Accreditation

• Accreditation refers to the act of giving official authorization or approval to a qualified auditor to conduct financial audit to cooperatives.
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• Cooperative Development Authority or CDA is the only government agency granting juridical personality to cooperatives, herein referred to as the Authority.
• An auditing firm refers to either the partners of a firm providing audit services or a sole practitioner providing audit services, as appropriate.
• An auditor-in-charge refers to the team leader of the audit engagement.
• A cooperative external auditor is an independent Certified Public Accountant (CPA) accredited by the CDA, whose relationship to the client is to express an opinion on the financial statements.
• A cooperative external auditor may be the signing partner in an auditing firm or a sole practitioner.
• Fraud refers to an intentional act by one or more individuals among management, employees, or third parties that result in a misrepresentation of financial statements.
• Fraud may involve: manipulation, falsification or alteration of records or documents, misappropriation of assets, suppression or omission of the effects of transactions from records or documents, recording of transactions without substance, intentional misapplication of accounting policies, omission of material information, and any other instance/factor which may be classified as fraud.
• A partner refers to all members of a partnership or an audit firm but not necessarily conducting audit to cooperatives.
• Audit Engagement Letter refers to a letter that informs the cooperative of an upcoming audit, detailing the audit objectives, the timeline, and the audit team members.
• Application Requirements for Renewal of Accreditation include an application letter, updated profile of the applicant with updated 2 x 2 colored ID picture, valid PRC ID, valid Certificate of Accreditation with the PRC-BOA, current PTR issued by the local government, valid Certificate of Membership in Good Standing with PICPA, and certificate of training equivalent to 24 hours of required training.
• Application Requirements for Initial Accreditation include a letter application, profile of the applicant with attached 2 x 2 colored ID picture, valid Professional Regulation Commission Identification Card, valid Certificate of Accreditation with the Professional Regulation Commission – Board of Accountancy, current Professional Tax Receipt issued by the local government, valid Certificate of Membership in Good Standing with the Philippine Institute of Certified Public Accountants, and certificate of training equivalent to a minimum of 24 hours of required training.
• A partnership refers to a professional partnership engaged in the practice of public accountancy duly registered with the Securities and Exchange Commission.
• Net worth to risk assets ratio; Loans and other risk assets review and classification using portfolio at risk; and
• The External Auditors who have committed the above violations may re-apply for accreditation after a period of three (3) years following the initial accreditation process
• For financial audit conducted by an Accredited Audit firm/partnership, only the partner/s of the audit firm/partnership who have attended the training requirements and have submitted the necessary documents to the CDA shall sign the audit report of the cooperatives to ensure that the requirement of the Authority on financial audit of cooperatives are substantially complied with
• Memorandum Circular No.2009 – 03 dated September 14, 2009 and all other issuances inconsistent with these guidelines shall be deemed repealed and/or modified accordingly
• The following shall be the grounds for revocation and/or cancellation for accreditation: Misrepresentation of Financial Statements which are used by the cooperatives in fraudulent acts; Allowing the use of Accreditation number by any unauthorized external auditor; and Other acts analogous to the foregoing
• An external auditor who found to have committed the above mentioned violations which resulted to the detriment of the cooperatives shall be barred from conducting audit to cooperatives
• In case the effectivity/validity of these records have lapsed, the cooperative external auditor must submit the valid documents to update his/her records to the CDA.
• The external auditor shall inform and/or discuss with the management of the cooperative details of the adverse findings with the corresponding corrective measures
• The procedures for revocation/cancellation of accreditation shall be in accordance with the rules of procedure to be promulgated by the Authority
• Records of the Accredited Cooperative External Auditors submitted to the CDA shall be valid/updated at all times.
• Findings on matters of cooperative governance that may require urgent action by the Authority
• This Circular shall take effect fifteen (15) days following its filing three (3) copies hereof with the Office of National Administration Register (ONAR), University of the Philippines Law Center, Diliman, Quezon City pursuant to Presidential Memorandum Circular No.11 dated 09 October 1992
• In all cases, accredited external auditor shall maintain the audit working paper for a minimum period of seven (7) years
• The External Auditor shall prepare the audited financial statements in accordance with Philippine Financial Reporting Framework (PFRF) for Cooperatives taking into consideration cooperative laws, rules and regulations.
• Auditors’ Report
• Statements of Cash Flows
• Notes to Financial Statements.
• In case of the firm/partnership, rotation among the signing partners is not allowed.
• Statements of Operations
• The external auditor must not be related to any officer and employee of the cooperative up to the fourth degree of consanguinity or affinity.
• Insufficiency of the cooperative’s assets to cover claims of creditors.
• Termination or resignation as external auditor, prior to the completion of audit engagement, and stating the reason thereof;
• Statements of Financial Condition
• Internal audit functions;
• In the case of partnership, this prohibition shall apply to all the partners and the auditor-in-charge of the engagement.
• For the immediate past three years, the external auditor must not have held a position relevant to the conduct of audit such as, but not limited to, Chief Executive Officer, Chief Financial Officer, Comptroller, Accountant, Bookkeeper, Audit Committee, etc.