1

CHAPTER ITHE PROBLEM

Introduction

Ethical requirements and governing standards commit the management to

provide services or facilities with reputable credentials and accreditation in order

to maintain valued client relationships. Through accreditation, one can be

reasonably sure that the management adheres to certain standards, assurance

codes, and professional ethics.

As a status, accreditation provides public notification that an institution or

program meets standards of quality set forth by an accrediting agency. As a

process, accreditation reflects the fact that in achieving recognition by the

accrediting agency, the institution or program is committed to self-study and

external review by one's peers in seeking not only to meet standards but to

continuously seek ways in which to enhance the quality of services and training

provided. Accreditation is significant due to its attestation to the respectable

business standing of an individual auditor or firm. It ensures public accountability

of a program or an institution – that it has the means to demonstrate the

outcomes for its auditing process that are consistent with the established

standards.

To ensure competence, integrity, and global competitiveness, Certified

Public Accountants in public practice go through accreditation process

promulgated by the Cooperative Development Authority (CDA) in order to allow

them to be able to practice as a cooperative external auditor.

2

Background of the Study

The field of public accounting is composed of individual practitioners,

small accounting firms and large multinational organizations that render

independent and expert financial services to the public. (Valix, 2011) Of the

three common services it offers, Auditing has been the primary service being

practice by most public accounting practitioners.

During the Industrial Revolution there is an economic growth all over the

world, some businesses have vastly grow and became large entities thus

emerging a need of passing the management from the owners to professional

managers. This led, in the period 1850 to 1905, to an increased demand for

auditors who were independent of management and who were engaged to detect

not only clerical errors, but also management fraud. Consequently, auditors

began to periodically report on the work they had performed to the owners of an

entity, and thus the concept of what is now referred to as the "independent

auditor's report" emerged. (Arjarquah, 2009)

During the early 20th century American and British Audit differs in

objective. American audits focused on reporting on the actual financial condition

of the entity; conversely British audits continued to focus on the detection of fraud

and error. From 1940 onwards, it became increasingly accepted by the auditing

profession, that the primary objective of an audit was the provision of an opinion

on the financial statements. (Ireneo, 2012) Although the objectives of an audit

have remained unchanged since about 1940, pressure from the public to widen

3

audit objectives continues. As a result, there still is an increasing recognition of

the importance of audit risk concepts in audit practice. Audit firms adopted what

is generally called a 'risk-based approach' in auditing. An external auditor

is an audit professional who performs an audit on the financial statements of a

company, government, individual, or any other legal entity or organization, and

who is independent of the entity being audited. In the Philippines, in order to be

external auditor, a certificate of accreditation shall be issued to Certified Public

Accountants only upon showing in accordance with rules and regulations

promulgated by the Board of Accountancy (BOA) and approved by the

Professional Regulations Commission (PRC) that such registrant has acquired a

minimum of three years of meaningful experience in any of the areas of practice.

Before the establishment of the Sarbanes-Oxley Act of 2002, the auditing

profession was mainly a self-regulated profession where peer review is the

primary method which enables auditors to assess audit quality. Because of this,

external auditors were subject to business pleasures, the desire for larger fees

and profit margins, and the influence of paying clients who wanted

certain accounting treatment and tax results. (Rezaee, 2007) Some big

companies like Enron went to a bankruptcy due to this threats experienced by

the external auditors thus the business world realizes a need to have an audit

committee who will evaluate the auditor that will provide the service.

In overseeing the work of external auditors, a responsible national body

must be assigned to do the tasks. Having a national body in the public sector

involves a variety of advantages or benefits that enables external auditors to

4

produce an unbiased audit regarding the public sector’s entities. This not only

enhances and develops the relationship and communication of both parties, but

also contributes to the improvement of the coordination and teamwork being

exhibited in the public sector.

Accordingly, the State recognizes the rights of the cooperative sector to

initiate and foster within its own ranks cooperative promotion, organization,

training, information gathering, audit and support services, with government

assistance where necessary. Pursuant to Republic Act 6939, an act creating the

Cooperative Development Authority (CDA) and Article 80 of Republic Act 9520,

otherwise known as the Philippine Cooperative Code of 2008, there are

guidelines issued to govern the accreditation of cooperative external auditors. In

furtherance of this policy and to ensure that reliance by regulatory authorities and

the public on the opinion of external auditors is well placed, the following rules

and regulations shall govern the selection, appointment, and delisting for external

auditors of cooperatives.

Statement of the Problem

The study focuses on the analysis of accreditation process for

accountants by the Cooperative Development Authority.

Specifically, this study aims to seek answers to the following questions:

1.) What rules and regulations govern the accreditation of Cooperative

External Auditor?

5

2.) What are the requirements of the Cooperative Development Authority for

the accreditation for external auditors?

3.) To what extent does the Cooperative Development Authority accreditation

affect the individual CPAs regarding:

a. Financial Aspect

b. Quality of Services

c. Time Period

4.) How does the CDA measure the accountants’ adherence to the basic

ethical principles, in terms of:

a. Professional Competence

b. Ethical conduct

c. Independence

Significance of the Study

The study is designed to provide significant analyses of the accreditation

process made by the Cooperative Development Authority that would help those

accredited as well as non-accredited individual accounting practitioners to be

acquainted with the requirements of CDA External Auditor Accreditation and to

provide an insight of how it would affect them. It would also enable them to fully

understand the rules and regulations of being a Cooperative External Auditor that

will guide them as they continue to develop their professional competence and in

adherence to the ethical conduct.

6

It could also make the accountancy students to become fully aware of the

accreditation process, the legal bases behind it, the purpose it serves and how it

could possibly affect them in the future.

The study serves as a detailed guide of the Cooperative Development

Authority Accreditation for the present researchers and lastly, it would help the

future researchers as it serve as a reference in acquiring more ideas and

information about the topic should they conduct a related study.

Scope, Limitation and Delimitation

The focus of this research is to analyze the accreditation process for the

individual CPA practitioners in Batangas city by the Cooperative Development

Authority.

However, this study was delimited only to the effects of Cooperative

Development Authority Accreditation requirements and did not include the

accreditation processes of BIR, SEC, BSP and Insurance Commission

Accreditation.

Definition of Terms

The following terms are operationally and lexically defined for a better

understanding of the concepts used in the study.

Accreditation. This term refers to a process in which certification of

competency, authority, or credibility is presented.

7

Associate. This term refers to any director, officer, manager, or any person

occupying a similar status or performing similar functions in the audit firm

including employees performing supervisory role in the auditing process.

Audit Engagement Letter. This refers to a document which informs the

cooperative of an upcoming audit. It details the audit objectives, the timeline, and

the audit team members. It also covers the pre-audit meeting, expected

deliverables, and the audit team’s mission.

Auditing Firm. This means either the partners of a firm providing audit

services or a sole practitioner providing audit services, as appropriate.

Auditor-in-charge. This refers to the team leader of the audit engagement.

Certified Public Accountant or CPA. This refers to a person who holds a

valid Certificate of Registration and a valid professional identification card issued

by the Commission upon recommendation by the board to those who have

satisfactory complied with all the legal and procedural requirements for such

issuance, including in appropriate cases, having passed the CPA licensure

examination.

