Agreement-JD-001-16-11-2023

OBJECT: This Regulation has as its object to establish the requirements that external auditors must meet to be registered in the Registry of External Auditors of CONSUCOOP (RAEC) which is maintained for this purpose by the National Supervisory Council of Cooperatives (CONSUCOOP), hereinafter the Supervisory Entity; as well as to establish the general provisions to be complied with by Cooperatives of Other Subsectors, including Savings and Credit Cooperatives and Mixed Cooperatives with principal activity in savings and credit with assets less than One Million Dollars of the United States of America (US$ 1,000,000.00) for the contracting of external audit work, for the review of financial statements at the close of each fiscal year; likewise this regulation establishes the minimum scope that external auditors must observe when certifying the financial statements of the Cooperatives in reference.

MANDATORY PROVISIONS: In accordance with the current legal and regulatory provisions, the financial statements of Cooperatives of Other Subsectors including Savings and Credit Cooperatives and Mixed Cooperatives with principal activity in savings and credit with assets less than One Million Dollars of the United States of America (US$ 1,000,000.00) shall be audited by an External Audit Firm or by Independent External Auditors authorized and registered in the Registry of External Auditors of CONSUCOOP (RAEC) which shall be maintained for this purpose by the Supervisory Entity. For compliance with this requirement the Cooperatives in reference shall inform the Supervisory Entity within ten (10) business days of their contracting, the name of the External Audit Firm or the Independent External Auditor that will conduct the review of their financial statements at the close of that same fiscal year.

DEFINITIONS: For purposes of application of this Regulation, the following shall be understood as: a. INDEPENDENT EXTERNAL AUDITOR: Professional authorized by this Regulation, duly registered with their professional association to provide external audit services, with an academic degree of Commercial Accountant and Public Accountant/Bachelor's degree in Accounting and Finance, legally established as an Individual Merchant, Unipersonal Company, or Provider of technical services under the figure of Professional Fees. b. EXTERNAL AUDIT: The service whose principal object is to issue an independent report on the reasonableness of the basic financial statements, in accordance with International Auditing Standards (IAS). c. LETTER OF INDEPENDENCE: A declaration that auditors must issue for the exercise of their activity, ensuring absolute independence direct or indirect from the supervised entity, which allows them absolute freedom at the moment of issuing their opinion. d. INDIVIDUAL MERCHANT: Natural person duly established to conduct acts of commerce or any other technical economic activity related to Audits registered in the Corresponding Commercial Registry. e. CONSUCOOP OR SUPERVISORY ENTITY: National Supervisory Council of Cooperatives. f. COOPERATIVES OF OTHER SUBSECTORS (COS'S): Cooperatives of Other Subsectors, including Savings and Credit Cooperatives and Mixed Cooperatives with principal activity in savings and credit with assets less than One Million Dollars of the United States of America (US$ 1,000,000.00). g. EXTERNAL AUDIT FIRM: Commercial companies dedicated to providing external audit services. h. SIGNIFICANT EVENTS: Occurrences that expose or that may eventually expose the Cooperative to risks that could have an impact on its solvency and liquidity, such that there is the possibility of affecting compliance with its obligations to its members and any other risk that could expose the cooperative. i. PROFESSIONAL FEES: Remuneration received by a natural person in exchange for the provision of professional services to a Cooperative, for which the person contracted under this modality must issue to the service acquirer, the respective tax document (receipt for professional fees) duly authorized and/or accepted by the tax administration, being subject to the respective withholding of Income Tax. j. IDENTIFICATION AND RISK MANAGEMENT: Determination, measurement, monitoring and control of the risks assumed by the Cooperative. k. ACCOUNTING AND PRUDENTIAL STANDARDS OR APS: Accounting standards issued by CONSUCOOP for the regulation, surveillance, control and supervision of Savings and Credit Cooperatives and Cooperatives of Other Subsectors. l. RAEC: Registry of External Auditors of the National Supervisory Council of Cooperatives (CONSUCOOP). m. INTERNAL CONTROL SYSTEM: Set of policies, procedures and control techniques established by the cooperative to achieve adequate administrative organization, operational efficiency, reliability of reports, appropriate identification and management of the risks it faces, as well as compliance with the legal provisions applicable to it. n. INFORMATION SYSTEM: Set of policies and procedures established by the cooperative for the adequate generation of the flow of valid and reliable information, necessary for internal decision-making and the provision of information to third parties and competent authorities. It includes the information systems used for the registration and generation of the information flow. o. UNIPERSONAL COMPANY: Commercial companies established by a single partner, duly registered in the corresponding Commercial Registry. CHAPTER II OF THE REGISTRY

