PERFORMANCE

AUDIT FOR
COOPERATIVES
 -Good Governance
MC 2021 -04 –
PERFORMANCE
- Effective Management
AUDIT REPORT
Practices
FOR
COOPERATIVES
- Healthy Financial
Condition
 Art 80 of RA 9520

Cooperative under this Code

Legal Basis shall be subject to an annual
financial,

performance and social audit.

Legal Basis

 Rule8, Section 2 (b) of the

Implementing Rules and Regulations of
R.A. 9520 specifies Performance Audit
Report as one of the mandatory reports
to be submitted to the Authority
PERFORMANCE AUDIT REPORT

Submission to the Authority must

include the Semi-Annual Report on
Mediation and Conciliation as
received by the Authority pursuant
to EO 97.
DEFINITION OF TERMS

Governance and Management –

refers to Part 1 of the Performance Audit Report covering the different responsibility
centers entrusted with the formulation and implementation of the policies, systems
and procedures.

Financial Performance-

refers to Part II of the PAR which measures the overall financial health condition of
the cooperative over a given period of time.
 Impaired Assets – assets with
recoverable value which is less than
its book value.
Definition of
Terms… Liquid Assets - can be easily
converted to cash and cash
equivalent within 90 days without
any loss in the value , such as Cash
and Cash Equivalents.
 Net Surplus Before Other Items – net
surplus before adding or deducting special
transactions e,g, Project subsidy, Gain or
Loss on Sale of Assets, Prior Period
adjustments, etc.
Definition of
Terms . . Net Worth – refers to equity, inclusive of
members’ equity, donations/grants and
statutory funds, less unbooked allowance
for probable losses on loans ,
investments and other assets, and other
capital adjustments.
 Non Earning Assets – assets that are not
producing income to the coop , e.g. Cash
on Hand, Petty Cash Fund, Revolving Fund,
Prepaid Expenses, Property , Plant and
Equipment.
Definition of
Terms… Performance Audit – an audit of the
efficiency and effectivity of the
cooperative as a whole, its management
and officers, and its various responsibility
centers. As a basis for improving
individual, team or overall performance.
 Risk Assets refers to total assets less the following :

a) Cash on hand
Definition of
Terms. . . . b) Evidence of Indebtedness of the Republic of the Phils. And the
BSP and other evidences of indebtedness or obligations the
servicing and repayment of which are fully guaranteed by the
govt.

c) Loans to the extent covered by hold-outs or assignments of

deposits maintained in the coop and held in the Phils.
 d) Land owned by the coop being used for operations;

e) Building and Land improvements, net of depreciations;

Risk Assets . f) Furnitures, Fixtures and Equipment net of Depreciations;

. g) Real Estate Mortgage Loans insured by the Home Guaranty

Corp to the extent to the amount of the insurance; and

h) Other non risk items as the CDA may from time to time ,
determine.
 Service Receivables- refers to the service which
have already been rendered but payment has
not yet been received.

Definition of
Terms . . .
Short Term Payables- refer to obligations
which are reasonable expected to be
settled within the coop’s normal operating
cycle or 12 month period .
 Unbooked Allowance – refers to the insufficient
amount on the provision of allowance for
probable losses on receivables based on PAR
with 30 days grace period and Assets that are
already impaired, in accordance with the
Definition of Standards issued by the authority.

Terms Volume of Business – the gross receipts from all

types of services and Net Sales ad for credit
operations, it refers to the Gross Loans
Releases during the year.
 PURPOSES

MC 2021-04  Regulatory and Supervisory tool - to

determine the appropriate
PERFORMANE intervention of the entire
AUDIT REPORT operations of the cooperative.
FOR  Management Tool – for coop to
COOPERATIVES identify problem areas in the
governance and management
practices.
COVERAGE
This Guidelines shall cover all
registered cooperatives regardless of
types and categories.
 1) The Governance and Management
Reports (GMR) ANNEX A
Performance
2) The financial Performance
Audit Report Standards – STEPS ANNEX B
consists of :
3) Summary ANNEX C
POST AUDIT CONFERENCE

 The Internal Auditor/Audit Committee must conduct a

post audit conference to discuss the observations and
recommendations with the Board of Directors and
management of the cooperative prior to the submission
to the Authority.

