inc.,

Mactan Economic Zone, Lapulapu City

Cebu, Philippines

Attention: Ms. Lilibeth Peralta Chief Financial OfficerMadam:

We are pleased to submit this proposal for professional services to performstatutory audit of the financial statements of the Cooperative as of and for theyear ended December 31, 2007 be rendered to LIPI EMPLOYEES MULTI-PURPOSE COOPERATIVE (the Cooperative).

Scope of Work

Our work will consist of a statutory audit of the financial statements of theCooperative as of and for the year ended December 31, 2007 to enable us to express

an opinion on its financial position as of that dates and on the results of itsoperations and its cash flows for the years then ended.

Our audit of the financial statements of the Cooperative will be made in accordancewith the Philippine Standards on Auditing and, accordingly, will include a review andevaluation of existing internal controls as a basis for determining the nature andtiming of other audit procedures and the extent of tests of recorded transactions.

Although, to some extent, we will assist you in the compilation of the sourcedocuments and accounting records to reconstruct account balances and the financialstatements, such is your primarily responsibility as we are prohibited by the code ofethics to do so being your external auditors.

Moreover, as you know, the principal reliance for the detection of irregularities isnecessarily placed on the accounting procedures and internal control of theCooperativesince the extent of activities and volume of transactions make itimpracticable, both from the standpoint of volume and cost, to make 100%examination of the documents and records. Any irregularities, which may come toour attention, will, of course, be carefully analyzed and be promptly reported to you.We will also submit to you any suggestions we may have for strengthening andimproving accounting procedures and internal control.


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MORA, LUMARDA AND ASSOCIATESCertified Public Accountants

Deliverables

Upon completion of the engagement,we will submit the following reports:

1. an auditors' report containing our opinion on the Cooperative's financialstatements;

2. an auditors certification for submission to the CDA;

3. draft financial statements of the Cooperative as of and for the yearended December 31, 2007 for your review and approval, which include thefollowing:

statement of financial condition statement of operation and distribution of net savings statement of changes in members equity

cash flow statements notes to financial statements

Professional Fee

Normally, our fee is based on the actual time that we will incur to complete theengagement. For the services outlined above, we propose a professional fee ofP40,000, exclusive of out-of-pocket expenses (OPEs) and filing fees and othercharges that may be required by the CDA.

This fee estimate contemplates that the Cooperative will provide help by way of

compiling the available source documents and records, preparation of requiredschedules and analyses, coordinating with parties whom information could beextracted (such the banks, the officers of the Cooperative, etc.), and giving clericalassistance.

OPEs (which will usually be incurred for transportation and reproduction costs of

documents and reports) shall be for your account. We propose to bill you a fixed

amount of OPE ofP4,000 only.

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Our proposed professional fee and fixed OPEs will be billed as follows:

Upon acceptance of this proposal:1/4 of the professional fee P 10,000

1/2 of the fixed OPEs 2,00012,000

Upon start of audit fieldwork

1/2 of the professional fee 20,000

1/2 of the fixed OPEs 2,000

22,000

Upon completion of the audit

and submission of the

financial statements

1/4 of the professional fee 10,000

P 44,000

For the filing fees and other charges that maybe required by the CDA, we will

advance from you the amount before filing the papers and documents to the said

regulatory agency.

In the event that this engagement is discontinued as a result of your decision not

to proceed with our services relative to this engagement, any initial fee shall be

considered as our fees for services rendered thus far.

Other Terms and Conditions

Our Obligations

We must use all reasonable commercial efforts to complete the services. We will

perform the services with due care, competence and diligence. However, the

quality of the services will depend on inputs from you and other necessary parties.

Your Obligations

In a timely fashion, you shall give us the following:

1. information we are entitled for access to necessary information involving theengagement; and,

2. documents, records and system with our assistance, you undertake to compileall available source documents and records; we should have an access to thesesource documents and records, compiled information, books of accounts andinformation technology system, if any, and access to premises and to people(whether management or staff) with relevant information, skills and experience.

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Delays and Liability Clause

We will not be liable for any failure or delay in performing the services if that

failure or delay arises from anything beyond our control - including the untimelyperformance by you of your obligations.

In the unlikely event that you sustain loss or damage in relation to this

engagement, we would only be liable to the extent of the fees for providing the

services under this engagement; provided, however, that our liability for such loss

or damage shall arise only if such loss or damage is clearly proven to have directly

resulted from willful misconduct or willful breach of any applicable law, rule or

regulation by us.

Confidentiality

Both of us agree to take reasonable steps to maintain (within our respective

organizations) the confidentiality of any proprietary or confidential information of

the other.

Termination

The engagement will be terminated when the services have been provided.However, either party may terminate, for a reasonable cause, the engagement

upon fifteen (15) days prior written notice to the other party. If this occurs, you

will be invoiced for time and expenses incurred up to the termination date together

with reasonable time and expenses incurred to bring the services to a close in a

prompt and orderly manner.

