Some Important Cooperative Practices

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Some Important Cooperative Practices

  1. 1.  Alexander B. Raquepo Cooperative Governance Practitioner and Advocate
  2. 2. 1. Coops must allocate an allowance for probable losses (bad debts). The standard allocation is 35% for past due loans below 1 year and 100% for loans above 1 year.
  3. 3.  2. According to Philippine Coop Laws, Cooperatives are tax exempted. However, to enjoy this privileged the cooperative must apply for tax exemption at BIR.
  4. 4.  3. Cooperatives are required to submit yearly reports to the Cooperative Development Authority (CDA), a requirement in getting a Certificate of Operation (CO). A Certificate of Good Standing (CGS) is also issued by CDA for coops who have sound financial conditions.
  5. 5.  4. Regular monitoring of DOSRI (Directors, Officers, Staff and Related Interests) must be undertaken. A separate report must be prepared.
  6. 6.  5. Cooperatives are required to use the approved Standard Chart of Accounts (SCA) and must compute its COOP-PESOS Rating every month. COOP-PESOS is a rating system developed by CDA to evaluate the soundness and stability of cooperatives.
  7. 7.  C – Compliance with Administrative and Legal Requirements;  O – Organizational Structure and Linkages;  O – Operational Management; and  P – Plans and Programs.
  8. 8.  P – Portfolio Quality (Portfolio at Risk and Allowance for Probable Losses); E – Efficiency (Asset Yield, Cost per Peso Loan, Administrative Efficiency, Loan Portfolio Profitability, Operational Self- Sufficiency); S – Stability (Liquidity, Solvency); O – Operations (Membership Growth, External Borrowings); and S – Structure of Assets (Non- Earning Assets, Total Deposits, Share Capital, Loans Receivables)
  9. 9.  6. The basic qualification of Board of Directors will be at least College graduate or 3 years experience in business. Once elected, they are required to undergo a coop governance course.
  10. 10.  7. Loan delinquency is now computed based on Portfolio At Risk (PAR) and not based on loan maturity.
  11. 11.  8. Cooperatives are required to fund its Reserve Funds. This fund must be deposited separately.
  12. 12.  9. Coops are encouraged to network or link with other coops or become active members of apex organizations.
  13. 13.  10. Cooperatives must be externally audited yearly by an independent CPA accredited by CDA or PICPA.
  14. 14.  11. Coop records must be updated and regularly audited by the Audit and Inventory Committee.
  15. 15.  12. Loans must be properly documented with all the necessary attachments complete and duly signed.
  16. 16.  13. The cooperative must have a continuous capital build up (both share and savings) to minimize outside loans.
  17. 17.  14. Remember this- “Your cooperative is in the business of business and is not a social welfare organization.” All transactions therefore must be treated in a business manner.
  18. 18.  15. Monthly meeting of the BODs is a must and also the Committees (Credit, Audit, Education, etc.). During this BOD monthly meeting, the GM must report the operations of the cooperative.
  19. 19.  16. Cooperatives must have a regular Annual Plan and Budget and a 5-Year Strategic Plan.

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