What is auditing? What is assurance?

How important is audit and assurance in every

organization? These are the questions in my mind when we heard about the word auditing. Basically,
auditing is a systematic process of evaluating the accounting entries in the company’s financial
statements to provide an accurate and ethically and fairly presented financial statements. On the other
hand, assurance is the process of analyzing and assessing accounting entries and financial records. It is
the process of verifying the company’s accounting record as per accounting standards and principles.

In Auditing and Assurance: Specialized Industry, I have new learning about these subject that
adds up to my current learning about the other subject of auditing and assurance. Some of the topics is
really new to me since it is all about specialized industries. I’ve learned that industries become specialize
because they have specific accounting standards and distinct accounting policies which have been
developed to account specialized transactions and balances. In this subject, we touched only 1 industry
which is the Cooperative. Cooperative is an autonomous association of persons united voluntarily to
meet their common economic, social and cultural needs and aspirations through a jointly owned and
democratically controlled enterprise. It is an important type of business organizations because they help
to strengthen single proprietorship, partnerships, and profit-type corporations by group buying, selling
and servicing.

The first topic in cooperative is its fundamentals which talks about the different ideas of
cooperative in historical view. These historical view of cooperatives has so much important ideas that
will be used in today’s generation. There are also various PFRF for Cooperatives that need to consider
since it is an important factor on how to measure and account each transaction. These PFRF is used in
order to have an accurate and reliable financial statements that conforms to Philippine Standards.
Cooperative shall present a complete set of financial statements at least annually. Complete set of FS
includes Statement of Financial Condition, Statement of Operations, Statement of Changes in Equity,
Statement of Cash Flows, and Notes to Financial Statements.

In the standard chart of accounts for cooperatives, it shall be applied in the accounting and
financial reporting of all type of cooperative, duly registered with the CDA. MC-2016-16 is the revised
standard chart of accounts for cooperatives to be used in recording all transactions. It is important to
have standard chart of accounts because it provide guidelines in the use of account and account titles in
the preparation of financial statements. There are also various cooperative updates that needs to be
consider. Implementation of revised rules and regulations for cooperatives that will serve as the
guidelines in governing and auditing a cooperative.

The key point in establishing a cooperative is that one should follow the practical cooperative
governance and ethical standards. Cooperative governance is the system designed to control and
distribute power within an organization. First, a coop is expected to with basic standards of
transparency and compliance. Next, a coop is expected to adhere to democratic member-driven nature,
as it exists to serve its members. Then, every coop officer/employee has moral obligation to conduct
ethical conduct and professionalism. Having ethical conduct improved quality of life, strive to becomes
self-reliant and self-sustaining, uphold democratic process, and comply with laws and legal orders. In
social and performance audit, the coverage of social audit are the assessment of social impact and
ethical performance in relation to its stated mission, vision, goals and code of responsibility and the
coverage of performance audit are the good practices that must be observed, the people who are
required to comply with the good governance practices, management reports, and the financial ratios
that will be used in determining the status of cooperatives. In the internal control of the business, it is a
process effected by an organization’s people, designed to provide reasonable assurance regarding the
achievement of objectives. Internal control is important because it promote operational efficiency,
ensure that all records are accurate, encourage adherence to policies, and protect the entity’s assets.
The five components of internal control are control environment, risk assessment, control activities,
information and communication and monitoring. We all know that the objective of an audit of FS is to
enable the auditor to express an opinion whether the financial statements are prepared in all material
aspects, in accordance with an applicable financial reporting period. General principle governing an
audit of FS are the auditors should comply with the Code of Professional Ethics, conduct an audit in
accordance with the Philippine Standards on Auditing and adopt attitude of professional skepticism. The
auditor should also recognize that fraud, error and noncompliance with laws and regulations may
materially affect the financial statements.

In conclusion, all of these topics that are tackled are very interesting since most of it are new to
us. Auditing is such an important factor in cooperatives and other organizations that will help in
providing accurate and reliable financial statements.