AS 2021 comes to a close, cooperative external auditors have to prepare for cooperative financial statement audits. By this time, the auditor must have already established an understanding of the cooperative as well as the overall audit approach based on risk, materiality and analytic procedures. Whether it be a micro or large cooperative, the auditor must also consider its compliance with relevant laws and regulations.
One important document that the auditor must secure is the cooperative's tax exemption certificate and its validity date. It is important to note that the certificate specifies the activities that are tax-exempt — income derived from an unregistered activity is considered taxable. If the cooperative's reserve fund exceeds P10 million, it must identify its transactions with nonmembers, if any, and pay the related VAT/percentage tax as well as income tax. Also, the auditor must check if the cooperative has been listed as a top withholding agent and remits withholding taxes on purchases of goods and services.
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