Pamantasan ng Lungsod ng Valenzuela

by:

Agnes V. Manito, CPA

Financial Management Professor
 voluntary and open membership
democratic organization wherein
members have equal rights
autonomous and self-help organization
controlled by their members
members shall receive limited
compensation or limited interest, if any,
on capital subscribed and paid up as a
condition of membership
 To encourage thrift and savings mobilization
among the members;
To generate funds and extend credit to the
members for productive and provident
purposes;
To promote and advance the economic,
social and educational status of the members
 Member includes a person either an natural
or juridical who, adhering to the principles
set forth in this Code and in the articles of
cooperation, has been admitted by the
cooperative as a member.

General Assembly shall mean the full

membership of the cooperative duly
assembled for the purpose of exercising all
the rights and performing all the obligations
pertaining to cooperatives.
 Board of Directors shall mean that body
entrusted with the management of the
affairs of the cooperative under its articles
of cooperation and bylaws.

Committee shall refer to any body entrusted

with specific functions and responsibilities
under bylaws or resolution of the general
assembly or by the board of directors.
 Articles
of Cooperation means the articles of
cooperation registered under this Code and
includes a registered amendment thereof.

Bylawsmeans the bylaws registered under

this Code and includes any registered
amendment thereof.

Registration means the operative act

granting juridical personality to a proposed
cooperative and is evidenced by a certificate
of registration.
 Cooperative Development Authority refers to the
government agency in charge of the registration
and regulation of cooperatives as such,
hereinafter to as the Authority.

Universally Accepted Principles mean that body

of cooperative principles adhered to worldwide
by cooperative.

Representative Assembly means the full

membership of a body of representatives elected
by each of the sectors, chapter or district of the
cooperative duly assembled for the purpose of
exercising such powers lawfully delegated unto
them.
 Officers of the Cooperatives shall include the
members of the board of directors, members of
the different committees created by the general
assembly, general manager or chief executive
officer, secretary, treasurer and members
holding other positions as may be provided for in
their bylaws.

Social Audit is a procedure wherein the

cooperative assesses its social impact and ethical
performance vis--vis its stated mission, vision,
goals and code of social responsibility for
cooperatives to be established by the Authority
in consultation with the cooperative sector.
 Performance Audit shall refer to an audit on the
efficiency and effectiveness of the cooperative
as a whole; its management and officers; and its
various responsibility centers as basis for
improving individual, team, or overall
performance.

Single-line or single-purpose are those which

provide any type of service to its members,
including but not limited to, transport
information and communication, insurance,
housing, electric, health services, education,
banking, savings, and credit.
 Subsidiary Cooperative refers to any organization
all or majority of whose membership or
shareholders come from cooperative, organized
for any other purpose different from that of, and
receives technical, managerial, and financial
assistance from, a cooperative, in accordance
with the rules and regulations of the Authority.

Federation of Cooperatives refers to three or

more primary cooperatives, doing the same line
of business, organized at the municipal,
provincial, city, special metropolitan political
subdivision, or economic zones created by law,
registered by the Authority.
Credit cooperative
promotes and undertakes savings
and lending services among its
members.
Consumers cooperative
the primary purpose is to
produce and distribute
commodities to members and
non-members.
Producers cooperative
undertakes joint production whether
agricultural or industrial for production
and processing of raw materials or
goods produced by its members into
finished or processed products for sale.
Marketing cooperative
engages in the supply of production
inputs to members and markets
their products.
Service cooperative engages
in medical and dental care,
hospitalization, transportation,
insurance housing, labor, electric light
power, communication, professional
and other services.
Multipurpose cooperative
combines two or more of the
business activities of these
different types of cooperatives.
Advocacy cooperative promotes and
advocates cooperativism among its members
ad the public through socially-oriented
projects, education and training, research and
communication, and other similar activities to
reach out its intended beneficiaries.
Agrarian reform cooperative
organized by marginal farmers majority of
which are agrarian reform beneficiaries
for the purpose of developing an
appropriate system of land tenure, land
development, land consolidation or land
management.
Cooperative bank the
primary purpose is providing a wide
range of financial services to
cooperatives and their members.
Dairy cooperative
members are engaged in the
production of fresh milk which
may be processed or marketed
as dairy products.
Education cooperative the
purpose is owning and operating
licensed educational institutions.
Electric cooperative the
purpose is undertaking power
generation, utilizing renewable
energy sources, acquisition and
operation of subtransmission or
distribution to its household
members.
Financialservice
cooperative the purpose is
engaging in service and credit
services and other financial services.
Fishermen cooperative
organized by marginalized
fishermen in localities whose
product are marketed either as
fresh or processed products.
Health services cooperative
the purpose is providing medical,
dental, and other health services.
Housing cooperative
organized to assist or provide
access to housing for the benefit of
its members who actively
participate in the savings program
for housing.
Transport cooperative
includes land and sea transportation,
limited to small vessels as defined
under the Philippine maritime laws.
Water service cooperative
organized to own, operate and
manage water systems for the
provision and distribution of
water for its members and
households.
Workers cooperative
organized by workers, including the
self-employed, who are at the same
time the members and owners of the
enterprise to provide employment
and business opportunities to its
members.
 General Assembly
elects

