1. INTRODUCTION TO
COOPERATIVE AUDITING
Prepared by:
EFFERSON P. RAMIREZ
Senior Auditor

2. Auditing
A critical and systematic examination of a
client’s:
 Internal control system
 Accounting transaction, records and financial
statements already prepared by management
and staff and other legal records and
documents
 Management performance

3. Basic Principles
 Auditing is a systematic and independent examination of
evidences (books of accounts, internal control systems,
risk management and others) to enable expression of
opinion as to the fairness of an entity’s financial
statements in accordance with Philippine Accounting
Standards.
 It is conducted periodically
 It should be documented for review purposes for future
improvement

4. Who shall conduct the audit?
 Any competent persons not having direct
responsibility of the entity being audited.

5. Objectives
 To enable expression of opinion on the
fairness of the financial statements in
accordance with the new Philippine
Accounting Standards

6. Other Objectives
 An audit is conducted to find out whether an
organization has set of procedures and systems in
place to manage risks.
1. A requirement for any business management system;
2. To verify whether risk identification systems and
mitigation procedures are working;
3. Find opportunities for improvement and provide
management with information for continuous
improvement on risks mitigation.

7. Remember
 The audit is intended to find improvement for
the organization NOT necessarily to FIND
FAULT in the way people are doing things.

8. Kinds of Audit
As to who will perform the
As to approach of the audit :
audit :
Traditional Audit
Internal Audit
Risk Based Audit
External Audit
As to what audit
Financial audit
Management audit

9. In any kind of audit, the management and
auditor would have to prepare schedules
and checklist to do a site or document audit
or both to get a complete picture of the
organization’s state of affair.

10. Scope of Financial Audit
 Examination of the books of accounts of the
client (Cash Receipts Journal, Sales Book,
General Journal, Subsidiary Ledger);
 And all documents and evidences
supporting the entries in the books of
accounts for the year under audit.

11. Value Added Audit through Risk
Based Approach
 For now we shall at least help to start
awareness and introduce management of
risks on aspects like good governance,
financing, marketing, production,
personnel. office management and
accounting controls and practices.

12. On Good Governance
 The Auditor must look into the client’s goals,
objectives, plans, programs, policies
implementation, efficiency, effectiveness
fairness, accountability, transparency of the
board of directors, committees, and
management staff and internal controls
adopted by the client.

13. On Risk Management
 The Auditor must assess and help mitigate
risk management system in 5 areas:
• Strategic Risk
• Credit Risk
• Market Risk
• Liquidity Risk
• Operational Risk

14. On Financing
 The capital build-up of the
client, its ability to make
payment for prompt payables
(liquidity), and with financing
institutions (solvency).

15. On Marketing
• The ability of the client to maximize
sales/services with the least amount
of money involved through fast turn-
over of goods/services shall be
assessed.

16. On Production
• The ability of the client to maximize
utilization of existing manpower,
materials, capital, facilities, and
machines in the production of goods
and services shall be evaluated.

17. On Personnel Management
• Policies and recruitment and selection,
remuneration, staff development and
performance, compliance with labor
welfare and laws must be evaluated.

18. On the Accounting Aspect
• The auditor must look into how the
management has effectively utilized the
financial report and decision-making.
These can be determined in the policies,
plans and programs, budget, and results
of operations of the client.

19. Frequency of Auditing
• The auditor shall have continuous audit on the transactions
of the client, (based on agreed upon schedules);
• Surprise cash count, confirmation of receivables and
payables, pre-audit of disbursement voucher, inspection of
purchases, and observation of inventory taking, physical
verification of properties, plants ( fixed assets) shall be
done accordingly;
• Other procedures may also be conducted.

20. Frequency of Audit
• Other procedures may also be
conducted from time to time for
continuing audit engagements.

21. Review of Audit Committee Report
• The audit committee shall submit the audit
report to the BOD at least regularly. The
external auditors should also review
recommendations whether acted upon by
management.

22. Year end Audit
• The Philippine Cooperative Code of 2008
(RA9520) requires cooperative to be audited
by accredited external auditor.
• BSP and SEC also require Banks and SEC
registered entities to be audited by Accredited
Auditors

23. Some competencies required for the auditors
 Adequate technical training and proficiency in
accounting;
 Familiarity with business and legal nature of the
cooperatives, banks, NGOs and other clients;
 Deep sense of responsibilities;
 Good moral character

24. Qualifications…
 At least with mathematical ability;
 Capable of self learning at work and on field
work;
 With at least fair analytical approach;
 At least acceptable office and work problem
solving skills.

25. Qualifications…
 Willingness and ability to serve the Clients
 Willingness to continually learn
 Willingness and ability to be a team player
 Willingness to assume responsibilities and challenges
 Willingness to think creatively
 Willingness to align personal philosophy and
objectives with your office nature of services.

26. THANKS & GOD
BLESS!!!