Final Document

BA167 Group Members:

Borres, Jhon Alfredo
Calderon, Nicole Gabriele
Castillon, Charmaine Joy
Fajanilbo, John Emanuel
Ortega, Angel Heather
Paye, John Exzel

You're an internal audit team for BCD Coop.

The auditee and audit universe:

BCD Coop has 3 main business lines: Retail of drugs and medicines through its branch
pharmacies, wholesale of drugs and medicines done at the main wholesale office, and savings
and loans also done through its branches but in a separate office. Main office also has
different departments. Main office is located at Valencia City.

These are the different departments of the company:

a.​ Admin – Purchasing

b.​ Admin – Warehouse and Wholesale
c.​ Admin – Accounting and Finance
d.​ Admin – Marketing
e.​ Admin – Human resource
f.​ Admin – CEO’s office

Here are the branches operating retail:

In order of highest Sales In order of highest inventory

Main Main
Malaybalay Highway
Maramag II Malaybalay
Highway Market
Kisolon Manolo
Aglayan Maramag II
Market Maramag I
Plaza Aglayan
Quezon Puerto
Alae Bulua
Manolo Kisolon
Bulua Plaza
Maramag 1 Kisolon
Puerto Quezon
OTC OTC

Here are the branches operating Savings and Loans, in order of highest loan portfolio:

a.​ Main
b.​ Malaybalay
c.​ Puerto
d.​ Maramag I
e.​ Bulua
f.​ Manolo
 g.​ Quezon
h.​ Aglayan
i.​ Kisolon

The audit work and team:

There are 2 types of audit to be done throughout the whole year. A Spot Audit where
you visit the unit or branch and do table audit and cash count, and a Thorough Audit. Time
for spot audit is 2 days, while time for thorough audit is 1 week.

There are 6 members of the audit team.

There are also special audits requested by the CEO or the BOD every month. You should
account for these, too.

The group work:

Create an audit plan for the year 2025, outlining the schedule for the audit.

SPOT AUDIT

UNIT TIME RESOURCES AUDIT

NEEDED PROCEDURES
Main Office – 2 days 2 auditors, travel Cash count, petty
Admin Departments budget (₱5000), cash review,
(Purchasing, supplies for cash count inventory
Warehouse & and document review observation,
Wholesale, reconciliation of
Accounting & department
Finance, Marketing, expenditures
Human Resource,
CEO's Office)

Main Branch 2 days 2 auditors, travel Cash count,

(Retail, Savings and budget (₱5000), meals physical inventory
Loans) allowance (₱500 per check, sales
auditor), inventory reconciliation,
records, purchase review credit
orders, supplier policies and
invoices, loan procedures,verify
applications and loan terms, review
agreements, interest collateral
calculation records management

Malaybalay Branch 2 days 2 auditors, travel Cash count,

(Retail, Savings and budget (₱4000), inventory spot
Loans) inventory records, checking, sales
purchase orders, ledger to cash
supplier invoices, loan comparison, verify
applications and supported
documents for
 agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Highway Branch 2 days 2 auditors, travel Cash count,

(Retail) budget (₱3500), sales inventory
and inventory records, validation, daily
price lists and discount sales reconciliation
policies

Market Branch 2 days 2 auditors, travel Cash count, sales

(Retail) budget (₱3000), sales collection review,
and inventory records, inventory
price lists and discount sampling,
policies reconciling
physical count to
records, trace sales
transactions

Maramag II Branch 2 days 2 auditors, travel Cash count,

(Retail) budget (₱4000), sales inventory sample
and inventory records, audit, sales records
price lists and discount matching, review
policies sample of
receiving reports

Maramag I Branch 2 days 2 auditors, travel Cash count, loans

(Retail, Savings and budget (₱4000), ledger review,
Loans) inventory records, inventory
purchase orders, verification, verify
supplier invoices, loan supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest
Plaza Branch 2 days 2 auditors, travel Cash count,
(Retail) budget (₱3500), sales inventory check,
and inventory records, sales recording
price lists and discount review, reconciling
policies physical count to
records, trace sales
transactions

Aglayan Branch 2 days 2 auditors, travel Cash count, spot

(Retail, Savings and budget (₱3000), inventory review,
Loans) inventory records, verify supported
purchase orders, documents for
supplier invoices, loan sales invoice,
applications and review procedures
agreements, interest for receiving,
calculation records storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Kisolon Branch 2 days 2 auditors, travel Cash count,

