DRAFT PROPOSAL FOR THE

ACCREDITATION OF
EXTERNAL AUDITOR

EVERY COOPERATIVE SHALL DRAW

UP AN ANNUAL REPORT OF ITS
AFFAIRS AS OF THE END OF EVERY
FISCAL YEAR WHICH INCLUDE
FINANCIAL REPORTS

ANNUAL SUBMISSION OF FINANCIAL

STATEMENTS, DULY AUDITED BY
A CERTIFIED PUBLIC ACCOUNTANT

ARTICLE 81 RA 6938
COOPERATIVE UNDER THIS CODE SHALL
BE SUBJECTED TO ANNUAL AUDIT BY AN
AUDITOR WHO SATISFIES ALL THE
FOLLOWING QUALIFICATIONS:
(1) HE IS INDEPENDENT OF THE
COOPERATIVE BEING AUDITED
AND ANY SUBSIDIARY OF THE COOP
(2) HE IS A MEMBER OF ANY RECOGNIZED
PROFESSIONAL ACCOUNTING OR
COOPERATIVE AUDITORS ASSOCIATION
WITH SIMILAR QUALIFICATIONS

DEVELOPMENT OF STANDARD
AUDIT SYSTEM FOR COOPERATIVES
TO ENCOURAGE PRACTIONER TO TAKE
A LOOK AT COOPERATIVES AS ENTITIES
REQUIRING THEIR SERVICES
TO FAMILIARIZE PRACTIONERS ON THE
PECULIARITIES OF COOPERATIVES
TOOL TO GUIDE AUDITOR AND COOPS
IN THEIR AUDITING WORK

CDA MEMORANDUM CIRCULAR 2000-06

FULL IMPLEMENTATION OF THE STANDARD
AUDIT SYSTEM FOR COOPERATIVES BY END
OF FISCAL YEAR 2002

MEMORANDUM CIRCULAR 2000-07

ORGANIZATION, COMPOSITION AND
FUNCTION OF THE COOPERATIVE
EXTERNAL AUDITORS RECOGNITION
BOARD

MEMORANDUM CIRCULAR 2003-03

RULES AND REGULATIONS IMPLEMENTING
CDA MEMORANDUM CIRCULAR NO. 2000-07,
ESTABLISHING THE COOPERATIVE EXTERNAL
AUDITORS RECOGNITION BOARD IN EVERY
CDA EXTENSION OFFICES

IMPLEMENTED FROM JUNE 2003 TO MARCH 2005

PARALLEL INITIATIVES UNDERTAKEN

DEVELOPMENT OF THE STANDARD
CHART OF ACCOUNTS FOR CREDIT
COOPERATIVES AND OTHER TYPES
WITH LENDING OPERATION
DEVELOPMENT OF PERFORMANCE
STANDARDS FOR CREDIT AND
OTHER TYPE WITH CREDIT SERVICES
DEVELOPMENT OF STANDARD CHART
OF ACCOUNTS FOR OTHER TYPES
OF COOPERATIVES

 MANUAL OF RULES AND REGULATION

FOR CREDIT AND OTHER TYPE OF
COOPERATIVES WITH CREDIT
SERVICES

PROVISIONS IN THE MANUAL OF RULES

REGULATIONS, PERTAINING TO
EXTERNAL AUDITOR
SCCs SHALL ENGAGE THE SERVICES OF AN
INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT DULY RECOGNIZED/
ACCREDITED BY THE CDA TO AUDIT THEIR
BOOKS OF ACCOUNT AT LEAST ONCE A
YEAR

 THE SAME INDIVIDUAL EXTERNAL AUDITOR,

WHETHER ON HIS INDIVIDUAL CAPACITY OR
AS PARTNER OF A FIRM, SHALL NOT UNDERTAKE THE EXTERNAL AUDIT OF THE CONCERN
COOPERATIVE FOR MORE THAN THREE (3)
CONSECUTIVE YEARS

A SCCs SHALL NOT ENGAGE THE SERVICES OF

AN EXTERNAL AUDITOR WHOSE PARTNER OR
AUDITOR-IN-CHARGE OF THE AUDIT ENGAGEMENT
DURING THE PRECEDING YEAR HAS BEEN HIRED
OR EMPLOYED BY THE COOPERATIVE AS CEO,
CHIEF FINANCIAL OFFICER, CHIEF ACCOUNTING
OFFICER OR ANY POSITION OF EQUIVALENT RANK

 IT SHALL NOT ALSO ENGAGE THE SERVICES OF

AN EXTERNAL AUDITOR WHO IS A MEMBER,
OFFICER OF THE SCC TO WHICH HE BELONGS
TO OR OF ANY FEDERATION/UNION TO WHICH
THE SCC IS AFFILIATED

THE EXTERNAL AUDITOR SHALL NOT BE RELATED

TO ANY OFFICER AND EMPLOYEE OF THE SCCs UP
TO THE FOURTH DEGREE OF CONSANGUINITY OR
AFFINITY

 WHEN WARRANTED, THE AUTHORITY MAY,

AT THE EXPENSE OF THE SCC REQUIRE THE
EXTERNAL AUDITOR TO UNDERTAKE A
SPECIFIC REVIEW OF A PARTICULAR ASPECT
OF THE OPERATIONS OF THE SCC. THE
REPORT SHALL BE SUBMITTED TO THE
AUTHORITY AND TO THE SCC SIMULTANEOUSLY,
WITHIN THIRTY (30) CALENDAR DAYS AFTER
THE CONCLUSION OF THE REVIEW