REGISTRY OF EXTERNAL AUDITORS OF CONSUCOOP (RAEC): The Supervisory Entity maintains a registry in which External Audit Firms and Independent External Auditors must be registered, which will allow them to provide professional external audit services to Cooperatives. Said registry shall be kept updated on this entity's website. In the RAEC, in addition to External Audit Firms, their partners, directors, administrators, legal representatives or audit professionals to whom the firm entrusts the direction and execution of audits and those responsible for signing the respective reports shall be registered. External Audit Firms, in accordance with their installed capacity and volume of their operations, shall be classified in categories. The RAEC shall establish for what types of supervised cooperatives the Firms shall be authorized to provide external audit services; for such purpose, they shall be registered in categories A, B, C, D, or E in accordance with the methodology described in Annex 1 of this Regulation. In the case of Independent Professionals, they shall be identified as Independent External Auditors as long as they meet the requirements established in this Regulation and shall have a single registration category "E".

REGISTRATION REQUIREMENTS IN THE RAEC: The following shall be registered in the RAEC: External Audit Firms or Independent External Auditors that meet the following requirements: 1. In the case of firms, to be legally established as a commercial company and that has as its principal activity the provision of External Audit services for the certification of the financial statements of Cooperatives. 2. In the case of Independent External Auditors, to be established as individual merchants, unipersonal commercial companies, or Providers of technical services under the figure of Professional Fees, that have as their principal activity the provision of External Audit services for the certification of financial statements. 3. In the case of firms, the capital of the commercial company must belong at least 51% to Public Accounting professionals, and that they are authorized to perform functions of audit of financial statements. 4. External Audit Firms must have collegiate and qualified professionals to direct audits of financial statements and sign the respective reports, with solid knowledge of their business, and of the current legal framework governing the Cooperatives supervised by CONSUCOOP. 5. The shareholders, directors, administrators, legal representatives of the Firm, the Independent External Auditors and persons authorized to direct audits or sign reports, shall not have direct connection or through third parties in the ownership or management of the Cooperatives supervised by CONSUCOOP, or other audited companies in which the Cooperative has a shareholding interest. 6. The partners, directors, administrators, legal representatives and Independent External Auditors, persons in charge of directing and executing audits or responsible for signing reports, must be suitable persons, of recognized solvency and honorability that strictly observe the ethical principles of their profession. As evidence thereof they must comply with the following: 6.1 That they have not been convicted of crimes involving lack of probity, willful crimes or financial crimes; 6.2 That they have not been declared bankrupt or be unrehabilitated bankrupts, or have been convicted of crimes against property linked to the execution of audit services; 6.3 That they are not in any circumstance that affects their solvency, provided that this affects the provision of audit services; 6.4 That the company, partners, directors, administrators, legal representatives or Independent External Auditors, persons in charge of directing and executing audits or as responsible for signing reports, are not direct or indirect debtors in the Cooperatives supervised by CONSUCOOP or have relationship within the fourth degree of consanguinity and second of affinity with cooperative personnel. 6.5 That they have not been suspended or disqualified from practicing the profession; 6.6 That they are not officials and employees of the Cooperatives supervised; and, 6.7 That they are not officials or employees of the National Supervisory Council of Cooperatives and of the National Banking and Insurance Commission.

