Auditing & Assurance: Spec.

Industries

AUDITS OF COOPERATIVES

Please study (1) Republic Act No. 9520 "AN ACT AMENDING THE COOPERATIVE CODE OF THE PHILIPPINES
TO BE KNOWN AS THE “PHILIPPINE COOPERATIVE CODE OF 2008” (2) Audited FS of BAUG CARP
BENEFICIARIES MUTII PURPOSE COOPERATIVE and answer the following questions.

1. What is the definition of Cooperatives?

- According to Art. 3 of R.A 9520, A cooperative is an autonomous and duly registered
association of persons, with a common bond of interest, who have voluntarily joined together
to achieve their social, economic, and cultural needs and aspirations by making equitable
contributions to the capital required, patronizing their products and services and accepting a
fair share of the risks and benefits of the undertaking in accordance with universally accepted
cooperative principles.

2. It is said that every cooperative shall conduct its affairs in accordance with Filipino culture, good
values and universally accepted principles of cooperation. What are the Universally Accepted
Principles of Cooperation and explain each?
- Universally Accepted Principles refers to the body of cooperative principles adhered to
worldwide by cooperatives in other jurisdictions.
- Voluntary and Open Membership—cooperatives are voluntary organizations, open to all
people able to use their services and willing to accept the responsibilities of membership,
without gender, social, racial, political or religious discrimination.
- Democratic Member Control—cooperatives are democratic organizations controlled by their
members – those who buy the goods or use the services of the cooperative – who actively
participate in setting policies and making decisions.
- Member Economic Participation—members contribute equally to, and democratically
control, the capital of the cooperative. This benefits members in proportion to the business
they conduct with the cooperative rather than on the capital invested.
- Autonomy and Independence—cooperatives are autonomous, self-help organizations
controlled by their members. If the co-op enters into agreement with other organizations or
raises capital from external sources, it is done so based on terms the ensure democratic
control by the members and maintains the cooperative’s autonomy.
- Education, Training and Information—cooperatives provide education and training for
members, elected representatives, managers and employees so they can contribute
effectively to the development of their cooperative. Member also inform the public about the
nature and benefits of cooperatives.
- Cooperation among Cooperatives—cooperatives serve their members most effectively and
strengthen the cooperative movement by working together through local, national, regional,
and international structures.
 - Concern for Community—while focusing on member needs, cooperatives work for the
sustainable development of communities through policies and programs accepted by the
members.
3. Can a legal entity be a member of cooperative? Why or Why not?
- Yes, according to the Cooperatives Development Authority, a member of a cooperative is one
who has complied with all the membership requirements and entitled to all the rights and
privileges of membership as stated in the Cooperative Code and the cooperative by laws.
Thus, any legal entity that adheres to the characteristics and requirements of a qualified
member could be considered.
4. What is a General Assembly? Who may compose the members of general assembly of
cooperatives with dispersed membership?
- General Assembly refers to the full membership of the cooperative duly assembled for the
purpose of exercising all the rights and performing all the obligations pertaining to
cooperatives, as provided by this Code, its articles of cooperation and by-laws.

5. What is the responsibility of Board of Directors of cooperatives?

- Board of Directors refers to the body entrusted with the management of the affairs of the
cooperative under its articles of cooperation and by-laws.

6. What is the definition of committee in a cooperative?

- Committee refers to anybody entrusted with specific functions and responsibilities under
the by-laws or resolution of the general assembly or the board of directors.

7. Differentiate the Articles of Cooperation and the Bylaws.

- Articles of Cooperation refers to the articles of cooperation registered under this Code and
includes a registered amendment thereof. While Bylaws refers to the by-laws registered
under this Code and includes any registered amendment thereof.