 The report shall be kept and maintained by the

cooperative and shall be made available during
inspection.
The
1) The Governance Report –
Governance
and
Management - consists of reports on actions undertaken
by the different responsibility centers, to
Report (4 wit: General Assembly, Board of Directors,
Components) Different Committees and other Officers of
the Cooperatives
The 2) MANAGEMENT REPORTS/RECORDS
Governance
and
Management - Consists of records and reports of
the Human Resource, Organizational
Report Structures, Systems and Procedures,
and Compliance to and Certificates
from different Government Agencies.
The 3. PARTNERSHIP, NETWORKING AND
LINKAGING
Governance
and
- pertains to involvement,
Management participation and affiliation of
cooperatives to different
Report organizations and
activities/undertakings.
The 4. MEMBERSHIP PARTICIPATION
Governance
and
Management - pertains to direct participation
of members to governance and
Report cooperative affairs, programs
and activities.
 The report reflects the financial performance of the
cooperative using the following as indicators ( STEPS)

S – Stability

FINANCIAL T -Turn Over Ratio

PERFORMANCE
E – Efficiency
(ANNEX B)
P - Profitability and

S - Structure of Assets
 The report contains the overall observations
and findings gathered from the Governance
and Management Report - Part 1 and Financial
SUMMARY Performance Standards Part II.

REPORT It contains the strong areas of the cooperative

(ANNEX C) and the areas to be improved for compliance
as reflected in the Governance and
Management Report. The cooperative shall
provide the actions needed and timeline for
areas to be improved or for compliance.
 Governance Management Report 40%

The sum of the total of part I will be

multiplied by 40%
RATING STEPS 60%
SYSTEM
The total points earned in Part II will be
multiplied by 60%

FOR A TOTAL OF 100%

Adjectival Rating
Large Medium5 Small Micro Adjectival
Rating

96-100% 93-100% 90-100% 87-100% Excellent

91-95% 85 – 92% 80-89% 75-86% Very

Satisfactory
86-90% 77-84% 70-79 63-74% Satisfactory

81-85% 69-76% 60-69% 51-62% Fair

Below 81% Below 69% Below 60% Below 51% Needs

Improvement
 Submission of
PAR
 Within 120 days after
the end of each
calendar year using
the CDA on line
system
SANCTIONS OFR NON SUBMISSION OF PAR

1) NON ISSUANCE OF CERTIFICATE OF GOOD

STANDING
2) FINE OF PHP100.00 PER DAY OF DELAY

3) THE AUTHORITY MAY DISSOLVE/REVOKE,

AFTER DUE PROCESS THE COR WITH THE CDA
 FIELD INSPECTION OF
CDS
VALIDATION OF
PAR
ANNEX A – 1. GOVERNANCE AND MANAGEMENT
REPORT

2) WITH
1) ANSWERABLE
CORRESPONDING
BY YES OR NO
POINTS
 GENERAL ASSEMBLY OR MEMBERS
 BOARD OF DIRECTORS
 AUDIT COMMITTEE WHO ARE
 ELECTION COMMITTEE REQUIRED TO



EDUCATION COMMITTEE
ETHICS COMMITTEE
COMPLY WITH
 GAD COMMITTEE THE GOOD
 GENERAL MANAGER GOVERNANCE
SECRETARY
PRACTICES


 TREASURER
1. Approved Development Plans/Strategic Plan
2. Approved of Plans and Budget

3. Acceptance /approval/ confirmation of the ff. GOOD

3.1 Board Report
GOVERNANCE
3.2 Committee Reports
3.3 Management Report
PRACTICES TO
BE OBSERVED
4. Documents showing the engagement of External Auditors