PROCEDURES FOR REGISTRATION IN THE RAEC: A. To register in the RAEC, External Audit Firms must submit to the Supervisory Entity a written application, attaching the following information: External Audit Firms 1. Address of offices, telephone, fax and email, the latter of which shall be used to receive communications issued by CONSUCOOP on matters related to this Regulation. 2. Photocopy of the numeric National Tax Registry and photocopy of the National Identification Document (DNI) of partners, directors, administrators, legal representatives and persons authorized to direct and execute audits or sign reports; 3. Copy of the articles of incorporation of the company and its amendments. 4. Information on the financial capacity of the Firm. 5. Certificate of registration in the Honduran College of Professionals with University Education in Public Accounting and/or College of Commercial Accountants and Public Accountants, both for the commercial company and for those in charge of directing and executing audits or responsible for signing reports. 6. Curriculum vitae of the partners, directors, administrators, legal representatives of the firm and persons authorized to direct and execute audits or responsible for signing reports, accrediting with copy of documents, studies completed, experience and other knowledge acquired. 7. Description of the Organization, including: 7.1 Historical summary of the Firm; 7.2 Structure of ownership of capital stock; 7.3 Detail of partners, directors, administrators and legal representatives; 7.4 Organizational structure and job profiles of the firm; 7.5 Detail of technical personnel in charge of directing and executing audits or responsible for signing reports, administrative and logistical support personnel, in accordance with the model in Annex 2; 7.6 Description of the Quality Control Evaluation System for audits conducted by the Firm. 7.7 Detail of office equipment and data processing systems, indicating which is used for the development of audit work; and, 7.8 Global detail by sector of the client portfolio, in accordance with the format in Annex 3; 8. Sign and present a copy of a bond policy or Professional Civil Liability insurance, covering possible damages to third parties due to malpractice, errors or omissions in the development of their work. In this regard, CONSUCOOP shall establish the amount of the bond and may update it for the external audit firm, when it deems necessary. 9. Sworn Statement, in accordance with the format in Annex 4. B. To register in the RAEC, Independent External Auditors must submit to CONSUCOOP a written application, attaching the following information: Independent External Auditors: 1. Photocopy of the degree obtained in higher education of Bachelor of Public Accounting and Finance, or in its absence the secondary school degree obtained of Commercial Accountant and Public Accountant. 2. Address of the office(s) or residence where the auditor lives, telephone, fax and email, the latter of which shall be used to receive communications issued by the Supervisory Entity on matters related to this Regulation. 3. Photocopy of the numeric National Tax Registry and photocopy of the National Identification Document (DNI) of the Independent External Auditor or legal representative, or person authorized to direct and execute audit or sign reports. 4. Copy of articles of incorporation of individual merchant or unipersonal company. 5. Certificate of registration in the Honduran College of Professionals with University Education in Public Accounting and/or College of Commercial Accountants and Public Accountants of Honduras. 6. Certificate of Criminal Background. 7. Certificate of Police Record. 8. Accredit experience and training in the exercise of professional activity in external audit and complete review of financial statements conducted in the Cooperative and/or Financial sector for a period not less than two (2) years for Bachelors of Public Accounting and Four (4) years for Commercial Accountants and Public Accountants. (Annex 3). 9. Detail of technical personnel if they have any contracted. 10. Detail of office and computer equipment they possess. 11. Financial Statements from their last accounting close that they possess. 12. Present 3 work references. 13. Sign and present a copy of a bond policy or Professional Civil Liability insurance, covering possible damages to third parties due to malpractice, errors or omissions in the development of their work. In this regard, CONSUCOOP shall establish the amount of the bond and may update it for Independent External Auditors, when it deems necessary. 14. Sworn Statement (Annex 4). C. CONSUCOOP, in accordance with the due process established in the current legal framework, may reject any application that is presented and does not meet the established requirements or whose background, once evaluated, does not guarantee the economic independence, professional quality and seriousness that is deemed indispensable for auditing the Cooperatives supervised. D. The requirements and information declared may be verified by CONSUCOOP together with the Firm or Independent External Auditors requesting registration. E. Once the requirements for registration have been evaluated and satisfied, the external audit firm and/or Independent External Auditors shall be registered, which shall be reported by means of a resolution from the National Registry of Cooperatives. F. If during the process of verifying the information presented and prior to registration or at any time, the inclusion of false information is determined and proven conclusively, the External Audit Firm and the partners that comprise it or the Independent External Auditors shall be barred from submitting new applications, for a period of up to three (3) years, depending on the seriousness of the fault committed. These cases, once the administrative proceedings guaranteeing the right of defense have been exhausted, shall be brought to the attention of the professional college where the Audit Firm and partners or Independent External Auditors are registered, for the pertinent effects. G. Applications for registration shall be received at any date. H. Registration shall have indefinite validity. I. The Firm and/or the Independent External Auditor, in the case that it has more than one person, shall inform the Supervisory Entity annually of the significant changes that it has undergone in its structure, organization, in professional personnel or others, attaching the pertinent documentation to keep the registration file updated. If there are no significant changes, the Firm and/or the Independent External Auditor, with a simple note shall communicate to CONSUCOOP such situation.