Cooperative Development Authority or CDA. This refers to the only

government agency granting juridical personality to cooperatives, herein referred

to as the Authority.

Cooperative External Auditor. This refers to an independent Certified

Public Accountant (CPA) accredited by the CDA, whose relationship to the client

8

is to express an opinion on the financial statements. He/she may be the signing

partner in an auditing firm or a sole practitioner.

Fraud. This means an intentional act by one or more individuals among

management, employees, or third parties that result in a misrepresentation of

financial statements.

It may involve:

• Manipulation, falsification or alteration of records or documents.

• Misappropriation of assets.

• Suppression or omission of the effects of transactions from records or

documents.

• Recording of transactions without substance.

• Intentional misapplication of accounting policies.

• Omission of material information

• And any other instance/factor which may be classified as fraud.

Partner. This term refers to all partners including those not performing

audit engagements.

Partnership. This means a professional partnership engaged in the

practice of public accountancy duly registered with the Securities and Exchange

Commission. [Art 1, Sec 1(g), Board of Accountancy Resolution No. 69, Series of

2003]

Philippine Institute of Certified Public Accountant or PICPA. This term

refers to the integrated national professional organization of Certified Public

9

Accountants accredited by the Board and the Commission per PRC Accreditation

No. 15 dated October 2, 1975.

10

CHAPTER IIREVIEW OF RELATED LITERATURE AND STUDIES

This chapter presents and discusses the related literature and studies

regarding this research study.

Related Literature

A. Accreditation

According to Ramani and Nelson (2008), accreditation refers to third-party

determination of the compliance of a “conformity assessment body” with

specific/defined technical and quality standards. Accreditation bodies such as the

International Accreditation Service (IAS) provide accreditation for compliance

with national and international standards of quality. Accreditation bodies must

themselves operate under strict quality standards which are internationally

defined by ISO/IEC and participate in a third-party peer-review process to assure

compliance with these standards.

In accounting and auditing, accreditation is also a must to regulate and

improve the practice of these fields. Having accreditation does not necessarily

mean that an auditor can provide absolute assurance, but it helps to separate

undesirable audit practitioners. Thus, clients can rely and commit with the quality

control procedures by audited auditing firms. Accreditation is significant due to its

attestation to the respectable business standing of an individual auditor or firm. It

ensures public accountability of a program or an institution – that it has the

11

means to demonstrate the outcomes for its auditing process that are consistent

with the established standards. (Salosagcol, 2009)

Ethical requirements and governing standards commit the management to

provide services or facilities with reputable credentials and accreditation in order

to maintain valued client relationships. Through accreditation, one can be

reasonably sure that the management adheres to certain standards, assurance

codes, and professional ethics. With this, the International Organization for

Standardization (ISO) aptly states that, "if there were no standards, we would

soon notice." (http://www.healism.com/)

As defined by the American Psychological Association, accreditation is

both a status and a process. As a status, accreditation provides public

notification that an institution or program meets standards of quality set forth by

an accrediting agency. As a process, accreditation reflects the fact that in

achieving recognition by the accrediting agency, the institution or program is

committed to self-study and external review by one's peers in seeking not only to

meet standards but to continuously seek ways in which to enhance the quality of

services and training provided.

(http://www.apa.org/ed/accreditation/about/about-accreditation.aspx)

B. Cooperative Accreditation

Akins (2010) stated that Cooperative accreditation is beneficial since a

certain level of credibility and respect among the cooperatives and higher

administration has been enhanced, as they have learned of the program’s

12

accreditation status. The cooperative accreditation can enforce its policies,

procedures, and requirements much better with its students and employers.

In this, the Philippine Institute of Certified Public Accountants (PICPA) has

joined forces with the CDA to enable the country's cooperatives sector come up

with and adopt a financial reporting framework that complies with the

International Financial Reporting System (IFRS). CDA commits to align the

Standard Chart of Accounts (SCA) with the IFRS and the IAS; and draft the

financial reporting frameworks for cooperatives. On the other hand, PICPA shall

support CDA in the development of the said framework; assist the CDA in the

presentation of these frameworks to the Board of Accountancy, as well as the

Financial Reporting Standard Council. (http://cooperatives-society.blogspot.com/)

The Certified Public Accountants as professionals and practitioners play a

vital role in the promotion and development of cooperatives. They are not only

the external auditors of cooperatives but also the management and financial

consultants and oftentimes advisers of cooperative leaders and managers in the

internal affairs of the cooperatives. They are also the educators and trainers in so

far as accounting and financial management of cooperatives are concerned.

Because of their long standing relationship with these community based and

member-oriented organizations, the CPAs become coop advocates and leaders

of a higher level consciousness of cooperativism as a way of life.

The professional accountants also serve as the conscience of cooperative

leaders and managers on the cooperative transparency and their accountability

to the general membership and the cooperative movement. Nevertheless, there

13

is also a need for the accountants to regulate its own rank to weed out those who

do not practice the profession in accordance with ethical standards and

practices.

For an independent Certified Public Accountant to be a Cooperative

External Auditor, he must be accredited by the Cooperative Development

Authority. Under the Memorandum Circular No. 2005-06 released by the CDA, all

Certified Public Accountants duly accredited by the Professional Regulatory

Commission – Board of Accountancy (PRC-BOA) are authorized to render

external audit of Cooperatives. Such rule is implemented until it was revised last

2009.

Pursuant to Section 3 (f) of Republic Act 6939 and Article 80 of Republic

Act 9520, otherwise known as the Philippine Cooperative Code of 2008,

Memorandum Circular No. 2009-03 are issued to govern the accreditation of

cooperative external auditors. As specified in the provisions of Section 2, an

individual Certified Public Accountant (CPA) who seeks to be accredited as

Cooperative External Auditor must file an accomplished application form (Annex

1) directly to the Cooperative Development Authority – Extension Office (CDA-

EO) where such CPA is based, attaching thereto duly certified true copies of the

following documents:

i. Professional Regulation Commission Identification Card (PRC ID);

ii. Valid Certificate of Registration with the Professional Regulation

Commission – Board of Accountancy (PRC-BOA);

iii. Current Professional Tax Receipt (PTR) issued by the local

14

government;

iv. Certificate of Membership in Good Standing with the Philippine

Institute of Certified Public Accountants (PICPA) Chapter;

v. Certificate/s of Completion of Training equivalent to a minimum of

24 hours of training with topics on Standard Chart of Accounts

(SCA), Performance Standards for Credit & Other Types of

Cooperatives with Credit Services of COOP-PESOS, Financial

Reporting Standards for Cooperatives, Philippine Cooperative

Code and other Rules and Regulations issued by the Authority.

Such training shall be provided by the CDA or CDA recognized/

accredited institutions.

As stated in Section 3 of the supposed Memorandum, the accreditation of

Cooperative External Auditor shall be approved by the CDA Board of

Administrators (CDA-BOA) upon recommendation of the Regulatory Unit of the

CDA-CO. The applications for accreditation shall be fully disposed of within a

period of thirty (30) days from the receipt of completed documents by the CDA-

CO.

