STATEMENT OF MANAGEMENT’S RESPONSIBILITY FOR FINANCIAL STATEMENTS

The management of ABC DEVELOPMENT COOPERATIVE is responsible for all information and representations contained in the financial statements for the years ended December 31, 2009 and 2008. The financial statements have been prepared in conformity with Financial Reporting Standards applicable for Cooperatives in the Philippines and reflect amounts that are based on the best estimates and informed judgment of management with an appropriate consideration to materiality.

In this regard, management maintains a system of accounting and reporting which provides for the necessary internal controls to ensure the transactions are properly authorized and recorded, assets are safeguarded against unauthorized use or disposition and liabilities are recognized.

The Board of Directors the financial statements before such statements are approved and submitted to the members of the cooperative.

Xxx, the independent auditor and appointed by the board of Directors, has examined the financial statements of the cooperative in accordance with the Philippines Standards on Auditing and the Standard Audit Systems for Cooperatives and has expressed her opinion on the fairness of presentation upon completion of such examination, in her report to the members of the cooperative.

________

Chairman CEO/General Manager Treasurer

STATEMENT OF REPRESENTATION

TO THE COOPERATIVE DEVELOPMENT AUTHORITY:

In connection with my examination of the financial statements of the ABC DEVELOPMENT COOPERATIVE covering the period ended December 31, 2009 that are herewith submitted to the Cooperative Development Authority, I hereby represent the following:

1. The said financial statements herewith attached are prepared and presented in conformity with the financial reporting standards applicable to cooperatives in the Philippines;

2. That in the conduct of my audit, I adhere to the Philippine Standards on Auditing and the Standard Audit System for Cooperatives (SASC) as required by the Cooperative Development Authority;

3. That I am qualified as provided for in Section 8 of the Code of Professional Ethics for Certified Public Accountants and Article 81 of R.A. No. 9520 (Cooperative Code of the Philippines);

4. That I am fully aware of my responsibility as an independent auditor for the audit report issued and attached to the financial statements and the sanctions to be bestowed on me for my representations that I may have willingly or unwillingly committed;

5. That I or any member of my immediate family do not have any direct or indirect financial interest with the cooperative;

6. That I am not an employee or an officer of a secondary cooperative or tertiary cooperative of which this cooperative is a member;

7. That I am not an employee of the Cooperative Development Authority nor have I engaged an employee of the CDA in the course of audit;

8. That I make representation in my individual capacity;9. That I am a member of the __________Chapter of the PICPA.

It is however, understood that my accountability is based on matter with the normal coverage of an audit conducted in accordance with Philippine Standards on Auditing and the Standard Audit Systems for Cooperatives.

Name of auditor

CPA Reg. No.

BOA Reg. No. TIN No.

PTR No.

CDA Registration No.

Date

INDEPENDENT AUDIT REPORT

TO THE BOARD OF DIRECTORS

ABC DEVELOPMENT COOPERATIVE

TOWN, PROVINCE

We have audited the accompanying financial statements of ABC DEVELOPMENT COOPERATIVE, which comprise the statements of financial condition as at December 31, 2009 and 2008, and the statements of operations, statements of changes in equity and statements of cash flows for the years then ended, and a summary of significant accounting policies and other explanatory notes.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with Financial Reporting Standards applicable to Cooperatives in the Philippines, taking into consideration Cooperative laws, rules, regulations and principles. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error, selecting and applying appropriate accounting policies; and making accounting statements that are responsible in the circumstances.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Philippine Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatements.

An audit involves performing procedures to obtain audit evidence about the amount and disclosures in the financial statements. The procedure selected depend to the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements present fairly, in all material respects, the financial position of ABC DEVELOPMENT COOPERATIVE as of December 31, 2009 and 2008, and of its financial performance, changes in equity, and its cash flows for the years then ended in accordance with Financial Reporting Standards applicable to Cooperatives in the Philippines, taking into consideration Cooperative laws, rules, regulations and principles.

xxxName of CPA

CPA Reg. No.

BOA Reg. No. TIN No.

PTR No.