5. Conduct of Election Of Officers

- GENERAL
ASSEMBLY
6. Presentation and Acceptance of Required Reports
to be prepared and/or submitted to CDA GOOD
➢ For Primary
a. Copy of electronically encoded CAPR
GOVERNANCE
b. Audited Financial Statements PRACTICES TO
c. List of Officers and Mandatory Trainings
Undertaken/ Completed BE OBSERVED
d. Performance Audit Report
e. Semi Annual Report on Mediation/Conciliation
f. Social Audit Report
> GENERAL
ASSEMBLY
For Secondary and Tertiary Cooperatives
a) Copy of electronically encoded CAPR
b) Audited FS( with encoded CAFSIS)
c) List of Officers and Mandatory trainings/ undertaken

d)
/completed
Performance Audit Report, including copies of the semi
GOOD
e)
annual report on mediation/conciliation
Social Audit Report
GOVERNANCE
f) List of affiliates and coops which have remitted PRACTICES TO
Business Consultancy Assistance
g)
h) Other training activities undertaken
BE OBSERVED
7. Written policies/rules and procedures in conducting GA
meeting > GENERAL
8. Other Resolutions/Policies requiring approval of the GA
ASSEMBLY
1. Duly Signed Oath of Office
2. Compilation of the minutes of the Board
meetings GOOD
3. Copies of the following documents submitted at
least 5 days before the meetings
GOVERNANCE
3.1 Management Report PRACTICES TO BE
3.2 Committee Report
3.3 Chairperson Report
OBSERVED/
3.4 Treasurer’s Report MAINTAINED
3.5 Proposals
3.6 Reference Materials for attachment
3.7 CDA Assessment/Examination/ Investigation > BOARD OF
Report
DIRECTORS
4. Copies of the Minutes of Meetings with
discussion on the following :
4.1 Mgt Reports including the periodic FS GOOD
4.2 Budget GOVERNANCE
4.3Policy Formulation PRACTICES TO BE
4.4 Policy Review and monitoring OBSERVED/
4.5 Product/Service Review MAINTAINED
4.6 Discussion of AFS
4.7 All unresolved issues identified - Board of
during examination Directors
5. Copies of Board Resolution embodying all
major decisions of the BOD
6. BR for the regular meetings GOOD
7.Presence of an independent advisors, if GOVERNANCE
needed
PRACTICES TO BE
8.Written Policies/ Rules and Procedures
OBSERVED/
9. Succession Program
10. Disciplinary actions on Late/ Absences of
MAINTAINED
the BOD
11. The BOD does not interfere on the day to > Board of
day operations of the coop
Directors
12. The new members of the BOD and other officers
have undergone orientation on ACBL and other
regulations , coop policies and programs
13. The Board has acted on the results of the GOOD
feedback which require prompt action
GOVERNANCE
14. The Board implemented and imposed sanctions
in violation of the Confidentiality Agreement PRACTICES TO BE
Policy
OBSERVED/
15. The Election Committee related protest filed with
the coop are acted upon. MAINTAINED
16. Awareness of their duties and responsibilities in
relation to various laws affecting coops.
> Board of
Directors
 GOOD
Compilation of the Minutes and Committee
1.
Reports and Recommendations GOVERNANCE
2. Duly signed oath of office PRACTICES TO
3. Duly approved election rules and guidelines BE OBSERVED/
4. Certified list of members entitled to voted
as determined by the BOD
MAINTAINED
5. Results of Elections
- ELECTION
COMMITTEE
1. Compilation of the Minutes and Committee
Reports and Recommendations
GOOD
2. Duly signed oath of office GOVERNANCE
3. Audit Manual PRACTICES TO
Audit Program
4.
BE OBSERVED/