When the applicant is accredited, he can now engage as an External

Auditor prior to the conditions provided in Section 5 of Memorandum Circular No.

2009-03. The said conditions include that a) No external auditor may be

engaged/qualified in the audit of a cooperative and any of its subsidiary if he/she

or any member of his/her immediate family had or has committed to acquire any

direct or indirect financial interest in the cooperative, or if his/her independence is

15

considered impaired under the circumstances specified in the Code of

Professional Ethics for Certified Public Accountants. b) The external auditor and

the members of the audit team do not have/shall not have outstanding loans or

any credit accommodations with the cooperative at the time of signing of the

engagement and during the engagement. c) The external auditor must not be

currently engaged nor was engaged during the past 3 years in providing the

following services to the Cooperative: Internal audit functions; Information

systems design, implementation, and assessment; and such other services,

which could affect his/her independence as, may be determined by the CDA. d)

The external auditor, auditor-in-charge, and members of the audit team must

adhere to the highest standards of professional conduct and shall carry out

services in accordance with relevant ethical and technical standards, such as the

Philippine Accounting Standards, Philippine Financial Reporting Standards,

Philippine Standards on Auditing (PSA) and the Code of Professional Ethics for

Certified Public Accountants; e) For the immediate past three years, the external

auditor must not have held a position relevant to the conduct of audit such as, but

not limited to, Chief Executive Officer, Chief Financial Officer, Comptroller,

Accountant, Bookkeeper, Audit Committee, etc; f) For the immediate past three

years, the external auditor must not have been a member/officer of the

cooperative or employee/officer of a federation/union to which the cooperative

being audited is affiliated; g) The external auditor must not be related to any

officer and employee of the cooperative up to the fourth degree of consanguinity

or affinity; and h) The external auditor, whether on his/her individual capacity or

16

as partner of a firm, may undertake the external audit of the concerned

cooperative for not more than five (5) consecutive years, provided that the

external auditor may be allowed to audit the same client after a gap of two (2)

years.

As stated in the provisions of Section 4, also known as the “Validity of

Accreditation and Inclusion in CDA List,” the accreditation of external auditor

shall be valid for a period of three (3) years from the date of issue. The CDA-

accredited external auditors may apply for the renewal of their accreditation

within three months prior to the expiration. The provisions of Section 3 of this

Accreditation Criteria shall likewise apply for each application renewal. The CDA

will circularize to all cooperatives the list of accredited cooperative external

auditors once a year. The CDA, however, shall not be held liable for any damage

or loss that may arise from the selection of the accredited cooperative external

auditors to be engaged by the cooperatives for regular or special audit

engagements. (http://www.cda.gov.ph/website/Downloads/accreditation.pdf)

In Section 4 (k) of Memorandum Circular No. 2012-11 issued by the

Cooperative Development Authority, the practice of the CDA-accredited external

auditors is in adherence to Republic Act 9298 or Philippine Accountancy Act of

2004 as the legal basis of the “Guidelines for the Registration of Service

Cooperative Organized among Professionals to Practice a Particular Profession.”

(http://www.cda.gov.ph/website/Downloads/MC2012-11.pdf)

17

C. Republic Act 9520

Article 80 of Republic Act 9520 states that cooperatives registered under

this act shall be subject to an annual financial, performance and social audit.

Having an effective audit system is important for a cooperative because it

enables the management to pursue and attain its various objectives central to the

promoting the viability and growth of cooperatives as instruments for equity,

social justice and economic development.

Cooperative Audit is comprised of annual financial, performance and

social audit. One of the most common types of audit is the financial statement

audit which provides reasonable assurance as to the fairness of the financial

statements taken up as a whole. (Salosagcol et al., 2009)

On the other hand, performance audit is an assessment of the activities of

an organization to see if the resources are being managed with due regard for

economy, efficiency and effectiveness. (Khan, 2000)

According to Investopedia (2012), social audit is a formal review of a

company's endeavours in social responsibility. A social audit looks at factors

such as a company's record of charitable giving and measures the organization's

social and ethical performance.

Clemens (2005) of Demand Media states that cooperatives need various

forms of internal control to facilitate supervision and monitoring, prevent and

detect irregular transactions, measure on-going performance, maintain adequate

business records and to promote operational productivity. External auditors

18

review the design of the internal controls and informally propose improvements,

and document any material irregularities to enable further investigation by

management if it is warranted under the circumstances.

External auditors express an opinion regarding the fairness of the financial

statements to provide reasonable assurance to the intended users of this

information. These auditors assess the risk of material misstatement in a

company's financial reports. Hence, the management and users can make

informed decisions with respect to the outcome of the financial statements. Thus,

external auditors, being an essential part of the cooperative, must undergo

certain procedures and comply with all the necessary requirements in order to be

accredited.

Auditors engaging in the cooperative sector are subject to certain

qualifications. As to external auditor of financial statements, one must be

independent of the cooperative or any of its subsidiary that he is auditing; and a

member in good standing of the Philippine Institute of Certified Public

Accountants (PICPA) and is accredited by both the Board and Accountancy and

the Authority. On the other hand, the social audit shall be conducted by an

independent social auditor accredited by the Authority. Performance and social

audit reports which contain the findings and recommendations of the auditor shall

be submitted to the board of directors. (Section 9, Article 80, R.A. 9520)

Focusing on the financial statement audit, without a system of internal

controls or an audit system, the cooperative would not be able to create reliable

financial reports for internal or external purposes. Thus, it would not be able to

19

determine how to allocate its resources and would be unable to know which of its

segments are profitable. Additionally, it could not manage its affairs, as it would

not have the ability to tell the status of its assets and liabilities and would be

rendered undependable in the marketplace due to its inability to consistently

produce its goods and services in a reliable fashion. Accordingly, an audit system

is crucial in preventing debilitating misstatements in a company's records and

reports. (Clemens, 2005)

Related Studies

Board of Accountancy accreditation is established to enhance the

capability of an individual accounting practitioner in delivering professional

service; to foster excellence through the development of principles and

guidelines for assessing the delivery of the professional activity; to attain and

maintain the highest standards and quality in the practice of accountancy; to

contribute to public confidence in the integrity of financial reporting in the

Philippines by promoting high quality independent auditing; and to develop and

maintain the capabilities that enable a professional accountant to perform

competently within the professional environment. (Ebora, Lapitan, Padernos &

Virata, 2012)

According to Ebora et. al., (2012), BOA Accreditation has varying effects

on the income of accounting practitioners. Majority of firms experienced an

increase in their income. Complying with the accreditation program is relatively

convenient and beneficial since the time consumed is reasonably sufficient. CPA

firms have become more well-informed on the matters affecting the accounting

20

profession. With this, the quality of their services has stepped up to an advanced

level giving them additional confidence in every report they issue. However, non-

accredited practitioners view BOA accreditation as a regulating process which

limits those who enter the public practice.