CDA Registration No.

Date

ABC DEVELOPMENT COOPERATIVE

XXX TOWN , PROVINCE

NOTES TO FINANCIAL STATEMENTS

As of December 31, 2009

(Amounts in Peso)

1. GENERAL INFORMATION

The ABC DEVELOPMENT COOPERATIVE (referred hereinafter as “Cooperative”) was registered as a cooperative pursuant to RA 9520 for the purpose of encouraging thrift and granting loans to members for productive, educational and providential purpose, providing goods and services and other requirements of the members, among others. The Cooperative adopted its current name as per amended articles of cooperation as well as by-laws during the Cooperative’s General Assembly held las_________.20__. Its former name is ABC Credit Cooperative, Inc.

The Cooperative’s new name was granted the CDA Registration No. LGA-xxxxx last August 17,1995. Under the RA 9520, the cooperative is exempt from payment of income and sales taxes, provided that a substantial portion of its net income is returned to members in the form of interest and or patronage refunds.

ADD: Cooperative Identification No.

Coperative was issued a Certificate of Good Standing dated____

The area of operation of this cooperative includes_________ and its principal office is located at___________ Town, province.

The financial statements of the cooperative for the year ended December 31, 200_ were authorized for issued by the Board of Directors on xxx,20__.

2. SUMMARY OF SIFNIFICANT ACCOUNTING POLICIES

To facilitate the understanding of the financial statements, the more significant accounting policies and practices of the Cooperative are summarized as follows:

Basis of Preparation/Partial Adoption of New/Revised Philippine Accounting Standards

The financial statements have been prepared in conformity with Financial Reporting Standards applicable to the Philippine Cooperatives

PAS 1 - Presentation of Financial Statements

PAS 8 - Accounting Policies, Change in Accounting Estimates and Errors

PAS 10 - Events after Balance Sheet Date

PAS 16 - Property, Plant and Equipment

PAS 19 - Employee Benefits

PAS 21 - The Effects of Changes in Foreign Exchange Rates

PAS 24 - Related Party Transactions

PAS 36 - Impairment of Assets

PAS 41 - If producers and agriculture type of coop

PAS 2 - Inventories

PAS 7 - Cash Flow Statements

PAS 18 - Revenue

PAS 38 - Intangible Assets

PAS 32,39 - for credit coops

PAS 40 - Investment Property

PAS 1 - Presentation of Financial Statements

Provides framework of financial statements presentation. It requires more specific balance sheet line items tax liabilities, provisions, non-current interest bearing debt, among others; financial statements must be comparative; and, has a number of new disclosure requirements. The standard also requires presentation of comparative information.

PAS 8 - Accounting policies, Changes in Accounting Estimates and Errors

The standard is applied in selecting and applying accounting policies, and accounting for changes in accounting policies, changes in accounting estimates and correction of prior period errors.

PAS 10 - Events after Balance Sheet Date

The standard is applied in the accounting for, and disclosure of the events after balance sheet date.

PAS 16 - Property, Plant and Equipment

PAS 16 (a) provides additional guidance and clarification on recognition and measurement of property, plant and equipment; requires capitalization of the cost of asset dismantling, removal or restoration; and requires measurement of an item f property and equipment acquired in exchange for a non-monetary asset or a combination of monetary and nonmonetary assets at fair value, unless the exchange transaction lacks commercial substance. The standard also provides guidelines for derecognition. (disposal).

PAS 19/IAS 19 - Employee Benefits

Prescribes the accounting and disclosure for employee benefits, including short-term benefits (wages, annual leave, sick leave, annual profit-sharing bonuses, and non-monetary benefits); pensions, post-employment life insurance and medical benefits’ other long-term employee benefits

(long-service lease, disability, deferred compensation, long-term profit sharing and bonuses, and equity compensation).

PAS 21/IAS 21 - The Effects of Changes in Foreign Exchange Rates

Provides certain restrictions in allowing the capitalization of foreign exchange differentials. Under prevailing circumstances, the adoption will not have a material effect on the Company’s financial position, results of operations and cash flows in year________.

