Final Document PDF

Republic of the Philippines
BATANGAS STATE UNIVERSITY

COLLEGE OF ACCOUNTANCY, BUSINESS, ECONOMICS AND
INTERNATIONAL HOSPITALITY MANAGEMENT
CITE Building, Pablo Borbon Main I, Rizal Avenue, Batangas City
Sapphire Audit Company

The Audit Approach to Tampayak Multi-Purpose Cooperative
Year Ended 31 December 2017
EXECUTIVE SUMMARY
Tampayak Multi-Purpose Cooperative is a cooperative which started as a small retail store

and gradually stepped up into being a provider of numerous services. Now, the Cooperative is on
its 14th year having 210 members.
The auditors audited the accompanying financial statements of TAMPAYAK MULTI-

PURPOSE COOPERATIVE, which comprise the balance sheet as at December 31, 2017, and the
statement of earnings, the statement of comprehensive earnings, the statement of the reserve, the
statement of the enhancement reserve, and the cash flow statement for the year then ended, and a
summary of significant accounting policies and other explanatory information.
Management is responsible for the preparation and fair presentation of these financial
statements, and for such internal control as management determines is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud
or error
The auditors’ responsibility is to express an opinion on these financial statements based on

the audit. The auditors conducted audit in accordance with generally accepted auditing standards.
Those standards require that auditors comply with ethical requirements and plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free from material
misstatement.
The auditors audited Tampayak Multi-Purpose Cooperative in the manner of considerable

judgement enhanced with transparency and accountability of the said client. Professional judgment
is used in determining the quantity, type, and content of audit documentation. The auditors prepared
the audit documentation in connection with each engagement in sufficient detail to provide a clear
understanding of the work performed (including the nature, timing, extent, and results of audit
procedures performed), the audit evidence obtained and its source, and the conclusions reached.
Audit documentation did provide the principal support for the representation in the auditor's report
that the auditor performed the audit in accordance with generally accepted auditing standards; and,
did provide the principal support for the opinion expressed regarding the financial information.
Audit documentation is the record of audit procedures performed, relevant audit evidence
obtained, and conclusions the auditors reached. The auditors applied procedures to generate a copy
that is faithful in form and content to the original paper document.
The form, content, and extent of audit documentation depend on the circumstances of the
engagement and the audit methodology and tools used. It is, however, neither necessary nor
practicable to document every matter the auditor considers during the audit. In determining the
form, content, and extent of audit documentation, the auditor considered the following factors: the
nature of the auditing procedures to be performed; the identified risk of material misstatement
associated with the assertion, or account or class of transactions, including related disclosures; the
extent of judgment involved in performing the work and evaluating the results; the significance of
the audit evidence obtained to the assertion being tested; the nature and extent of exceptions
identified; and, the need to document a conclusion or the basis for a conclusion.
The auditors have an ethical and legal obligation to maintain the confidentiality of client
information. Because audit documentation often contains confidential client information, the
auditors adopted reasonable procedures to maintain the confidentiality of that information.
BACKGROUND OF TAMPAYAK MULTI-PURPOSE COOPERATIVE
Most people wondered what was the true meaning of the word TAMPAYAK. Some
insisted that this came from Tagalog words “Tama at Payak”, while, some said this was just a
product of a creative mind. However, it was discovered that Tampayak was the former name of
Barangay Sta. Cruz, a common village inhabited by simple residents. Simple yet have the principle
of “Poverty is not a hindrance to a genuine and sincere purpose towards development of the
community”. And so, on June, 1998, from a very common siesta talks of Ruben Medrano (Barangay
Chairman) and his friends: Ruel De La Roca, Zoilo Petoral, Randy Odeste, Ponciano Casas, Nicetas
Caponpon, Ricardo Laygo and Noel Medrano, an idea stirred.
The conversation was full of laughs and active exchange of opinions until it ended up with
an idea of “Friday Club”. The plan was to collect small amount of money from the members and
members’ families. The collection was for the purpose of having the initial capital of establishing
a small retail store where the members and their families can buy their necessities.
On the next meeting, the news spread about the plan. Each was curious about this plan and
asked if this was a group, a corporation or a cooperative. The idea of turning a simple plan into a
cooperative came from those curious questions. Because of inadequate knowledge about
establishing a cooperative, the mentioned circle of friends did not hesitate to inquire to some
professional who has greater knowledge about it, until the whole community of Barangay Sta. Cruz
has been aware of it.
A small amount of money was collected from the eight original members which turned to
forty- five (45) members. With the help of the Office of Agricultural Services of Municipality of
Rosario and of Provincial Cooperative Development Office, the TAMPAYAKE MULTI-
PURPOSE COOPERATIVE was created. The original Board Members were:
Zoilo Petoral Chairperson

Domingo Magadia Board Member
Ruben Medrano Board Member
Ruel De la Roca Board Member
Efren Medrano Board Member
Ernesto Abjelina Board Treasurer
Liezl Umali Secretary
Ponciano Casas Manager
Leticia Latade Storekeeper
Esmeralda Mercado Bookkeeper
Linda Petoral Accountant
There were people who were against and tried to stop the establishment of the Cooperative
for they had the negative perspective about the hopeful success of this; however, the members did
not entertain hopeless feeling and take full courage to continue what was planned.
On September 2, 1998, members opened a small retail store made of wood and iron sheet-
roof at the land owned by the barangay. The members rendered their services for free and without
compensation yet had the feeling of fulfillment ins serving the purpose established.
On February 22, 1999, the cooperative was formally introduced as a legal cooperative
named Tampayak MPC by the Cooperative Development Authority. This brought signal to the
Municipality of Rosario to grant the Cooperative with financial support as additional capital and
for the improvement of the physique of the retail store. After a month, the first General Assembly
was held where formal election happened to organize the Board of Directors. Also, the construction
of the retail store began.
The Cooperative started with sales of retail products purchased by its members until it
innovated to hog fattening and giving hog feeds allowance for those who make living through hogs.
The cooperative runs smoothly and the it helped the members to earn additional income.
The Cooperative gradually acquired assets such as own parcel of land on 2005 where they
constructed a storage room and motorcycle with side car on 2008 which served as a means of
delivery vehicle.
On May, 2010, the Cooperative received a letter from the Barangay mandating them to
move out of the land owned by the barangay. Immediately, the Cooperative held an Emergency
Meeting to inform the members about the situation and eventually make a decision. The members
have decided to solicit financial supports from the leaders of local government unit and private
individuals and they never failed. The Cooperative successfully made it to move into more
convenient place, called their own, on June 30, 2010 which was before the deadline given by the
barangay.
On November 12, 2010, a thanksgiving mass was held participated by mass of people
including members of the Cooperative and residents of the barangay. Also, the new building was
inaugurated which was headed by Hon. Governor Vilma Santos- Recto, together with the Vice
Governor, Board Members, Municipal Mayor, and other officials of the government. Having felt
the overwhelming feeling of support, this gave an assurance to the members of the Cooperative
about the cooperative’s success. This was just an evidence that a cooperative founded by trust,
respect, honesty and teamwork will continue to be firm, strong, and fight no matter what challenges
come.
The Board and the members of the TAMPAYAK MULTI-PURPOSE

COOPERATIVE, on its 14th years in service and with 210 members, highly hopes that may what
has been started continues in many years to come and serves as an inheritance to the next
generation.
MISSION
 To instill the inherent purpose of the Cooperative in minds and hearts of every member;
 To improve the way of living of every members and of the community;
 To serve as an inspiration and as a guide in campaigning community development;
 To give support to the needs of every member;
 To strengthen the level of knowledge and skills of the board and of the members through
active participation in the activities of the Cooperative; and,
 To continue to connect with different groups and agency to have support in fulfillment of
the goals of the Cooperative.
VISION
A Godly, honest, and successful Cooperative rendering service to its members and the
community aiming to increase the way of living and knowledge.
BOARD OF MEMBERS:
Lawrence M. Banawa Chairperson

Teodoro M. Atienza Board Member
Jose P, De Guzman, Sr. Board Member
Ruel M. De la Roca Board Member
Jeffrey Dimaunahan Board Member
Emily U. Magadia Board Treasurer
Marivic B. Medrano Secretary
Zoilo L. Petoral Manager
Linda Petoral Accountant
Maria Concepcion Benamer Cashier/ Bookkeeper
Rowena A. Caballa Bookkeeper
Jerome D. Delubio Storekeeper
ASSIGNMENT OF ENGAGEMENT PARTNERS
Each group members document the assignment in an audit task. We take the responsibility
for the direction, supervision, performance and review of the group audit engagement and for being
satisfied that sufficient appropriate audit evidence has been obtained on which to base the auditor’s
opinion on the financial statements. Some appropriate procedures regarding the continuance of
client relationships have been followed and determining that conclusions reached in this regard is
appropriate.
In addition, we take the responsibility for reviews being performed in accordance with the
firm’s review policies and procedures. The performance of the audit engagement in compliance
with professional standards and applicable legal and regulatory requirements and the auditor’s
report being appropriate in the circumstances. We undergo a review of the audit documentation
with the engagement team that sufficient audit evidence has been obtained to support the
conclusions reached and for the auditor’s report to be issued.
Our senior auditor were responsible for the overall findings, conclusions, or opinions, the
group engagement partner is responsible for the group audit opinion. Significant matters arising
during the audit has been made, the conclusions reached thereon, and significant professional
judgments made in reaching those conclusions.
We seek information of knowledgeable persons both financial and nonfinancial within the
entity and also examining records or documents from internal or external in paper form. It serves
as an audit evidence to determine the reliability in preparing the financial statements. Importantly,
we inspected sales invoices to ensure that the accuracy of the amount and the customer. In addition,
we recalculate source documents such as sales invoices and other accounting records; it serves as
one of the reliable source of obtaining audit evidences. Analytical procedures has been used for the
planning and completing the audit, that is, to have a better understanding of the client’s industry
and business and to assess the firm’s ability to continue as going concern. It was however important
to obtain sufficient audit evidence that the information supplied is complete and accurate and apply
judgment in doing so, taking into the account previous experience of the firm’s reliability and extent
to which the firm’s representations appear compatibles with other audit findings, as well as the
materiality of the items under discussions. The company’s accounting records such as ledgers,
subsidiary, ledgers, journals, supporting schedules such as sales invoices and payment vouchers
that were been prepared by the management it helps to undergo an examination about the quality
of information.
ASSESSMENT OF INTERNAL CONTROL
Understanding the internal controls of Tampayak Multi-Purpose Cooperative helps us to

identify how management maintains a system of accounting and reporting which provides for the
necessary controls to ensure that transactions are properly authorized and recorded, assets are
safeguarded against unauthorized used, physical control of the documents or disposition of
liabilities are recognized.
Procedures performed by the Auditors

Recording of Transactions We have reviewed the transactions prepared and carried forward
for recording and posting in the general journal and ledger. We
have also reviewed the competency of the individuals making
journal entries and conducted a reconciliation of general ledger.
Authorization of the Board We have reviewed the documents made by the department
of Directors or its whether it bears the necessary authorization.
authorized Representative
Custody of materials and We have observed physical count and reconciles the result of such
other documents count to the entity’s records.
RISK ASSESSMENT
Risks Description Audit Approach