5. Internal Audit Report/Audit Committee
Report MAINTAINED
6. Monitoring Report on the compliance of
internal and audit recommendation
AUDIT COMMITTEE
1. Compilation of the Minutes and Committee Reports
and Recommendations
GOOD
2. Board Resolution Appointing the members of the ETC GOVERNANCE
3.
4.
Duly signed oath of office
Capacity Building Program/Training Plan/Program
PRACTICES TO
5.
with Budget
Training Report
BE OBSERVED/
6. Training modules conducted by the coop MAINTAINED
7. Compilation of training materials
8. List of Pool of Trainers
9. Feedback/Evaluation Tool EDUCATION AND
TRAINING COMMITTEE
1. Compilation of the Minutes and Committee Reports
and Recommendations
2. Board Resolution Appointing the members of the ETC GOOD GOVERNANCE
3. Duly signed oath of office PRACTICES TO BE
4. Written Duties and Responsibilities OBSERVED/
5. GAD Plan with Budget MAINTAINED
6. Sex disaggregated data of members, officers and
staff - GAD COMMITTEE
7. GAD Assessment Report
1. Compilation of the Minutes and Committee
Reports and Recommendations GOOD
2. Board Resolution Appointing the members of the
MCC
GOVERNANCE
3. Duly signed oath of office PRACTICES TO BE
4. Written Duties and Responsibilities OBSERVED/
5. Conflict Resolution Policies and procedures MAINTAINED
6. Medcon Plan/Program
7. Pool of Mediators/Conciliators, if any > MEDIATION/
Medcon semi annual report submitted to CDA
8.
CONCILIATION
COMMITTEE
1. Books of minutes of meetings of GA and BOD
2. Appointment Paper /Renewal of Appointment supported
by Board Resolution
3. Duly signed oath of office
GOOD
4. Registry of members
5. Share and Transfer Book GOVERNANCE
6. Copy of COR, COC, ACBL
PRACTICES TO BE
7. Compilation of Board Resolutions
8. Treasurer’s and other periodic reports OBSERVED/
9. Certified List of members entitled to vote as determined
by BOD MAINTAINED
10. Cooperative Seal
11. Disseminations of the approved policies of the board
12. Contracts, MOA, other docs > SECRETARY
1.Appointment Papers/Renewal of
Appointment supported by BR
GOOD
2. Duly signd oath of office
GOVERNANCE
3. Cash Book
PRACTICES TO
4. Bank Books
BE OBSERVED/
5. Cooperative Securities
MAINTAINED
6. Cash Position Report
7. Petty Cash Book
> Treasurer
1. Appointment Paper
GOOD
2. Policy Implementation Files
GOVERNANCE
3. Monthly and Annual Mgt. Report
PRACTICES TO BE
4. Implementation of the following : OBSERVED/
5. a. Board’s Decisions MAINTAINED
6. B. Risk Management Plan
7. C. Communication Protocol > GENERAL
MANAGER/CEO
2. Management
Reports
 Organizational/Operational Structures
1. Organizational Chart
2. Management Structures
3. Functional Statement of each unit/department/section
 1. Complete BIR registered book of
accounts
2. Internal Control
System and
➢ CASA
Procedures
➢ Imprest System
➢ Bond of accountable officer
➢ Record preservation
➢ Risk Assessment System
3. Manual of Operation
➢ Business Operation Manual
 ➢ Accounting Manual
 Code of Governance and Ethical
Standards
Systems  Human Resource
 Access of Records

and 4. Copies of Guidelines Implementing the

Procedures Approved Policies
5. Business Continuity/Contingency Plan
6. Communication and Feedback
Mechanism
 Human Resource Records
 Contract
/ Certificate
of employment
Systems
 Job Description
 Qualification
and Standards
 Personnel File
procedures
 Performance
Evaluation
1. Standard of Measurement