PAS 24 - Related Party Transactions

This standard applies in: (a) identifying related party relationships transactions; (b) identifying outstanding balances between an entity and its related parties; identifying the circumstances in which disclosures to be made about these items.

PAS 36 - Impairment Assets

This standard applies in accounting for impairment of assets other than those covered by separate standards.

PAS 41 - Agriculture

Prescribes the accounting treatment, financial presentation and disclosures for agricultural activity.

PAS 2 - Inventories

Prescribes the accounting treatment for inventories.

PAS 7 - Cash Flows

Prescribes the provision f information about the historical changes in cash and cash equivalents of an entity by means of a cash flow statement which classifies cash flows during the period from operating, investing.

PAS 18 - Revenue

Prescribes the accounting treatment for revenue arising from certain types of transaction and events.

PAS 38 - Intangible Assets

Prescribes the accounting treatment for Intangible Assets not dealt with specifically in another Standard.

PAS 32, 39 - Financial Instruments

Prescribes the accounting treatment, presentation and ______________ for credit coops disclosure requirements for Financial Instruments.

PAS 40 - Investment Property

Prescribes the accounting treatment and disclosure requirements for Investment Property.

Management’s Use of Judgments and Estimates

The financial statements are prepared in conformity with the above-mentioned accounting principles accepted in the Philippines which requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Those estimates and assumptions used in the financial statements are based on management’s evaluation of relevant facts and circumstances as of date of the financial statements. Actual results could be differ from such estimates.

The key estimates/assumptions concerning the future that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:

Estimated Useful Lives

The useful life of each of the Cooperative’s property or equipment is estimated based on the period.

Asset Impairment

PFRS requires that an impairment review be performed when certain impairment indicators are present. Determining the value of property and equipment, which require the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, requires to Cooperative to make estimate and assumptions that can materially affect its statement of assets, liabilities and stockholders’ equity. Future events could cause the Cooperative to conclude that the property and equipment are impaired. Any resulting impairment loss shall be charged to operations.

Functional and presentation Currency

Items included in the Cooperative’s financial statements are measured using the currency of the primary economic environment in which the entity operates (the “functional currency”). The financial statements are presented in Philippine Peso, which is the Cooperative’s functional and presentation currency.

Revenues Recognition

Revenue is recognized when it is probable that the economic benefits associated with the transaction will flow to the Cooperative and the amount of revenue can be measured reliably. Revenues from transactions of the Cooperative are recognized on a modified accrual basis.

If you are using the above do not use PAS 18, use only PAS 18 if you use full accrual.

Cash and Cash Equivalents

Cash includes cash on hand and in banks. Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and with original maturities of three months or less and that are subject to an insignificant risk of change in value.

Financial Assets Receivables

Receivables, if any, are valued at face value, net of allowance for doubtful accounts and any anticipated adjustments that will reduce the amount to its to its estimated realizable value. The allowance for doubtful accounts is determined after a study of the estimated collectability of the receivable balance and evaluation of such factors as aging of the accounts, collection expense of the Cooperative in relation to the particular receivable, past and expected loss experience and identified doubtful accounts.

Note: If coops has more types of financial assets, use disclosures as stated in separate sheets in this file.

Inventories

Inventories are assets which are held for sale in the ordinary course of business, in the process of production for such sale or in the form of materials or supplies to be consumed in the production process or in the rendering of services. Inventories are valued at the lower of cost and net realizable value.

Note: if producers and agricultural type, use PAS 41 as reference (agriculture)

Property and Equipment

Property and Equipment are carried at cost less accumulated depreciation and impairment in value. Depreciation is computed using the straight-line method over the estimated useful lives of the properties.

Land Improvements

Building

Office Equipment

Office Furniture and Fixture

Transportation Equipment

Consumer Equipment

Financial Liabilities

Financial liabilities include bank loans, trade and other payables, as well as Interest on Share Capital and Patronage Refund Payable to the Cooperative’s members. These are recognized when the cooperative becomes a party to the contractual agreements of the instrument. All interest related charges are recognized as Statement of Operations under the caption Finance Costs.