Accreditation strengthened developing work on all sections of an industry

or profession and valuation of technical skills, proficiency and competency

increased. (Tuunila, 2012)

21

CHAPTER IIIRESEARCH METHODS AND PROCEDURES

This chapter presents the brief descriptions of the research design,

subjects, research materials and procedures and data gathering procedures that

will be used by the researchers in conducting the study.

Research Design

The descriptive method of research is used in this study. Descriptive

method of research is a fact-finding study with adequate interpretation of the

findings. It describes with emphasis what actually exist such as current

conditions, practices situations, or any phenomena. It is a logical manner of

inductive-deductive reasoning to arrive at generalizations. Descriptive research is

a scientific method which involves observing and describing the behaviour of a

subject without influencing it anyway.

Subjects

The subjects of the study are the accredited cooperative individual

practitioners in Batangas city. A total of six respondents within the Batangas city

are selected to make as the samples. Due to the constraints of time and location,

only four questionnaires are answered and returned to the researchers.

Data Gathering Methods and Instruments

Data collection comes from both primary and secondary sources. Primary

data sources include key informants from the public sector. Secondary data

22

sources covered memorandums, publications and technical documents.

Secondary sources provide the researchers with the essential information in

preparing the questionnaire. Secondary sources help to verify official information

and facilitate brainstorming for a comprehensive study of the analysis of

accreditation process for accountants by the Cooperative Development Authority.

Information is collected with the aid of secondary source analysis and

questionnaires. Data gathered from research instruments are then computed for

interpretation. Along with the primary data, the researchers also make use of

secondary sources in the form of published articles and literatures to support the

survey results.

After collecting the accomplished questionnaires, the researchers evaluate

the data acquired. Upon further analysis, the researchers draw out possible

conclusions to suit its objectives.

Data Analysis

This research study uses the bar graph in presenting the results. Due to

small population, the researchers only use the frequency and percentage in

accumulating the results and evaluating the questionnaires given out to the

subjects. The data obtained from the respondents are tabulated systematically in

order to obtain accurate information related to each element of the target

population. Moreover, document analysis is used in the fieldwork conducted for

this study.

23

CHAPTER IVPRESENTATION, ANALYSIS AND INTERPRETATION

This chapter presents the tabulated data, analysis and interpretation of

data related to the study.

Part I: Rules and Regulations Governing the Accreditation of Cooperative

External Auditor

A. Republic Act No. 6939

An act creating the cooperative development authority to promote the

viability and growth of cooperatives as instruments of equity, social justice and

economic development, defining its powers, functions and responsibilities,

rationalizing government policies and agencies with cooperative functions,

supporting cooperative development, transferring the registration and regulation

functions of existing government agencies on cooperatives as such and

consolidating the same with the authority, appropriating funds therefore, and for

other purposes.

Cooperative Development Authority requires all cooperatives, their

federations and unions to submit their annual financial statements, duly audited

by certified public accountants, and general information sheets.

B. Republic Act 9298

An act regulating the practice of accountancy in the Philippines, otherwise

known as the Philippine Accountancy Act of 2004.

The State recognizes the importance of accountants in nation building and

24

development. Hence it shall develop and nurture competent, virtuous, productive,

and well rounded professional accountants whose standards of practice and

service shall be excellent, qualitative, world class and globally competitive.

C. Memorandum Circular No. 2009-03

A circular issued by Cooperative Development Authority (CDA) and

implemented starting 2009 up to present, issuing the guidelines, rules, and

regulations that govern the accreditation of cooperative external auditors.

Part II: Requirements of Cooperative Development Authority Accreditation

for External Auditors

Pursuant to Section 3 (f) of Republic Act 6939 and Article 80 of Republic

Act 9520, otherwise known as the Philippine Cooperative Code of 2008,

Memorandum Circular No. 2009-03 are issued to govern the accreditation of

cooperative external auditors.

As specified in the provisions of Section 2, separate documentary

requirements are needed to be filed by an individual CPA and by partnership or

auditing firm.

A. For Individual CPA

An individual Certified Public Accountant (CPA) who seeks to be

accredited as Cooperative External Auditor must file an accomplished application

form (Annex 1) directly to the Cooperative Development Authority – Extension

Office (CDA-EO) where such CPA is based, attaching thereto duly certified true

25

copies of the following documents:

i. Professional Regulation Commission Identification Card (PRC ID);

ii. Valid Certificate of Registration with the Professional Regulation

Commission – Board of Accountancy (PRC-BOA);

iii. Current Professional Tax Receipt (PTR) issued by the local

government;

iv. Certificate of Membership in Good Standing with the Philippine

Institute of Certified Public Accountants (PICPA) Chapter;

v. Certificate/s of Completion of Training equivalent to a minimum of 24

hours of training with topics on Standard Chart of Accounts (SCA),

Performance Standards for Credit & Other Types of Cooperatives with

Credit Services of COOP-PESOS, Financial Reporting Standards for

Cooperatives, Philippine Cooperative Code and other Rules and

Regulations issued by the Authority. Such training shall be provided by

the CDA or CDA recognized/ accredited institutions.

B. For Partnership/Auditing Firm

The Partnership/Auditing Firm which seeks to be accredited as

Cooperative External Auditor must file an accomplished application form (Annex

2) directly to the CDA EO where such firm is based; attaching thereto duly

certified true copies of the following documents:

I. SEC Registration;

II. Partnership’s Current Certificate of Registration with the BOA;\

26

III. Business Permit/Municipal License;

IV. Certificate of Membership in Good Standing with PICPA chapter of at

least one (1) partner;

V. Certification that at least one (1) partner complied with the required

training as prescribed in Section 2.A.1.v for the Individual CPAs, duly

supported by certified true copies of certificates of completion or

attendance;

As stated in Section 3 of the supposed Memorandum, the accreditation of

Cooperative External Auditor shall be approved by the CDA Board of

Administrators (CDA-BOA) upon recommendation of the Regulatory Unit of the

CDA-CO. The applications for accreditation shall be fully disposed of within a

period of thirty (30) days from the receipt of completed documents by the CDA-

CO.

When the applicant is accredited, he can now engage as an External

Auditor prior to the conditions provided in Section 5 of Memorandum Circular No.