Risk of fraud or error whether PAS 18 prescribes - Review and test
due to fraud or error, design in accounting treatment of revenue and expense
revenue and expense revenue arisinf from certain recognition principle
ependiture types of transactions and - Review and test
events. revenue cut-off at the
period end cut off
Risks of management override Management is in unique - Evauate the business
position to penetrate fraud transaction for
because of its ablity to significant unusual
manipulate accounting transactions.
records directly or indirectly - Testing the
and prepare fraudulent appropriateness of
financial statements by journal entries
overriding controls that recorded in the general
otherwise appear to be legder and other
operating directly. adjustmentsmade in
the presentation of
financial statements.
DRAFT OF AUDIT PROGRAM
Bugdeted Time Actual Time

Understanding the business and the
developments relevant to the business and the
audit
Assess the significant risks andother risks
affecting the audit
Develop an audit plan to develop a resonable
assurance that the financial statements are free
from material misstatements and preparedin all
material respects in accordance with the PFRS.
Devise audit strategy. ( Extract the data, analyze
the data using different parameters and report
output to team. )
Stores audit evidence and document the
processes and controls.
Express an opinion on the compliance of
Financial Statements on the requirements of
Philippine Financial Reporting Standards.
Reporting of audit findings on those charged
with governance.
TEST OF CONTROLS, EVALUATION OF RESULTS AND

REASSESSMENT AUDIT RISK
The auditors conducted test controls to reduce substantive testing, or obtain information on
which to base recommendations in the Management Letter. The following tables list some control
procedures that a company have in place for cash, accounts receivable, and inventories, along with
tests that the auditor performed to see if these controls are operating.
Control Procedures or Activities Tests of the Control

Cash:
Authority to sign bank payment orders is Observe and make inquiries about the
restricted to selected individuals who do not performance of various functions and duties.
have access to the accounting records
(segregation of duties).
Cash receipts are listed and deposited on a Select a sample of daily cash receipts listings.
daily basis. Compare information (date and amount) to
cash receipts journal and posting to accounts
receivable.
Cash disbursements must be properly Compare the details of a sample of recorded
authorized. disbursements in the cash disbursements
journal to accounts payable postings, receiving
reports, invoices
Cash on hand is adequately safeguarded. Observe and make inquiries about the security
procedures for cash on hand, including
inquiries about access.
Accounts Receivable and Sales:
Segregate duties over sales from duties over Observe and make inquiries about the
collections of receivables. performance of various functions and duties.
Review of the clerical accuracy of sales Select a sample of sales invoices and examine
invoices by a second person. them for evidence of second-person review.
Use listings to control and document cash Observe, make inquiries about the process,
collections. and reconcile selected listings to the bank and
accounting records.
Use credit memoranda for authorization of Select a sample of credits to customers’
adjustments to sales and receivables. accounts and inspect credit memoranda and
other supporting documents.
Inventories:
Segregation of duties over purchases and Observe and make inquiries about the
custody of inventories. performance of various functions.
Establish procedures for authorizing purchase Observe and make inquiries about purchase
transactions, reconciling purchase invoices to procedures, and test a sample of purchase
purchase orders and receiving reports, and transactions by inspecting evidence of
verifying the clerical accuracy of purchase authorizations and reconciliations, comparing
invoices. the details to authorized purchase orders and
receiving reports, and recomputing the invoice
amounts.
Establish general ledger control of inventories Inspect accounting and production records and
of raw materials, goods in process, and selected reconciliations.
finished goods and periodically reconcile to
production records.
Use perpetual records to control inventories. Inquire about the perpetual inventory
procedures, and test the records by reference
to purchase invoices, receiving reports, and
production records.
Establish appropriate physical controls over Observe and inquire about the physical control
inventories. policies and procedures.
The objective of audit tests, or audit procedures, is to allow the auditor to obtain sufficient
appropriate audit evidence to support the auditor's opinion on internal control over financial
reporting as of year end and support the auditor's control risk assessments for purposes of the audit
of financial statements. In order to test the controls, we ask inquiries, inspect the references, observe
the data evidence and recalculate if deemed necessary.
Based on the following procedures we conducted, we were able to assess the internal
controls and evaluate the audit risks. We evaluated the effectiveness and efficiency of control over
financial reporting. We therefore assessed that internal control is reliable and should reduce its
substantive testing.
FINAL AUDIT PROGRAM
1. Client Acceptance and Continuance

 Independence
We will consider our compliance on the indepence requirements before accepting
and continuing with the engagement.
 Client Evaluation
We consider the particular risk that might arise on the acceptance of audit
engagement.
2. Audit Objectives: To verify whether;

 Transactions and events have been recorded in the proper accounts.
 Financial information is appropriately presented and disclosures are clearly expressed.
( Classification)
 Amounts and other data relating to recorded transactions have been recorded
appropriately. ( Accuracy)
 All transactions and events that should have been recorded have been recorded.
 All required disclosures have been included in the financial statements.
(Completeness)
 Transactions and events have been recorded in the correct accounting period. (Cut-off)
 Transactions and events that have been recorded and disclosed have occurred and
pertain to the entity. (Occurence)
3.
Audit Procedures Bugdeted Actual
Time Time
1. Determine whether all the supporting documents of the 1 hour 1.5 hours
transactions are in file.
2. Match the details on the other form, invoice and check 3 hours 3.5 hours
consistency of quantities, amount, date and name of the
supplier
3. Trace payment advice to the actual payment on the ledger to 3 hours 3 hours
ensure that payment was made.
4. Confirm that the order form and the payment advice have 3 hours 3 hours
signature of the proper delegated person as approval.
5. Compare the ledger entry to the amount on the invoice and 2 hours 2.5 hours
confirm that the acquisition was recorded at the correct
amounts.
6. Confirm that the payment or acquisition were allocated to te 2 hours 2 hours
correct legder account.
7. Compare the dates on the invoice and the recording on the 1 hour 1 hour
legder and determine whether the transaction was recorded
in the amount in the correct payment was made within a
reasonable time.
8. Compare the the date of payment and the date for the receipt 1 hour 1.5 hour
of invoice determine whether payment was made after the
due date
4. Expressing an opinion of the financial statements based on the evidences and gathered and
reasonable judgment of the auditors.
5. Report of audit findings with those charged with governance.
6. Signing of financial statements opinion.
AUDIT EVIDENCE GATHERING PROCEDURES
The auditors designed detailed audit program, setting out the procedures that are
appropriate to obtain sufficient evidence through the use of inspection of documents and inquiry.
The audit programs were reviewed and approved before the start of execution phase.
The auditors made inquiries about the business profile, different functions and control policies
and procedures. They inspect the following documents during the execution of the audit:
 Cash receipts books;
 Cash disbursement books;
 Cash receipts;
 Vouchers;
 Sales book;
 General journal;
 General ledger; and
 Financial Statements.
The cash receipts are compared in the cash receipts journal to book of sales, accounts
receivable posting and sales posting. The recorded disbursements in the vouchers are then
compared in the cash disbursements journal to accounts payable postings. The amounts recorded
in the cash receipts and cash disbursements journal are then compared to what is recorded in the
general journal to postings in the general ledger.
SUBSTANTIVE TEST AUDIT PROGRAM
In conducting an audit engagement, we, the auditors uses assertions in assessing the risks
by taking into consideration the types of potential misstatements that may occur and thereby
designing audit procedures that are responsive to the assessed risks.
Asset Assertion Objective Procedures

Cash Existence All cash on the financial Conducting surprise
(Cash on Hand, statement at the reporting date is cash counts.
Cash in Bank, held by the entity or by others for
Petty Cash the entity.
Fund and
Change Fund )
Presentation Cash is properly classified,
and described and disclosed in the
Disclosure financial statements, including
notes, in accordance with the
PFRS.
Completeness All cash owned by the entity at te
reporting date is included in the
Statement of Financial Position.
Accounts Existence/ All receivables on the statement Confirmation of
Receivable Occurence of financial position are authentic receivables and review
claims of the entity and all sales of subsequent cash
have really occurred and pertain receipts.
to the entity.
Completeness All authentic claims of the entity Reconciliation of
for the accounts receivable are Subsidiary Legder with
included in the Statement of General Legder.
Financial Position.
Valuation Receivables are carried at their Evaluation of

net realizable value. allowance for Doubtful
Acccounts.
Presentation Receivables are properly Investigate any
and classified, described and transactions with or
Disclosure disclosed in the financial related party
statements, including notes, in receivables.
accordance with PFRS.
Merchandise Presentation Inventories are properly Valuation in
Inventory and classified, described and accordance with
Disclosure disclosed in the financial accounting policies.
statements, including notes, in Lower of cost or net
accordance with PFRS. realizable value test
Existence All inventories included on the Inventory count
statement of financial position observation and test
are held by the entity or by others counts.
for the entity and pus rchases
have really occurred and pertain
to the entity.
Completeness All inventories owned by the Reconciliation of
entity at the reporting date are Inventory Summary
included on the statement of Sheet with General
financial position and all cost of Legder.
sales is included in the statement
of comprehensive income.
Investment in Existence All recorded investments on the Verfying the existence
Subsidiaries/ statement of financial position and ownership of
Associates and exist. securities.
Joint Ventures
Presentation Investments and other related Review Financial

and investment income account are Statement Presentation
Disclosure properly classified, described and and disclosure of
disclosed in the financial investments including
statements, including notes, in related account/
accordance with PFRS.
Occurence All recorded income from Evaluating the
investments has accrued to the accounting methods
entity at the reporting date. used and test the
valuation.
Property and Existence All propert and equipment on the Examinations of
Equipment statement of financial position additions and disposals
exist. including retirements.
Completeness All PPE owned by the entity at Reconciliation of
the reporting date is included on Subsidiary Legder with
the statement of financial General Legder.
position.
Presentation PPE and related accounts are Evaluate financial
and properly classified, described and statement presentation
Disclosure disclosed in the financial and disclosures for
statements, including notes, in PPE and related
accordance with PFRS. revenue and expense
account.
Liabilities Existence All recorded liabilities on the
statement of financial position
are authentic debts due to the
creditors of the entity.
Completeness All the liabilities owed by the Recognize the
entity at the eporting date are reconciliation of
included in the statement of subsidiary legder with

financial position. the general ledger.
Valuation and Liabilities are included in the
Allocation statement of financial position at
the appropriate amounts.
Share Capital Disclosure Equity accounts classified, Ensure proper
and described and disclosed in the disclosure in the
Presentation financial statements, including financial statements as
the notes, in accordance with the follows:
applicable financial reporting a.) Number of shares
framework. authorized
b.) Number of shares
Issued and fully paid
c.) Par value per share
d.) Number of shares
outstanding at the
beginning and at the
end of period.
Existence All the equity accounts and Reconcile the total

interests in the statement of number of shares
financial position exist. outstanding to the
general ledger.
PERFORMANCE OF SUBSTANTIVE TESTING AND SUMMARY OF RESULTS OF

