The Machete is one of many obtainable items in COTC. This machete is dropped by the Cult Leader when killed.
The Machete is used to open a door in the Orphanage which gives players access the Orphanage Control Room, where you can contact the police and obtain the ending 5 badge.
How to obtain
As stated above, in order to obtain the item, you must kill the Cult Leader. However, when the game starts, the Cult Leader is invincible. In order to make him vulnerable to damage and obtain the Machete, you must burn his mask (Cult Leader's Mask), which you can find in the Hunting Cabin. You can only burn the mask in the ritual that takes place behind the Hunting Cabin.