Trade payables are recognized at their nominal value. Interest on Share Capital and Patronage Refund payable are recognized as financial liabilities based on the Cooperative’s By-Laws as well as Cooperative principles and policies

Financial liabilities are derecognized from the balance sheet only when the obligations are extinguished either through discharge, cancellation or expiration.

Impairment of Assets

The carrying amounts of the Cooperative’s non-current assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If any of such indication exists, the asset’s recoverable amount is estimated.

An impairment loss is recognized whenever the carrying amount of an asset r its cash-generating unit exceeds its recoverable amount.

Costs and Expenses

Costs and expenses, not directly attributable to capitalizable assets or projects, are recognized and charged to operations as incurred.

Accounting Expenses

The preparation of financial statements in accordance with accounting principles generally accepted in the Philippines requires the Cooperative to make estimates and assumptions that affect the reported amounts on income, expenses, resources, liabilities and disclosure of contingent resources and liabilities. Actual results could differ from those estimates.

ACCOUNTS PECULIAR TO COOPERATIVE

The following accounts are peculiar to a Cooperative due to its nature as well as adherence to Cooperative laws, issued policies, rules and regulations, as well as cooperative principles and practices:

ASSETS:

Cash in Cooperative Federation – refers to money deposited in federation which are unrestricted and readily available when needed. These are treated as cash and other cash equivalents.

Due from Accountable Officers and Employees – refers to total collectibles from shortages and other losses due from accountable officers and employees that are subject to immediate settlement/sanction. These are recognized at cost, less allowance for impairment, if any.

Cooperative Development Cost – refers to expenses incurred prior to the actual operations of the cooperative. These are recognized at cost, subject to amortization for a period not exceeding 3 years.

Other Funds and Deposits – refers to restricted funds set aside for funding of reserves (Statutory and Other Reserves) established by the cooperative such as Retirement, Mutual Benefit and other Funds. This is recorded at cost.

LIABILITIES:

Interest on Share Capital Payable – refers to liability of the cooperative to its member for interest on share capital, which can be determined only at the end of every fiscal year.

Patronage Refund Payable – is the liability of the cooperative to its members and patrons for patronage refund, which can be determined only at the end of every fiscal year.

Due to Union /Federation (CETF) – in an amount set aside for the education and training fund of an apex organization, which is 50% of the amount allocated, by the cooperative in accordance with the provision of the cooperative’s by-laws and the cooperative code. The apex organization may either be a federation or union of which the cooperative is a member.

Revolving Capital Payable – is the deferred payment of interest on share capital and patronage refund whose payment has been withheld, which should be agreed upon in the General Assembly.

Project Subsidy Fund Payable – unused portion of the donation/grant for training, salaries and wages.

Mutual Benefit and Other Fund Payable – are funds for special purposes such as members’ welfare and benefits i.e. loan protection, hospitalization, death, scholarship assistance, etc. including KBGF?CGF, provision for accidents not taken from net surplus.

EQUITY

Donation/Grants – are amounts received by the cooperative as awards, subsidies, grants, aids and other. This shall not be available for distribution as interest on share capital and patronage fund, and shall form part of the members’ equity of the Statement of Financial Condition.

Statutory Funds – are mandatory funds established/set up in accordance with Article 86 and 87 of the Cooperative Code. They are as follows:

Reserve Fund – amounts set aside annually for the stability of the cooperative and to meet net losses in its operations. It is equivalent to at least 10% of the net surplus. A corresponding fund should be set up either in the form of time deposit with local banks or government securities. Only the amount in excess of the paid up share capital may be used for the expansion and authorized investment of the cooperative as provided for in its by-laws.

Education and Training Fund – an amount retained by the cooperative out of the mandatory allocation as stipulated in the cooperative’s by-laws.

Community Development Fund – This is computed at__% of cooperative’s net surplus. This is used for projects or activities that will benefit the community where the cooperative operates.

Optional Fund – fund set aside from the net surplus (should not Exceed 10%) for future use such as land and building, community development, etc.