SUBSTANTIVE TESTING
After considering the risk, we performed substantive tests to detect material

misstatements in the financial statements. We used substantive test of details which involves
examining the ending balances of an account.
Since it would be impractical to examine the individual transactions that occurred during
the year and most of these transactions are probably immaterial to the financial statements taken
as a whole. Test of details of balances was used when account balances are affected by large
volume of relatively immaterial transactions. Also, we used test of details of transactions by
testing the transactions which give rise to the ending balance of an account.
Our audit focus on these accounts because on our judgment, these accounts are prone to
management fraud or error and contains unusual transactions unlike the other remaining accounts.
Permanent/Nominal Substantive Testing Results of Substantive

Account Testing
Cash Conducting cash counts There is no material

mistatements on the
cash account.
Accounts Receivable The first step that is obtaining the trial The balances per book
balance of receivable. Secondly, the conforms with the
auditors test the clerical accuracy balances per audit thus,
(cross-footing) of the schedule and there's no material
inquiring of management as to steps mistatement that occurs
taken to ensure the trial balance is on the receivsble
complete that is that all receivables due account.
to the company are included on the trial
balance.
After the auditors obtained and

reviewed the reconciliation prepared by
the entity between the receivables sub-
ledger and the control account which is
the general ledger and investigate
reconciling items, particularly any
unusual non-standard journal entries.
Accounts Payable The first step that is obtaining a copy of The balances per book
the entity’s reconciliation of subsidiary conforms with the
ledger and general ledger. After balances per audit thus,
obtaining the entity’s reconciliation there's no material
schedules, the auditors test the clerical mistatement that occurs
accuracy (cross-footing) of the on the accounts payable
schedule. The auditor reviewed the account.
reconciliation prepared by the entity
between the sub-ledger and the control
account which is the general ledger, and
investigate reconciling items
particularly any unusual non-standard

journal entries.
These procedures aim to determine

whether the liability figure appearing in
the statement of financial position
agreed with the individual items
comprising the detailed records.
Another procedure is the inspection of
supporting documents on the said
liability.
Sales The auditors had gathered information As a result of our audit

concerning the cooperative's nature of on the sales occured,
operations and applicable financial there was mistatement
reporting framework, the auditors that occured on the
evalusted the accounting policies used sales account.
by the cooperative in recognizng and
measuring its revenues in compliance
with the relevant PFRSs. The auditor
selacted the items for testing to
determine if revenue was recorded
based in the accounting policy adopted.
Purchases Tested the computation of recorded The purchases and

amounts if the expense was recorded expenses account
Other Expenses with a corresponding credit to payabkes which are nominal
or paid directly with cash based on the accounts do not include
invoice or other supporting documents. any material
Furthermore, the auditors also tested the mistatements on its
computations of recorded amounts if balance, thus the said
the expense was recorded with a balance is faithfully
corresponding credit to an accrued represented.
expense account.
COMMUNICATIONS WITH THOSE CHARGED WITH GOVERNANCE
Communication of audit matters with those charged with governance requires us to

communicate with you on a timely basis on all significant facts and matters that bear on our
independence and objectivity. The aim of these communications is to ensure full and fair disclosure
by us to those charged with your governance on matters in which you have an interest.
We will communicate with those charged with governance regarding, among other matters,
the planned scope and timing of the audit and significant audit findings, including any significant
deficiencies in internal control in the event that we identify during our audit.
Our audit includes the mandatory procedures that we are required to perform in accordance
with laws and auditing standard. Under our practice, our scope and principal objective are to review
and report to the Cooperative’s financial statements and to form opinion to the financial statements
under the Philippine Standards on Auditing. Should any changes occur during the audit, we will
update you accordingly. But during our audit, there have been no changes in the scope of our audit
at the date of this report.
For the purposes of determining whether the financial statements are free from material
error, we define materiality as the magnitude of an omission or misstatement that, individually or
in aggregate, could reasonably be expected to influence the users of the financial statements. Our
evaluation requires professional judgement and so takes into account qualitative as well as
quantitative considerations implied in the definition.
And for the purpose of this audit, we inform you our final opinion by reference to all
matters that could be significant to users of the financial statements, including the total effect of
any audit misstatements, and our evaluation of materiality at that date. The financial position of
Tampayak Multi-Purpose Cooperative as at December 31, 2017 and its financial performance and
its cash flow for the years then ended are reviewed and resulted in a fairly presentation in all
material respect in accordance with Philippine Financial Reporting Framework for Cooperatives.
The information taken were subjected to the auditing procedures applied in our audit of the basic
financial statements which are fairly stated in all material respects in relation on basic financial
statements as a whole. There have been some misstatements but when taken as a whole are
immaterial to the presentation of financial statements which could not reasonably influence the
users of financial statements.
CONFIRMATION OF THE IDENTIFICATION OF CONTINGENCIES AND

COMMITMENTS OF THE CLIENTS
The term “contingencies” used is restricted to conditions or situations at the balance sheet
date, the financial effect of which is to be determined by future events which may or may not occur.
Estimates are required for determining the amounts to be stated in the financial statements for many
on-going and recurring activities of an enterprise. One must, however, distinguish between an event
which is certain and one which is uncertain. The fact that an estimate is involved does not, of itself,
create the type of uncertainty which characterises a contingency. The uncertainty relating to future
events can be expressed by a range of outcomes. This range may be presented as quantified
probabilities, but in most circumstances, this suggests a level of precision that is not supported. by
the available information. The possible outcomes can, therefore, usually be generally described
except where reasonable quantification is practicable. Here are some confirmation to identify
commitments and contingencies. That is to obtain management or legal adviser a description and
evaluation of the litigation and claims that existed at the balance sheet date and during the period
from the balance sheet date to the date the information is provided to the auditors. Also, examine
documents, including correspondence and invoices from lawyers, in the clients possession
concerning litigation, claims and unasserted claims. More so, obtain and evaluate letters from legal
advisors and discuss with management the clients policies and procedures for identifying,
evaluating, and accounting for commitments. Then, review the results of audit procedures
performed in other accounts. The disclosure requirements herein referred to apply only in respect
of those contingencies or events which affect the financial position to a material extent.
THE AUDITOR'S CONSIDERATION OF AN ENTITY'S ABILITY TO CONTINUE AS

A GOING CONCERN
AUDITORS' REPORT
TO THE MEMBERS OF TAMPAYAK MULTI-PURPOSE COOPERATIVE
We have audited the financial statements which have been prepared in accordance with accounting
principles generally accepted in the Philippines.
Respective responsibilities of directors and auditors

The Companies Ordinance requires the directors to prepare financial statements which give a true
and fair view. In preparing financial statements which give a true and fair view it is fundamental
that appropriate accounting policies are selected and applied consistently.
It is our responsibility to form an independent opinion, based on our audit, on those statements and
to report our opinion to you.
Basis of opinion
We conducted our audit in accordance with Philippine Auditing Standards issued by the Philippine
Institute of Certified Public Accountants. An audit includes examination, on a test basis, of
evidence relevant to the amounts and disclosures in the financial statements. It also includes an
assessment of the significant estimates and judgements made by the directors in the preparation of
the financial statements, and of whether the accounting policies are appropriate to the company's
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we
considered necessary in order to provide us with sufficient evidence to give reasonable assurance
as to whether the financial statements are free from material misstatement. In forming our opinion,
we also evaluated the overall adequacy of the presentation of information in the financial
statements. We believe that our audit provides a reasonable basis for our opinion.
Fundamental uncertainty
In forming our opinion, we have considered the adequacy of the disclosures made in the financial
statements concerning the possible outcome of negotiations. The financial statements have been
prepared on a going concern basis. The financial statements do not include any adjustments that
would result from a failure to obtain information about going concern. Details of the circumstances
relating to this fundamental uncertainty are described in note to the financial statements. We
consider that the fundamental uncertainty has been adequately accounted for and disclosed in the
financial statements and our opinion is not qualified in this respect.
Opinion
In our opinion the financial statements give a true and fair view of the state of the company's affairs
as at 31 December 2017 and of its profits and cash flows for the year then ended and have been
properly prepared in accordance with the Companies Ordinance.
Sapphire Group Audit Team

Philippines
December 12, 2018
TAMPAYAK MULTI-PURPOSE COOPERATIVE

Brgy. Sta.Cruz, Rosario, Batangas
STATEMENT OF MANAGEMENT'S RESPONSIBILITY

FOR FINANCIAL STATEMENTS
The management of the TAMPAYAK MULTI-PURPOSE COOPERATIVE is responsible for

all the information and representations contained in the financial statements for the years ended
December 31, 2017 and 2016. The financial statements have been prepared in conformity with
Financial Reporting Standards applicable to Cooperatives in the Philippines and reflect amounts
that are based on the best estimates and informed judgment of management with an appropriate
consideration to materiality.
In this regard, management maintains a system of accounting and reporting which provides for the
necessary internal controls to ensure that transactions are properly authorized and recorded, assets
are safeguarded against unauthorized use or disposition and liabilities are recognized.
The Board of Directors reviews the financial statements before such statements are approved and
submitted to the members of the cooperative.
Sapphire Group, the auditor and appointed y the Board of Director, has examined the financial
statements of the cooperative in accordance with the Philippines Standards on Auditing and the
Standard Audit Systems for Cooperatives and has expressed their opinion on the fairness of
presentation upon completion of such examination , in their report to the members of the
cooperative.
_____________________
CERES D. PUNZALAN
Chairperson
____________________
LINDA D. PETORAL
General Manager
___________________
EMILY U. MAGADIA
Treasurer
The Board of Directors and Members

Sta. Cruz, Rosario, Batangas
We would like to take this opportunity to remind your management the primary responsibility to
detect and prevent fraud. It is important that those charged with governance has a culture of ethical
behavior and a strong control environment that both deters and prevents fraud.
Our responsibility is to plan and perform audits to contain reasonable assurance about whether the
financial statements as a whole are free from of material misstatements whether caused by error or
fraud. As auditors, we approach the said engagement with questioning mind that accepts the
possibility of material misstatement due to fraud could concur and design appropriate procedures
to consider such risks.
Based on the requirements of auditing standards our approach will focus on:
 Determining fraud risks during the planning stage.

