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Cooperative audit: Taking the high road

Updated: May 17, 2023

MARCH is a significant month for the Cooperative Development Authority (CDA), as it celebrates its anniversary on March 10, 2023. We are reminded that the main mandate of CDA is to promote the viability and growth of cooperatives as instruments of equity, social justice and economic development.


As auditors of cooperatives, we ask ourselves, "How do we contribute to the mandate of the authority? How does an audit of cooperative financial statements help alleviate poverty in the country?"


Indeed, this might seem like a gargantuan task, especially for small practitioners. But if we are to analyze the composition of the cooperative sector in the country, it is worth noting that out of more than 18,000 cooperatives, the majority of them are micro and small cooperatives. These cooperatives need guidance in the preparation of sound financial statements because they are custodians of their members' hard-earned money. They also have to understand the value of good governance and internal controls as well as risk management. After all, it is a business entity that they are running. Unfortunately, these are business entities whose resources are scarce, some due to mismanagement, and others due to the overall economic situation of the country.


As accountants and public practitioners involved in the cooperative sector, we are often called to take the high road, albeit challenges and lower professional fees. In doing our audits, we have to bear in mind that our audit opinion plays a significant role in the decision-making process of these cooperatives' future members. Quality in the way we do our audits is crucial; then again, we have to strike a balance between an effective and efficient audit. This is the reason why our knowledge of the cooperative, its industry, related laws and regulations, its objectives and the related risks is vital in the audit process. We should also never forget that quality audit goes hand in hand with ethics.


Aside from providing quality audits and complying with the code of ethics, we need to have our cooperative clients understand how a financial statement makes sense. We are oftentimes trapped with the figures in the financial statements that we forget to see what these figures mean to an ordinary Juan de la Cruz. These cooperatives look at auditors as total business advisors; we have to add value to our work by having them understand the implication of the financial statements on their savings deposit and share capital. In the process of our audits, if there are certain internal control weaknesses that might pose as risks, it is always good to bring this up to management and those charged with governance so that they can improve their system and processes. We can also contribute in educating the members and officers on risk management, good governance, internal controls and fraud prevention.


At the end of the day, a certified public accountant who decides to be a cooperative auditor must, consciously or unconsciously, want to take part in nation-building and helping uplift the economic well-being of Filipinos. He must learn to love the cooperative sector and his cooperative clients, for him to develop a genuine concern for the cooperative's growth and their members' financial emancipation without expecting an equivalent return. Malasakit (concern) as the Tagalog term goes.


The Dalai Lama once said, "Just as ripples spread out when a single pebble is dropped into water, the actions of individuals can have far-reaching effects."


Let us be one with the CDA in nation-building.


Mabuhay, Cooperative Development Authority!

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Ma. Elma L. Ilagan–Ame is a sole proprietor of the M.I. Ame Accounting Office. She is a cooperative advocate, auditor and lecturer.


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