EXPENSES

General Assembly Meeting – expenses incurred in the conduct of regular/special meeting

Members’ Benefit – all expenses incurred for the benefit of the members

Affiliation Fee – amount incurred to cover membership or registration fees and annual dues to a federation or union.

Social and Community Service – expenses incurred by the cooperative in its social community involvement including solicitations and donations to charitable institutions.

Provision for CGF (KBGF) – amount set up for the provision of CGF(KBGF)

Provision for Member’s Future Benefits – amount set up for future benefit of members, such as pension of members, etc. not taken from net surplus.

OTHER ITEMS

Project Subsidy – refer to the amount deducted from project subsidy fund to subsidized project expenses. This shall appear in the statement of operation as a contra account to Subsidized Project Expenses.

Donation and Grant Subsidy – refers to an amount deducted from Donation and Grants account to subsidize depreciation funded by donations and grants.

Optional Fund Subsidy – refers to an amount deducted from Optional Fund to subsidize depreciation funded by Optional Fund and/or community development expense.

Subsidized Project Expenses – refers to a portion of the Project Subsidy Fund expended for training, salaries and wages and other activities by donations and grants.

INCOME TAXES

The Cooperative Code states that the Cooperative transacting business only with its members is exempt from all government taxes, and therefore cannot apply the PAS for income taxes because of its tax- exempt nature. However, should the cooperative exceed the limit as set forth in the cooperative code, it will adopt the accounting standards for income taxes as stated in PAS 12.

INCOME RECOGNITION

As a rule, cooperatives adopt the accrual basis of accounting. However, for credit and other cooperative, recognition of revenues is on modified accrual basis, i.e. Interest income, fines, penalties and surcharges shall be recognized when earned and actually collected. This is so because only interest income, fines, penalties and surcharges on loans receivable that has been realized (i.e. earned and collect) shall be the basis of the income available for distribution to its members through interest on share capital and patronage refund.

Also, due to the cash-based income distribution scheme of a cooperative as well as the inherent limitations of small-scale countryside credit cooperatives, it cannot adopt the effective interest method.

3. MMANAGEMENT’S SIGNIFICANT ACCOUNTING JUDGEMENT AND ESTIMATES3.1 Judgments

The preparation of the Cooperative’s financial statements in conformity with Financial Reporting Framework (in reference to the Generally Accepted Accounting Principles of the Philippines) requires management to make estimates and assumptions that affect the amounts reported in the Cooperative’s financial statements and accompanying notes. The estimates and assumptions used in the Cooperative’s financial statements are based upon management’s

evaluation of relevant facts and circumstances as of the date of the Cooperative’s financial statements. Actual results could differ from such estimates, judgments and estimates are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

3.2 Estimates In the application of the Cooperative’s accounting policies, management is required to make judgments, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.The following represents a summary of the significant estimates and judgments and related impact and associated risks in the Cooperative’s financial statements.

Allowance for Doubtful AccountsThe Cooperative assesses whether objective evidence of impairment exist for receivables and due from related parties that are individually significant and collectively for receivables that are not individually significant. Allowance for doubtful accounts is maintained at a level considered adequate to provide for potentially uncollectible receivable.There are no allowances for doubtful accounts because they are potentially collectible based on their historical collection.The Cooperative follows the guidance of PAS 39 in determining when an asset is other than temporarily impaired. The determination requires significant judgment. In making this judgment, the Cooperative evaluates, among the factors, the duration and extent to which the fair value of an investment is less than its cost; the financial health of and near-term business outlook of the investee, including factors such as industry and sector performance, changes in technology and operational and financing cash flow.If the assumption made regarding the duration that, and extent to which the fair value is less than the cost, the Cooperative would suffer an additional loss in its financial statements, representing the write down of cost at its fair value.

