TORIL COMMUNITY COOPERATIVE

TORIL, DAVAO CITY

March 12, 2024

AUDIT AND INVENTORY COMMITTEE REPORT

To Toril Community Cooperative members

We, the TCC AIC express our warmest greetings to all the members of Toril Community Cooperative. We salute
your diligence in thinking through the contribution that you, our dear members, that even if you face the challenges of
times, you still step forth with ideas and commitments engaging us together to achieve our goal as we gather in TCC’s
55th General Assembly!

It is our great pleasure and honor to serve you as your elected audit committee. We thank the Heavenly Father
for the guidance and for continuing to provide us with the graces to make the right plan and procedure to come up with
recommendations that will benefit the general membership. May you continue to give us the wisdom to approach
tomorrow with gratitude and humility.

We are pleased to submit to you our Annual Report which the report is intended as a summary of the principal
activities and opinions of the Audit Committee for the year 2023. Our committee implemented audit plans and adopted
proper and formal audit procedures. As stated in our previous report, we conducted audit procedure on internal control
weaknesses and misstatements in the management reports that were brought to the committee’s attention(Capital
Expenditure/ CAPEX Report, Provision on APLL/Allowance for Probable Loan Losses or APLL, Inventory Report,
Implementation of Policies and Investment opportunities), the substance and programmatic focus of your meetings
promise to illumine the most important topics of the assembly— to the shape of our TCC on its vision, to transform it as
to our mission, and to achieve our success as to goal.

We continued to visit the TCC branches operating in Calinan, Mintal, Sta. Cruz, Digos and Padada and also the
Special Projects TCC Condo Hostel, Funeral Home Padada and Toril. We checked fully their books of accounts, used and
unused receipts, opened their journals and ledgers. We made cash count on their petty cash and revolving funds as part
of our standard auditing procedures.

Accordingly, we also continue to audit and verified as if it follows on the guidelines and recommends to the
Board and management to review and assess the operation to refine their statements of risk management so that it is
more applicable and useful in different types of risk setting; and to communicate the level of risk the TCC is
organizationally willing to take under various circumstances which balance the meeting of humanitarian needs with
other operational objectives such as minimizing inefficiencies, curtailing waste of time and preventing fraud.

We continued to audit our properties and supplies through the inventory system as listed in the Lapsing
schedule on properties whether they are serviceable or not so that proper recommendations for their maintenance or
disposal can be undertaken.

We reviewed and discussed the performance of this year as compared to the previous year specifically on the
growth of membership and releases of loans in connection with the 3-year Development Plan guided from the 5-year
Blueprint. This is shown on the table below:
Delinquency Allowance for Probable Loan Losses
Loan Releases for 2023
Memb Share Rate Analysis
Savings
ership Capital To
Target Actual Variance 2022 2023 Actual Required
Comply

29.17%
Toril

34.44%
Calinan

48.22%
Mintal

51.52%
Sta. Cruz

Digos 70.10%
 Delinquency Allowance for Probable Loan Losses
Loan Releases for 2023
Memb Share Rate Analysis
Savings
ership Capital To
Target Actual Variance 2022 2023 Actual Required
Comply

59.67%
Padada

25.72%
Puan

51.52%
TOTAL

As we focus our attention to the figures in the table above, we are happy that there are gains and sad at some
losses for these are essentials in the ventures of business and entrepreneurship.
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Recommending comments are being undertaken after major concerns (as shown below) regarding the TCC’s
administrative, financial and operational management in order to implement controls to protect against fraud and theft.

FINDINGS EFFECT TO FINANCIAL RECOMMENDATION REMARKS

Under Provision on Allowance
for Probable Loan Losses (APLL)
Lack of
clarity/transparency/monitoring
of Investment Proposals and
Partnership, RE: insurance
partnership with Climbs.
Operational Mismanagement of
Puan Satellite Office
Operational Mismanagement
TCC Condo Hostel Losses
(Recommend for closure but
BOD continues its operation for
the hope of recovery)
Lack of proper Reporting
standard on Capital
Expenditure(CAPEX) Approved
GA Budget vs Actual Expense
Lack of Capitalization Policy
PERFORMANCE
Overstatement of Income
and understated expenses
Probable inaccuracy of
reported income and return
of investment for members.
Negative effects on the TCC
profitability, customer
dissatisfaction, income eaten
up by fixed expense
Continued Loss due to
repairs and fixed expenses
(depreciation and
administrative salaries)
Poor information as to what
have been purchased and its
amortized value
This may lead to
misappropriation of funds
 Follow the Standards set for
Cooperatives on the
Provision of APLL and
Segregation of Past due
account for industry
comparison. (STEPS);
 Analyze the performance
standards using STEPS
indicators(CDA MC 2021-
04)
 Transparency/Compliance
of Proposals/ Contract and
ROI agreements
 Periodic reporting and
assessment.
 Creation of Branching Policy
 Conduct a Feasibility Study
on a new venture to
identify its viability
 Conduct a Feasibility Study
on a new venture to
identify its viability
 Creation of report – CAPEX
approved Budget vs Actual
Expense
 Creation of Capitalization
Policy
Evaluation on the APLL is not
taken up regularly to remind
the policy makers of TCC
status.
Reluctance of policy makers
to provide
transparency/clarity on
investment proposals and
ROI. Unclarified contracts
were not seriously reviewed
for almost 38 years.
Puan Satellite office still
stationed at Toril Branch and
already reviewing its Business
Plan
Already made follow-up with
BOD, (refer also to AIC's
previous reports)
Aside from request budget,
Actual expense must be
include on the GA report
To have a standard reference
on Items depreciate over its
useful life

The AIC will continue to monitor until Findings will be fully realized
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PRIOR AUDIT REPORT THAT ARE COMPLIED/DONE:

 1. BOOKS AND RECORDS
2. DISCIPLINARY MEASURES ON EERING EMPLOYEES
3. AMENDMENT OF POLICIES(Disposition of Vouchers and Documemts, Recruiters Incentives)
4. INVENTORY - RECOMMEND DISPOSAL on unserviceable items
5. PETTY CASH AND REVOLVING FUND POLICY Patterned with Imprest System
6. MANDATORY TRAININGS AND SEMINAR FOR OFFICERS has been ATTENDED

TCC needs to find ways to improve members' growth and customers’ satisfaction. I should not just remain the
parallel lines of a railway track, just like rivers moving towards a point of confluence. Branches, satellite and department
offices are set up to meet members' needs, thus they have their responsibilities of establishing targets/objectives and
evaluation are the basis of improvement. Head Office was created to monitor employer-employee-members
relationship. The hiring of competent individuals is imperative to realize the objectives.

Overall risk management and internal control processes continue to improve. The new management
demonstrates the willingness to continue driving improvement and modification of controls as TCC processes change.
And as usual practice, we will continue to monitor all things aforementioned.

We appreciate the new management headed by CEO Teodoro Ardepolla for the positive response on our every
audit and to our internal Auditors for being transparent during the course of audit plans.

We wish to remind you of the vital ecumenical contributions that you have already made and still make to the
life, well-being, and future of Toril Community Cooperative. Indeed, your legacy of active engagement in the life of TCC
has been as helpful to attain our cooperative vision-mission-goal.

God bless the TCC! May God bless you all!

The Audit Committee:

ADRIAN M. CARCUEVA EUFRONIO SANORIA DELIA ELMIDO

Chairman Vice-Chairman Secretary