(Retail, Savings and budget (₱3500), inventory
Loans) inventory records, verification, sales
purchase orders, matching, verify
supplier invoices, loan supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Manolo Branch 2 days 2 auditors, travel Cash count, loan

(Retail, Savings and budget (₱4000), portfolio review,
Loans) inventory records, physical inventory
purchase orders, check, verify
supplier invoices, loan supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
 releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Quezon Branch 2 days 2 auditors, travel Cash count, loan

(Retail, Savings and budget (₱4000), portfolio sampling,
Loans) inventory records, inventory
purchase orders, validation, verify
supplier invoices, loan supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Puerto Branch 2 days 2 auditors, travel Cash count,

(Retail, Savings and budget (₱3000), inventory spot
Loans) inventory records, checking, loan
purchase orders, transaction review,
supplier invoices, loan verify supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest

Bulua Branch 2 days 2 auditors, travel Cash count, sales

(Retail, Savings and budget (₱3000), ledger review,
Loans) inventory records, inventory
purchase orders, reconciliation,
supplier invoices, loan verify supported
applications and documents for
agreements, interest sales invoice,
calculation records review procedures
for receiving,
 storing, and
releasing of
inventory, examine
aging analysis of
loan portfolio,
check calculation
of interest
​
Alae Branch (Retail) 2 days 2 auditors, travel Cash count, small
budget (₱2500), sales inventory review,
and inventory records, reconciling
price lists and discount physical count to
policies records, trace sales
transactions,
review sample of
receiving reports

OTC Branch 2 days 2 auditors, travel Cash count, basic

(Retail) budget (₱2500), sales inventory sample
and inventory records, check, reconciling
price lists and discount physical count to
policies records, trace sales
transactions,
review sample of
receiving reports

SPOT AUDIT
​ The audit team at the BCD Cooperative in planning the spot audit schedule has made
use of a risk-based auditing approach of the International Professional Practices Framework
(IPPF) and Philippine Auditing Standards (PAS). The overall design was chiefly derived from
the PAS 300 – Planning an Audit of Financial Statements. The PAS 315 – Identifying and
Assessing the Risks of Material Misstatement was the basis for the selection and ordering of
the units to be included in the audit.

During these types of audits, the primary locations that are verified are usually the
ones with a higher risk of irregularity and the occurrence of fraudulent activities that are
mainly dependent on the range of cash, inventory, savings, or loan transactions. According to
PAS 330 – The Auditor’s Responses to Assessed Risks, the procedures applied are cash count
is a method used to determine the liabilities of the company that may be fraudulent and also
to make sure there is no on-hand cash error, is the specific audit of. Next, Inventory Sample
Checking is a process that examines a few of the total stock to see if the actual number of
items is not only real and in good condition but also the right quantity, therefore meeting the
requirement of PAS 500 – Audit Evidence. Lastly, Sales Reconciliation is a way to discover if
there are any differences between what was on the sales list and the money received, thus
carrying out one of the main duties of an auditor as per PAS 240 – The Auditor’s
Responsibilities Relating to Fraud.
 All the leading branches and business units underwent the spot audit process to ensure
that not satisfactory areas are there, as far as the audit follow-up is concerned, as per IPPF
2010 – Planning and IPPF 2120 – Risk Management. None of the branches or units were
excluded so that the cooperative could maintain not only consistency but also fairness and
accountability. Another thing we did was to have an extra day after each spot audit
engagement solely for report writing and final documentation, accounting for PAS 230 –
Audit Documentation standards as per PAS 230. It is so because this way we can be sure that
the data, evidence, and suggestions of findings are accurately noted and made known to all
concerned parties within the stipulated time frame.