2. Rating of All Officers and

Management Staff
 Compensation and
Benefits
SYSTEMS  Salary scaling program
 Incentive and Reward
and Program
 Leave Incentives
procedures Programs
 Retirement Plan/
Program /Package
 COMPLIANCE TO GOVERNMENT
REQUIREMENTS
 Certificate of Compliance
(CDA)
Systems
 Certificate of Tax Exemption
(BIR)
 Annual Registration with BIR

Registration (SSS)
and


 Registration (PHILHEALTH)
 Registration (PAG IBIG)
procedures  Annual Tax Incentive Report
 Business Permit (LGU)
 Other agencies, specify the
document, if applicable
3. PARTNERSHIP, NETWORKING AND
LINKAGING

The cooperative is a member of the following :

a. Cooperative Federation/union

b. Local special bodies, if applicable

c. Cooperative Development Councils

2. The board participates and supports the activities of the coop federation/union/local
special bodies (LGU) and Civic Organizations or People Organizations
 1. Presence of at least 10% in new set of
officers yearly

4. MEMBERSHIP
PARTICIPATION 2. At 50% of the total membership
attended/participated in at last one
activity o the coop, such as
seminars/trainings, community programs
and activities, etc. except GA meetings
 ANNEX B
FINANCIAL
PERFORMANCE
 Financial performance indicators express
in terms of ratios/percentages, measured
against the set standards to determine
the degree of
achievement/accomplishment
STEPS
This determine the financial health of
cooperative.
STEPS

The five (5) major groupings enable users/decision makers to

assess the cooperative performance and identify the areas that
needs improvements and/or areas that need immediate action.

Help identify risk areas and those that are requiring strict control
mechanism
 1. S (STABILITY)

❖ Determine whether financial

services can be delivered to
members in a sustained manner.
Sufficient liquidity, level of
institutional capital, capital
adequacy are the areas looked
into by this cluster.

❖ TOTAL RAW SCORE 19 POINTS

 1.1 LIQUIDITY RATIO – 4 pts.
Measures the coop’s ability to meet
short terms obligations as it falls due

Above 500% 0
Above 400% to 500% 1
Formula : Above 300% to 400% 2
Above 150% to 300% 3
Current Assets 100% to 150% 4
Below 100 to 95% 3
Current Liabilities Below 95% to 90% 2
Below 90% to 85% 1
Below 85% 0
 1.2 QUICK ASSET RATIO - 3 POINTS
Measures the coop’s ability to pay its
current labilities using its quick assets.

Formula : 200% and above 3

Liquid Assets 150% to Below 200% 2
100% to Below 150% 1
Current Liabilities – Legal Below 100% 0

Policy Reserves
 1.3 SOLVENCY RATIO - 5 POINTS
Measures the degree of protections that the coop
has for members savings and share capital
contribution in the event of liquidation of the coop’s
assets and liabilities.
Formula :
( Assets + Allow for PLL+ Allow for Impaired Assets) – Total
Liabilities – Deposits Liabilities) + Past Due Receivables
+Receivables under Litigations + Impaired Assets)
Deposits Liabilities + Paid up Share Capital + Deposits for
SC Subscriptions
110% and above 5
100% to Below 110% 3
Below 100% 0
 1.4 NET INSTITUIONAL CAPITAL 3 POINTS
Measures the level of institutional
capital to absorb potential losses.

Formula :
Reserve Fund + ( Allowance for PLL on Receivables) -
( Past Due Receivables + Receivables on Litigations)
Total Assets
10% and above 3.00
7% to Below 10% 2.50
5% to Below 7% 2.00
3% to Below 5% 1.50
1% to Below 3% 1.00
Below 1% 0
 1.5 CAPITAL ADEQUACY RATIO- 4 POINTS
Measures the sufficiency of the capital
to cover the risk assets.
Formula :
Net Worth ( Equity-Unbooked Allowance for
Probable Losses on Receivables – Unbooked
Allowance for Impairment of Assets)
Total Assets
8% and above 4.00
6% to Less than 8% 3.00
4% to Less than 6% 2.00
2% to Less than 4% 1.00
Below 2% 0.00
 Determines whether the
cooperative receivables will be
collected as it falls due .
2. TURN
OVER RATIO
Total Raw Score is 6 Points
 2.1 ASSET TURN OVER RATIO - 3 POINTS
Measures how efficiently the coop uses
asset to generate income

