This document outlines various requirements and best practices for cooperatives in the Philippines. It states that cooperatives must allocate allowances for probable loan losses, apply for tax exemption with BIR, and submit yearly reports to CDA to maintain their Certificate of Operation. It also describes the COOP-PESOS rating system used by CDA to evaluate cooperatives' soundness. Additional requirements include proper documentation of loans, regular financial audits, and developing strategic plans.

1.  Alexander B. Raquepo
Cooperative Governance Practitioner and Advocate

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.  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.  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.  4. Regular monitoring of
DOSRI (Directors, Officers,
Staff and Related Interests)
must be undertaken. A
separate report must be
prepared.

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.  C – Compliance with
Administrative and Legal
Requirements;
 O – Organizational Structure and
Linkages;
 O – Operational Management; and
 P – Plans and Programs.

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.  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.  7. Loan delinquency is now
computed based on Portfolio
At Risk (PAR) and not based on
loan maturity.

11.  8. Cooperatives are required
to fund its Reserve Funds. This
fund must be deposited
separately.

12.  9. Coops are encouraged to
network or link with other
coops or become active
members of apex
organizations.

13.  10. Cooperatives must be
externally audited yearly by an
independent CPA accredited
by CDA or PICPA.

14.  11. Coop records must be
updated and regularly audited
by the Audit and Inventory
Committee.

15.  12. Loans must be properly
documented with all the
necessary attachments
complete and duly signed.

16.  13. The cooperative must have
a continuous capital build up
(both share and savings) to
minimize outside loans.

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.  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.  16. Cooperatives must have a
regular Annual Plan and Budget
and a 5-Year Strategic Plan.