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STATEMENTS
________
Chairman
CEO/General Manager
Treasurer
STATEMENT OF REPRESENTATION
TO THE COOPERATIVE DEVELOPMENT AUTHORITY:
In connection with my examination of the financial statements of the ABC
DEVELOPMENT COOPERATIVE covering the period ended December 31, 2009 that
are herewith submitted to the Cooperative Development Authority, I hereby
represent the following:
1. The said financial statements herewith attached are prepared and presented
in conformity with the financial reporting standards applicable to
cooperatives in the Philippines;
2. That in the conduct of my audit, I adhere to the Philippine Standards on
Auditing and the Standard Audit System for Cooperatives (SASC) as required
by the Cooperative Development Authority;
3. That I am qualified as provided for in Section 8 of the Code of Professional
Ethics for Certified Public Accountants and Article 81 of R.A. No. 9520
(Cooperative Code of the Philippines);
4. That I am fully aware of my responsibility as an independent auditor for the
audit report issued and attached to the financial statements and the
sanctions to be bestowed on me for my representations that I may have
willingly or unwillingly committed;
5. That I or any member of my immediate family do not have any direct or
indirect financial interest with the cooperative;
6. That I am not an employee or an officer of a secondary cooperative or tertiary
cooperative of which this cooperative is a member;
7. That I am not an employee of the Cooperative Development Authority nor
have I engaged an employee of the CDA in the course of audit;
8. That I make representation in my individual capacity;
9. That I am a member of the __________Chapter of the PICPA.
It is however, understood that my accountability is based on matter with the normal
coverage of an audit conducted in accordance with Philippine Standards on Auditing
and the Standard Audit Systems for Cooperatives.
Name of auditor
CPA Reg. No.
BOA Reg. No. TIN No.
PTR No.
CDA Registration No.
Date
Opinion
In our opinion, the financial statements present fairly, in all material respects, the
financial position of ABC DEVELOPMENT COOPERATIVE as of December 31, 2009 and
2008, and of its financial performance, changes in equity, and its cash flows for the
years then ended in accordance with Financial Reporting Standards applicable to
Cooperatives in the Philippines, taking into consideration Cooperative laws, rules,
regulations and principles.
xxxName of CPA
CPA Reg. No.
BOA Reg. No. TIN No.
PTR No.
CDA Registration No.
Date
1. GENERAL INFORMATION
The ABC DEVELOPMENT COOPERATIVE (referred hereinafter as Cooperative)
was registered as a cooperative pursuant to RA 9520 for the purpose of
encouraging thrift and granting loans to members for productive, educational
and providential purpose, providing goods and services and other requirements
of the members, among others. The Cooperative adopted its current name as
per amended articles of cooperation as well as by-laws during the Cooperatives
General Assembly held las_________.20__. Its former name is ABC Credit
Cooperative, Inc.
The Cooperatives new name was granted the CDA Registration No. LGA-xxxxx
last August 17,1995. 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 members in the form of interest and or patronage refunds.
ADD: Cooperative Identification No.
Coperative was issued a Certificate of Good Standing dated____
The area of operation of this cooperative includes_________ and its principal office
is located at___________ Town, province.
The financial statements of the cooperative for the year ended December 31,
200_ were authorized for issued by the Board of Directors on xxx,20__.
2. SUMMARY OF SIFNIFICANT 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
PAS 8 -
PAS 10
PAS 16
PAS 19
Employee Benefits
PAS 21
PAS 24
PAS 36
Impairment of Assets
PAS 41
PAS 2
Inventories
PAS 7
PAS 18
Revenue
PAS 38
Intangible Assets
PAS 32,39
PAS 40
Investment Property
PAS 1
The standard is applied in the accounting for, and disclosure of the events after
balance sheet date.
PAS 16
Employee Benefits
Prescribes the accounting and disclosure for employee benefits, including shortterm benefits (wages, annual leave, sick leave, annual profit-sharing bonuses,
and non-monetary benefits); pensions, 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 21/IAS 21 -
This standard applies in: (a) identifying related party relationships 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 Assets
This standard applies in accounting for impairment of assets other than those
covered by separate standards.
PAS 41
Agriculture
- Inventories
Cash Flows
Prescribes the provision f 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.
PAS 18
Revenue
Prescribes the accounting treatment for revenue arising from certain types of
transaction and events.
PAS 38
Intangible Assets
Prescribes the accounting treatment for Intangible Assets not dealt with
specifically in another Standard.
PAS 32, 39
Financial Instruments
Investment Property
Office Equipment
Office Furniture and Fixture
Transportation Equipment
Consumer 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 Cooperatives
members. These are recognized when the cooperative becomes a party to the
contractual agreements of the instrument. All interest related charges are
recognized as 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
Cooperatives By-Laws as well as Cooperative principles and policies
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 Cooperatives non-current assets are reviewed at
each balance sheet date to determine whether there is any indication of
impairment. If any of such indication exists, the assets recoverable amount is
estimated.
An impairment loss is recognized whenever the carrying amount of an asset r its
cash-generating unit exceeds its recoverable amount.
Costs and Expenses
Costs and expenses, not directly attributable to capitalizable assets or projects,
are recognized and charged to operations as incurred.
Accounting Expenses
The preparation of financial statements 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 COOPERATIVE
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:
OTHER ITEMS
Project Subsidy refer to the amount deducted from project subsidy fund to
subsidized 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 Grants 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.
the revision and future periods if the revision affects both current and future
periods.
The following represents a summary of the significant estimates and
judgments and related impact and associated risks in the Cooperatives
financial statements.
Allowance for Doubtful Accounts
The Cooperative assesses 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 receivable.