Formula : Above 10.5% 2

10.5% and below 1
Gross Revenue 0 or Negative 0

Average Total Assets

 2.2.1 ACCOUNTS RECEIVABLE TURN OVER RATIO -4 POINTS

Measures the number of times accounts

receivables are collected within the year
( For Consumers/Marketing coops)

8 times and more 4

6 times but below 8 3
Formula : 3 times but below 6 2
Net Credit Sales 0.1 to below 3 1
0 or negative 0
Average Account Receivables
 2.2.2 LOANS RECEIVABLE TURN OVER RATIO -4 POINTS

Measures the number of times accounts

receivables are collected within the year
( For Credit/coops with lending )
4 times and more 4
3 times but below 4 3
Formula : 2 times but below 3 2
Above 0 but below 2 1
Loan Releases 0 or negative 0
Average Loans Receivables
 2.2.3 SERVICE RECEIVABLE TURN OVER RATIO -4 POINTS

-measures the number of times service

receivables are collected in a year.
( For Labor Service and other service
cooperatives )
9 times and more 4
8 times but below 9 3
Formula : 7 times but below 8 2
Below 7 1
Gross Receipts 0 or negative 0
Average Service Receivables
3. EFFICIENCY

 Ratios under this group determines

how cooperative manage efficiently
their resources maximizing income
with lesser expense These include
administrative cost, cost of
borrowed fund from outside sources
and internally generated funds, and
adequacy of loans/accounts
provisioning.

 Total Raw Score is 38 Points

 3.1 ADMINISTRATIVE EFFICIENCY – 4 POINTS
-measures the cost of efficiently managing
the cooperative’s assets.
Below 10% 4 Pts
10% to below 15% 3
15% to below 20% 2
20% to below 25% 1
Formula : Above 25% 0
Administrative Cost – Members’ Benefit
Expense +Social Service Expense

Average Total Asset

 3.2 COST OF EXTERNAL BORROWINGS - 3 POINTS

measures the efficient cost of borrowing

in financing business operations of the
coop. Below Inflation Rate 3
Within Inflation Rate 2
Above Inflation Rate 1

Formula :
Interest on Borrowings + Other Borrowing Costs

Average Total Loans Payable

3.3 COST OF BORROWINGS FROM MEMBERS-3 POINTS

measures the efficient cost of

borrowed capital from members in
financing coop operations. Below Inflation Rate 3
Within Inflation Rate 2
Above Inflation Rate 1

Formula :
Interest on Deposits + Interest of Revolving Capital
Average Total Deposits Liabilities + Average Revolving
Capital Payable
3.4 COST PER VOLUME OF BUSINESS - 3 POINTS

measures the efficiency in managing

the coop’s business 25 cents and below 3
26 to 32 cents 2
33 to 39 cents 1
40 to 46 cents 0.5
47 cents and below 0
Formula :
Total Cost/Expenses – Members’Benefit
Expense - Social Service Expense
Total Volume of Business
 3.5 EXTENT OF VOLUME OF BUSINESS - 5 POINTS

measures the ability of the

coop to use its assets to 100% and above 5
generate or increase its 75% to below 100% 4
volume of business 50% to below 75% 3
25% to below 50% 2
5% to below 25% 1
Below 5% 0
Formula :
Total Volume of Business

Average Total Assets

 3.6 GROWTH IN MEMBERSHIP CONTRIBUTIONS - 5 POINTS

- measures the ability of coop

to encourage members to Above 12% 5
increase their capitalization in Above 10% to 12% 4
the coop Above 8% to 10% 3
Above 6% to 8% 2
Above 4% to 6% 1
Formula : 4% and below 0
Paid up Capital end – Paid up Capital Beginning
Paid up Capital Beginning
 3.7 DELINQUENCY RATE = 5 POINTS
- measures the risks of default in the portfolio or the
rate of uncollectible accounts.