 Inquiry on the management about risks of fraud and the controls to addressed to such risks.
 Understanding the oversight given by those charged with governance of management
processes over fraud.
 Consideration on the effectiveness of management's control designed to address the risks
of fraud.
 Identifying the appropriate strategy to address any identified risks and fraud; and
 Performing procedures regardless of specifically identified risks.
Respectfully,
_____________
Vina B. Mirano
Senior Auditor
Sapphire Group
REPORT OF INDEPENDENT AUDITORS
The Board of Directors and Shareholders of

Report on the Audit of the Financial Statements
Opinion
In our opinion, the accompanying financial statements present fairly, in all material respects, the
consolidated financial condition of Tampayak Multi-Purpose Cooperative as at December 31, 2017
and 2016, and its financial performance and its cash flows for the years then ended in accordance
with Philippine Financial Reporting Framework for Cooperatives.
We have audited the financial statements of the Tampayak Multi-Purpose Cooperative, which
comprise the statement of financial condiion as at December 31, 2017 and 2016, and the statement
of operations, statement of changes in equity and statement of cash flows for the year then ended,
and notes to the financial statements, including a summary of significant accounting policies.
Basis for Opinion
We conducted our audit in accordance with Philippine Standard on Auditing (PSAs). Our
responsibilities under those standards are further described in the Auditor's Responsibilities for the
Audit of the Consolidated Financial Statements section of our report. We are independent of the
Cooperative within the meaning of Code of Ethics for Professional Accountants in the Philippines
(Code of Ethics) and have fulfilled our other responsibilities under those ethical requirements. We
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Responsibilities of Management and Those Charged with Governance for the Financial
Statements
Management is responsible for the preparation and fair presentation of these financial statements
in accordance with Philippine Financial Reporting Framework for Cooperatives, and for such
internal control as management determines is necessary to enable the preparation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error. Those
charged with governance are responsible for overseeing the Cooperative's financial reporting
process.
In preparing the financial statements, management is responsible for assessing the Cooperative’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern unless basis of accounting unless management either intends to
liquidate the Cooperative or to cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Statements
The objectives of our audit are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to fraud or error,
and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with PSAs will always
detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial
statements. As part of an audit in accordance with PSAs, my exercise professional judgment and
maintain professional skepticism throughout the audit. We also:
 Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery,
intentional omissions, misrepresentations, or the override of internal control.
 Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the entity's internal control.
 Evaluate the appropriateness of accounting policies used and the reasonableness of

accounting estimates and related disclosures made by management.
 Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
 Obtain sufficient appropriate audit evidence regarding the financial information of the
entities and business activities within the group to express an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and performance of
the group audit. We remain solely responsible for our audit opinion.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit and significant audit findings, including any
significant deficiencies in internal control that we identify during our audit.
Report on the Supplementary Information Required Under Revenue Regulations 15-2010
Our audits were conducted the purpose of forming an opinion on the basic financial statements
taken as a whole. The supplementary information on taxes, duties and license fees to the financial
statements is presented for purposes of filing with the Bureau of Internal Revenue and is not a
required part of the basic financial statements. In our opinion, the information is fairly stated in all
material respects in relation to the basic financial statements taken as whole.
The engagement partner responsible for the audit resulting in this independent auditor's report is
Daniel John F. Falo, CPA.
Vina B. Mirano
Senior Auditor
Sapphire Group
Batangas City
December 14, 2014

STATEMENT OF FINANCIAL CONDITION

As of December 31, 2017 and 2016
(Amounts in Philippine Pesos)
Notes 2017 2016

ASSETS
CURRENT ASSETS
Cash and Cash Equivalent 5 544,000.58 125,710.81
Account Receivables 6 2,776,579.75 3,234,465.30
Inventory 7 64,893.05 76,137.20
Biological Assets 8 916,999.00 559,312.50
Other Current Assets 9 5,789.65 7,826.70
Total Current Assets 4,308,262.03 4,003,452.51
NON-CURRENT ASSETS
Investment 10 13,600.00 13,000.00
Property and Equipment 11 478,207.91 539,213.91
Other Non-current Assets 12 2,600.00 2,600.00
Total Non-Current Assets 494,407.91 554,813.91
TOTAL ASSETS 4,802,669.94 4,558,266.42
LIABILITIES AND EQUITY

LIABILITIES
CURRENT LIABILITIES
Trade, Non-Trade and Other Payables 13 268,071.24 299,587.50
Interest on Share Capital Payable 14 281,817.82 208,316.11
Patronage Refund Payable 14 171,691.56 119,660.46
Due to Union/Federation 15 21,397.06 216,063.86
Total Current Liabilities 742,977.68 843,627.93
NON-CURRENT LIABILITIES
Revolving Capital Payable 210,249.34 -
Retirement Fund Payable 16 109,750.00 97,750.00
Members' Benefit and Other Funds Payable 17 67,679.75 91,085.75
Total Non-Current Liabilities 387,679.09 188,835.75
TOTAL LIABILITIES 1,130,656.77 1,032,463.68
EQUITY
Share Capital 18 2,253,100.00 2,154,900.00
Deposit on Future Share Capital Subscriptions 19 8,946.43 9,968.68
Donations/Grants 20 303,868.00 283,868.00
Statutory Fund 21 1,106,098.74 1,077,066.06
TOTAL EQUITY 3,672,013.17 3,525,802.74
TOTAL LIABILITIES AND EQUITY 4,802,669.94 4,558,266.42


STATEMENT OF OPERATION
For the Years Ended December 31, 2017 and 2016
Notes 2017 2016
REVENUES
Income from Consumer Store Operation 22 400,083.43 345,405.92
Income from Service Operation 23 - 1,762.00
Income from Production Operation 24 12,228.00 22,611.00
Income from Hog Fattening 25 371,145.15 109,272.80
Other Income 26 61,534.00 50,580.00
TOTAL REVENUES 844,990.58 529,631.72
EXPENSES 27 473,339.86 413,341.33
NET SURPLUS 371,650.72 116,290.39
DISTRIBUTED AS FOLLOWS: 28
Reserve Fund 37,165.07 11,629.04

Education and Training Fund- Local (0.5%) 18,582.54 5,814.52
Due to Union/ Federation (0.5%) 18,582.54 5,814.52
Community Development Fund (3%) 11,149.52 3,488.71
Optional Fund (7%) 26,015.55 8,140.33
Interest on Share Capital Payable (60%) 156,093.30 48,841.96
Patronage Refund Payable (40%) 104,062.20 32,561.31
TOTAL DISTRIBUTION 371,650.72 116,290.39


STATEMENT OF OPERATION
Notes 2017 2016
REVENUES
Income from Consumer Store Operation 22 400,083.43 345,405.92
Income from Service Operation 23 - 1,762.00
Income from Production Operation 24 12,228.00 22,611.00
Income from Hog Fattening 25 371,145.15 109,272.80
Other Income 26 61,534.00 50,580.00
TOTAL REVENUES 844,990.58 529,631.72
EXPENSES 27 473,339.86 413,341.33
NET SURPLUS 371,650.72 116,290.39
DISTRIBUTED AS FOLLOWS: 28
Reserve Fund 37,165.07 11,629.04

Education and Training Fund- Local (0.5%) 18,582.54 5,814.52
Due to Union/ Federation (0.5%) 18,582.54 5,814.52
Community Development Fund (3%) 11,149.52 3,488.71
Optional Fund (7%) 26,015.55 8,140.33
Interest on Share Capital Payable (60%) 156,093.30 48,841.96
Patronage Refund Payable (40%) 104,062.20 32,561.31
TOTAL DISTRIBUTION 371,650.72 116,290.39


STATEMENT OF CHANGES IN EQUITY

Notes 2017 2016

SHARE CAPITAL 18
Authorized 8,000,000 shares at P500.00 par value
Share Capital, Beginning 2,154,900.00 2,125,700.00
Add: Additional Capital 131,100.00 39,500.00
Total 2,286,000.00 2,165,200.00
Less: Withdrawal 32,900.00 10,300.00
Ending Balance 2,253,100.00 2,154,900.00
DEPOSIT ON FUTURE SHARE

SUBSCRIPTION 19
Beginning Balance 9,968.68 8,767.04
Add (Less) - 1,022.25 1,201.64
Total Deosit on Future Share Subscription 8,946.43 9,968.68
DONATIONS/GRANTS 20
Beginning Balance 283,868.00 243,868.00
Add: Credit 24,800.00 42,300.00
Total 308,668.00 286,168.00
Less: Charges 4,800.00 2,300.00
Ending Balance 303,868.00 283,868.00
STATUTORY FUNDS 21
RESERVE FUND
Balance, Beginning 794,585.84 782,956.80
Add: 10% of net surplus 37,165.07 11,629.04
Ending Balance 831,750.91 794,585.84
COOPERATIVE EDUCATION AND TRAINING FUND

Add: .005% of net surplus 18,582.54 5,814.52
Balance 209,785.44 191,552.90
Less: Charges 2,000.00 350.00
Ending Balance 207,785.44 191,202.90
COMMUNITY DEVELOPMENT FUND

Add: 3% of Net Surplus 11,149.52 3,488.71
Total 23,393.48 12,543.96
Less: Charges 1,700.00 300.00
Ending Balance 21,693.48 12,243.96
OPTIONAL FUND
Add: 7% of Net Surplus 26,015.55 8,140.33
Total 105,048.91 139,213.36
Less: Charges 60,180.00 60,180.00
Ending Balance 44,868.91 79,033.36
TOTAL STATUTORY FUNDS 1,106,098.74 1,077,066.06
TOTAL EQUITY 3,672,013.17 3,525,802.74

Brgy. Sta. Cruz, Rosario, Batangas
NOTES TO FINANCIAL STATEMENTS

As of December 31, 2017
1. GENERAL INFORMATION
The TAMPAYAK MULTI-PURPOSE COOPERATIVE (referred hereinafter as

“Cooperative”) was registered as a cooperative pursuant to RA 9520 for the purpose of encouraging
thrift and savings mobilization among members for the capital formation; to create funds in order
to grant loans for productive and providential purposes to its members; to provide goods and
services and other requirements of the members; to promote the cooperative as a way of life for
improving the social and economic well- being of the people; to do any related activity for the
members’ self-government, improve social and economic well-being under a truly just democratic
society; to work with cooperative movement, non- government development of cooperatives and
carrying out government policies; to undertake other activities for the effective and efficient
implementation of the provisions of the cooperative code.
The Cooperative’s name was granted the CDA Registration No. LGA-3904 last February
22,1999. And the cooperative re-registration granted last October 26,2009 with Registration No.
9520-04001217. The Cooperative Identification No. (CIM)-0105040184 and its Certificate of
Compliance were issued last July 8, 20116. Under the RA 9520, the cooperative is exempt from
payment of income and sales taxes, provided that a substantial portion of its net income is returned
to member in the form of interest and/ or patronage refunds.
The area of operation of this cooperative includes Brgy. Namunga, Rosario and its principal
office is located at Sta. Cruz, Rosario, Batangas.
These financial statements of the cooperative for the year ended December 31, 22017 were
authorized for issue by the Board of Directors on March 03, 2018.
To facilitate the understanding of the financial statement, the more significant accounting
policies and practices of the Cooperative are summarized as follows:
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
To facilitate the understanding of the Financial statements, the more significant accounting
policies and practices of the cooperative are summarized as follows:
Basis of Preparation/ Partial Adoption of New/ Revised Philippine Accounting Standards
The financial statements have been prepared in conformity with Financial Reporting
Standards applicable to the Philippine cooperatives:
PAS 1 – Presentation of Financial Statements
PAS 8 – Accounting Policies, Change in Accounting Estimates and Errors
PAS 10 – Events After Balance Sheet Date
PAS 16 – Property, Plant and Equipment
PAS 19 – Employee Benefits