DISCLOSURE OF EXTERNAL AUDITORS

FINDINGS
WITHIN THIRTY (30) CALENDAR DAYS AFTER
DISCOVERY OF THE FOLLOWING:
ANY MATERIAL FINDINGS INVOLVING
FRAUD OR DISHONESTY (INCLUDING
CASES THAT WERE RESOLVED DURING
THE PERIOD OF AUDIT)
ANY POTENTIAL LOSSES THE
AGGREGATE OF WHICH AMOUNTS TO
AT LEAST ONE PERCENT (1%) OF THE
PAID-UP SHARE CAPITAL

 INABILITY OF THE AUDITOR TO

CONFIRM THAT THE CLAIMS OF
THE CREDITORS CAN STILL BE
COVERED BY THE SCCS ASSETS

WITHIN FIFTEEN (15) CALENDAR DAYS OF THE

OCCURRENCE OF THE FOLLOWING:
TERMINATION OR RESIGNATION AS
EXTERNAL AUDITOR, PRIOR TO THE
EXPIRATION OF THE CONTRACT,
STATING THE REASON THEREOF
DISCOVERY OF A MATERIAL BREACH OF
COOPERATIVE LAWS OR THE RULES AND
REGULATIONS SUCH AS, BUT NOT
LIMITED TO:

1. NET WORTH TO RISK ASSET RATIO

2. LOANS AND OTHER RISK ASSETS
REVIEW AND CLASSIFICATION
USING PORTFOLIO AT RISK
3. FINDINGS ON MATTERS OF
COOPERATIVE GOVERNANCE THAT
MAY REQUIRE URGENT ACTION
BY THE AUTHORITY

PROPOSED CRITERIA
IN THE SELECTION OF
EXTERNAL AUDITORS
AND INCLUSION IN THE CDA LIST

Statement of Policy
It is the policy of the CDA to promote
high ethical and professional standards
in public accounting practice and to
encourage coordination and sharing of
information between external auditors and
the Authority to ensure effective
supervision of cooperatives
and to avoid unnecessary duplication
of efforts.

In furtherance of this policy and to ensure

that reliance by regulatory authorities and
the public on the opinion of external
auditors is well placed, the following
rules and regulations shall govern the
selection, appointment, and delisting
for external auditors of cooperatives

Application Requirements

All applicants for accreditation shall

submit the following documents
to the Authority:

1.

For Individual CPAs

WRITTEN APPLICATION ADDRESS TO
THE EXTERNAL AUDITOR RECOGNITION
BOARD AT THE EXTENSION OFFICES OF
CDA WHERE SUCH CPA IS BASED, WITH
THE FOLLOWING :
A CERTIFIED TRUE COPY OF CURRENT
PROFESSIONAL LICENSE ISSUED BY
THE PROFESSIONAL REGUATORY
COMMISSION (PRC)

 CERTIFIED TRUE COPY OF THE CERTIFICATE

OF REGISTRATION WITH PRC/BOARD OF
ACCOUNTANCY (BOA)
CERTIFIED TRUE COPY OF CURRENT
PRIVILEGE TAX RECEIPT (PTR) ISSUED
BY THE LOCAL GOVERNMENT WHERE
HE RESIDES
CERTIFIED TRUE COPY OF THE CERTIFICATE
OF MEMBERSHIP IN GOOD STANDING WITH
HIS PICPA CHAPTER

 CERTIFIED TRUE COPY OF CERTIFICATE

OF COMPLETION OF TRAINING ON THE
SASC OR FIVE YEARS EXPERIENCE IN
COOPERATIVE AUDIT USING SASC
CERTIFIED TRUE COPY OF CERTIFICATE OF
TRAININGS CREDITED FOR SIXTEEN (16)
HOURS FOR EVERY THREE (3) YEARS ON
COURSES/TOPICS RELEVANT TO
COOPERATIVE OPERATION

For partnership / FIRMS

CERTIFIED TRUE COPY OF THE FIRM/
PARTNERSHIP CERTIFICATE OF
REGISTRATION WITH THE PRC/BOA
CERTIFICATION THAT AT LEAST ONE (1)
PARTNER HAVE THE REQUIRED TRAINING
ON SASC AND REPRESENTS THE
PARTNERSHIP WITH REGARDS TO THE
AUDIT REPORTS FOR COOPERATIVES

 LIST OF AUDIT STAFF INVOLVED IN

COOPERATIVE AUDIT
CERTIFIED TRUE COPY OF THE CURRENT
PROFESSIONAL LICENSE ISSUED BY THE
PRC FOR THE PARTNER/AUDIT SUPERVISOR IN CHARGE OF COOPERATIVE
AUDIT

 CERTIFIED TRUE COPY OF CURRENT

PRIVILEGE TAX RECEIPT OF THE FIRM/
PARTNERSHIP ISSUED BY THE LOCAL
GOVERNMENT
CERTIFIED TRUE COPY OF CERTIFICATE OF
TRAININGS CREDITED FOR SIXTEEN (16)
HOURS FOR EVERY THREE (3) YEARS ON
COURSES/TOPICS RELEVANT TO
COOPERATIVE OPERATION

PROCESSING FEE

INDIVIDUAL

PARTNERSHIP/FIRM

P 1,000.00

5,000.00

THANK YOU