ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE

Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

AUDITOR’S REPORT FOR THE MONTH OF AUGUST

DATE: August 7,2021

FACTS, ISSUES AND CONCERNS
OSSMPC Main Branch
Loan Voucher
OBSERVATIONS AND FINDINGS
As I checked the loan vouchers, It was noted that some Bob Loans were already
released even before the loan applications were submitted to me for checking
and verification. Furthermore, one of the borrower-applicant availed a loan
amount that is beyond its honorarium capacity thus a need to attach a proof for
other source of income. However, no attachments were made.

Zamora, Sharmaine
July 23, 2021
Granted amount Php 51,880

Candilas, Fe
July 23, 2021
Granted amount Php 139,860

In addition, it was again noted there were members availing the Bob loan
priviledge that were granted other priviledge loan products beyond the max
amount allowable based on the criteria stipulated in the credit policy.

Laude, Ricky Ubayubay

July 23, 2021
Petty Cash
Granted amount Php 9,715

Abejo Cedric Edwin

August 2, 2021
Petty Cash
Granted amount Php 7,400
Maximum amount that may be availed 6,452

AUDIT REPLY

Date : August 18, 2021

To : Marycel Agan, CEO
From : Ruby Roa, BM
Subject : Reply on Audit Findings
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

On loans of Sharmaine Zamora & Fe Candilas:
We accelerate releasing for BOB loans application because these are secured loans and collection is
through salary deduction. No more hassle for AO’s to individually collect. Regularization were made
after release.

On petty cash of Cedric Abejo and Ricky Laude:

It’s part of the MOA to also to grant petty cash loans to BOB members. Since Main Branch a huge
amount of investible funds, me as Branch Manager decided to grant this loan to them regardless of the
share capital but with the knowledge of the CEO.

Note:
All recommendations regarding the approval and releases of BOB loans are duly noted.

RECOMMENDATION AND ACTION TAKEN

A regular verification minimizes the risk of errors or irregularities

going undetected for an extended period of time. This makes
correction of possible errors or irregularities much easier. All loans
granted, restructured, renewed and extended should be checked
and verified before loan release.

To minimize losses due to loan defaults, loan applications should

be examined and evaluated prior to loan approval and release.
Refer to the credit policy. What is stipulated in the policy should
prevail over all agreements and/or contracts subsequently made
that are otherwise in contrary to it.
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

DATE: August 7,2021

FACTS, ISSUES AND CONCERNS
OSSMPC Cogon Branch
Loan Voucher
OBSERVATIONS AND FINDINGS
As I checked the loan vouchers, It was noted that some of the
granted loans exceeded the max amount allowable based on the
criteria stipulated in the credit policy.

1. Rabadan, Josefina Maamo

Amount granted Php 5,750
July 28, 2021
LAD
Maximum amount that may be availed is Php 5,218.

2. Madelozo, Henry Jr.

Amount granted Php 7,000
July 29, 2021
Petty Cash Loan
Maximum amount that may be availed is Php 6,722

3. Tagotongan, Rhachirona
Amount granted Php 10,000
July 30, 2021
Emergency
Previous granted emergency loan is Php 10,000. However, based on the current
Share Capital of member, which is the basis in the computation of the credit limit,
maximum amount that may be availed was reduced to Php 8,965.

AUDIT REPLY

August 17, 2021

To : Ms. Nova Cimacio

Internal Auditor

From : Oro Savings & Sharing MPC

Cogon Branch

Re : Audit Findings dated August 7 2021

==================================================================
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

This has reference to your audit findings dated August 07, 2021 re;

1. LAD granted exceeding the maximum limit - P5,250 dated July 29 2021.
-LO miscompute the Savings and Share Capital

2. Petty Cash Loan Exceeds to 7,000 instead of 5,000

- Mislook on the capital share

3. Petty cash loan with an amount P10, 000.

- Mislook on the capital share

Hope our explanation will suffice your findings. Thank you for the reminder and God bless us.

Rengie R. Macayana
Loan Officer

RECOMMENDATION AND ACTION TAKEN

It is the duty and responsibility of the Loan Officer to double check

the Share Capital, Savings, and all existing loans of the member
before approving and releasing the loan. He/she shall see to it that
the amount in words and figures are accurate.

Refer to the Credit Policy Manual for the accurate computation of

the max amount that may be granted to the members particularly
to Priviledge loans.
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

FACTS/ISSUES/CONCERNS:

Fixed Asset
Cogon Branch

The audit reviewed the controls and processes surrounding fixed assets, including the process of
verification checks. This audit has considered the extent to which assets are identified, recorded, verified
and accurately reflected in the accounts. The audit seek to ensure that depreciation is appropriate.

Fixed Asset Audit

Location Tag Number Description Model no. Serial No. Status
Cogon Branch 022 Desktop N/A N/A Not
Computer Functional

Summary of findings
Control Objectives
Assets are correctly and
accurately reflected in the
accounts.
Findings
Associated risk of not achieving the control objective:
Assets may be Inaccurately reflected in the accounts.

Assets are identified, recorded Found no significant weaknesses

and regularly verified.
Depreciation is appropriate and Associated risk of not achieving the control objective:
in accord with existing
regulations. Assets may be inaccurately recorded in the asset register and financial
reports.
Assets are appropriately Found no significant weaknesses
protected and insured

Main findings

Assets are correctly and accurately reflected in the accounts.