Audit Board of Election

Committee Directors Committee

Treasurer
Trainings and
Development
appoint

appoint
Committee
Secretary
Ethics Committee

Ways and Means

Manager Committee
Dividend
a. For Total Distributable Dividend, 70% of Net
Surplus less Statutory Reserves

b. For individual Dividend,

% ( )

1. Reserve Fund can be used for any project
that would expand the operations of the
Coop upon the resolution of the GA.
a. At least 10% of net surplus
b. Provided, that in the first five years of
operations after registration, this amount
shall of be less than fifty percent (50%) of
the net surplus.
2. Education and Training Fund use for
education and training purposes.
shall not be more than ten percent (10%) of
the net surplus

3. Community Development Fund use for

projects or activities that will benefit the
community where the Coop operates.
shall not be more than three percent (3%) of
the net surplus
4. Optional Fund a land and building fund,
and any other necessary fund that the GA
may decide to buy.
shall not be more than seven percent (7%) of
the net surplus
 Cooperative Income Statement
Sample accumulated share and deposit
Gross Income P 100,000
Date Balance Date Balance
Operating Expenses 80,000
Jan 100 Jul 750
Net Surplus P20,000
Feb 200 Aug 800
Less: Statutory Funds Mar 350 Sep 800
Reserve Funds 10% P 2,000 Apr 400 Oct 1,000
Educ. & Training Fund 10% 2,000 May 500 Nov 1,100
Jun 600 Dec 1,200
Community Dev. Fund 3% 600
Optional Fund 7% 1,400
Distributable Surplus P14,000
Dividends 70% * P14,000 P9,800
Patronage Refund
30% * P14,000 P4,200
100 + 200 + 350 + 400 + 500 + 600 + 750 + 800 + 800 + 1,000 + 1,100 + 1,200
. =
12

=
 Based on previous computation Lets say that after computing the average
Dividends 70%*P14,000 P 9,800 share per month of each member, the Total
Patronage Refund Average Share per month of all the
30% * P14,200 4,200 members is P30,000.
Net Surplus P14,000

. .
:
9,800
Percentage of = = 32.67%
30,000

= 32.67% x P650 = P212.33

 Based on previous computation Lets say that the following data were
Dividends 70%*P14,000 P 9,800 gathered:
Patronage Refund 1. Total interest paid by the said member is
30% * P14,200 4,200 P200.
Net Surplus P14,000 2. Total interest paid by all members is
P10,0000.

:
4,200
= = 42%
10,000
Patronage Refund = 42% x P200 = P84

All in all, based on the sample case, the member with an outstanding
paid-up capital of P1,200 with an average share of P650 and has paid
total interest of P200 from his/her loan collects the following from the
Coop:
Dividend of P212.33
Patronage Refund of P84.
 Advantages:
1. Easy Formation:
Compared to the formation of a company,
formation of a cooperative society is easy. Any
fifteen adult persons can voluntarily form
themselves into an association and get it
registered with the Cooperative development
Authority.

2. Limited Liability:
Like company form of ownership, the liability of
members is limited to the extent of their capital
in the cooperative societies.
 Advantages:
3. Perpetual Existence:
A cooperative society has a separate legal entity.
Hence, the death, insolvency, retirement,
lunacy, etc., of the members do not affect the
perpetual existence of a cooperative society.

4. Social Service:
The basic philosophy of cooperatives is self-help
and mutual help. Thus, cooperatives foster
fellow feeling among their members and
inculcate moral values in them for a better
living.
 Advantages:
5. Open Membership:
The membership of cooperative societies is
open to all irrespective of caste, color and
economic status. There is no limit on
maximum members.

6. Tax Advantage:
Unlike other three forms of business
ownership, a cooperative society is
exempted from income-tax and surcharge on
its earnings up to a certain limit.
 Advantages:
7. Local Government Assistance:
Government has adopted cooperatives as an effective
instrument of socio-economic change. Hence, the
Government offers a number of grants, loans and
financial assistance to the cooperative societies to
make their working more effective.

8. Democratic Management:
The management of cooperative society is entrusted
to the managing committee duly elected by the
members on the basis of one-member one -vote
irrespective of the number of shares held by them.
The proxy is not allowed in cooperative societies.
Thus, the management in cooperatives is democratic.
 Disadvantages:
1. Lack of Secrecy:
A cooperative society has to submit its annual reports
and accounts with the Cooperative Development
Authority. Hence, it becomes quite difficult for it to
maintain secrecy of its business affairs.

2. Lack of Business Expertise:

The member of cooperative societies generally lack
business expertise. When such members become the
members of the Board of Directors, the affairs of the
society are expectedly not conducted efficiently.
These also cannot employ the professional managers
because it is neither compatible with their stated
ends nor the limited resources allow for the same.
 Disadvantages:
3. Lack of Interest:
The paid office-bearers of cooperative societies do
not take interest in the functioning of societies due
to the absence of profit motive. Business success
requires sustained efforts over a period of time
which, however, does not exist in many cooperatives.
As a result, the cooperatives become inactive and
come to a grinding halt.

4. Corruption:
In a way, lack of profit motive breeds fraud and
corruption in management. This is reflected in
misappropriations of funds by the officials for their
personal gains.
 Disadvantages:
5. Lack of Mutual Interest:
The success of a cooperative society depends
upon its members utmost trust to each
other. However, all members are not found
imbued with a spirit of co-operation.
Absence of such spirit breeds mutual rivalries
among the members. Influential members
tend to dominate in the societys affairs.
THANK YOU!!!