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Lapanday Multipurpose
Cooperative
AUDIT
REPORT
1
EXECUTIVE
SUMMARY
CONTENTS
Type chapter title (level 1)........................1
Type chapter title (level 2)......................2
Type chapter title (level 3) 3
Type chapter title (level 1)........................4
Type chapter title (level 2)......................5
Type chapter title (level 3) 6
Scope
As set out in our engagement letter dated February 24, 2020, the scope of our
engagement was to conduct a compliance audit to the organization, Lapanday Multi-
Purpose Cooperative for year-end 2019 and an audit of their current internal controls.
During the engagement, we direct our procedures to the following:
1. Prepare an audit on the cooperative’s compliance with the Cooperative
Development Authority’s requirements.
2. Audit the cooperative’s internal control.
3. Provide advice and recommendation in areas with identified certain internal
control weaknesses, opportunities for improvement of internal processes and
business operations, and other matters.
Overall Observation
Based on our examination on their compliance with the Cooperative Development
Authority (CDA), Lapanday Multi-Purpose Cooperative is in full compliance according to
documentations required by MC No. 2017-05, Series of 2017 and dated September 22,
2017 issued by the CDA. On the other hand, we observed some strengths and
weaknesses in their current established internal controls.
Summary of Findings
Audit of the current established internal controls of the cooperative
EXECUTIVE 2
SUMMARY
If they can no longer afford to hire another employee, the cooperative must
establish mitigating control to eliminate or at least minimize business risks.
They may opt to install a safety box for their undeposited cheques and cash on
hand to avoid loss or theft, or establish a policy requiring all cash receipts to be
deposited directly to their bank account.
3
INTRODUCTION
Our audit of the Cooperative’s compliance and internal controls would not
necessarily disclose all significant deficiencies in these structures, because we
employed, as is customary, only tests of selected accounting records and related
data.
4
AUDIT SCOPE
The audit is from objectives and scope described in our engagement letter dated
February 24, 2020, which was to conduct a compliance audit for the year-end 2019
and internal control audit to Lapanday Multi-Purpose Cooperative. During the
engagement, we direct our procedures to the following:
METHODOLOGY
The audit team used different procedures to arrive at a conclusion. They used the
following approaches and procedures.
Inquiry – this was to ask clear, concise and relevant questions to the
organization using a checklist. The audit team also inquire from formal
written and informal oral inquiries. It also involves asking follow-up
questions and evaluating the responses.
Observation – this was used for checking the office for possible
weaknesses in their internal control to avoid business risks.
6
RISK EXPOSURE
COOPERATIVE’s 7
RESPONSIBILITIE
S
1. To provide the team with the necessary documents and information needed
in the audit.
2. To allow the audit team to conduct tests and procedures needed in audit.
3. To give assistance to the auditing team during their audit.
AUDITOR’s 8
RESPONSIBILITIE
S
RECOMMENDATIO
N
Summary of Findings
Audit of the current established internal controls of the cooperative
If they can no longer afford to hire another employee, the cooperative must
establish mitigating control to eliminate or at least minimize business risks.
They may opt to install a safety box for their undeposited cheques and cash
on hand to avoid loss or theft, or establish a policy requiring all cash receipts
to be deposited directly to their bank account.
10
Marketing Yes N NA
12
o
Designated personnel or officer is in charge of the
marketing program of the cooperative
Incentives are given to members and employees in relation
to the marketing efforts of the cooperative
Budget for sales promotion and marketing strategies are
approved and appropriated.
Marketing programs are regularly evaluated and properly
implemented by designated officer
Feedback mechanisms are designed to determine the level
of satisfaction of clients/members
Prices of goods and services (interest) are comparable and
can compete with the industry
Quality control measures are designated to monitor and to
check any deficiencies of services and products offered to
members.
Pricing policy on services and products offered are regularly
evaluated and properly adjusted
Products and services are undergoing innovations and
improvement
Evaluation is made on the implementation and result of the
marketing activities of the cooperative
subsidiary ledger
Schedules of payables are periodically prepared
Accrued expenses are settled immediately
15
16
Marjorie Cabatingan
Reflection
Upon doing the audit report, there is some realization that comes up to my mind. First, my
perspective in audit changed. I thought that in order for you to conduct audit is you need to be
genius in accounting but this activity proves me wrong. What is theoretically taught in school is
way more complicated than what is really practiced in real world. Second, Audit is made by
collaboration between the auditors and the auditees because without cooperation between the
two we cannot come up with a good report. Third, in making audit report it requires time, effort
and patience.
It was a though and exciting journey. As we go in our journey to make an audit report there were
some hindrances but we make sure to find ways for those hindrances. We are so glad that the
cooperative that we chose were so friendly and gave us the information that we needed. I
remembered the very first time that we met our clients none of us really knew what exactly what
we’re doing. What we did was just ask question based on what we learned from our Internal Audit
and auditing theory subject. We follow the steps and rules of conducting audit and our knowledge
helps us to get through in our first visit. But as the time goes by we finally know what the essence
of Auditing. Lastly, Teamwork. In every project there should be cooperation and exchanging of
knowledge between the people in involved and with this they will come up with successful
presentation/project and that is what we have teamwork.
17
Reflection
I was ecstatic to conduct an internal audit because I did not have much chance
during my internship, which involved mostly tax jobs and bookkeeping. When I learned
that we were going to audit outside the school, I honestly felt nervous because it is
something that is new to me. Bagged only with our classroom knowledge, we all had no
actual practice of internal audit, which was the reason of our wariness. Thankfully, we
have a professor who encouraged and supported us in this activity.
At first, it was a challenge not only for us, but actually for the whole class, just to be
able to find a cooperative who were willing to be audited. Thankfully, my friend knew
someone who was a member of a cooperative, and they happily accepted our request for
an audit. We sent them our engagement letter and we agreed on a date for the audit.
Then, as an audit team, we made a plan on how to conduct the audit and the things we
needed for the said activity.
Our first meeting with our clients, Lapanday Multi-Purpose Cooperative, was nerve-
wracking since we weren’t very sure on what to expect. Fortunately, the employee who
assisted us was very welcoming. The audit went off without a hitch since she answered all
our questions without any hesitation and provided us everything we asked for. During this
audit, we found out that she was the only employee on-duty these days and that their
cooperative was planning for dissolution. Therefore, we concluded that there was no
segregation of duties since she was the only one doing all kinds of tasks in the
cooperative.
The fact we were able to provide and finish the audit report was an achievement for
us as an Accounting Technology student. I learned during this activity that teamwork and
patience are essential and vital for the success of any activity.