MEMORANDUM CIRCULAR NO. 2017-05
Series of 2017
SUBJECT: GOVERNANCE AND MANAGEMENT AUDIT REPORT FOR COOPERATIVES
Section 1. Title
This Memorandum Circular shall be known as the GOVERNANCE AND MANAGEMENT AUDIT REPORT FOR COOPERATIVES (PERFORMANCE AUDIT REPORT).
Section 2. Legal Basis
- Article 53 of R.A. 9520, otherwise known as the Philippine Cooperative Code of 2008, to wit:
“Every cooperative shall draw up regular reports of its program of activities, including those in pursuance of their socio-civic undertakings, showing their progress & achievements at the end of every fiscal year. xxx”
- Article 80 of the same Code states:
“Cooperatives registered under this Code shall be subject to an annual financial, performance, and social audit. xxx”
Rule 8, 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.
Section 3. Definition of Terms
- Governance and Management Audit Working Paper – refers to the working paper to be used by the Audit Committee or Internal Auditor in analyzing/assessing the performance of the cooperative in a form to be prescribed by the Authority.
- Governance and Management Audit Report – refers to the summary report of analysis/assessment to be undertaken by the cooperative based on the result of the audit using the tool prescribed by the Authority.
Section 4. Purpose
The purpose of the Governance and Management Audit Report is to determine the presence of the documents needed to be maintained by every cooperative in the operation and management of its business. Specifically, the report will serve as:
- regulatory and supervisory tool of CDA in programming the roadmap of developmental intervention for management and governance of cooperatives; and
- management tool of cooperative to identify problem areas in its governance and management practices.
Section 5. Coverage
This Guideline shall govern and cover all registered cooperatives, regardless of types and categories, except for micro cooperatives which have the option to use and/or submit the report.
Section 6. Governance and Management Audit Working Paper
This document shall serve as the working paper in the conduct of performance audit which shall be kept and maintained by the cooperative.
The Governance and Management Audit Working Paper must be filled up by the Internal Auditor or the Audit Committee in coordination with the responsible person/s in the key units of the cooperative signifying the presence of the documents being asked. The remarks portion should indicate findings in the document whether it is not in the possession by the right person, found to be incomplete in substance, or the document is not duly signed by responsible officers.
There are two (2) major components in the working paper. The 1st component is the Governance Reports while the 2nd component is the Management Report/Records.
Section 7. Governance and Management Audit Report
The presentation of the Governance and Management Audit Report (see Annex A – Format Template) shall at least include the following parts:
- Basic Information – presents the general information about the cooperative.
- Executive Summary – presents the overview of the objectives and scope of the audit, over-all rating and rating per component, and the summary of the key observations and conclusions together with the key recommendations identifying the strong points and main areas which need to be addressed by the cooperative.
- Objectives and Scope of the Audit – presents the objectives set and brief scope of audit including the actions chosen for audit and broad details of the procedures carried out.
- Observations /Findings – presents a clear and logical analysis of the identified strong points or problems confronted by the cooperative within the auditing period. The report should provide sufficient details of the observations and findings to substantiate the points given
- Recommendation and Conclusion – This part should be clear and precise on the need for appropriate action to address the issue. The recommendation shall form as basis for any follow-up audit, evaluation or examination.
Section 8. Period of Submission and Sanctions
The Governance and Management Audit Report (see Annex B – Sample Report) shall be submitted by the cooperative to the CDA not later than 120 days from the end of each Calendar Year as attachment to the CAPR.
The cooperative who failed to submit the report shall not be issued Certificate of Compliance (COC) or may also be subjected to a procedural process of cancellation.
Section 9. Consolidation, Evaluation and Submission of Governance and Management Audit Reports
The Supervision and Examination Unit (SEU) of every CDA Extension Offices shall be responsible in the consolidation, evaluation and analysis of the Governance and Management Audit Report. After the sixty (60) days deadline of submission by the cooperatives, the consolidated evaluation and analysis shall be submitted by the SEU Extension Offices to the Extension Office Directors for possible intervention by the other operating units of CDA.
The summary report of analysis and intervention shall be submitted to SEU Central Office through the Executive Director.
Section 10. Repealing Clause
Memorandum Circular No. 2013-15, Series of 2013 dated February 25, 2013 Re: Performance Report Standards for Cooperatives is hereby repealed accordingly.
Section 11. Effectivity
This Memorandum Circular shall take effect upon approval of the CDA Board of Administrators and fifteen (15) days after its publication in the Office of National Administrative Register (ONAR).
Approved by the CDA Board of Administrators on August 15, 2017 per BOA Resolution No. 213 Series of 2017.
For the CDA Board of Administrators:
(SGD) ORLANDO R. RAVANERA