Estimated Useful Lives of Property, Plant and EquipmentThe Cooperative estimates useful lives of property, plant and equipment based on the period over which the property, plant and equipment are expected to be available for use. The estimated useful lives of the property, plant and equipment are reviewed periodically and are updated if expectations differ from previous estimates due to physical wear and tear, technical or commercial obsolescence and legal or other limits on the use of the property, plant and equipment. In addition, the estimation of the useful lives of property, plant and equipment is based on the collective assessment of industry practice, internal technical evaluation and experience with similar assets. If possible, however, that future financial performance could be materially affected by changes in the estimates brought about by changes in factors mentioned

above. The amounts and timing of recorded expenses for any period would be affect ted by changes in these factors and circumstances.A reduction in the estimated useful lives of the property, plant and equipment would increase the recorded expenses and decrease the noncurrent assets.Depreciation is computed on a straight-line method over the estimated useful lives of the assets as follows:

Leasehold Improvements 5-10 yearsFurniture and Fixture 3-5 yearsOther Equipment 3-5 yearsMotor Vehicle 5 years

The company assets the value of property, plant and equipment which require the determination of future cash flows expected to be generated from the continued use and ultimate disposition of such assets, and require the Company to make estimates and assumptions that can materially affect the financial statements. Future events could cause the Company to conclude that property, plant and equipment and other long-lived assets are impaired. Any resulting impairment loss could have a material adverse impact on the Company’s financial condition and result of operation.

The preparation of the estimated future cash flow involves significant judgment and estimations. While the Company believes that its assumptions are appropriate and reasonable, significant changes in these assumptions may materially affect the Company’s assessment of recoverable and may lead to future additional impairment charges.

Revenue RecognitionThe Company’s revenue recognition policies require the use of estimates and assumptions that may affect the reported amounts of revenues and receivables. Differences between the amounts initially recognized and actual settlements are taken up in the accounts upon reconciliation. However, there is no assurance that such use of estimates may not result to material adjustments in future periods.

4. Financial Risk Management Objectives and Policies

The Cooperative is exposed to credit, liquidity, and other risk that arise in the normal course of its business. Its risk and control framework includes a focus on minimizing negative effects on the Company’s financial performance due to unpredictability of financial markets that drives the risks.

Credit Risk

Generally, the maximum credit risk exposure of financial assets is the carrying amount of the financial assets as shown on the face of the statement of financial condition.

The Cooperative continuously monitors defaults of customers and other counterparties, and incorporate this information into its credit risk controls. The Cooperative’s policy to deal only with creditworthy counterparts.The Cooperative’s management considers that all the above financial assets that are not impaired or past due for each balance sheet are of good credit quality.

With respect to trade and other receivables, the Cooperative is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.

The credit risk for cash and cash equivalents, money market funds, debentures and derivatives financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Liquidity risks

Liquidity or funding risk is the risk than an entity will occur difficulty in raising funds to meet commitments associated with financial instruments. Liquidity risk may result from either the inability to sell financial assets quickly at their fair values; or counterparty failing on repayment of contractual obligation; or inability to generate cash flows as anticipated.

In order to minimize liquidity risk, the Cooperative maintains sufficient cash and has the availability of funding through an adequate amount committed credit facilities.

Other Price Risk Sensitivity

The Cooperative’s market price risk arises from its investments carried at fair value (financial assets classified as financial assets and fair value through profit or loss and available-for-sale financial assets). It manages its risk arising from changes in market price by monitoring the changes in the market price of the investments.

NOTE: IF DEPRECIATION IS ALLOCATED BETWEEN DIRECT COST AND EXPENSES, PROVIDE BREAKDOWN

45. ALLOCATION AND DISTRIBUTION OF NET SURPLUSThe Cooperative’s constitution and by-laws explicitly provides that its net surplus at the end of the fiscal year shall be distributed in the following manner:

a. Reserve Fund - ___percent (__) shall be set Not less than 10%, if Aside for the reserve fund. These reserve fund less thanShall be used for the stability of the cooperative 5 years, not And to meet net losses in its operation 50%

Use by-laws, check if exceedingLimits

b. Educational and Training Fund - ___ percent 5%- educational

(___) for the educational and training fund. And training fund,5%

Half of the amount transferred to the due to Union/Feder

Education and training fund annually under this action

Subscription may be spent by the cooperative for

Education and training and other purposes; while

The other half shall be credited to the Cooperative’s

Education and training fund of the apex organization

Of which the cooperative is a member.