OF THE EVALUATION AND CLASSIFICATION OF THE FIRM OR OF THE INDEPENDENT EXTERNAL AUDITOR: CONSUCOOP reserves the right to verify in situ the documentation presented by the Firm or by the Independent External Auditor for registration in the RAEC. Once the registration application documentation has been verified, CONSUCOOP shall proceed to evaluate and classify the application based on the criteria, factors and guidelines established in the methodology of the internal evaluation of the RAEC, in accordance with the provisions established in Annex 1 of this Regulation.

FAULTS AND SANCTIONS: CONSUCOOP shall apply sanctions to the Firm or to the Independent External Auditor when it commits the following faults: A. Minor Faults 1) Failure to comply with the requirements established in Article 13 of this Regulation; 2) Prepare working papers that make it difficult to verify against the content of the independent report; 3) Provide incompatible services indicated in Article 14 of this Regulation; and, 4) Failure to remit to CONSUCOOP the annual reports, prepared for the Cooperatives in a timely manner with its corresponding opinion. Minor faults shall be sanctioned with a written warning. B. Serious Faults 1) Issue opinions while being subject to any of the incompatibilities established in Article 14 of this Regulation; 2) Failure to maintain confidentiality of information known in the exercise of its activity; 3) Failure to effect the rotation indicated in Article 20 of this Regulation; 4) Commission of three (3) minor faults in the period of two (2) years; and, 5) Failure to comply with any of the registration requirements established in Article 5 of this Regulation. Serious faults shall be sanctioned with reclassification to the immediately next lower category to which the Firm has at the time of the fault. C. Very Serious Faults 1) Failure to communicate to the Supervisory Entity facts that in the execution of its work are determined to affect the financial stability of the audited Cooperatives. 2) Violation of the requirement of professional independence; 3) Issue opinion without being subject to International Auditing Standards (IAS); 4) Offer or receive gratifications, rewards, bribes in cash or in kind to members of Board of Directors, Supervisory Committee, General Management or any other official or employee of a Cooperative in exchange for favors, award of audit work or other services or change of opinion about the work performed by the firm; 5) When in the opinion intentionally:

• I)

  Relevant information of which there is knowledge is omitted;

• II)

  False information is incorporated or information that induces error or the result is adjusted in order to present a situation different from what the Cooperative actually has; and,

• III)

  Suggest, accept and do not pronounce, propitiate or propose that a certain transaction be recorded in a manner different from the accounting criteria established by CONSUCOOP and significantly alter the financial statements of the supervised Cooperative. Very serious faults shall be sanctioned with suspension of registration for a period of two (2) years and if recidivism occurs in this same type of faults, it shall be sanctioned with definitive cancellation of the Registry of External Auditors of CONSUCOOP (RAEC).

SANCTION PROCEDURES: When CONSUCOOP determines that a Firm or the Independent External Auditor has committed any of the faults detailed in the preceding Article, before being sanctioned, the Firm or Independent External Auditor shall be notified so that in the exercise of the right of defense enshrined in the Constitution of the Republic, they proceed to present within the term of ten (10) business days the corresponding response. If the Firm or the Independent External Auditor does not present the response or the same do not dissipate the determined fault, the Supervisory Entity through resolution shall proceed to impose the corresponding sanction, likewise, once the administrative procedure of suspension or cancellation of a Firm or of the Independent External Auditor in the RAEC has been concluded, it shall bring it to the attention of the supervised institution and the professional colleges of Public Accountants and, if the seriousness of the fault warrants it, shall also report it to the Public Ministry. CONSUCOOP shall publish on its website the Firms and Independent External Auditors that have been registered and those that have been suspended or canceled in the RAEC. The Firm or the Independent External Auditor that has requested its cancellation in the RAEC may request again its Registration, presenting all the information required in Article 5 of this Regulation. CHAPTER III CONTRACTING OF EXTERNAL AUDITS BY COOPERATIVES OF OTHER SUBSECTORS (COS'S)