2009-03. These conditions include:

a) No external auditor may be engaged/qualified in the audit of a cooperative

and any of its subsidiary if he/she or any member of his/her immediate

family had or has committed to acquire any direct or indirect financial

interest in the cooperative, or if his/her independence is considered

impaired under the circumstances specified in the Code of Professional

Ethics for Certified Public Accountants. In the case of a partnership, this

27

limitation shall apply to the partners, associates, and the auditor-in-charge

of the engagement and members of their immediate family.

b) The external auditor and the members of the audit team do not have/shall

not have outstanding loans or any credit accommodations with the

cooperative at the time of signing of the engagement and during the

engagement. In the case of partnership, this prohibition shall apply to the

partners and the auditor-in-charge of the engagement.

c) The external auditor must not be currently engaged nor was engaged

during the past 3 years in providing the following services to the

Cooperative:

i. Internal audit functions;

ii. Information systems design, implementation, and assessment; and

iii. Such other services, which could affect his/her independence as, may be

determined by the CDA.

d) The external auditor, auditor-in-charge, and members of the audit team

must adhere to the highest standards of professional conduct and shall

carry out services in accordance with relevant ethical and technical

standards, such as the Philippine Accounting Standards, Philippine

Financial Reporting Standards, Philippine Standards on Auditing (PSA) and

the Code of Professional Ethics for Certified Public Accountants;

e) For the immediate past three years, the external auditor must not have

held a position relevant to the conduct of audit such as, but not limited to,

28

Chief Executive Officer, Chief Financial Officer, Comptroller, Accountant,

Bookkeeper, Audit Committee, etc;

f) For the immediate past three years, the external auditor must not have

been a member/officer of the cooperative or employee/officer of a

federation/union to which the cooperative being audited is affiliated;

g) The external auditor must not be related to any officer and employee of the

cooperative up to the fourth degree of consanguinity or affinity; and

h) The external auditor, whether on his/her individual capacity or as partner of

a firm, may undertake the external audit of the concerned cooperative for

not more than five (5) consecutive years, provided that the external auditor

may be allowed to audit the same client after a gap of two (2) years.

As stated in the provisions of Section 4, also known as the “Validity of

Accreditation and Inclusion in CDA List,” the accreditation of external auditor

shall be valid for a period of three (3) years from the date of issue. The CDA-

accredited external auditors may apply for the renewal of their accreditation

within three months prior to the expiration. The provisions of Section 3 of this

Accreditation Criteria shall likewise apply for each application renewal. The CDA

will circularize to all cooperatives the list of accredited cooperative external

auditors once a year. The CDA, however, shall not be held liable for any damage

or loss that may arise from the selection of the accredited cooperative external

auditors to be engaged by the cooperatives for regular or special audit

engagements.

29

Part III: The Effects of the Cooperative Development Authority Accreditation

to the Individual Practitioners

A. Financial Aspect

Expensive Reasonable Inexpensive0

0.51

1.52

2.53

3.54

4.5

Figure 1Cost Incurred in the Accreditation Process

Foremost, the respondents of this study are uniformly re-accredited

individual CPA practitioners in Batangas City. All of them have less than ten

cooperative clients. Only four out of six questionnaires have been returned to the

researchers due to time and distance constraints. Furthermore, the relatively

small number of respondents has caused difficulty to trace the target subjects;

consequently, the researchers have only come up with four out of six CDA

accredited practitioners.

According to Section 8 of Memorandum Circular No. 2009-03, the

accreditation fees vary from individual practitioners to partnerships or firm. The

initial filing fee costs two thousand pesos (P2, 000.00) and five thousand pesos

(P5, 000.00) for an individual and partnership or firm, respectively.

30

With respect to renewal fee, accreditation fees cost one thousand pesos

(P1, 000.00) for an individual practitioner and three thousand pesos (P3, 000.00)

for partnership or Firm. On the other hand, re-application fee costs two thousand

pesos (P2, 000.00) for an individual practitioners and five thousand pesos (P5,

000.00) for partnership or firm.

All four respondents find the accreditation fees reasonable. The

accreditation fee is neither too expensive nor inexpensive. It suffices the firm’s

capability to carry out its duties for the period which the accreditation is valid.

They further note that the benefits derived from being a CDA-accredited CPA

reasonably compensate the cost of the accreditation.

Significantly Increased Slightly Increased No change in Income0

0.5

1

1.5

2

2.5

Figure 2Change in Income after being accredited

50% of the respondents reveal that after being accredited by the

Cooperative, their income slightly increased while the other half felt no increased

in income at all. The slight increase in income can be attributed to the offsetting

of the costs from accreditation and the earnings from auditing cooperatives.

31

Though there is only a slight increase in income, the benefits of the accreditation

process still exceeds its cost since the auditors have been benefited from the

trainings and learnings gained from the CDA.

B. Quality of Service

Significantly Improved Slightly Improved Did not improve0

0.5

1

1.5

2

2.5

3

3.5

Figure 3Improvement in the Quality of Service

75% of the respondents remark that there have been significant

improvements on the quality of services that they execute. Only one out of four

respondents assesses that there has been only a slight improvement in the

quality of service he or she gives.

With this, they also believe that there is a difference in the quality of

services before and after completion of training with topics on Standards Chart of

Accounts of the Cooperative, FRSC-Cooperative and other rules and regulations.

These trainings make the CDA-accredited auditor different and essentially

preferred from those who are not accredited. They have gained substantial

32

learning in auditing the cooperative financial statements. With this, the

respondents believe that the accreditation process has significantly helped the

cooperative sector in pursuing and attaining reliable and dependable financial

information and the accounting profession in advancing the knowledge of

auditing financial statements for key areas in the Philippine economy, such as the

Cooperative.

C. Time Period

Lengthly Sufficient Too Short0

0.5

1

1.5

2

2.5

3

3.5

Figure 4Time consumed in Accreditation

About 75% of the respondents consider the time they spent in complying

with the requirements for the accreditation for renewal as ample and sufficient

while the remaining 25% feels that the accreditation process is lengthy.

Respondents consider the accreditation process time-consuming due to the

required training for the cooperatives. This can probably be attributed to the

required certificate of completion of training equivalent to a minimum of 24 hours

33

of training with topics on Standard Chart of Accounts (SCA), Performance

Standards for Credit & Other Types of Cooperatives with Credit Services of

COOP-PESOS, Financial Reporting Standards for Cooperatives, Philippine

Cooperative Code and other Rules and Regulations issued by the Authority.

Such training shall be provided by the CDA or CDA recognized/accredited

institutions.

Part IV: How Cooperative Development Authority measures the

accountants’ adherence to the basic ethical principles, in terms of:

A. Professional Competence

A certificate or license defining professional status implies that the holder

has a certain minimum level of professional competence. The Cooperative

Development Authority has long realized the importance of establishing a

minimum level of competence for the public accounting profession engaged with

the cooperative sector. Thus, an individual CPA who seeks to be accredited as

Cooperative External Auditor must file an accomplished application form directly

to Cooperative Development Authority – Extension Office (CDA-EO) where the

such CPA is based, attaching thereto duly certified true copies of the following

documents: PRC ID, Individual’s current Certificate of Registration with the PRC-

BOA, iii. Current Professional Tax Receipt (PTR) issued by the local government,

Current PTR issued by the local government, Certificate of Membership in Good

Standing with his/her PICPA Chapter, Certificate of Training equivalent to 24

hours of training attended on cooperative updates and issuances and other

34

related courses provided by CDA/CDA-accredited institutions. On the other hand,

partnerships and firms need to file additional documents other than those above

such as SEC registration and business permits.

As stated in Section 130 of the Code of Ethics for Professional

Accountants in the Philippines, a professional accountant has a continuing duty

to maintain professional knowledge and skill at the level required to ensure that a

client or employer receives competent professional service based on current

developments in practice, legislation and techniques. A professional accountant

should act diligently and in accordance with applicable technical and professional

standards when providing professional services.