Formula :
Balance of Loans/Accounts Receivables
with one day missed payments (PAR)
Total Loans/Receivables Outstanding

5% and below 5 Pts

Above 5% to 10% 4
Above 10% to 15% 3
Above 15% to 20% 2
Above 20% to 25% 1
Above 25% 0
 HOW TO DETERMINE PORTFOLIO AT RISK
 Principal – 12,000.00
 Interest - 2% per month based on diminishing balance
 Term of Payment – 12 equal monthly installment
 Date Loan Released – February 2, 2020
 March 2, 2020 – 1st Loan Amortization of P1,000.00 plus interest
P240.00
 If not paid on March 2, 2020, on the following day the loan of 12,000
becomes Portfolio at Risk (PAR) but not yet past due
How to Determine Past Due
Loans/Accounts
➢ On April 3, 2020 if not yet paid, the loan of P12,000
becomes past due less than 1 year and the allowance for
probable losses is 35%

➢ On February 3, 2021 if the whole amount of loan is not

paid, it now becomes past due more than 1 year and the
Allowance for PLL is 100%.
 MEASURES THE
ADEQUACY OF THE
ALLOWANCE ALLOWANCE FOR
EXPECTED LOSSES ON
FOR LOANS/ACCOUNTS
a) APLL over 12
PROBABLE months 100%
LOSSES ON Standards:
LOANS (APLL) b) APLL 1 to 12
months 35%
 3.8 ADEQUACY OF PROVISIONING OF APLL (OVER 12 MOS.
PAST DUE) - 5 POINTS
measures the adequacy of allowance for loans past due
over 12 months.

Formula :
Total Amount of Allowance
Total Outstanding Balance of Loans over 12
months past due
100% 5 Pts
80 to less than 100% 4
60 to less than 80% 3
35 to less than 60% 2
10% to less than 35% 1
less than 10% 0
3.9 ADEQUACY OF PROVISIONING 1 TO 12 MONTHS PAST DUE
- 5 POINTS
- measures the adequacy of allowance for loans past due
one year and below.
Formula :
Total amount of allowance- Required amount of allowance for loans
over 12 months past due using PAR with 30 days grace period
Total Outstanding Balance of Loans one year and below past due.

35% 5 Points
25% to below 35% 4
17% to below 25% 3
9% to less than 17% 2
1% to less than 9% 1
Less than 1% 0
 Determines the capacity
of the cooperative
assets generate income
4. PROFITABILITY
RATIO- 15

Raw Score is 15 Points

 4.1 RETURN ON ASSETS RATIO - 5 POINTS

measures the coop assets to generate income.

Formula :
Net Surplus Before Other Items
Average Total Assets

20% and above 5 Points

15% to below 20% 4
10% to below 15% 3
5% to below 10% 2
Below 5% 1
 4.2 RETURN ON MEMBER’S SHARE = 5 POINTS

- measures the earning capacity of member’s share capital.

Formula :
Amount Allocated for Interest on Share Capital
Average Paid up Share Capital + Deposit for Share Capital
Subscription – Treasury Shares
Higher than Inflation Rate 5 Points
Within the Inflation Rate 4
2 Points Below Inflation Rate 3
3 Points Below Inflation Rate 2
Net Loss 1
4.3 RATE OF NET SURPLUS = 5 POINTS
 -measures the capacity of the coop to generate surplus.