FULL AUDIT

UNIT TIME RESOURCES AUDIT

NEEDED PROCEDURES
Main Office – 3 auditors, travel Full internal control
Admin Departments budget (₱5000), review, detailed
(Purchasing, additional supplies for expenditure tracing,
Warehouse & document review, procurement process
Wholesale, 1 Week laptops, backup drive audit, inventory
Accounting & system audit, cash
Finance, Marketing, disbursement analysis,
Human Resource, financial statement
CEO's Office) validation, review of
HR files (hiring,
termination,
promotion, salaries),
CEO office review of
BOD communications
and resolutions
implementation
Main Branch 3 auditors, travel End-to-end sales
(Retail, Savings and budget (₱5000), meals transaction audit,
Loans) allowance (₱500 per inventory cycle count
auditor), access to and reconciliation,
complete sales, verification of daily
inventory, loan, and sales reporting
1 Week cash records process, loan
origination and
approval audit,
verification of
collateral and
collection procedures,
compliance review to
cooperative policies
Malaybalay Branch 3 auditors, travel Transaction
(Retail, Savings and budget (₱4000), full walk-throughs, sales
Loans) access to sales, and cash collection
inventory, and loans reconciliation, branch
documents petty cash audit, loans
1 Week portfolio detailed
 review, analysis of
overdue accounts, test
of compliance with
savings and loan
policies
Highway Branch 3 auditors, travel Comprehensive sales
(Retail) budget (₱3500), branch testing, inventory
1 Week financial records and system audit, policy
systems access compliance audit,
daily cash handling
procedures review
Market Branch 3 auditors, travel Inventory management
(Retail) budget (₱3000), branch system validation, full
financial documents review of sales and
1 Week and inventory access cash deposit slips,
surprise cash count,
compliance with
pricing and discount
policies
Maramag II Branch 3 auditors, travel Inventory system test
(Retail) budget (₱4000), sales and tracing, revenue
1 Week reports, inventory completeness testing,
records access validation of branch
remittances to Main
Office
Maramag I Branch 3 auditors, travel Review of loan
(Retail, Savings and budget (₱4000), documentation,
Loans) complete access to customer credit
sales, loans, and review, aging of
1 Week inventory data accounts receivables,
cash receipts and
disbursement testing,
inventory management
validation
Plaza Branch 3 auditors, travel Full sales to cash
(Retail) budget (₱3500), sales deposit reconciliation,
1 Week and inventory data inventory controls
access testing, daily cash
operations audit
Aglayan Branch 3 auditors, travel Testing of loan terms
(Retail, Savings and budget (₱3000), access and interest
Loans) to branch records and calculations, sampling
loan files of savings
1 Week transactions, inventory
management and
reconciliation audit,
cash count and control
assessment
Kisolon Branch 3 auditors, travel End-to-end inventory
(Retail, Savings and 1 Week budget (₱3500), branch audit, review of sales
Loans) access to inventory, reports, review of loan
loan, and savings application to release
systems process, spot-checking
of member savings
balances
Manolo Branch 3 auditors, travel Comprehensive review
(Retail, Savings and 1 Week budget (₱4000), full of loan approvals, loan
Loans) branch document repayments audit, full
access sales and cash
reconciliation,
verification of
inventory physical
count vs. system
Quezon Branch 3 auditors, travel Cash and sales
(Retail, Savings and 1 Week budget (₱4000), access reconciliation audit,
Loans) to loans and inventory loans portfolio
systems compliance checking,
inventory system audit
and sample validation
Puerto Branch 1 Week​ 3 auditors, travel Review of
(Retail, Savings and budget (₱3000), access disbursements, petty
Loans) to loan, sales, and cash management
inventory records audit, loan agreement
sampling, collateral
review, inventory audit
Bulua Branch 1 Week 3 auditors, travel Audit of member
(Retail, Savings and budget (₱3000), full savings accounts, loan
Loans) branch access to transactions tracing,
financials validation of physical
inventory, sales
reconciliation to
deposits
Alae Branch (Retail) 1 Week 3 auditors, travel Inventory turnover
budget (₱2500), branch analysis,
sales and inventory spot-checking of stock
records receipts and
dispatches,
compliance with sales
invoicing practices
OTC Branch 1 week 3 auditors, travel Sales system testing,
(Retail) budget (₱2500), branch review of small
financial documents inventory
management,
validation of revenue
recognition process
Special Audits 1 Week Per Month 2-4 auditors depending Depends on request;
(CEO or BOD on scope, special could include
Requests) investigations,
 project fund (₱8000 performance audits,
per month) fraud audits, branch
focus audits,
compliance reviews

FULL AUDIT

Main Office – Admin Departments (Purchasing, Warehouse & Wholesale, Accounting &
Finance, Marketing, Human Resource, CEO's Office)

The Main Office audit covers the Admin Departments, which include Purchasing,
Warehouse and Wholesale, Accounting and Finance, Marketing, Human Resource, and the
CEO’s Office. It requires a full internal control review, detailed expenditure tracing,
procurement process audit, inventory system audit, cash disbursement analysis, financial
statement validation, and a review of HR files regarding hiring, termination, promotion, and
salaries. It also includes a review of the CEO office communications and BOD resolutions
implementation. For this audit, three auditors are needed, along with a ₱5000 travel budget,
laptops, backup drive, and additional supplies for document review.