CONTRACTING OF EXTERNAL AUDITORS: In order for Cooperatives to present reports of Audited Financial Statements in their Regular General Assembly within the first three (3) months following the close of their fiscal year, the following must be considered: a) Savings and Credit Cooperatives and Mixed Cooperatives with principal activity in savings and credit with assets less than one million dollars of the United States of America (1,000,000.00), must contract an External Audit Firm or Independent External Auditor registered in the RAEC, who shall conduct the audit of the financial statements of the corresponding fiscal year, said contracting must be no later than September 30 of each year. b) In the case of Cooperatives of Other Subsectors and Cooperatives that have a fiscal period different from January to December; they must contract an External Audit Firm or Independent External Auditor registered in the RAEC, to conduct the audit of the corresponding financial statements, no later than ninety (90) calendar days before fiscal close, complying with what is indicated in this regulation.

DESIGNATION OF THE FIRM OR OF THE INDEPENDENT EXTERNAL AUDITOR: The selection of the Firm or of the Independent External Auditor that will examine and issue an opinion on the financial statements of the Cooperatives, must be contracted by the Board of Directors, previously selected by the Supervisory Committee who shall leave evidence of the selection process carried out, in its minutes book. The supervised cooperatives must inform CONSUCOOP of the reasons that may motivate a change of External Audit Firm or of the Independent External Auditor, after the respective contract is signed, attaching the certification of the minutes point where such change was agreed. The contracting of the Firm or of the Independent External Auditor, as well as the rescission of the contract must be communicated to the Supervisory Entity within a period of ten (10) business days counted from the date the respective agreement was made, attaching the respective certification of the minutes point of the Board of Directors, of the contracting agreement and certification of minutes point of the Supervisory Committee of the agreement of its selection.

MINIMUM CONTRACT CONTENT: The contract executed between the Cooperatives and the External Audit Firms or the Independent External Auditor must contain at a minimum express clauses that clearly specify the following:

• 1)

  That the Firm or the Independent External Auditor declares to know and accept what is established in the RAEC;

• 2)

  Declaration by the firm or the Independent External Auditor that manifests not having any type of direct and indirect links with the cooperative, to which it will execute the audit that could affect the independence of the work to be performed;

• 3)

  That the Cooperatives authorize the Firm or the Independent External Auditor and this in turn undertakes to allow CONSUCOOP, without limitations access to working papers or other means of documentation of audit evidence, starting one hundred twenty (120) calendar days after the date of close of the annual fiscal year and to provide copies of them in the cases required and attend inquiries about the audit conducted;

• 4)

  That the audit will be conducted in accordance with International Auditing Standards (IAS);

• 5)

  That in the application of IAS the accounting and prudential provisions issued by CONSUCOOP are verified, insofar as applicable to the Cooperatives. CONSUCOOP on its website shall make available all the standards it issues and the technical information necessary to comply with the established requirements;

• 6)

  The Firm or the Independent External Auditor must verify the control and prevention processes established in the Money Laundering Law and regulations issued by CONSUCOOP for prevention of this risk;

• 7)

  The Firm or the Independent External Auditor undertakes to deliver to the audited Cooperative the corresponding audit reports, within the term and maximum period of one (1) month before the notice of call for the holding of the Regular General Assembly. 8. The audit must be initiated by mutual agreement with the contracting institution with due advance notice in order to comply with the term previously indicated. 9. The Cooperative undertakes to make known to the Firm or Independent External Auditor, the reports and resolutions issued by CONSUCOOP; and, 10. Indicate the date on which the relationship or provision of services with the External Audit Firm or the Independent External Auditor begins. 11. The Firm or the Independent External Auditor, must provide CONSUCOOP, with a copy of the final report of each audit they conduct, in which the following must appear: The audited period, the working methods put into practice, the anomalies found, the legal grounds and the observations, recommendations and qualifications that the reporting parties deem pertinent. 12. Maintain strict confidentiality with respect to the data and information of those audited that come to their knowledge, which must be used exclusively for purposes related to the issuance of the corresponding opinions. This data or information may not be used for own or others' benefit and may only be provided when required by CONSUCOOP and the Public Ministry.