Upon termination for any reason, the parties shall return each others confidentialinformation, except that we may retain a set of working papers even if they

contain confidential information of the client.

Who are the partners?

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ATTY. RHENEIR P. MORA, CPAMANAGING PARTNER

BIR Accredited Practitioner 2387 Inayagan, Naga, Cebu

CDA Accredited Practitioner Tel. no.: (032) 255-4960

SEC Accredited Practitioner Mobile no.: 0927-5728150

PRC/BOA Accredited Practitioner Email address: [email protected]

WORK EXPERIENCE

CPA Review Professor / College InstructorUniversity of San Jose-RecoletosCPA Review Center (June 2006present)Taxation and Practical Accounting 1

PractitionerR. P. Mora Accounting and Auditing Services (2003-present)Bookkeeping, Auditing and Consultancy Services

College InstructorUniversity of Southern Philippines Foundation (2003-present)Cebu Institute of Technology (2004-2006)Practical Accounting 1 and 2, Advanced Accounting, Taxation, and Business Law

Finance and Administrative OfficerMundogas Philippines, Inc. (Sept. 2001-May 2003)Cebu Uniting for Sustainable Water Foundation, Inc. (Oct. 2000 to Sept 2001)

Junior Audit StaffDiaz Murillo Dalupan, CPAs (Jan. 2000 to June 2000)

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ALEXANDER G. LUMARDA , CPA

Partner11th Placer October 1999 CPA Licensure Examination

Pungsod, Lawaan 3, Talisay City, 6045 Cebu, PhilippinesMobile no.: 0905-2630557

Email address: [email protected]

WORKING EXPERIENCE CPA Practitioner

Bookkeeping, Auditing and Consultancy Services

College InstructorCebu Institute of Technology (2000-2004)Practical Accounting 1, Practical Accounting 2, Advanced Accounting,

Cost Accounting and Taxation

Proprietor/EntrepreneurSurefun Video House & AC Home Video (March 2004-present)AlexCole Realty Ventures (March 2004-present)

Junior Audit StaffSycip Gorres Velayo & Co, CPAs (Nov. 1999 to June 2000)

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CURRENT CLIENTS SERVED:

PHOENIX BUILDING SYSTEMS CORP.

PHOENIX BUILDING SYSTEMS (DAVAO) CORP.

GLOBAL BUILDING MATERIALS (GBM) MARKETING CORP.

CEBU MITSUMI EMPLOYEES MULTI-PURPOSE COOPERATIVE (CEMEMCO)

AUDIONET-AXIS TELECOMM/ IDNI / CODI

TRAX TECHNOLOGIES APAC

A.C. POWERTECH SERVICES, INC.

A. SUAREZ STERLING CORPORATION

ZERAUS ESTATE LEASING

ADRENALINE EX ADVERTISING CORPORATION

DO IT MARKETING CO. PHILS., INC.

CEBU LADY LAWYERS ASSOCIATION (CELLA)

REGNER CONSTRUCTION AND DEVELOPMENT CORP.

BORJA FAMILY HOSPITAL CORPORATION

SOUTHFIELD DISTRIBUTION NETWORK FIELDS

SHEYALAINE TRADING

GENACE PHARMA DISTRIBUTOR

EUROSOL PACIFIC, LTD. / EUROSOL PHILIPPINES

COMPUSHACK COMPUTER SALES

ORLANES MEDICAL CLINIC

MASTERS MACHINE SHOP

SIRC TRADING/ SIRC ELECTRONICS

MRA CREDIT COLLECTION AGENCY

SERVICES OFFERED:

Your success is paramount to us.. This is why we make sure you get value-

added services that will help you gain or maintain a competitive advantage in the

market where you operate, whether at home or abroad. Our approach is carefully

designed to identify, anticipate, and meet your particular needs. In the

Philippines, we offer the following services:

a. Assurance and Advisory Business Services

b. Internal audit solutionsc. Tax planning and consultancy

d. Due diligence reviewe. Special Audit using agreed-upon procedures

f. Compilation and Review engagements

g. Bookkeeping and Reportorial compliance

h. Legal Services offered:- Litigation

- Non-Litigation

- Financial and Corporate Services

* * *

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If the foregoing terms meet with your approval, we will appreciate your signing theduplicate copy of this letter and returning it to us.

Very truly yours,

MORA, LUMARDA AND ASSOCIATES

BY: ATTY. RHENEIR P. MORA, CPAManaging Partner

CONFORME:

We acknowledge that the engagement letter is a binding agreement betweenMora, Lumarda and Associates and LIPI EMPLOYEES MULTI-PURPOSE

COOPERATIVE.

(Signature) (Signature)

(Name and Position) (Name and Position)

(Date) (Date)

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Documents

LIPI Employees Coop Proposal