Main Branch (Retail, Savings, and Loans)

The Main Branch (Retail, Savings, and Loans) requires an end-to-end sales
transaction audit, inventory cycle count and reconciliation, verification of daily sales
reporting process, loan origination and approval audit, verification of collateral and collection
procedures, and a compliance review to cooperative policies. Three auditors are needed for
this audit, with a ₱5000 travel budget, meals allowance of ₱500 per auditor, and access to
complete sales, inventory, loan, and cash records.

Malaybalay Branch (Retail, Savings, and Loans)

The Malaybalay Branch (Retail, Savings, and Loans) focuses on transaction

walk-throughs, sales and cash collection reconciliation, branch petty cash audit, loans
portfolio detailed review, analysis of overdue accounts, and testing of compliance with
savings and loan policies. Three auditors are required, with a ₱4000 travel budget and full
access to sales, inventory, and loan documents.

Highway Branch (Retail)

The Highway Branch (Retail) will undergo a thorough audit focused on testing the
accuracy and completeness of sales transactions. A full inventory system audit will be
conducted to verify that inventory records match physical stocks and are properly updated.
Policy compliance will be checked to ensure that branch practices follow company and
regulatory standards. Additionally, daily cash handling procedures will be reviewed to
identify any weaknesses in the branch’s cash management practices. This audit will require
the deployment of three auditors, a travel budget of ₱3500, and full access to the branch’s
financial records and operating systems.

Market Branch (Retail)

 The Market Branch (Retail) audit will center on validating the branch’s inventory
management system, making sure that the system records correctly reflect actual inventory
movement. Auditors will conduct a complete review of all sales transactions and
corresponding cash deposit slips to detect any discrepancies between recorded and deposited
amounts. A surprise cash count will also be done to assess cash control and accountability.
Furthermore, the branch’s compliance with company pricing strategies and discount policies
will be verified. Three auditors are assigned to this branch, with a ₱3000 travel budget and
full access to financial documents and inventory records.

Maramag II Branch (Retail)

At the Maramag II Branch (Retail), auditors will carry out a detailed inventory system
test and tracing to verify the integrity and accuracy of inventory records. Revenue
completeness testing will be performed to ensure that all sales revenues have been properly
recorded and reported. Auditors will also validate whether the branch has correctly remitted
its collections to the Main Office, thus checking for any fund management issues. This
branch requires three auditors, a ₱4000 travel budget, and access to sales reports and
inventory records.

Maramag I Branch (Retail, Savings, and Loans)

The Maramag I Branch (Retail, Savings, and Loans) will be audited with a strong
focus on the branch’s loan operations. A review of loan documentation will be conducted to
ensure that loan processing follows policies and proper approvals. Customer credit review
will assess the soundness of loans granted, while aging analysis of accounts receivables will
evaluate the collection performance and identify delinquent accounts. Cash receipts and
disbursement testing will verify the accuracy and control of cash transactions. Inventory
management validation will also be performed to ensure correct recording and management
of inventory assets. The audit will involve three auditors, a ₱4000 travel budget, and
complete access to the branch’s sales, loans, and inventory records.

Plaza Branch (Retail)

The Plaza Branch deals only with retail operations and does not handle savings or loans.
Its audit activities include full sales to cash deposit reconciliation, inventory controls testing,
and daily cash operations audit. It requires access to sales and inventory data and has an
allocated travel budget of ₱3500.

Manolo, Quezon, Kisolon and Aglayan Branch (Retail, Savings, and Loans)

The Manolo Branch, Quezon Branch, Kisolon Branch, and Aglayan Branch all involve
both retail and loan operations, requiring a broader scope of audit activities. The Manolo
Branch requires a comprehensive review of loan approvals, loan repayments, full sales and
cash reconciliation, and verification of inventory physical count versus system, with full
branch document access and a travel budget of ₱4000. The Quezon Branch focuses on cash
and sales reconciliation audit, loans portfolio compliance checking, inventory system audit,
and sample validation, also requiring access to loans and inventory systems with a ₱4000
travel budget. The Kisolon Branch involves an end-to-end inventory audit, review of sales
reports, review of the loan application to release process, and spot-checking of member
savings balances, requiring access to inventory, loan, and savings systems with a travel
budget of ₱3500. Meanwhile, the Aglayan Branch centers on testing loan terms and interest
calculations, sampling of savings transactions, inventory management and reconciliation
audit, and cash count and control assessment, with access to branch records and loan files and
a travel budget of ₱3000.