REQUIREMENTS FOR CONTRACTING THE FIRM OR OF THE INDEPENDENT EXTERNAL AUDITOR: The Firm or the Independent External Auditor that is contracted by the Cooperatives supervised by the Supervisory Entity, must comply with the following requirements: 1. To be registered in the RAEC. 2. Not to be affiliated with the Cooperative that contracts its services; furthermore, the partners, directors, administrators, legal representatives of the Firm or the Independent External Auditors, and persons authorized to direct audits or sign reports, likewise, may not be affiliated, delegates, managers and/or officials/employees of the Cooperative to which the external audit service is provided, nor have relationship of kinship with the managers or employees of said institution within the fourth degree of consanguinity or second of affinity. 3. That the company, the partners, directors, administrators, legal representatives and other audit professionals of the Firm or of the Independent External Auditors do not have direct or indirect obligations under preferential conditions with the Cooperative where it will provide its services. 4. Not to be in any circumstance that could affect its independence according to what is indicated in International Auditing Standards (IAS).

INCOMPATIBLE SERVICES: Cooperatives may not contract financial statement audit services with an External Audit Firm or Independent External Auditors, that during the same accounting year provides the following services to the entity:

• 1)

  Accounting services or others related to the operations of the Cooperative;

• 2)

  The design and implementation of information technology systems;

• 3)

  Evaluation or appraisal services;

• 4)

  Legal services, from which elements arise that must be subject to the accounting or audit opinion;

• 5)

  Actuarial services, when they are used in the accounting of the audited Cooperative;

• 6)

  Internal audit services, direct or indirect;

• 7)

  Management functions and personnel selection and recruitment of the Cooperative to occupy management positions and the two immediate levels below such positions; and, 8. Consulting services. The Firm and Independent External Auditors may perform consulting, only after one (1) year has passed since they ceased their professional services to the same entity.

SCOPE OF AUDIT WORK: In the scope of work determined by the Firm or the Independent External Auditor, it must include at a minimum the following: 1. Evaluation of the Internal Control System. 2. Tests of compliance with the norms of accounting and financial character contained in resolutions issued by CONSUCOOP. 3. Evaluation of the Information Technology System. In the case of Cooperatives that carry out only their accounting operations manually, it shall not be necessary to consider said evaluation and therefore should not be part of its scope. 4. The scope of work shall be determined between the Firm or the Independent External Auditor and the Cooperative.

REPORTS: Audit reports shall comprise the following: 1. The report on whether the financial statements, such as; Balance Sheet of Financial Position, Statement of Surplus, Cash Flow Statement and Statement of Changes in Equity; fairly present the financial position, financial performance and cash flows of the audited Cooperative, in accordance with the accounting standards issued by the Supervisory Entity and Generally Accepted Accounting Principles. Cooperatives shall disclose such other disclosures as are necessary for the understanding of the financial statements. Financial Statements must be prepared under the responsibility of the administration of the supervised Cooperative. 2. A report on the credit portfolio based on the Standards for the Evaluation and Classification of the Credit Portfolio issued by CONSUCOOP for Cooperatives, in accordance with what is established in the ISA referring to "Special Considerations", audits of single financial statements and specific items, accounts or entries of a financial statement. For this report, external auditors must verify the classification criteria and procedures applied by the aforementioned Cooperatives with principal activity of savings in credit operations that represent a minimum of 40% of the total amount of the credit portfolio. 3. The scope of the work shall be determined between the Firm or the Independent External Auditor and the Cooperative. 4. A report on the evaluation of the Internal Control System that includes the Internal Control Recommendations Letter, with regard to accounting, administrative and management aspects; Risk of Asset Laundering and Financing of Terrorism; including reviews of compliance with prudential standards issued by the Regulatory Entity, as well as assessments regarding the follow-up of observations from the last supervision conducted by CONSUCOOP, facts or situations of relative importance indicated by internal audit and previous reports of external audit. 5. In a specific section of the letter indicated in numeral 4 of this Article, observations must be presented regarding the evaluation of the Technological Information System, conducted for purposes of the audit of the Cooperative's financial statements, which must be signed by the partner in charge of the audit or the Independent External Auditor; this letter must contain at minimum the following: 5.1 A general description of the scope of work performed; explanations regarding the areas or applications evaluated, the audit procedures or techniques applied, the components of financial information or validated reports; 5.2 With respect to the results of the evaluation of each area or application system evaluated, the auditor's comments, a detail of the deficiencies observed, and the applicable recommendations to resolve them or prevent future consequences; 5.3 A general comment on the evaluation of the general information technology controls applied by the audited Cooperative; and 5.4 The Firm or the Independent External Auditor shall submit directly to CONSUCOOP, one (1) copy of these reports within the deadline established in numeral 7 of Article 12 of this Standard.

