Audit.
SEC. 86. Audit.—
The Administrator shall audit or cause to be audited by some person, hereinafter referred to as the auditor, authorized by him in writing the accounts of every co-operative registered under this Act at least once a year.
Every director, committee member, officer, employee or member of the co-operative shall furnish such information in regard to the transactions and working of the co-operative as the administrator or the auditor may require.
Co-operatives shall pay the cost of audit as determined by the Administrator in accordance with the scale to be prescribed in the regulations. The Administrator shall have power to collect and credit the amount to the Central Co-operative Audit Fund to be administered by the Central Co-operative Educational Board and also shall have power to appoint auditors from out of a list of persons recommended by the said board, when the personnel of the Co-operatives Administration Office is inadequate to audit all the co-operatives and to meet the remuneration of the auditors from out of the Central Co-operative Audit Fund in the scale to be determined by the Central Cooperative Educational Board. At the close of each fiscal year, fifty per centum or higher proportion of the unexpended balance of the Central Co-operative Audit Fund shall be transferred to the Central Co-operative Educational Fund created under Section eighty-two.
Power of Administrator to have accounts written up.
SEC. 87. Power of Administrator to have accounts written up.—If at the time of audit the accounts of a co-operative are not complete, the Administrator or his duly authorized representative may cause the accounts to be written up at the expense of the co-operative or the employees, as he deems fit.
Nature of audit.
SEC. 88. Nature of audit.—
The audit under Section eighty-six shall include:
A verification of the cash balances and securities;
A verification of the balance to the credit of depositors and creditors and of the amounts due from the debtors of the co-operative;
An examination of overdue debts, if any;
A valuation of the assets and liabilities of the co-operative ;
An examination of the transactions of the co-operative within such limits as may be prescribed;
An examination of the financial statements prepared in the prescribed form and manner by the board of directors;
A certification of the business done with members and non-members; and
Such other matters as may be prescribed.
The financial statements thus audited, together with the modifications, if any, made therein by the Administrator shall be final and binding on the co-operative.
Audit report.
SEC. 89. Audit report.—The auditor shall, on such date as may be prescribed, submit to the co-operative and to the Administrator an audit report in the prescribed form and manner, including a statement of:
Every transaction which appears to him to be contrary to law, to the regulations or the by-laws;
Every sum which ought to have been, but has not been, brought into account;
The amount of any deficiency or loss which appears to have resulted from any negligence or misconduct or which requires further investigation;
Any money or property which ought to have been in the custody of the co-operative which appears to have been misappropriated or fraudulently retained by any person; and
Such other matters as may be prescribed.
Inquiry.
SEC. 90. Inquiry.—
The Administrator may, on his own initiative, at any time conduct an inquiry or direct some person authorized by him in writing in this behalf, to conduct an inquiry into the constitution, working and financial condition of a co-operative.
The Administrator or the person authorized by him shall conduct such inquiry on the application of:
A majority of the members of the board of directors of the co-operative;
Ten per centum of the members of the co-operative;
A federation of co-operatives of which the co-operative is a member; and
Creditors representing not less than one-half of the borrowed capital of the co-operative.
All directors, committee members, officers, employees and members of the co-operative whose affairs are investigated shall furnish such information in their possession in regard to the affairs of the co-operatives as the Administrator or the person authorized by him may require.
The Administrator shall communicate the result of any inquiry under this section to those who applied for inquiry under subsection (2).
Inspection.
SEC. 91. Inspection.—
The Administrator may, on his own initiative or on the application of a creditor of a co-operative, inspect or direct any person authorized by him in this behalf in writing to inspect the co-operative.
No inspection shall be made or directed under subsection (1) on the application of a creditor unless:—
The creditor satisfies the Administrator that the debt is a sum then due, that he has demanded payment thereof and he has not received satisfaction within a reasonable time; and
The creditor deposits with the Administrator such sum as security for the cost of the proposed inspection as the Administrator may fix.
A federation of co-operatives shall have the right to inspect at any time any co-operative which is indebted to it. The inspection may be made either by an officer of the federation of co-operatives or by a member of its paid staff certified by the Administrator as competent to conduct such an inspection.
The results of an inspection under this section shall be communicated to the creditor, to the co-operative and to the federation of co-operatives to which the co-operative is indebted; and when the inspection is made by a federation of co-operatives, to the Administrator and the cooperative.
Cost of inquiry and inspection.
SEC. 92. Cost of inquiry and inspection.—
The Administrator may prescribe the cost of inquiry under Section ninety and inspection under Section ninety-one and may, after giving the parties an opportunity to be heard, apportion the cost or such part of the cost as he may think right between the co-operative, the members or creditor demanding an inquiry or inspection, the officers or former officers and the members or past members of the co-operative. The grounds on which the Administrator has apportioned the cost shall be specified in writing.
Any sum awarded by way of cost under subsection (1) if not paid within the time specified may be recovered under Section one hundred forty-four.
Rectification of defects pointed out in audit, inquiry or inspection.
SEC. 93. Rectification of defects pointed out in audit, inquiry or inspection.—If the result of audit under Section eighty-six or an inquiry under Section ninety or an inspection under Section ninety-one discloses any defects or irregularities in the working of a co-operative, the Administrator shall bring such defects or irregularities to the notice of the co-operative, and if the co-operative is a member of a federation of co-operatives to the notice of it, and shall afford them an opportunity of explaining such defects or irregularities pointed out in audit, inquiry or inspection, and thereafter if the co-operative or its proper officers or the federation of co-operatives fail to remedy such defects or irregularities, then the Administrator may proceed to take action as provided under Section ninety-four.
Source: Supreme Court E-Library, Republic of the Philippines. Philippine laws are public documents (works of the government).