PAS 24 – Related Party Transactions
PAS 36 – Impairment of Assets
PAS 41 – Producer and Agriculture Coop
PAS 2 – Inventories
PAS 7 – Cash Flows Statements
PAS 18 – Revenue
PAS 32, 39 – Financial Instrument
PAS 40 – Investment Property
PAS 1 – Presentation of Financial Statements
Provides frameworks of financial statements presentation. It requires more specific balance

sheet line items (tax liabilities) provisions, non-interest bearing debt, among others, financial
statements must be comparative, has a number of new disclosure requirements. The standards also
require presentation of comparative information.
PAS 2 - Inventories
The objective of this Standard is to prescribe the accounting treatment for inventories. A
primary issue in accounting for inventories is the amount of cost to be recognized as an asset and
carried forward until the related revenues are recognized. This standard provides guidance on the
determination of cost and its subsequent recognition as an expense, including any write-down to
net releasable value. It also provides guidance on the cost formulas that are assign costs to
inventories.
PAS 7 – Cash Flow Statements
Information about the cash flows of an entity is useful in providing users of financial
statements with a basis to assess the ability of the entity to generate cash and cash equivalents and
the needs of the entity to utilize those cash flows. The economic decisions that are taken users
require an evaluation of the ability of an entity to generate cash and cash equivalents and the timing
and certainty of their generation. This standard is to require the provision of information about the
historical changes in cash and cash equivalents of an entity by means of a cash flow statement
which classifies cash flows during the period from operating, investing and financing activities.
PAS 8 – Accounting Policies, Change in Accounting Estimates and Errors
The standard is applied in selecting and applying accounting policies, and accounting for
changes in accounting policies, changes in accounting estimates and correction of prior period
errors.
PAS 10 – Events After Balance Sheet Date
The standard is applied in the accounting for, and disclosure of events after balance sheet
date.
PAS 16 – Property, Plant and Equipment
PAS 16 (a) provides additional guidance and clarification on recognition and measurement
of property, plant and equipment; requires capitalization of the costs of asset dismantling, removal
or restoration; and requires measurement of an item of property and equipment acquired in

exchange for a non-monetary asset or a combination of monetary and non-monetary assets at fair
value, unless the exchange transaction lacks commercial substance. The standard also provides
guidelines for derecognition (e.g. disposal).
PAS 18 – Revenue
Prescribes the accounting treatment for revenue arising from certain types of transaction
and events.
PAS 19/IAS 19 – Employee Benefits
Prescribes the accounting and disclosure for employee benefits, including short-term
benefits (wages, annual leave, sick leave, annual profit-sharing bonuses, and non-monetary
benefits): pension, post-employment life insurance and medical benefits’ other long-term employee
benefits (long-service lease, disability, deferred compensation, long-term profit sharing and
bonuses, and equity compensation).
PAS 24 – Related Party Transactions
This standard applies in: (a) identifying related party relationship transactions;(b)
identifying outstanding balances between an entity and its related parties; identifying the
circumstances in which disclosures to be made about these items.
PAS 36 – Impairment of Assets
This standard in accounting for the impairment of assets other than those covered by
separate standards.
PAS 41 – Agriculture
Prescribes the accounting treatment, financial presentation and disclosure for agricultural
activity.
PAS 32, 39 – Financial Instruments
Prescribes the accounting treatment, presentation and disclosure requirement for Financial
Instruments.
PAS 40 – Investment Property
Prescribes the Accounting treatment and disclosure requirement for Investment Property.
Management’s Use of Judgments and Estimates
The financial statements are prepared in conformity with the above mentioned accounting
principles accepted in the Philippines which requires management to make estimates and
assumptions that affect the amounts reported in the financial statement and accompanying notes.
Those estimates and assumptions used in the financial statements are based on management’s
evaluation of relevant facts and circumstances as of date of the financial statements. Actual results
could differ from such estimates.
The key estimates/assumptions concerning the future that have a significant risk of causing
a material adjustment to the carrying amounts of assets and liabilities within the next financial year
are discussed below:
Estimated Useful Lives
The useful life of each of the Cooperative’s property or equipment is estimated based on
the period over which the asset is expected to be available for use. Such estimation is based on a
collective assessment of industry practice, internal technical evaluation and experience with similar
assets. The estimated useful life of each asset is reviewed periodically technical evaluation and
experience with similar assets. The estimated useful life of each asset is reviewed periodically and
updated if expectations differ from previous estimates due to physical wear and tear, technical or
commercial obsolescence and legal or other limits on the use of the assets. It is possible, however,
that future results of operations could be materially affected by changes in the amounts and timing
of recorded expenses brought about by changes in the factors mentioned above.
Asset Impairment
PFRS requires that an impairment review be performed when certain impairment indicator
are present. Determining the value of property and equipment, which require the determination of
future cash flows expected to be generated from the continued use and ultimate disposition of such
assets, requires to Cooperative to make estimate and assumption that can materially affect its
statement of assets, liabilities and members’ equity. Future events could cause the Cooperative to
conclude that the property and equipment are impaired. Any resulting impairment are impaired.
Any resulting impairment loss shall be charged to operations.
Functional and Presentation Currency
Items included in the Cooperative’s financial statements are measured using the currency
of the primary economic environment in which the entity operates (the “functional currency”). The
financial statements are presented in Philippine Peso, which is the Cooperative’s functional and
presentation currency.
Revenues Recognition
Revenue is recognized when it is probable that the economic benefits associated with the
transactions will flow to the cooperative and the amount of revenue can be measured reliably.
Revenues from transactions of the Cooperative are recognized on a modified accrual basis.
Cash and Cash Equivalents
Cash includes cash on hand and in bank. Cash equivalent are short-term, highly liquid
investments that are readily convertible to known amounts of cash and with original maturities of
three months or less and that are subject to an insignificant risk of change in value.
Financial Assets
Receivables
Receivables, if any, are valued at face value, net of an allowance for doubtful accounts and
any anticipated adjustment that will reduce the amount to its estimated realizable value. The
allowance for doubtful accounts is determined after study of the estimated collectability of the
receivable balances and evaluation of such factors as aging of the accounts, collection expense of
the Cooperative in relation to the particular receivable, past and expected loss experiences and
identified doubtful accounts.
Inventories
Inventories are assets which are held for sale in the ordinary course of business, in the
process of production for such sale or in the form of materials or supplies to be consumed in the
production process or in the rendering of services.
Property and Equipment
Property and Equipment are carried at cost less accumulated depreciation and impairment
in value. Depreciation is computed using the straight- line method over the estimated useful lives
of the properties.
Land
Land Improvement
Building Improvements
Office, Furniture and Fixtures
Transportation Equipment
Financial Liabilities
Financial liabilities include bank loans, trade and other payables. As well as Interest on
Share Capital and Patronage Refund Payable to the cooperative’s members. These are recognized
when the Cooperative becomes a party to the contractual agreements of the instrument. All interest
related charges are recognized as an expense in the Statement of Operations under the caption
Finance Costs.
Trade payables are recognized at their nominal value. Interest on Share Capital and
Patronage Refund payable are recognized as financial liabilities based on the Cooperative’s By-
Laws as well as Cooperative laws and regulations.
Financial liabilities are derecognized from the balance sheet only when the obligations are
extinguished either through discharge, cancellation or expiration.
Impairment of Assets
The carrying amounts of the Cooperative’s non-current assets are reviewed at each balance
sheet date to determine whether there is any indication of impairment. If any such indication exists,
the asset’s recoverable amount is estimated.
An impairment loss is recognized whenever the carrying amount of an asset or its cash-
generating unit exceeds recoverable amount.
Cost and Expenses
Cost and expenses, not directly attributable to capitalizable assets or projects, are
recognized and charged to operation as incurred.
Accounting Estimates
The preparation of financial statement in accordance with accounting principles generally

accepted in the Philippines requires the Cooperative to make estimates and assumptions that affect
the reported amounts on income, expenses, resources, liabilities and disclosure of contingent
resources and liabilities. Actual results could differ from those estimates.
ACCOUNTS PECULIAR TO COOPERATIVES
The following accounts are peculiar to a Cooperative due to its nature as well as adherence
to Cooperative laws, issued policies, rules and regulations, as well as cooperative principles and
practices.
ASSETS:
Cash in Other Cooperative Federation- refers to money deposited in federations which

are unrestricted and readily available when needed. These are treated as cash and other cash
equivalents.
Due from Accountable Officers and Employees- refers to total collectibles from
shortages and other losses due from accountable officers and employees that are subject to
immediate settlement sanction. These are recognized at cost, less allowance for impairment, if any.
Cooperative Development Cost- refers to expenses incurred prior to the actual operations
of the cooperative. These are recognized at cost, subject to amortization for a period not exceeding
3 years.
Other Funds and Deposits- refer to funds set aside for funding of reserves (Statutory and
Other Reserves) established by the cooperative such as Retirement, Mutual Benefit and other
Funds. This is recorded at cost.
LIABILITIES:
Interest on Share Capital Payable- refers to liability of the cooperative to its members
for interest on share capital, which can be determined only at the end of every fiscal period.
Patronage Refund Payable- is the liability of the cooperative to its member and patrons
for patronage refund, which can be determined only at the end of every fiscal period.
Due to Apex (CETF)- is an amount set aside for the education and training fund of an
apex organization, which is 50 % of the amount allocated by the cooperative in accordance with
the provision of the cooperative’s by-laws and the cooperative code. The apex organization may
either be a federation or union of which the cooperative is a member.
Revolving Capital Payable- is the deferred payment of interest on share capital and
patronage fund whose payment has been withheld, which should be agreed upon in the General
Assembly.
Project Subsidy Fund Payable- Unused portion of the donation/ grant for training,
salaries and wages, etc.
Mutual Benefit and other Funds Payable- are funds for special purposes such as
member’s welfare and benefits, i.e. loan protection, hospitalization, death, scholarship assistance,
etc. including KBGF/ CGF, provision for accidents not taken from net surplus.
EQUITY:
Donation/ Grants- are amounts received by the cooperative as awards, subsidies, grant,
aids and others. This shall not be available for distribution as interest on share capital and patronage
refund, and shall form part of the members’ equity of the Statement of Financial Condition.
Statutory Funds- are mandatory funds established/ set up in accordance with Article 86
and 87 of the Cooperative Code. They are as follows:
General Reserve Fund- amounts set aside annually for the stability of the cooperative and
to meet net losses in its operations. It is equivalent to at least 10% of the net surplus. A
corresponding fund should be set up either in the form of time deposit with local banks or
government securities. Only the amount in excess of the paid up share capital may be used for the
expansion and authorized investment of the cooperative as provided for in its by-laws.
Education and Training Fund- an amount retained by the cooperative out of the
mandatory allocation as stipulated in the cooperative’s by-laws.
Community Development Fund- This is computed at 3% of cooperative’s net surplus.