CUSTODY OF WORKING PAPERS: The working papers and/or audit evidence, electronic or printed, that support the reports issued, from the examinations conducted on Cooperatives governed by this Standard, shall be preserved for a minimum period of five (5) years following the audited fiscal year; however, in case of litigation, they must be preserved until resolution thereof. Access to working papers shall be without restrictions for CONSUCOOP, upon prior communication to the Supervised Cooperative.

OBLIGATIONS OF SUPERVISED INSTITUTIONS WITH THE FIRM AND INDEPENDENT EXTERNAL AUDITOR: The Board of Directors, Supervisory Committee and General Management or whoever acts as General Manager of the Cooperatives are responsible for providing to the Firm or the Independent External Auditor it hires, all necessary information so that it may express its opinion in an independent manner and without limitations.

SPECIAL REPORTS: After exhausting the right to defense that the Firm that has issued a report on the Financial Statements has, where the Supervisory Entity has detected situations that in its judgment constitute important errors or omissions in the audit of such financial statements, CONSUCOOP shall inform the audited Cooperative and may require that another Firm or another Independent Professional be hired to issue a second independent report on the same or an additional special supervision to those mentioned above, the cost of which shall be borne by the Cooperative.

ROTATION OF EXTERNAL AUDITORS: In order to strengthen the independence of the Firm and independent external auditors, it shall be the responsibility of the Cooperatives to require the rotation of the partner or Independent External Auditor of a particular institution, for a minimum of three (3) consecutive annual fiscal years of having conducted audit work in the same Cooperative, and may be designated again after a minimum interruption of two (2) years. In the event that the location or circumstances do not permit the cooperative to perform the rotation of the external audit firm and independent external auditor, they must previously request non-objection from the Cooperative Superintendency of other Subsectors of Cooperatives to continue hiring the same firm that has been conducting the external audit for prior periods. This must be done each time the firm or external auditor cannot be rotated.

PLANNING: In the planning of audit work, in addition to compliance with International Standards on Auditing (ISAs), the Firm or the Independent External Auditor shall include tests on compliance or due diligence in accordance with its structure or complexity of operations, of the prudential standards issued and approved by CONSUCOOP, of which among others the following are noted: Savings and Credit Cooperatives and Mixed ones with principal activity in Savings and Credit less than one Million United States Dollars of America. 1. Standards for the Administration of Liquidity in Savings and Credit Cooperatives; 2. Accounting Manual for Savings and Credit Cooperatives; 3. Guidelines established for the Cooperative Stabilization Fund (FEC); 4. Cooperative Governance Standards for Savings and Credit Cooperatives; 5. Standards on Transparency Matters; 6. Standards for the Evaluation and Classification of the Credit Portfolio; 7. Standards for the Administration of Contingent Assets; 8. Standards for the Operation of Internal Audit; 9. Comprehensive Risk Management Standards; 10. Information Technology Standards; 11. Standards for the Provision of Services through Subsidiaries, Branch Offices Agents Correspondent Banks by Savings and Credit Cooperatives and/or Mixed ones with Savings and Credit activity; 12. Standards for the Prevention and Detection of Asset Laundering and Financing of Terrorism to be Applied by Cooperatives; and, 13. Any other Standard issued by the Regulatory Entity. Cooperatives of Other Subsectors 1. Standards for Financial Indicators. 2. Chart of Accounts for Cooperatives of Other Subsectors. 3. Prudential Standard for the procedure to follow in the declaration of leadership for Cooperatives of Other Subsectors. 4. Standards for the Prevention and Detection of Asset Laundering and Financing of Terrorism to be Applied by Cooperatives; and, 5. Any other Standard issued by the Regulatory Entity. It is understood that the prudential standards related to the Standards for the Evaluation and Classification of the Credit Portfolio shall be evaluated in accordance with the procedures required for the issuance of the report on the credit portfolio indicated in Article 16 numeral 2 of this standard.