 Formula :
 Net Surplus
 Gross Revenue

 30% and above 5 Points

25% to below 30% 4
10% to below 25% 3
5% to below 10% 2
Below 5% 1
STRUCTURE OF ASSETS

◆ THIS GROUP OF RATIOS HELP

ASCERTAIN THE QUALITY AND THE
STRUCTURE OF ASSETS OF THE
COOPERATIVE

◆ TOTAL RAW SCORE

22%
 5.1 NON EARNING ASSETS = 5 POINTS
- measures the percentage of assets not producing
income
Formula:
Non Earning Assets
Total Assets

5% and below 5 Points

Above 5% to 8% 4
Above 8% to 10% 3
Above% 10 to 12% 2
Above 12% to 14% 1
Above 14% 0
5.2 PERCENTAGE OF INVESTMENT- 4 POINTS
-
- measures the degree of assets placed as investments.
 Formula :
 Total Investment
 Net Worth
0 to 5% - 4 Points
Above 5% to 10% 3
Above 10% to 15% 2
Above 15% to 20% 1
Above 20% 0
 5.3 EXTENT OF ASSETS FINANCED BY DEPOSIT
LIABILITIES - 5 POINTS
 - measures the extent of assets financed by deposit liabilities
 Formula :
 Total Deposit Liabilities
 Total Assets

 50% and above 5 Point

 40% to below 50% 4
 30% to below 40% 3
 20% to below 30% 2
 10% to below 20% 1
 Below 10% 0
 – 5.4 EXTENT OF TOTAL ASSETS TO
EXTERNAL BORROWINGS AND STATUTORY
RESERVES = 3 POINTS
 - measures the extent of assets financed by external
borrowings and statutory reserves
 Formula :
 External Borrowings + Statutory Reserves
 Total Assets
 No Borrowings – 3 Points
 15% and Below - 2
 Above 15% to 40% - 1
 Above 40% -0
 5.5 EXTENT OF ASSETS FINANCED BY
MEMBERS’ SHARE CAPITAL - 5 Pts
- measures the degree of participation of members’ share to
total assets.
Formula :
Paid up Share Capital + Deposits for Share Capital
Subscription – Treasury Shares
Total Assets
50% and above - 5 Points
40% and below 50% 4
30% and below 40% 3
20% and below 30% 2
10% and below 20% 1
ANNEX C- PERFORMANCE AUDIT REPORT-SUMMARY
REPORT FOR PRIMARY AND OTHER SPECIAL TYPES
OF COOPERATIVES
ABC Cooperative is a duly registered cooperative with the Cooperative
Development Authority (CDA) under Registration No.with Official postal Address at
_____________________ engaging in the provision of __________.

The audit was conducted by the ______ last _____ of ____ 20___to ascertain
the documents required by MC No. 2021-04 Series of 2021 issued by the CDA, a
government Agency in charge in the regulation and development of
cooperatives. Methodologies employed include verification of the presence of
the documents, whether the dodument is updated, and whether it is duly
approved by the CDA. Prior to the conduct of audit, a memorandum was issued
to the concerned units/persons at least two (2) week before the conduct of the
audit.
A. Governance and Management
Summary of observations and findings are found below:

STRONG AREAS

AREAS TO BE NEEDED ACTION TIMELINE

IMPROVED/FOR COMPLIANCE
 B. Results of Financial Performance

Steps Standard Coops Rating

Rating
STABILITY 19 5
TURN-OVER RATIO 6 0
EFFICIENCY 38 8
PROFITABILITY 15 0
STRUCTURE OF ASSETS 22 0
TOTAL RATING – STEPS 100 13

C. Total Points

Total Points
Governance and Management x 40% 0.4
STEPS x 60% 7.8
Grand Total 100% 8,20
ADJECTIVAL RATING

Your cooperative obtained a total rating of ____ with adjectival rating of

__________ (please refer to our M.C. 2021-____ for the matrix of adjectival
rating), which means that _______.

Prepared by:

Audit Committee
“The beautiful thing about learning is that
nobody can take it away from you.”
― B.B. King

“Anyone who stops learning is old, whether

at twenty or eighty. Anyone who keeps
learning stays young.”
― Henry Ford