In addition, they should conform with the technical and professional

standards of the following: Board of Accountancy (BOA) / Professional

Regulation Commission (PRC); Securities and Exchange Commission (SEC);

Financial Reporting Standards Council (FRSC); Auditing and Assurance

Standards Council (AASC); and Relevant legislation.

Competent professional service requires the exercise of sound judgment

in applying professional knowledge and skill in the performance of such service.

Professional competence may be divided into two separate phases:

(a) Attainment of professional competence; and

(b) Maintenance of professional competence.

The attainment of professional competence requires initially a high

standard of general education followed by specific education, training and

35

examination in professionally relevant subjects, and whether prescribed or not, a

period of work experience. This should be the normal pattern of development for

a professional accountant.

The maintenance of professional competence requires a continuing

awareness and an understanding of relevant technical professional and business

developments. Continuing professional development develops and maintains the

capabilities that enable a professional accountant to perform competently within

the professional environments.

B. Ethical conduct

Professional accountants should consider the ethical requirements as the

basic principles which they should follow in performing their work particularly in

the cooperative sector.

A distinguishing mark of the accountancy profession is its acceptance of

the responsibility to act in the public interest. Therefore, a professional

accountant’s responsibility is not exclusively to satisfy the needs of an individual

client or employer. In acting in the public interest a professional accountant

should observe and comply with the ethical requirements of this Code.

With this, memorandum circular no. 2009-03 issues guidelines to govern

the accreditation of cooperative external auditors. Under Section 5, the

Cooperative Development Authority has given the following conditions the auditor

should comply before engaging in the financial statement audit of a cooperative.

No external auditor may be engaged/qualified in the audit of a cooperative

36

and any of its subsidiary if he/she or any member of his/her immediate family had

or has committed to acquire any direct or indirect financial interest in the

cooperative, or if his/her independence is considered impaired under the

circumstances specified in the Code of Professional Ethics for Certified Public

Accountants. In the case of a partnership, this limitation shall apply to the

partners, associates, and the auditor-in-charge of the engagement and members

of their immediate family.

The external auditor and the members of the audit team do not have/shall

not have outstanding loans or any credit accommodations with the cooperative at

the time of signing of the engagement and during the engagement. In the case of

partnership, this prohibition shall apply to the partners and the auditor-in-charge

of the engagement.

The external auditor must not be currently engaged nor was engaged

during the past 3 years in providing the following services to the Cooperative:

Internal audit functions;

Information systems design, implementation, and assessment; and

Such other services, which could affect his/her independence as, may be

determined by the CDA.

The external auditor, auditor-in-charge, and members of the audit team

must adhere to the highest standards of professional conduct and shall carry out

services in accordance with relevant ethical and technical standards, such as the

Philippine Accounting Standards, Philippine Financial Reporting Standards,

37

Philippine Standards on Auditing (PSA) and the Code of Professional Ethics for

Certified Public Accountants.

For the immediate past three years, the external auditor must not have

held a position relevant to the conduct of audit such as, but not limited to, Chief

Executive Officer, Chief Financial Officer, Comptroller, Accountant, Bookkeeper,

Audit Committee, and other similar positions.

For the immediate past three years, the external auditor must not have

been a member, officer of the cooperative, employee, officer of a federation/union

to which the cooperative being audited is affiliated.

The external auditor must not be related to any officer and employee of

the cooperative up to the fourth degree of consanguinity or affinity; and

The external auditor, whether on his/her individual capacity or as partner

of a firm, may undertake the external audit of the concerned cooperative for not

more than five (5) consecutive years, provided that the external auditor may be

allowed to audit the same client after a gap of two (2) years.

C. Independence

Cooperative Members want effective control of finances. An effective audit

committee is an essential tool in overseeing the financial health of a cooperative.

Some areas of common audit committee oversight include the following partial

list:

Key areas of business and financial risk

Code of ethics at the top

38

Internal controls and systems

External audit activity and relationships

Periodic financial reporting

Internal audit activity

Key personal selection for critical financial/control positions

Although it does not directly apply to cooperatives, the Sarbanes-Oxley

Act must be kept in mind and respected even in the non-corporate arena. The

Sarbanes-Oxley Act contains a number of provisions affecting audit committees,

including heightened independence standards for audit committee membership,

audit oversight, audit committee financial experts, audit independence and

auditor communications with audit committees. Basically, it is important to

understand that no audit committee member from the board of directors is to

have any special business arrangements with the party under audit or the

cooperative. Before generating an audit committee, Sarbanes-Oxley should be

comprehended and considered.

A professional accountant in public practice who provides an assurance

service is required to be independent of the assurance client. Independence of

mind and in appearance is necessary to enable the professional accountant in

public practice to express a conclusion, and be seen to express a conclusion,

without bias, conflict of interest or undue influence of others. Section 290 of the

Code of Ethics for Professional Accountants in the Philippines provides specific

guidance on independence requirements for professional accountants in public

39

practice when performing an assurance engagement.

Independence of Mind is the state of mind that permits the expression of a

conclusion without being affected by influences that compromise professional

judgment, allowing an individual to act with integrity, and exercise objectivity and

professional skepticism.

Independence in Appearance is the avoidance of facts and circumstances

that are so significant that a reasonable and informed third party, having

knowledge of all relevant information, including safeguards applied, would

reasonably conclude a firm’s, or a member of the assurance team’s, integrity,

objectivity or professional skepticism had been compromised.

A professional accountant in public practice should evaluate the

significance of identified threats and, if they are other than clearly insignificant,

safeguards should be considered and applied as necessary to eliminate them or

reduce them to an acceptable level. Such safeguards may include:

Withdrawing from the engagement team.

Supervisory procedures.

Terminating the financial or business relationship giving rise to the

threat.

Discussing the issue with higher levels of management within the firm.

Discussing the issue with those charged with governance of the client

40

CHAPTER VSUMMARY, FINDINGS, CONCLUSIONS AND RECOMMENDATIONS

This chapter presents the summary of findings, conclusions, and

recommendations drawn from the gathered information by conducting the study.

Summary

This research study focuses on the analysis of accreditation process for

accountants by the Cooperative Development Authority in Batangas city.

Specifically, it sought to answer the following questions:

1. What rules and regulations govern the accreditation of Cooperative

External Auditor?

2. What are the requirements of the Cooperative Development Authority for

the accreditation for external auditors?

3. To what extent does the Cooperative Development Authority accreditation

affect the individual CPAs regarding:

a. Financial Aspect

b. Quality of Services

c. Time Period

4. How does the CDA measure the accountants’ adherence to the basic

ethical principles, in terms of:

a. Professional Competence

b. Ethical conduct

c. Independence

41

Findings

Based on the gathered data, the researchers came up with the following

findings:

1. There are three rules and regulations that govern the accreditation of a

cooperative external auditor (1) Republic Act No. 6939 which is an act

creating the Cooperative Development Authority which requires all

cooperatives, their federations and unions to submit their annual financial

statements, duly audited by certified public accountants, and general

information sheets. For this rule to be implemented and fulfilled, (2)

Memorandum Circular No. 2009-03, was issued by CDA and implemented

starting 2009 up to present. The circular provides the guidelines, rules, and

regulations that govern the accreditation of cooperative external auditors. The

practice of the accountants accredited shall be guided by (3) Republic Act

9298. An act regulating the practice of accountancy in the Philippines,

otherwise known as the Philippine Accountancy Act of 2004.