This is used for projects or activities that will benefit the community where the cooperative.
Optional Fund- fund set aside from the net surplus *should not exceed 7%) for future use
such as land and building community developments, etc.
EXPENSES:
General Assembly Meeting- expenses incurred in the conduct of regular/ special general
assembly.
Members’ Benefit- all expenses incurred for the benefit of the members.
Affiliation Fee- amount incurred to cover membership or registration fees and annual dues
to a federation or union.
Social and Community Service- expenses incurred by the cooperative in its social
community involvement including solicitations and donations to charitable institutions.
Provision for CGF (KBGF)- amount set up for the provisions of CGF (KBGF)
Provision for Members’ Future Benefits- amount set up for future benefit of member,
such as pensions of members, etc., not taken from Net Surplus.
OTHER ITEMS:
Project Subsidy- refers to the amount deducted from Project Subsidy Fund to subsidize
project expenses. This shall appear in the statement of operation as a contra account to Subsidized
Project Expenses.
Donation and Grant Subsidy- refers to an amount deducted from Donation and Grant
account to subsidize depreciation funded by donations and grants.
Optional Fund Subsidy- refers to an amount deducted from Optional Fund to subsidize
depreciation funded by Optional Fund and/or community development expense.
Subsidized Project Expenses- refers to a portion of the Project Subsidy Fund expanded
for training, salaries and wages and other activities subsidized by donations and grants.
INCOME TAXES
The Cooperative Code states that a Cooperative transacting business only to its members
is exempt from all government taxes, and therefore cannot apply the PAS for income taxes because
of its tax-exempt nature. However, should the cooperative exceed the limits as set forth in the
cooperative code, it will adopt the accounting standards for income taxes as stated in PAS 12.
INCOME RECOGNITION
As a rule, cooperative adopt the accrual basis of accounting. However, for credit and other
cooperatives, recognition of revenues is on a modified accrual basis, i.e., interest income, fines,
penalties and surcharges shall be recognized when earned and actually collected. This is so because
only interest income, fines, penalties and surcharges on loans receivable that has been realized (i.e.,
earned and collected) shall be the basis of the income available for distribution to its members
through interest on share capital and patronage refund.
Also, due to the cash-based income distribution scheme of a cooperative as well as the
inherent limitations of small-scale country side credit cooperatives, it cannot adopt the effective
interest method in recognizing interest income on loans receivable.
3. MANAGEMENT’S SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES
3.1 Judgment
The preparation of the Cooperative’s financial statements in conformity with Financial

Reporting Framework in reference to the Generally Accepted Accounting Principles of the
Philippines) requires management to make estimates and assumptions that affect the amounts
reported in the Cooperative’s financial statements and accompanying notes. The estimates and
assumptions used in the Cooperative’s financial statements are based upon management’s
evaluation of relevant facts and circumstances as of the date of the Cooperative’s financial
statements. Actual results could differ from such estimates, judgments and estimates are continually
evaluated and are based on historical experience and other factors including expectations of future
events and are based in historical experience and other.
3.1 Estimates
In the application on the Cooperative’s accounting policies, management is required to

make judgments, estimates and assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and associated assumptions are
based on historical experience and other factors that are considered to be relevant. Actual results
may differ from these estimates. The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate
is reviewed if the revisions affect only that period, or in the period of the revision and future periods
in the revision affect both current and future periods.
The following represents a summary of the significant estimates and judgments and related
impact and associated risks in the Cooperative’s financial statements.
Allowance for Doubtful Accounts
The Cooperative assessed whether objective evidence of impairment exist for receivables
and due from related parties that are individually significant and collectively for receivables that
are not individually significant. Allowance for Doubtful Accounts is maintained at a level
considered adequate to provide for potentially uncollectible receivables.
There are no allowances for doubtful accounts beause they are potentially collectible based
on their historical collections.
Impairment of Available-for-sale Financial Assets
The Cooperative follows the guidance of PAS 39 in determining when an asset is other-
than-temporarily impaired. This determination requires significant judgment. In making this
judgment, the Cooperative evaluates, among other factors, the duration and extent to which the fair
value of an investment is less than its cost; the financial health of and near business outlook of the
investee, including factors such as industry and sector performance, changes in technology and
operational and financing cash flows.
If the assumption made regarding the duration and extent to which the fair value is less
than cost, the Cooperative would not suffer an additional loss in its financial statement, representing
the write down of cost at its fair value.
Estimating Useful Lives of Property, Plant and Equipment
The useful lives of property, plant and equipment are estimated based on the period over
which the assets are expected to be available for use. The estimated useful lives of property, plant
and equipment are reviewed periodically and are updated if expectations differ from previous
estimated due to physical wear and tear, technical or commercial obsolescence and legal or other
limits on the use of the Cooperative’s assets. In addition, the estimation of the useful lives of
property, plant and equipment is based on Cooperative’s collective assessment of industry practice,
internal technical evaluation and experience with similar assets. It is possible, however, that future
results of operations could be materially affected by changes in estimates brought about by changes
in factors mentioned above. The amounts and timing of recorded expenses for any period would be
affected by changes in these factors and circumstances.
A reduction in the estimated useful lives of property, plant and equipment would increase
the recognized operating expenses and decrease non-current assets.
Depreciation is computed on a straight- line method over the estimated useful lives of the
assets as follows:
Furniture and Fixtures 3-5 years
The Cooperative assesses the value of property, plant and equipment which require the
determination of future cash flows expected to be generated from the continued use and ultimate
disposition of such assets, and require the Cooperative to make estimates and assumptions that can
materially of such financial statements.
Future events could cause the Cooperative to conclude that property, plant and equipment
and other long-lived assets are impaired. Any resulting impairment loss could have a material
adverse impact on the Cooperative’s financial condition and the results of operation.
The preparation of the estimated future cash flows involves significant judgment and
estimations. While the Cooperative believes that its assumptions are appropriate and reasonable,
significant changes in these assumptions may materially affect the Cooperative’s assessment of
recoverable values and may lead to future additional impairment charges.
Revenue Recognition
The company’s revenue recognition policies require the use of estimates and assumptions
that may affects the reported amounts of revenues and receivables. Difference between the amounts
initially recognized and actual settlement are taken up in the accounts upon reconciliation.
However, there is no assurance that such use of estimates may not result to material adjustment in
the future periods.
4. Financial risk management objectives and policies
The Cooperative is exposed to credit, liquidity, and other risks that arise in the normal
course of business. Its risk and control framework includes a focus on minimizing negative effects
on the Cooperative’s financial performance due to unpredictability of financial markets that drives
the risks.
Credit Risk
Generally, the maximum credit risk exposure of financial assets is the carrying amount of
the financial assets as shown on the face of the statement of financial condition.
The Cooperative continuously monitors defaults of customers and other counterparties and
incorporate this information into its credit risk controls. The Cooperative’s policy is to deal with
creditworthy counterparties.
The Cooperative’s management considers that all the above financial assets that are not
impaired or past due for each balance sheet dates are of good credit quality.
With respect to trade and other receivables, the Cooperative is not exposed to ay significant
credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics. Based on historical information about customer default rates management consider
the credit quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents, money market funds, debentures and
derivative financial instrument is considered negligible since the counterparties are reputable banks
with high quality external credit ratings.
Liquidity Risk
Liquidity or funding risk is the risk that an entity will encounter difficulty in raising funds
to meet commitments associated with financial instruments. Liquidity risk may result from either
inability to sell financial assets quickly at their fair values or counterparty failing on repayment of
contractual obligation, or inability to generate cash inflows as anticipated.
In order to minimize liquidity risks, the Cooperative maintains sufficient cash and has the
availability of funding through an adequate amount of committed credit facilities.
Other Price Risk Sensitivity
The cooperative’s market price risk arises from its investments carried at fair value
(financial assets classified as financial assets at fair value through profit or loss and available-for-
sale financial assets). It manages its risk arising from changes in market price by monitoring the
changes in the market price of the investments.
5. CASH AND CASH EQUIVALENTS
This account consists of the following:
2017 2016
Cash on Hand 395, 170.46 69, 041.69

Cash in Bank 145, 530.12 53,369.12
Petty cash Fund 3, 000.00 3,000.00
Change Fund 300.00 300.00
Total Cash and Cash Equivalents 544,000.58 125,710.81
Petty cash Fund is the amount used for immediate payments of transportation, Xerox,
supplies and small advance of employees and change fund.
Cash in banks as well as time deposits earn interest at rates based on daily bank deposit
rates.
6. ACCOUNTS RECEIVABLES
2017 2016
Accounts Receivable
Current 2,775,072.75 3,227,900.30
Past due
Other Current Receivable 1,507.00 6,565.00
Total Accounts Receivable 2,776,579.75 3,234,465.30
6.1 ACCOUNTS RECEIVABLE
2017 2016
Accounts Receivable
Store 297,108.66 412,480.06
Hog Fattening 463,129.70 381,491.09
Feeds Dispersal 2,138,688.44 2,499,804.67
Total Accounts Receivable 2,898,926.80 3,293,775.82
Less: Allowance for Profitable Losses on 123,854.05 65,875.52
Total Accounts Receivable, Net 2,775,072.75 3,227,900.30
The accounts are receivables to members in groceries, hog fattening and feeds dispersal.
7. INVENTORY
2017 2016
Merchandise Inventory 64,893.05 76,137.20
This is the merchandise inventory at the end of December 31, 2017.
8. BIOLOGICAL ASSETS
2017 2016
Biological Assets 916, 999.00 559,312.50
This account consists of inventory of Hog Fattening.
9. OTHER CURRENT ASSETS
2017 2016
Unused Supplies 5,789.65 7,826.70
This account consists of Official Receipts.
10. INVESTMENT
2017 2016
Federation of Batangas Cooperatives (FBC) 3000.00 3000.00

Jetstar Milling Corporation 5000.00 5000.00
Limcoma Multi-Purpose Cooperative 600.00 -
Soro Soro Ibaba Dev’t Coop. Inc. (SSIDCI) 5000.00 5000.00
Total Investment 13,600.00 13,000.00
10. PROPERTY AND EQUIPMENT
Land Land Building Furniture, Transpor- Total

Improve Improve- Fixtures tation
-ment ment Equipmen Equipmen
t t
At December 31, 2017
Opening Net
Book 201,300.0 1.00 271,168.42 63,824.49 2,920.00 539,213.91
Additions 0 3,000.00 3,000.00
Depreciatio 60,180.00 3,826.00 64,006.00
n
Closing 201,300.0 1.00 213,988.42 59,998.49 2,920.00 478,2017.91
0
Year Ended December 31, 2017

Cost 201,300.0 16,745.0 813,920.75 232,683.7 85,500.00 1,350,149.49
Accumulate 0 0 599,923.33 4 82,580.00 871,941.58
d 16,744.0 172,665.2
0 5
Net Book 201,300.0 1.00 213,988.42 59,998.49 2,920.00 478,2017.91
0
Land Land Building Furniture, Transpor- Total

Improve Improve- Fixtures tation
-ment ment Equipmen Equipmen
t t
At December 31, 2017
Opening Net
Book 192,500.0 1.00 331,348.42 67,636.61 2,920.00 594,406.03
Additions 0 8,800.00
Depreciatio 8,800.00 60,180.00 3,812.12 63,992.12
n
Closing 201,300.0 1.00 271,168.42 63,824.29 2,920.00 539,213.91
0
Year Ended December 31, 2017

Cost 201,300.0 16,745.0 810,920.75 232,683.7 85,500.00 1,347,149.49
Accumulate 0 0 539,752.33 4 82,580.00 807,935.58
d 16,744.0 168,859.2
0 5
Net Book 201,300.0 1.00 271,168.42 63,824.49 2,920.00 539,213.91
0
12. OTHER NON-CURRENT ASSETS
2017 2016
Deposits on Returnable Containers 2,600.00 2,600.00
This account includes Deposits on returnable containers.
13. TRADE, NON-TRADE AND OTHER PAYABLES
2017 2016
Accounts Payable 262,733.00 297,007.50

Loans Payable - -
SSS/ECC/PhilHealth/Pag-Ibig Premium Contribution Payable 2,880.00 2,580.00
SSS/ECC/PhilHealth/Pag-Ibig Loan Payable 1,850.00
Withholding Tax Payable 608.24
Total Trade, Non-Trade and Other Payables 268,071.24 299,587.50
Accounts Payables are groceries, rice and feeds purchased on account.