Asset verification review was not completely done. Due to the age of the asset that is more than a decade,
documentation and filing were no longer tracked and maintained. It was noted that old files have been kept
in different locations, some were placed in the Main office and some are placed in the empty space beside
the cogon branch office. As a result, the management cannot easily locate the fixed asset source document
(Invoice) upon my request and it would be impractical to spend time and manpower to locate an over a
decade old file.
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

In conclusion, there is a moderate assurance whether the date of acquisition, value upon purchase and
ownership reflected are true and accurate.

On a positive note, the existence and possession of asset can be ascertained from this review. Below is the
picture of asset 022.

Recommendation:
The controls are deficient in some aspects and requires actions to be taken.

Going forward, the board should make a policy review regarding retaining and disposal of the fixed assets
and accounting records.
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

The responsibilities of management involved safeguarding adequate fixed assets accounting. Fixed asset
records should be maintained for the period of the existence of each asset.

Depreciation is appropriate and in accord with existing regulations.

When reviewing the asset lapsing schedule I identified that the fixed asset with the tag number 022 and a
Desktop Computer description was fully depreciated and there were a number of other assets that were
fully depreciated.

As I have undergone an asset verification it is highly likely that the value of the asset has substantially
reduced to Php1 since it has been fully depreciated. Fully depreciated asset can either be in use or not in
use.

If in use a net book value should be revalued at their value in use. If assets are not in use they should be
disposed of/ retired and not reflected in the asset.

In the case of asset 022, the asset is no longer functional. With this, there is a risk that it is being inaccurately
recorded on the asset register, although the net book value is one there is still a gross value which is reported
on the financial statements resulting in inaccurate financial reporting as these assets should be retired.
Recommendation:
The board should review controls to ensure that useful economic life of fully depreciated assets are
appropriately considered.

Retirement of fully depreciated asset 022 in the asset register is deemed necessary to accurately report
assets in the financial statements. In addition, to continuously provide quality services to all members, it is
high time for Cogon branch to acquire a new Desktop Computer to be used for their operations.

Lapsing Schedule
Asset Description Date Acquisition Monthly Accumulated Book Status
No. Acquired Cost Depreciation Depreciation Value
022 Desktop 01/03/2008 23,650 656.94 23,649 1 Not
Computer Functional
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

FACTS/ISSUES/CONCERNS:

LOAN ACCOUNT TO BE WRITTEN OFF SUBJECT FOR APPROVAL

Damilag Branch

As of July 21, 2021

Florina M. Gorres
Loan Accounts: Php 24,737.69

1. Regular loan –Account # 64-02205-7 2. Petty Cash Loan –Account # 66-00839-0

Outstanding Principal : 12,141.13 Outstanding Principal: 2,565.09

Total Required to Close: 20,135.5 Total Required to Close: 4,602.19
Savings Deposit Php 269.1
Share Capital Php 296.3
Note:
 No CID indicated in the specimen card
 Loan voucher for the privilege loan was not forwarded in the HO. The branch has
difficulty tracing the said document due to the current practice where loan files for
privilege and regular loan were separately filed and maintained.

Reissuing the audit report of the predecessor Internal Auditor regarding Loan accounts to be
written off still for approval. As a successor auditor, I have reviewed and verified each accounts
undermentioned.

 Initao branch has submitted the following:

Total Required to Close
1. Eddie D. Maglangit as of 2/11/2021 P5,121.17

Savings: Php 182.55 Share Capital: Php 500

 Damilag branch has submitted the following:

Total Required to Close
1, Janeth C. Clemencio as of 2/11/2021 P 327,997.20

Savings: Php 0 Share Capital: Php 0

 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

Note: the member has no savings and share capital account already.

*along with her loan account inquiry the branch has provided photocopy of the death
certificate of the member, loan folder and specimen card
*has collateral but wasn’t encumbered, also not in the name of the member borrower.
The vehicle according to the Loan Officer is also not in the residence of the member
anymore. The copy of the collateral is as follows
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

As the internal auditor, the following controls to verify the validity of the said accounts have
been conducted:

 Made sure the name of the loan account matches the death certificate submitted
 Checked the loan folder of each member
 Checked if the loan account coincides with the loan voucher
 Pulled out their specimen cards
 Checked if the signature in the specimen card matched the signature in the
application form
 Checked if the CID no indicated in the specimen card matched what is indicated in
the system
 Checked the attached photocopy of ID of the member of that of the specimen card

There is a reasonable assurance as to the validity of these accounts and recommend for a
loans receivable writing off to all the abovementioned deceased members.
 ORO SAVINGS AND SHARING MULTI-PURPOSE COOPERATIVE
Capistrano-Echem Sts., Cagayan de Oro City

Office Tel. Nos. (088) 857 5892; (088) 850 0250

FACTS/ISSUES/CONCERNS:

LITIGATION ACCOUNTS

Initao Branch

Update regarding approved for litigation accounts that has already been filed and has
already court decision. The following accounts have been forwarded and checked to head
office.

As of July 28, 2021

NAME LOAN LITIGATED AMOUNT SHARE SAVINGS
Cherrylyn A. Cabasan Restructured 54,722.61 none 0.39
Glee Don B. Halasan Salary 53,864.63 0.37
Eva C. Cabiladas Restructured 65,306.81 0.19

As of August 3, 2021
NAME LOAN LITIGATED AMOUNT SHARE SAVINGS
Anne Alvarez Salary Loan 166,976.85 0.15

PREPARED BY: NOVA GRACELE A. CIMACIO SUBMITTED TO: MARYCEL A. AGAN

INTERNAL AUDITOR CHIEF EXECUTIVE OFFICER