2. An individual Certified Public Accountant (CPA) who seeks to be accredited

as Cooperative External Auditor must file an accomplished application form

(Annex 1) directly to the Cooperative Development Authority – Extension

Office (CDA-EO) where such CPA is based, attaching thereto duly certified

true copies of the following documents: (a) Professional Regulation

Commission Identification Card (PRC ID); (b) Valid Certificate of Registration

with the Professional Regulation Commission – Board of Accountancy (PRC-

BOA); (c) Current Professional Tax Receipt (PTR) issued by the local

42

government; (d) Certificate of Membership in Good Standing with the

Philippine Institute of Certified Public Accountants (PICPA) Chapter; and (e)

Certificate/s of Completion of Training equivalent to a minimum of 24 hours of

training with topics on Standard Chart of Accounts (SCA), Performance

Standards for Credit & Other Types of Cooperatives with Credit Services of

COOP-PESOS, Financial Reporting Standards for Cooperatives, Philippine

Cooperative Code and other Rules and Regulations issued by the Authority.

Such training shall be provided by the CDA or CDA recognized/ accredited

institutions.

The accreditation of Cooperative External Auditor shall be approved by

the CDA Board of Administrators (CDA-BOA) upon recommendation of the

Regulatory Unit of the CDA-CO. The applications for accreditation shall be

fully disposed of within a period of thirty (30) days from the receipt of

completed documents by the CDA-CO.

When the applicant is accredited, he can now engage as an External

Auditor prior to the conditions provided in Section 5 of Memorandum Circular

No. 2009-03. The accreditation of external auditor shall be valid for a period

of three (3) years from the date of issue. The CDA-accredited external

auditors may apply for the renewal of their accreditation within three months

prior to the expiration. The provisions of Section 3 of this Accreditation Criteria

shall likewise apply for each application renewal.

3. The accreditation process by the Cooperative Development Authority has

affected the individual accounting practitioners, regarding:

43

a. Financial Aspects

All four respondents find the accreditation fees reasonable. The

accreditation fee is neither too expensive nor inexpensive. They further noted

that the benefits derived from being a CDA-accredited CPA reasonably

compensate the cost of the accreditation. 50% of the respondents reveal that

after being accredited by the Cooperative, their income slightly increased

while the other half felt no increased in income at all.

b. Quality of Service.

75% of the respondents remark that there have been significant

improvements on the quality of services that they execute. Only one out of

four respondents assesses that there has been only a slight improvement in

the quality of service he or she gives. They also noted that there is difference

in the quality of services before and after completion of training with topics on

Standards Chart of Accounts of the Cooperative, FRSC-Cooperative and

other rules and regulations.

c. Time Period

About 75% of the respondents consider the time they spent in

complying with the requirements for the accreditation as ample and sufficient

while the remaining 25% feels that the accreditation process is lengthy.

Respondents consider the accreditation process time-consuming due to the

required training for the cooperatives. This can probably be attributed to the

required certificate of completion of training equivalent to a minimum of 24

44

hours of training with topics on Standard Chart of Accounts (SCA),

Performance Standards for Credit & Other Types of Cooperatives with Credit

Services of COOP-PESOS, Financial Reporting Standards for Cooperatives,

Philippine Cooperative Code and other Rules and Regulations issued by the

Authority. Such training shall be provided by the CDA or CDA recognized/

accredited institutions.

4. The Cooperative Development Authority measures the accountants’

adherence to the basic ethical principles, in terms of:

a. Professional Competence

The Cooperative Development Authority issues guidelines that will

establish a minimum level of competence for the public accounting profession

engaged with the cooperative sector. Thus, an individual accountant as well

as the partnership/auditing firm who seeks to be accredited as cooperative

external auditor must file an accomplished application form together with the

true copies of documents required by the authority. When providing services,

professional accountants must act with required professional knowledge and

skills and in accordance with applicable technical and professional standards.

b. Ethical conduct

The responsibility of a professional accountant is to act in the public

interest and to comply with the ethical requirements of the profession. No

external auditor, auditor-in-charge, and members of the audit team may be

engaged/qualified in the audit if his independence is considered impaired

45

under the circumstances specified in the Code of Professional Ethics. He

must adhere to the highest standards of professional conduct and shall carry

out services in accordance with relevant ethical and technical standards.

c. Independence

A professional accountant in public practice who provides an

assurance service is required to be independent of the assurance client.

Independence of mind and in appearance is necessary to enable the

professional accountant in public practice to express a conclusion, and be

seen to express a conclusion, without bias, conflict of interest or undue

influence of others.

A professional accountant in public practice should evaluate the

significance of identified threats to independence and, if they are other than

clearly insignificant, safeguards such as withdrawing from the engagement

and supervisory procedures, should be considered and applied as necessary

to eliminate them or reduce them to an acceptable level.

Conclusions

After conducting the study, the researcher was able to draw the following

conclusions:

1. There are three rules and regulations that govern the accreditation of a

Cooperative External Auditor. These are Republic Act No. 6939,

Memorandum Circular No. 2009-03, and Republic Act 9298.

2. In order for an individual Certified Public Accountant (CPA) to be

46

accredited as Cooperative External Auditor, he/she must file an

accomplished application form (Annex 1) directly to the Cooperative

Development Authority – Extension Office (CDA-EO) where such CPA is

based, together with duly certified true copies of the required documents

stated in Memorandum Circular No. 2009-03. The accreditation shall be

approved by the CDA Board of Administrators upon recommendation of

the Regulatory Unit of the CDA-CO. When the applicant is accredited, he

can now engage as an External Auditor, valid for three years from the date

of issue prior to the conditions provided.

3. The accreditation process by the Cooperative Development Authority has

varying effects to the individual practitioners, regarding financial aspect,

time used and quality of services rendered. In regards to the financial

aspect, the respondents find the accreditation fees reasonable. However,

there are no significant changes in the income of the auditors after being

accredited by the Cooperative Development Authority. Majority of the

respondents only experience a slight increase in income or no significant

changes at all. In terms of their quality of service, most of the respondents

remark that there have been significant improvements on the quality of

services that they execute. In terms of time used, majority of the

respondents consider the time they spent in complying with the

requirements for the accreditation as ample and sufficient.

4. In its guidelines, the Cooperative Development Authority provides some

qualifications that must be possess by the auditors to ensure that they

47

have the professional competence when conducting the audit. Aside from

competence, they also emphasize the ethical conduct and the

independence of an auditor. The key factor to be considered by an

external auditor to be able to produce a reliable audit is his ability to work

in line with his professional ethics. Through the accreditation process, the

Cooperative Development Authority can reasonably measure the

accountants’ adherence to the basic ethical principles. The CDA

accreditation process has helped the cooperative sector in pursuing and

attaining reliable and dependable financial information.