Loans Payable represents loans granted by the following:
Municipal Government of Rosario, Batangas with 6% fixed interest rate per annum
payable quarterly.
14. INTEREST ON SHARE CAPITAL AND PATRONAGE REFUND PAYABLE
2017 2016
Interest on Share Capital Payable 281,817.82 208,316.11
Patronage Refund Payable 171,691.56 119,660.46
Total Interest on Share Capital and Patronage Refund 453,509.38 327,976.57
Payable
15. DUE TO UNION/ FEDERATION
2017 2016
Due to Union/ Federation 21,397.06 216,063.86
16. RETIREMENT FUND PAYABLE
2017 2016
Retirement Fund Payable 109,750.00 97,750.00
The account represents the amount allocated for future retirement benefits of employees
changed against the income of the cooperative.
17. MEMBERS’ BENEFIT AND OTHER FUNDS PAYABLE
2017 2016
Members’ Benefit And Other Funds Payable 67,679.75 91,085.75
This account consists of Cooperative Guarantee Fund.

18. SHARE CAPITAL
2017 2016
Share Capital 2,253,100.00 2,154,900.00
Authorized share capital of the cooperative is Eight Million Pesos (P 8,000,000.00) and
said capital is divided into Sixteen Thousand (16,000) shares with a par value of Five Hundred
Pesos Only (P500.00).
The Present Board of Directors are:
Chairperson Ceres D. Punzalan
Vice-chairperson Ruel U. Dela Rosa
Board Members Teodoro A. Atienza
Board Members Lawrence M. Banawa
Board Members Jose De Guzman
Board Members Marivic B. Medrano
Board Treasurer Emily U. Magadia
Manager Zolo L. Petoral
19. DEPOSIT ON FUTURE SHARE SUBSCRIPTION
2017 2016
Deposit On Future Share Subscription 8,946.43 9,968.68
20. DONATIONS/ GRANTS
2017 2016
Donations/ Grants 303,868.00 283,868.00
The account represent the amount of donation granted to the Cooperative by the Municipal
Government of Rosario upon initial recognition to the CDA, a grant from the Municipal
Cooperative Development Office and from Congressman Dong Mendoza.
21. STATUTORY FUNDS
2017 2016
Reserve Fund 831,750.91 794,585.84

Education and Training Fund-Local 207,785.44 191,202.90
Optional Fund 44,868.91 79,033.36
Community Development Fund 21,693.48 12,243.96
Total Statutory Funds 1,106,098.74 1,077,066.05
22. INCOME FROM CONSUMER STORE OPERATION
2017 2016
SALES 4,579,864.56 4,160,760.25

LESS: COST OF SALES
Beginning Inventory 76,137.20 75,400.55
Add: Purchases 4,156,226.98 3,807,262.98
Freight-in 12,310.00 8,828.00
Total Goods Available for Sale 4,244,674.18 3,891,491.53
Less: Ending Inventory 64,893.05 76,137.20
Total Cost of Sales 4,179,781.13 3,815,354.33
GROSS INCOME 400,083.43 345,405.92
GROSS INCOME FROM CONSUMER STORE 1,106,098.74 1,077,066.05
OPERATION
23. INCOME FROM SERVICE OPERATIONS (Motorcycle with side car)
2017 2016
INCOME FROM SERVICE OPERATIONS - 1,762.00
24. INCOME FROM PRODUCTION OPERATIONS (Garments)
2017 2016
REVENUES 25,099.00 55,216.00

LESS: COST OF SERVICES
Gasoline, Oil and Lubricants 270.00 -
Labor (Sewer) 12,601.00 32,605.00
Total Cost of Services 12,871.00 32,605.00
INCOME FROM PRODUCTION OPERATIONS 12,228.00 22,611.00
25. INCOME FROM HOG FATTENING
2017 2016
SALES 3,377,523.00 2,298,710.00

LESS: COST OF SALES
Inventory, beginning 559,312.50 384,637.00
Add: Purchases 2,992,919.20 2,174,161.80
Caretakers’ Share 371,145.15 165,950.90
Total Cost of Goods Available for Sale 3,923,376.85 2,724,749.70
Less: Inventory, Ending 916,999.00 559,312.50
Total Cost of Sales 3,006,377.85 2,165,437.20
GROSS INCOME 371,145.15 133,272.80
LESS: OPERATING EXPENSES
Interest Expense on Borrowings 24,000.00
Total Operating Expenses - 24,000.00
INCOME FROM HOG FATTENING 371,145.15 109,272.80
26. OTHER INCOME
2017 2016
Commission Income 48,420.00 47,760.00

Miscellaneous Income 13,114.00 2,820.00
Total Other Income 61,534.00 50,580.00
26.1. MISCELLANEOUS INCOME
2017 2016
Coffee Vendo 1,856.00 1,369.00

Computer Income 10,000.00
Chair Rental 445.00 1,305.00
Sale of Empty Sacks 813.00 146.00
Total Other Income 13,114.00 2,820.00
27. EXPENSES
2017 2016
Salaries and Wages 195,000.00 169,000.00
SSS, PhilHealth and EC Contribution 22,845.40 22,172.40
Representation 673.00 912.00
Insurance - 1,300.00
Printing and Office Supplies 5,419.00 4,612.50
Store Supplies Expense 6,345.05 7,169.55
Professional Fees 10,000.00 10,000.00
Meeting and Conferences 794.00 -
Officer’s Honorarium and Allowances 74,000.00 58,500.00
Repair and Maintenance 4,127.00 555.00
Taxes and Licenses 2,383.00 2,036.00
Communication 45.00 -
Light, Power and Water 51,448.68 37,861.64
Social Service - 0
Travel and Transportation 15,012.00 11,261.50
Gas, Oil and Lubricants 132.00 2,370.00
Depreciation – Property and Equipment 3,826.00 3,812.12
Bank Charges - -
Retirement Benefit Expenses 12,000.00 12,000.00
General Assembly 10,282.20 1,493.10
Provision for Probable Losses on Accounts Receivable 57,978.53 65,875.52
Miscellaneous 1,030.00 2,410.00
Total Expenses 473,339.86 413, 341.33
27.1 TAXES AND LICENSES
Date Particular O.R. No. Amount
January 9, 2017 Brgy. Business Clearance 19361649 50.00

January 9, 2017 Fire Safety InspectionFee 158953 151.00
January 9, 2017 Mayor’s Permit 19387236 1,510.00
January 9, 2017 CTC 289297 500.00
January 9, 2017 RPT 2247859 171.00
Total Taxes And Licenses 2,382.00
28. ALLOCATION AND DISTRIBUTION OF NET SURPLUS
The Cooperative’s constitution and by-laws explicitly provides that its net surplus at the
end of the fiscal year shall be distributed in the following manner:
a. Reserve Fund – ten percent (10%) shall be set aside for the reserve fund. The reserve fund
shall be used for the stability of the cooperative and to meet net losses in its operations.
b. Education and Training Fund- one percent (1%) for the education and training fund. Half
of the amount transferred to the education and training fund annually under this
subscription may be spent by the cooperative for education and training and other people;
while the other half be credited to the Cooperative education and training fund of the apex
organization of which the cooperative is a member.
c. Community Development Fund- This is computed at 3% of cooperative’s net surplus. This
is used for project or activities that will benefit the community where the cooperative
operates.
d. Optional Fund- This is computed at 7% of cooperative’s net surplus.

e. Interest on Share Capital and Patronage Refunds- After deduction of the statutory accounts,
any remaining net surplus shall be distributed to the cooperative’s members in the forum
of interest not to exceed the normal rate return on the investments and patronage refunds.
Interest on Fixed Deposits shall be allocated in proportion to the individual members’
average share monthly, while patronage refund is divided according to their individual;
patronage; i.e., volume of loans availed.
29. EMPLOYEE BENEFIT
Retirement Benefits
Republic Act (RA) NO. 761 (New Retirement Law) took effect on January 7, 1993. Under
the new law, the Cooperative is required to provide minimum retirement benefits to qualified
retiring employees. This amount was set up by the Cooperative in compliance with such law.
30. RELATED PARTY TRANSACTIONS
There was no related party transaction made by the Cooperative for the years ending
December 31, 2017 and 2016.
31. EVENTS AFTER BALANCE SHEET DATE
There were no events after balance sheet date that would require a disclosure or adjustment
on the financial statement of the Company.
32. COMMITMENTS AND CONTINGENCIES
There was no significant commitment and contingencies involving the Company as a

Balance Sheet Date.
33. CAPITAL MANAGEMENT OBJECTIVES POLICIES AND PROCEDURES
The Cooperative’s capital management objectives are to ensure the Cooperative’s ability
to continue as going concern and to provide an adequate return to shareholders by pricing products
and services commensurate with the level of risk.
The Cooperative monitors capital on the basis of the carrying amount of equity as presented
on the face of the balance sheets. Capital for the reporting periods under review is summarized as
follows:
2017 2016
Total Liabilities 1,130,656.77 1,032,463.68