8. Who is the government agency in charge of the registration and regulation of cooperatives?
- Cooperative Development Authority
9. What is a representative assembly?
- Representative Assembly means the full membership of the body of representatives elected
by each of the sectors, chapter or district of the cooperative duly assembled for the purpose
of exercising such powers lawfully delegated unto them by the general assembly in
accordance with its by-laws."
10. Provide the composition of Officers of the Cooperative.
- General Manager or the Chief Executive Officer; (4) Secretary; (5) Treasurer; and (6) Members
holding other positions as may be provided for the by-laws of the cooperative. B. Officers
elected by the General Assembly: (1) Members of the Board of Directors; and (2) Members of
the Audit and Election Committee.
11. Differentiate Social Audit from Performance Audit.
- A social audit is a formal review of a company's endeavors, procedures, and code of conduct
regarding social responsibility and the company's impact on society. While a performance
audit is an examination of a program, usually in the government, to determine its
effectiveness and suggest any improvements.
12. Discuss the following:
13. Single-line or Single-Purpose Cooperative
- A Single-Line or Single-Purpose Cooperative shall include cooperative undertaking activities
which are related to its main line of business or purpose
14. Service Cooperative
- Service Cooperatives are those which provide any type of service to its members, including
but not limited to, transport, information and communication, insurance, housing, electric,
health services, education, banking, and savings and credit.
15. Subsidiary Cooperative
- Subsidiary Cooperative refers to any organization all or majority of whose membership or
shareholders come from a cooperative, organized for any other purpose different from that
of, and receives technical, managerial and financial assistance from, a cooperative, in
accordance with the rules and regulations of the Authority;”
16. What is (are) the purpose (s) that a cooperative may be organized and registered for?
- To encourage thrift and savings mobilization among the members;
- To generate funds and extend credit to the members for productive and provident purposes;
- To encourage among members systematic production and marketing;
- To provide goods and services and other requirements to the members;
- To develop expertise and skills among its members;
- To acquire lands and provide housing benefits for the members;
- To insure against losses of the members;
- To promote and advance the economic, social and educational status of the members;
- To establish, own, lease or operate cooperative banks, cooperative wholesale and retail
complexes, insurance and agricultural/industrial processing enterprises, and public markets;
- To coordinate and facilitate the activities of cooperatives;
- To advocate for the cause of the cooperative movements;
- To ensure the viability of cooperatives through the utilization of new technologies;
- To encourage and promote self-help or self-employment as an engine for economic growth
and poverty alleviation; and
- To undertake any and all other activities for the effective and efficient implementation of the
provisions of this Code.
17. What is the primary objective of Cooperatives?
- Provide goods and services to its members to enable them to attain increased income,
savings, investments, productivity, and purchasing power, and promote among themselves
equitable distribution of net surplus through maximum utilization of economies of scale, cost-
sharing, and risk-sharing. Provide optimum social and economic benefits to its members.
Teach them efficient ways of doing things in a cooperative manner. Propagate cooperative
practices and new ideas in business and management. Allow the lower income and less
privileged groups to increase their ownership in the wealth of the nation; and Cooperate with
the government, other cooperatives, and people-oriented organizations to further the
attainment of any of the foregoing objectives
18. What is the meaning of “Cooperatives not in restraint of trade”?
- Cooperatives Not in Restraint of Trade. No cooperative or method or act thereof which
complies with this Code shall be deemed a conspiracy or combination in restraint of trade or
 an illegal monopoly, or an attempt to lessen competition or fix prices arbitrarily in violation
of any laws of the Philippines
19. What are the Cooperative Powers and Capacities?
A cooperative registered under this Code shall have the following powers, rights and
capacities:
- To the exclusive use of its registered name, to sue and be sued;
- Of succession;
- To amend its articles of cooperation in accordance with the provisions of this Code;
- To adopt bylaws not contrary to law, morals or public policy, and to amend and repeal the
same in accordance with this Code;
- To purchase, receive, take or grant, hold, convey, sell, lease, pledge, mortgage, and otherwise
deal with such real and personal property as the transaction of the lawful affairs of the
cooperative may reasonably and necessarily require, subject to the limitations prescribed by
law and the Constitution;
- To enter into division, merger or consolidation, as provided in this Code;
- To form subsidiary cooperatives and join federations or unions, as provided in this Code;
- To avail of loans, be entitled to credit and to accept and receive grants, donations and
assistance from foreign and domestic sources, subject to the conditions of said loans, credits,
grants, donations or assistance that will not undermine the autonomy of the cooperative. The
Authority, upon written request, shall provide necessary assistance in the documentary
requirements for the loans, credit, grants, donations and other financial support;
- To avail of preferential rights granted to cooperatives under Republic Act No. 7160, otherwise
known as the Local Government Code, and other laws, particularly those in the grant of
franchises to establish, construct, operate and maintain ferries, wharves, markets or
slaughterhouses and to lease public utilities, including access to extension and on-site
research services and facilities related to agriculture and fishery activities;
- To organize and operate schools in accordance with Republic Act No. 9155, Governance of
Basic Education Act of 2001 and other pertinent laws; and
- To exercise such other powers granted by this Code or necessary to carry out its purpose or
purposes as stated in its Articles of cooperation.
20. When can a newly organized primary cooperative be registered as a multipurpose cooperative?
- Any newly organized primary cooperative may be registered as multipurpose cooperative
only after compliance with the minimum requirements for multipurpose cooperatives to be
set by the Authority. A single-purpose cooperative may transform into a multipurpose or may
create subsidiaries only after at least two (2) years of operations.
21. Why do Cooperatives have limited liability?
- Limited liability means that owners of a corporation or members of a cooperative are not
personally responsible for the debts the company incurs. It also means that if the company
should do something that's against the law, the owners or members can't be held personally
responsible
22. Describe the nature of operations of BAUG CARP BENEFICIARIES MUTII PURPOSE COOPERATIVE.
23. Identify the peculiarities in FS of BAUG CARP BENEFICIARIES MUTII PURPOSE COOPERATIVE.