Recommendation

Based from the foregoing conclusions, the following recommendations are

hereby presented.

1. Future researchers can conduct a study with a larger scope to achieve a

more comprehensive analysis of the accreditation process for financial

statement auditors by the Cooperative Development Authority.

2. A similar study should be conducted to partnership/auditing firm to

determine the similarities and differences of the requirements and the

effects of the accreditation to them.

3. A further survey should be conducted to verify whether the accredited

cooperative external auditors adhere to the basic ethical principles of the

practice of accountancy.

4. Strict measures and controls should be put in place and strengthen to

48

check and monitor the external auditors of the Cooperative.

5. The Cooperative Development Authority should strictly implement and

inform all the cooperatives about the accreditation process so that they will

be well-versed to whom they should rightly engage for a financial

statement audit.

49

Bibliography

A. Books

Salosagcol, Jekell G., et al., (2009) Auditing Theory, A Guide in understanding

the AASC Pronouncements PSA, PSRE, PSAE & PSRS, GIC Enterprises

& Co., Inc., Manila Philippines

B. Thesis

Ebora, Angelica, et al., (2012) A Study on the Effects of BOA Accreditation

among Individual Accounting Practitioners in Batangas Province,

University of Batangas, p. 36 – 40

Tuunila, R. (2012) Accreditation of chemical engineering programmes in

Lappeenranta University of Technology: observations of its effect on

development of education Lappeenranta University of Technology,

Department of Chemical Technology, p. 2 – 3

C. Journals

Muhammad Akram Khan (2000) Performance Auditing, Asian Journal of Government Audit

Clements, Jeff (2005) The Importance of an Audit System to Companies, Demand Media

Ramani, C. P. & Nelson, David (2008) The Effect of Accreditation on International Trade, IAS

Akins, Thomas (2010) Why Accreditation is important, Co-op Accreditation, Georgia Institute of Technology, Division of Professional Practice

50

D. Websites

http://www.apa.org/ed/accreditation/about/about-accreditation.aspx

http://www.healism.com/medical_tourism_safety/accreditation/importance_of_accreditation/

http://www.investopedia.com/terms/s/social-audit.asp

http://smallbusiness.chron.com/importance-audit-system-companies-14705.html

http://www.lawphil.net/statutes/repacts/ra2009/ra_9520_2009.html

http://www.cda.gov.ph/website/Downloads/accreditation.pdf

51

Appendix – Questionnaire

Sir/Madam:

Greetings!

We are third year college students of the College of Business and Accountancy of the University of Batangas. In line with the requirements in our Research Subject, we are writing a research paper about the “Analysis of Accreditation Process for Accountants by Cooperative Development Authority in Batangas city.”

In order to come up with an objective and comprehensive paper, may we be allowed to conduct a survey regarding the said topic. Your insights on the matter will be of utmost importance to us.

Be assured that your inputs will be treated with utmost confidentiality and will be used for research purposes only.

We thank you for your anticipated cooperation.

Yours truly,

_______________ _______________

Falculan, Delsie Macasaet, Sherlyn

Group Member Group Member

_______________

Ortega, Mirare D.

Group Member

Noted by:

______________________

MRS. SOCORRO TAMAYO

Research Adviser

52

QUESTIONNAIRE

Directions: Please read carefully the items provided below. Please check the item that corresponds to your answer.

PART I – PROFILE OF THE RESPONDENT

Name (optional): _______________ Gender: Male Female

Age: ________

Type of Respondent:

First time accredited cooperative auditor

Re-accredited

Under Renewal Process

Number of Cooperative Client

Less than five

5 – 10

10 – 20

More than 20

PART II – QUESTIONNAIRE PROPER

A. Has the Cooperative Development Authority Accreditation affect you, with

respect to:

I. Financial Aspect

a. Cost incurred in the Accreditation Process

Too expensive

Reasonable

Inexpensive

53

b. Changes in income after being Accredited

Significant increase in income

Slightly increase in income

No changes in income

Decrease in income

II. Time Aspects

a. Time consumed in Accreditation

Lengthy

Sufficient enough

Too short

b. Period of Renewal

Lengthy

Sufficient enough

Too short

III. Quality of Service

Significantly improved my quality of service

Slightly improved my quality of service

Did not improve my quality of service

B. Insights about the CDA Accreditation Process

1. Are the requirements for audit engagement (ethical requirements and

independence) met before auditing cooperatives?

Yes Partially met No

2. Are the reportorial requirements (PFRS compliance and disclosures of

adverse findings) met during the audit engagement?

Yes Partially met No

54

3. Is there a difference in the quality of services before and after completion of

training with topics on Standard Chart of Accounts of the Cooperative,

FRSC-Cooperative and other rules and regulations?

There is. There is none.

4. Is there a difference in the quality of services offered to Cooperatives by

CDA-accredited accounting practitioners from those who are not accredited?

There is. There is none.

5. Do the benefits derived from being a CDA-accredited CPA compensate the

cost of the accreditation?

Yes No

6. How strict is the CDA accreditation process?

Very strict Strict Not strict at all

7. Do you think there really is a need for accreditation?

There is. There is none

8. In your opinion, does the CDA accreditation process help the cooperative

sector in pursuing and attaining reliable and dependable financial

information?

Yes No

9. Do you agree that the CDA accreditation has contributed significantly in

providing more reliable financial statements and ensuring that the

cooperative is operating according to cooperative principles?

Yes No

10. In your opinion, does the CDA accreditation process for individual accounting

practitioners contribute to the advancement of the accounting profession?

Yes No

55

CURRICULUM VITAE

Name : Delsie F. Falculan

Date of Birth : January 10, 1994

Place of Birth : Batangas City

Address : Greenwoods South, Pallocan East, Batangas city

Educational Background

Tertiary Course

Bachelor of Science in AccountancyUniversity of BatangasHilltop, Batangas City2010 – present

Secondary Course

University of BatangasHigh school departmentHilltop, Batangas City2006 - 2010

Primary Course

University of BatangasElementary departmentMH Del Pilar St., Batangas City1999– 2006

56

CURRICULUM VITAE

Name : Sherlyn B. Macasaet

Date of Birth : March 25, 1993

Place of Birth : Batangas City

Address : Nueva Villa Subdivision, Alangilan, Batangas City

Educational Background

Tertiary Course

Bachelor of Science in AccountancyUniversity of BatangasKumintang Ilaya, Batangas City2010 – present

Secondary Course

Batangas National High SchoolRizal Avenue, Batangas City2006 - 2010

Primary Course

Batangas City South Elementary SchoolP. Canlapan St., Batangas City1999 - 2006

57

CURRICULUM VITAE

Name : Mirare D. Ortega

Date of Birth : August 15, 1994

Place of Birth : Batangas

Address : Malapad na Parang, Lobo, Batangas

Educational Background

Tertiary Course

Bachelor of Science in AccountancyUniversity of BatangasHilltop, Batangas City2010 – present

Secondary Course

University of BatangasHigh school departmentHilltop, Batangas City2006 - 2010

Primary Course

Malapad na Parang Elem. SchoolP. Canlapan St., Batangas City1999– 2006