SUPERVISION AND QUALITY CONTROL: External auditors must perform quality control of their work in accordance with their own standards, which they shall make known to the Supervisory Entity when it so requires. Likewise, the working papers or audit file systems in effect at the Firm must present evidence regarding:

• 1)

  The execution of the audit plan;

• 2)

  Criteria and methodology for sample selection and scope thereof;

• 3)

  Evidence of review by the Partner, Manager or Independent External Auditor in charge of the audit;

• 4)

  Summary of adjustments and/or reclassifications of the audit; and, 5. Audit conclusions. If during the audit of financial statements, the Firm or the Independent External Auditor finds a limitation in the development of the work, detects a fact or condition that constitutes a serious risk to the financial stability of the audited Cooperative or determines the existence of illegal operations, it must immediately make this known to said Cooperative, reporting directly to CONSUCOOP, without need of authorization from the audited Cooperative within a period of twenty-four (24) hours. Likewise, CONSUCOOP may verify after the delivery of the audit report, compliance with the audit plan. CONSUCOOP and the Firm or the Independent External Auditor shall establish the date of this review.

EVALUATION OF EXTERNAL AUDITORS' WORK: The evaluation of external auditors' work shall be based on compliance with International Standards on Auditing, the deficiencies found shall be made known to the Firm or the Independent External Auditor, so that it may present the arguments it deems convenient. If based on the corresponding evaluation and after the administrative proceedings that the right to defense provides, it is determined that the work of the Firm or the Independent Auditor does not meet the minimum quality requirements and application of the current regulatory framework, the sanctions established in Article 8 of this Standard shall be applied.

SUPERVISORY COMMITTEE: The members of the Supervisory Committee of the Cooperatives shall be responsible for providing adequate follow-up to the instructions of CONSUCOOP and to the observations of the External or Internal Audit. CHAPTER IV OTHER PROVISIONS

PUBLICATION OF AUDITED FINANCIAL STATEMENTS: The Cooperative governed by this Standard shall be obligated to publish within four (4) months following the close of each fiscal year, on the Cooperative's website, the Financial Statements as a whole: (Balance Sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity, Explanatory Notes) and External Auditor's Report. Cooperatives that do not have their own website shall do so on the CONSUCOOP website. Additionally, they must prepare their annual report which must include the information established in the preceding paragraph and ensure its availability to members. CHAPTER V FINAL PROVISIONS

ADAPTATION PERIOD: The Cooperatives governed by this Standard shall adapt themselves for its implementation within a maximum period of two (2) years from the date this Standard enters into effect. Savings and Credit Cooperatives and mixed ones that exceed one Million (US$1,000,000.00) United States Dollars of America shall be supervised by the Superintendency of Savings and Credit, applying the regulations already issued in that regard. External Audit Firms already registered in the RAEC shall continue in the same category that was defined for them in the Standard for the Hiring and Registration of External Auditors, issued by CONSUCOOP according to Agreement No. 002/15-12-2016 of December 15, 2016. Being able to audit the Cooperatives governed by this Standard, in accordance with their categorization of registration in the RAEC.

NON-COMPLIANCE: Non-compliance by Cooperatives with the provisions established in this standard shall be sanctioned in accordance with the current legal framework.

EFFECTIVE DATE: This Standard shall enter into effect as of its publication in the Official Gazette La Gaceta.