Total Equity 3,672,013.17 3,525,802.74
Debt to equity ratio 1:31 1:29
Financial Assets
Investment at Fair Value through Profit or Loss- refers to financial assets that are upon
initial recognition designated by the SCC as fair value through profit and loss. This shall comprise
both debt and equity securities.
Financial Assets are to be carried by Cooperative at fair value through profit or loss upon
initial recognition. A financial asset is classified in this category if acquired principally recognition.
A financial asset is classified in this category if acquired principal for the purpose of selling the
short term or if so designated by the Cooperative. Assets in this category are classified as current
assets if they are either held for trading or are accepted to be realized within 12 months of the
balance sheet date.
Subsequent to initial recognition, the financial assets included in this category are measured
at fair value with changes in fair value recognized in profit or loss. Financial assets originally
designated as financial assets at fair value through profit or loss may not be subsequently be
reclassified.
The use of fair value option shall be in accordance with the criteria set forth in the
amendment to PAS 39 subject to the following condition:
1. SCCs shall have in place appropriate risk management (including related risk
management policies procedures and controls) prior to initial application of the fair
value option for a particular activity or purpose and on an ongoing basis;
2. SCCs shall apply the fair value option only to instrument for which fair values can be
reliably estimated; and,
3. SCCS shall provide CDA with supplemental information as may be necessary, to

enable CDA to assess the impact of the SCCs utilization of the fair value option.
Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or
determinable payment that are not quoted in an active market. They arise when the Cooperative
provides money, goods or services directly to a debtor with no intention of trading receivables.
They are included in current assets, except for maturities greater than 12 months after the balance
sheet date which are classified as non-current assets.
Loans and receivables are subsequently measured at amortization cost using the effective interest
method less impairment losses. Any change in their values is recognized in profit or loss.
Loans and receivables are presented as Trade and Other Receivables in the Statement of
Financial Condition.
Impairment loss is provided when there is objective evidence that the Cooperative will not
be able to collect all amounts due to it in accordance with the original terms of the receivables. The
amount of the impairment loss is determined as the difference between the asset’s carrying amount
and the present value of estimated cash flows.
Allowance for probable losses is maintained at a level considered adequate to provide for
potential losses on loans and other resources. The allowance is increased by provision charged to
operations and reduced by net write-offs and reversals. The level of allowance is set up at the higher
of the amount determined based on management’s evaluation of potential losses after consideration
of prevailing and anticipated economic conditions.
Held-to-maturity Financial Assets. This includes non-derivative assets with fixed or

determinable payment and a fixed date of maturity, investments are classified as held-to-maturity
if the Cooperative has a positive intention and ability to hold them until maturity. Investments
intended to be held for an undefined period are not included in this classification. They are included
in non-current assets under Long-term Financial Assets account in the balance sheet, except those
maturing within 12 months of the balance sheet date.
Held-to-maturity investment are subsequently measured at amortized cost using the

effective interest method. In addition, if there is objective evidence that the investment has been
impaired the financial assets are measured at present value of estimated cash flows. Any changes
to the carrying amount of the investment are recognized in profit or loss.
Available-for-sale Financial Assets. This includes non-derivative financial assets that are either
designated to this category or do not qualify for inclusion in any of the other categories of financial
assets. They are included in non-current assets under the Long-term Financial Assets account in
the balance sheet unless management intends to dispose the investment within 12 months of the
balance sheet date.
All financial assets within this category are subsequently measured at fair value, unless
otherwise disclosed with changes in value recognized in equity, net of any effects arising from
income taxes. Gains and losses arising from securities classified as available-for-sale are
recognized in the statement of income when they are sold or when the investment is impaired.
In the case of impairment, any loss previously recognized in equity is transferred to the
income statement. Losses recognized in the statement of income on equity investment are not
reversed through the statement of income. Losses recognized in prior period income statement
resulting from the impairment of debt instruments are reversed through the income statement.
Unquoted Debt Securities Classified as Loans refers to debt securities with fixed or determinable
payment and fixed maturity. Unquoted debt securities are measured upon initial recognition at their
value plus transaction costs that are directly attributable to the acquisition of the securities. After
initial recognition, the Cooperative shall measure Unquoted Debt Securities at their amortized cost
using the effective interest method. A gain or loss arising from the change in the fair value of the
securities shall be recognized in profit or loss when the security is derecognized or impaired, and
through the amortization process.
Investment in Non-Marketable Equity Securities (INMES) refers to equity instruments that do

not have a quoted market price in an active market, and whose fair value cannot be reliably
measured.
INMES shall be measured upon initial recognition at its fair value plus transaction costs
that are directly attributable to the acquisition of the security. After initial recognition, the SCC
shall measure INMES at cost. A gain or loss arising from the change in the fair value of INMES
shall be recognized in profit or loss when the security is derecognized or and through the
amortization process.
Derecognition of financial assets occurs when the rights to receive cash flows from the
financial instruments expire or are transferred and substantially all of the rights and rewards of
ownership have been transferred.
34. FINANCIAL RISK MANAGEMENT
Financial risk management objectives and policies
The Cooperative’s activities expose it to a variety of financial risks: credit risk and
liquidity. The Cooperative’s overall risk management program seeks to minimize potential adverse
effects on the financial performance of the Cooperative. The policies for managing specific risks
are summarized below.
Management of Financial Risk
Governance Framework
The Cooperative has established a risk management function with clear terms of reference
and with the responsibility for developing policies on market, credit, liquidity and operational risk.
It also supports the effective implementation. The policies define the Cooperative’s identification
of risk and its interpretation, limit structure to ensure the appropriate quality and diversification of
assets to the cooperative goals and specify reporting requirements.
Capital Management Framework
The Cooperative’s risk management function has developed and implemented certain
minimum stress and scenario tests for identifying the risks to which the Cooperative are expected,
quantifying their impact on the volatility of economic capital. The results of these tests, particularly,
the anticipated impact on the realistic balance sheet and revenue account, are reported to the
Cooperative’s risk management function. The risk management function then considers the
aggregate impact of the overall capital requirement revealed by the stress testing to assess how
much capital is needed to mitigate the risk of insolvency to a selected remote level.
Regulatory Framework
The operation of the Cooperative’s is also subject to the regulatory requirement of SEC.
Such regulations not only prescribe approval and monitoring of activities but also impose certain
restrictive provisions.
Financial Risk
The Cooperative is also exposed to financial through its financial assets and financial
liabilities. The most components of this financial risk are credit risk, liquidity risk and market risk.
Credit Risk
The Cooperative credit risk is primarily attributable to its trade and other receivables. The
Cooperative has adopted stringent procedure in extending credit terms to customers and in
monitoring its credit risk.
Credit risk is the risk that one party to a financial instrument will fail to discharge and
obligation and causes the other party to incur a financial loss.
The Cooperative manages the level of credit risk it accepts through comprehensive credit
risk policy setting out assessment and determination of what constitutes credit risk for the
cooperative, setting up exposure limits by each counterparty or group of counterparties,
geographical and industry segment; guidelines on obtaining collateral and guarantees; reporting of
credit risk exposures and breaches to the monitoring authority; monitoring compliance with credit
risk policy and review of credit risk of credit risk policy for pertinence and changing environment.
The cooperative does not have any significant concentration of credit risk with a single
counterparty of group of counterparties, geographical and industry segments as of December 31,
2016.
Liquidity Risk
Liquidity or funding risk is the risk that an entity will encounter difficulty in raising funds
to meet commitments associated with financial instruments. Liquidity risk may result from either
the inability to sell financial assets quickly at their fair values or counterparty failing on repayment
of contractual obligation; or inability to generate cash inflows as anticipate. The Cooperative
manages liquidity through a liquidity risk policy which determine what constitutes liquidity risk
for the Cooperative; specifies minimum proportion of funds to meet emergency calls; setting up
contingency funding plans; specify the resources of funding and the events that would trigger the
plan; concentration of funding sources reporting of liquidity risk exposures and breaches to the
monitoring authority; monitoring compliance with liquidity risk policy and review of liquidity risk
policy for pertinence and changing environment.
Market Risk
Market risk is the risk of change in fair value of financial instruments from fluctuation in
foreign exchange rates (currency risks), market interest rates (interest rate risk) and market prices
(price risk).
Fair Value Interest Rate Risk
The fair value interest rate risk is the risk that the value of financial instruments will
fluctuate because of changes in market interest rate. The cooperatives fixed rate investments and
receivables in particular are exposed to such risk.
The cooperative’s market risk policy requires the management of interest rate risk by
maintaining appropriate mix of fixed and variable rate instruments. The policy also requires it to
manage the maturities of interest bearing financial assets and interest bearing financial liabilities.
Reclassification
Certain accounts in the prior year’s financial statements were reclassified to conform to the
current year’s presentation of accounts. Such reclassification had no impact on the previously
reported income.

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Republic of the Philippines

BATANGAS STATE UNIVERSITY

Sapphire Audit Company

Tampayak Multi-Purpose Cooperative is a cooperative which started as a small retail store

The auditors audited the accompanying financial statements of TAMPAYAK MULTI-

The auditors’ responsibility is to express an opinion on these financial statements based on

The auditors audited Tampayak Multi-Purpose Cooperative in the manner of considerable

BACKGROUND OF TAMPAYAK MULTI-PURPOSE COOPERATIVE

Zoilo Petoral Chairperson

The Board and the members of the TAMPAYAK MULTI-PURPOSE

Lawrence M. Banawa Chairperson

ASSIGNMENT OF ENGAGEMENT PARTNERS

ASSESSMENT OF INTERNAL CONTROL

Understanding the internal controls of Tampayak Multi-Purpose Cooperative helps us to

Procedures performed by the Auditors

Risks Description Audit Approach

DRAFT OF AUDIT PROGRAM

Bugdeted Time Actual Time

TEST OF CONTROLS, EVALUATION OF RESULTS AND

Control Procedures or Activities Tests of the Control

FINAL AUDIT PROGRAM

1. Client Acceptance and Continuance

2. Audit Objectives: To verify whether;

AUDIT EVIDENCE GATHERING PROCEDURES

SUBSTANTIVE TEST AUDIT PROGRAM

Asset Assertion Objective Procedures

Valuation Receivables are carried at their Evaluation of

Presentation Investments and other related Review Financial

included in the statement of subsidiary legder with

Existence All the equity accounts and Reconcile the total

PERFORMANCE OF SUBSTANTIVE TESTING AND SUMMARY OF RESULTS OF

After considering the risk, we performed substantive tests to detect material

Permanent/Nominal Substantive Testing Results of Substantive

Cash Conducting cash counts There is no material

After the auditors obtained and

particularly any unusual non-standard

These procedures aim to determine

Sales The auditors had gathered information As a result of our audit

Purchases Tested the computation of recorded The purchases and

COMMUNICATIONS WITH THOSE CHARGED WITH GOVERNANCE

Communication of audit matters with those charged with governance requires us to

CONFIRMATION OF THE IDENTIFICATION OF CONTINGENCIES AND

THE AUDITOR'S CONSIDERATION OF AN ENTITY'S ABILITY TO CONTINUE AS

Respective responsibilities of directors and auditors

Sapphire Group Audit Team

TAMPAYAK MULTI-PURPOSE COOPERATIVE

STATEMENT OF MANAGEMENT'S RESPONSIBILITY

The management of the TAMPAYAK MULTI-PURPOSE COOPERATIVE is responsible for

The Board of Directors and Members

TAMPAYAK MULTI-PURPOSE COOPERATIVE

 Determining fraud risks during the planning stage.

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Shareholders of

Report on the Audit of the Financial Statements

Basis for Opinion

Auditor’s Responsibilities for the Audit of the Financial Statements

 Evaluate the appropriateness of accounting policies used and the reasonableness of

Report on the Supplementary Information Required Under Revenue Regulations 15-2010

TAMPAYAK MULTI-PURPOSE COOPERATIVE

STATEMENT OF FINANCIAL CONDITION

Notes 2017 2016

TOTAL ASSETS 4,802,669.94 4,558,266.42

LIABILITIES AND EQUITY