Puerto and Bulua Branches (Retail, Savings and Loans)

These two branches were prioritized early in the field audit sequence due to their dual
operations in both retail and financial services (specifically, savings and loan functions).
Compared to retail-only branches, these units carry greater financial risk and regulatory
sensitivity. Activities like loan disbursements, member savings, and collateral management
have a direct impact on the cooperative’s financial integrity and compliance obligations.

Auditing these branches first enables the team to identify early indicators of risk
related to loan default management, accuracy of member savings balances, and the internal
controls over cash and financial reporting. The complexity of their operations also requires
more audit time and careful coordination, which is more manageable when scheduled in
advance of simpler audits.

Alae and OTC Branches (Retail Only)

These branches were scheduled after Puerto and Bulua due to their limited operational
scope. As retail-only units, their transactions are primarily related to sales, inventory, and
cash handling, which present lower complexity and less regulatory risk compared to those
with lending and savings services.

Alae and OTC audits focus on inventory turnover, stock reconciliation, sales
invoicing, and petty cash compliance. These areas, while still essential, involve more routine
procedures and less judgment-intensive analysis. Placing them later in the sequence supports
efficient workload distribution—allowing the audit team to shift from intensive financial
auditing to operational reviews without compromising quality.

Special Audits (CEO or Board-Requested Engagements)

Special audits were deliberately positioned as flexible and ongoing components of the
annual plan, with dedicated time and resources. This is to preserve the audit team's capacity
to respond promptly to executive concerns, such as fraud investigations, compliance reviews,
performance assessments, or urgent operational issues that may arise unexpectedly during the
year.

These audits are not tied to a fixed operational schedule but are triggered by specific
risks or issues raised by senior leadership. Their inclusion in the audit plan as a standing item
ensures the Internal Audit team remains responsive and strategically aligned with the
governance and oversight needs of the cooperative.
Websites
Source Application
PAS 300 Planning audits with risk and resources in mind

PAS 315 Identifying risky branches (high sales, inventory, loans)

PAS 330 Designing different audit procedures (spot vs

thorough)

PAS 240 Allowing monthly special audits for fraud prevention

IPPF Risk-based audit coverage and audit universe design

Standards

IIA Philippines Philippine-specific internal audit best practices

COA PGAS Travel and accommodation budgeting standards

PICPA Philippine accounting/auditing standards and manuals

●​ PAS 300 – Planning an Audit of Financial Statements. Philippine Institute of Certified

Public Accountants (PICPA). Retrieved from
https://www.picpa.com.ph/publications/standards/auditing-standards/pas-300​

●​ PAS 315 – Identifying and Assessing the Risks of Material Misstatement. PICPA.
Retrieved from
https://www.picpa.com.ph/publications/standards/auditing-standards/pas-315​

●​ PAS 330 – Auditor’s Responses to Assessed Risks. PICPA. Retrieved from

https://www.picpa.com.ph/publications/standards/auditing-standards/pas-330​

●​ PAS 240 – The Auditor’s Responsibilities Relating to Fraud. PICPA. Retrieved from
https://www.picpa.com.ph/publications/standards/auditing-standards/pas-240​

●​ International Professional Practices Framework (IPPF). Institute of Internal Auditors

(IIA). Retrieved from
https://na.theiia.org/standards-guidance/Public%20Documents/IPPF-Standards-2017
.pdf​

●​ Standards and Guidance for Internal Auditors. Institute of Internal Auditors

Philippines. Retrieved from https://iia-p.org/​

●​ Philippine Government Auditing Standards (PGAS). Commission on Audit (COA).

Retrieved from https://www.coa.gov.ph/guidelines/pgas/​

●​ Auditing Manuals and Standards. PICPA. Retrieved from https://www.picpa.com.ph/

●​ Developing a Risk-based Internal Audit Plan. Retrieved from
https://www.theiia.org/globalassets/documents/content/articles/guidance/practice-gui
des/developing-a-risk-based-internal-audit-plan/pg-developing-a-risk-based-internal-
audit-plan.pdf​

●​ The Spot Check Process. Retrieved from

https://www.ribo.com/licensee-resources/brokerage-resources/spot-check/​

●​ Internal Control Spot Checks. Retrieved from

https://jjco.com/2022/09/08/internal-control-spot-checks/
APA References