c. Community Development Fund – This is computed

at ___% of cooperative’s net surplus. This is use for Not exceeding 3%

projects or activities that will benefit the community

where the cooperative operates.

d. Optional Fund – This is computed at ____% of the Not exceeding 7% Cooperative’s net surplus

e. Interest on Share Capital and Patronage Refunds – afterDeduction of the statutory accounts, any remainingNet surplus shall be distributed to the cooperative’s Members in the form of interest not to exceed the Normal rate of return on investments and patronageRefunds. Interest on Fixed Deposits shall be allocatedIn proportion to the individual member’s averageShare monthly, while patronage refund is dividedAccording to their individual patronage i.e., volumes of loans availed.

46. COOPERETIVE GUARANTED FUND

Under the CDA Articles of Cooperation NO. 4 Section 4, the Cooperative Guarantee Fund shall be at least____% of the gross income of the cooperative and shall be set aside to constitute the Cooperative Guarantee Fund which shall be a social fund for the purpose of guaranteeing the realization of the objectives of the Cooperative, payment of common services and facilities for the benefit of the members, and for the investment in other cooperative

47. EMPLOYEE BENEFITSa. Retirement Benefits

Republic Act (RA No. 7641) (New RetirementLaw) took effect on January 7, 1993. Under DISCLOSE NATURE OFThe new law, the cooperative is required RETIREMENTTo provide minimum retirement benefits toQualified retiring employees. This amount was Set up by the Cooperative in complianceWith such law.

b. Other employee benefits DISCLOSE DIFFERENT TYPES OF EMPLOYEEBENEFITS

48. INCREASE CAPITAL STOCKIncrease in capital stock from____Shares to___ shares was approved by theCooperative’s Development Authority on___.

49. RELATED PARTY TRANSACTIONS

There were no related party transaction. HIGHLIGHT DIRECTORS/Made by the Cooperative for the years ending OFFICERS/STAFF LOANSDecember 2009 and 2008 IF IT EXCEEDING CEILING AS

OF DATE-AMOUNT OF CELINGSTATE COMPLIANCE WITHREGULATIONS

50. EVENTS AFTER BALANCE SHEET DATEThere were no events after balance sheetDate that would require a disclosure or Indicate distribution ofAdjustment on the financial statements of individualsThe Company as of Balance Sheet Date.

51. CAPITAL MANAGEMENT OBJECTIVES, POLICIESAND PROCEDURES

The Cooperative’s capital managementObjectives are to ensure the Cooperative’s DISCLOSE STRATEGIES TOAbility to continue as a going concern and to MANAGE COOPERATIVEProvide an adequate return to shareholders CAPITALBy pricing products and services commensurateWith the level of risk.

Financial Assets

Investment at Fair Value through Profit or Loss – refers to financial assets that are upon initial recognition designated by the SCC as fair value through profit and loss. This shall comprise both debt and equity securities.

There are to be carried by Cooperative at fair value through profit or loss upon initial recognition. A financial asset is classified in this category if acquired principally recognition. A financial asset is classified in this category if acquired principally recognition. A financial asset is classified in this category if required principally for the purpose of selling. The short term or if so designated by the Cooperative. Assets in this category are classified as current assets if they are either hold for trading or are expected to be realized within 12 months of the balance sheet date.

Subsequently to initial recognition, the financial assets included in the category are measured at fair value with changes in fair value recognized in profit or loss. Financial assets originally designated as financial assets at fair value through profit or loss may not be subsequently be reclassified.

The use of fair value option hall be in accordance with the criteria set forth in the amendments of PAS 39 subject to the following conditions:

1. SCC’s shall have in place appropriate risk management systems (including related risk management policies procedures and controls) prior to initial application of the fair value option for a particular activity or purpose and on ongoing basis;

2. SCC’s shall apply the fair value option only to instruments for which fair values can be reliably estimated;

3. SCC’s shall provide CDA with supplemental information as may be necessary, to enable CDA to assess the impact of the SCCs utilization of the fair value option.