There are no allowances for doubtful accounts because they are potentially
collectible based on their historical collection.
The Cooperative follows the guidance of PAS 39 in determining when an asset
is other than temporarily impaired. The determination requires significant
judgment. In making this judgment, the Cooperative evaluates, among the
factors, the duration and extent to which the fair value of an investment is
less than its cost; the financial health of and near-term business outlook of
the investee, including factors such as industry and sector performance,
changes in technology and operational and financing cash flow.
If the assumption made regarding the duration that, and extent to which the
fair value is less than the cost, the Cooperative would suffer an additional
loss in its financial statements, representing the write down of cost at its fair
value.
Estimated Useful Lives of Property, Plant and Equipment
The Cooperative estimates useful lives of property, plant and equipment
based on the period over which the property, plant and equipment are
expected to be available for use. The estimated useful lives of the property,
plant and equipment are reviewed periodically and are 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 property, plant and equipment. In addition, the estimation of the useful
lives of property, plant and equipment is based on the collective assessment
of industry practice, internal technical evaluation and experience with similar
assets. If possible, however, that future financial performance could be
materially affected by changes in the estimates brought about by changes in
factors mentioned above. The amounts and timing of recorded expenses for
any period would be affect ted by changes in these factors and
circumstances.
A reduction in the estimated useful lives of the property, plant and equipment
would increase the recorded expenses and decrease the noncurrent assets.
Depreciation is computed on a straight-line method over the estimated useful
lives of the assets as follows:
Leasehold Improvements
5-10 years
Furniture and Fixture
3-5 years
Other Equipment
3-5 years
Motor Vehicle
5 years
The company assets 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
Company to make estimates and assumptions that can materially affect the
financial statements. Future events could cause the Company 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
Companys financial condition and result of operation.
The preparation of the estimated future cash flow involves significant
judgment and estimations. While the Company believes that its assumptions
are appropriate and reasonable, significant changes in these assumptions
may materially affect the Companys assessment of recoverable and may
lead to future additional impairment charges.
Revenue Recognition
The Companys revenue recognition policies require the use of estimates and
assumptions that may affect the reported amounts of revenues and
receivables. Differences between the amounts initially recognized and actual
settlements are taken up in the accounts upon reconciliation. However, there
is no assurance that such use of estimates may not result to material
adjustments in future periods.
4. Financial Risk Management Objectives and Policies
The Cooperative is exposed to credit, liquidity, and other risk that arise in the
normal course of its business. Its risk and control framework includes a focus
on minimizing negative effects on the Companys 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 Cooperatives policy to deal only with creditworthy counterparts.
The Cooperatives management considers that all the above financial assets
that are not impaired or past due for each balance sheet are of good credit
quality.
With respect to trade and other receivables, the Cooperative is not exposed
to any significant credit risk exposure to any single counterparty or any group
of counterparties having similar characteristics. Based on historical
Not less
50%
Use by-laws, check if
exceeding
Limits
b. Educational and Training Fund - ___ percent
educational
(___) for the educational and training fund.
fund,5%
Half of the amount transferred to the
Union/Feder
5%And training
due to
action
Not
CAPITAL
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.
There 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 principally
recognition. A financial asset is classified in this category if required principally 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 hold for
trading or are expected to be realized within 12 months of the balance sheet date.
Subsequently to initial recognition, the financial assets included in the 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 hall be in accordance with the criteria set forth in the
amendments of PAS 39 subject to the following conditions:
1. SCCs shall have in place appropriate risk management systems (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
ongoing basis;
2. SCCs shall apply the fair value option only to instruments for which fair
values can be reliably estimated;
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 payments 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 the receivables. They are included in current assets,
except directly to a debtor with no intention of trading the 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 amortized cost using the
effective interest method, less impairment losses. Any change in their value is
recognized in profit or loss.
Loans and receivables are presented as Trade and Other Receivables in the
Statements 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 assets carrying amount and the present value of estimated
cash flows.
Under the Cooperatives Board Resolution No.______, the following interest rates
shall be implemented as a way of helping and at the same time encouraging
members to patronize the Banks lending services.
1. Secured Loans_____________________
2. Unsecured loan/Clean Loans_____________________________
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 the managements evaluation of potential losses after
consideration of prevailing and anticipated economic conditions.
Held- to- Maturity Financial Assets. This includes non-derivative financial assets
with fixed or determinable payments and a fixed date of maturity. Investments are
classified as held-to-maturity if the Company has a positive intention and ability to
hold them until maturity. They are included in a non-current assets under the Longterm Financial Assets account in the balance sheets, except those maturing within
12 months of the balance sheet date.
Hold-to-maturity investments 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 is 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 include non-derivative financial assets that
are either designated to this category or do not qualify for inclusion of any of the
other categories of financial assets. They are included in non-current assets under
the Long-term Financial Assets accounts in the Balance sheet unless management
intends to dispose the investment within 12 months of the balance sheet date.
All financial assets within the category are subsequently measured at fair value,
unless otherwise disclosed, with changes in value recognized in equity, net on 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 equity is transferred to
the income statement. Losses recognized in the statements of income on equity
investments are not reversed through the statement of income. Loss 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 the securities with fixed or
determinable payments and fixed maturity. Unquoted debt securities are measured
upon initial recognition at their value plus transaction cost 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 amortizing 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
cost 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 fair value of the INMES shall be recognized in profit or loss when the
security is derecognized or impaired.
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 risks
and rewards of ownership have been transferred.
NOTE: RISK MANAGEMENT POLICY SHOULD ALSO BE DISCLOSED WHEN A COOP
HAS FINANCIAL ASSETS