Loans and Receivables. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Cooperative provides money, goods or services directly to a debtor with no intention of trading the receivables. They are included in current assets, except directly to a debtor with no intention of trading the receivables. They are included in current assets, except for maturities greater than 12 months after the balance sheet date which are classified as non-current assets.

Loans and receivables are subsequently measured at amortized cost using the effective interest method, less impairment losses. Any change in their value is recognized in profit or loss.

Loans and receivables are presented as Trade and Other Receivables in the Statements of Financial Condition.

Impairment loss is provided when there is objective evidence that the Cooperative will not be able to collect all amounts due to it in accordance with the original terms of the receivables. The amount of the impairment loss is determined as the difference between the assets carrying amount and the present value of estimated cash flows.

Under the Cooperative’s Board Resolution No.______, the following interest rates shall be implemented as a way of helping and at the same time encouraging members to patronize the Bank’s lending services.

1. Secured Loans_____________________2. Unsecured loan/Clean Loans_____________________________

Allowance for probable losses is maintained at a level considered adequate to provide for potential losses on loans and other resources. The allowance is increased by provision charged to operations and reduced by net write-offs and reversals. The level of allowance is set up at the higher of the amount determined based on the management’s evaluation of potential losses after consideration of prevailing and anticipated economic conditions.

Held- to- Maturity Financial Assets. This includes non-derivative financial assets with fixed or determinable payments and a fixed date of maturity. Investments are classified as held-to-maturity if the Company has a positive intention and ability to hold them until maturity. They are included in a non-current assets under the Long-term Financial Assets account in the balance sheets, except those maturing within 12 months of the balance sheet date.

Hold-to-maturity investments are subsequently measured at amortized cost using the effective interest method. In addition, if there is objective evidence that the investment has been impaired the financial assets is measured at present value of estimated cash flows. Any changes to the carrying amount of the investment are recognized in profit or loss.

Available-for sale Financial Assets. This include non-derivative financial assets that are either designated to this category or do not qualify for inclusion of any of the other categories of financial assets. They are included in non-current assets under the Long-term Financial Assets accounts in the Balance sheet unless management intends to dispose the investment within 12 months of the balance sheet date.

All financial assets within the category are subsequently measured at fair value, unless otherwise disclosed, with changes in value recognized in equity, net on any effects arising from income taxes. Gains and losses arising from securities classified as available-for-sale are recognized in the statement of income when they are sold or when the investment is impaired.

In the case of impairment, any loss previously recognized equity is transferred to the income statement. Losses recognized in the statements of income on equity investments are not reversed through the statement of income. Loss recognized in prior period income statement resulting from the impairment of debt instruments are reversed through the income statement.

Unquoted Debt Securities Classified as Loans refers to the securities with fixed or determinable payments and fixed maturity. Unquoted debt securities are measured upon initial recognition at their value plus transaction cost that are directly attributable to the acquisition of the securities. After initial recognition, the Cooperative shall measure Unquoted-debt securities at their amortized cost using the effective interest method. A gain or loss arising from the change in the fair value of the securities shall be recognized in profit or loss when the security is derecognized or impaired, and through the amortizing process.

Investment in Non-Marketable Equity Securities (INMES) refers to equity instruments that do not have a quoted market price in an active market, and whose fair value cannot be reliably measured.

INMES shall be measured upon initial recognition at its fair value plus transaction cost that are directly attributable to the acquisition of the security. After initial recognition, the SCC shall measure INMES at cost. A gain or loss arising from the change in fair value of the INMES shall be recognized in profit or loss when the security is derecognized or impaired.

Derecognition of financial assets occurs when the rights to receive cash flows from the financial instruments expire or are transferred and substantially all of the risks and rewards of ownership have been transferred.

NOTE: RISK MANAGEMENT POLICY SHOULD ALSO BE DISCLOSED WHEN A COOP HAS FINANCIAL ASSETS