Sunday, January 19, 2014
IS YOUR CO-OP'S CALENDAR YEAR IN CONFLICT WITH ITS FISCAL YEAR?
What is the Fiscal Year of your cooperative? January 1 to December 31, right? This is the reckoning period, or the period used in measuring your financial operations.
What is the Calendar Year of your cooperative? It starts during the time when your cooperative elects your officers. The General Assembly meeting for many cooperatives is usually held in late March every year, and the new term of co-op officers start usually ten (10) days after the elections.
So the calendar year would start in April and ends in March, when new officers are elected, right?
IS THERE A
Have you noticed that for many cooperatives, there is an apparent conflict with their fiscal year and calendar year? And this conflict breeds some complications.
Let me illustrate. Under the Cooperative Codes (RA 6938, RA 9520) many official acts of the cooperative need to be given prior approval by its General Assembly.
Among these include, but are not limited to, operational budget, development plan, declaration of annual interest on share capital/patronage refund, etc.
ARE SOME EXPENSES
But what happens is these have the fiscal year as cut-off date (December 31). However, they are usually given approval by the General Assembly in March of the following year.
Are the expenditures and other activities of the cooperative between December 31 to March not authorized, being not yet approved by the General Assembly?
It appears so.
What perhaps started this irregularity, if we may call it that, is the fact that cooperatives are allowed to submit to the Cooperative Development Authority their annual compliance reports (cooperative annual performance report, audited financial statements, social audit report, etc.) within 120 days from the end of the fiscal year (Dec. 31).
Cooperatives have found it convenient to hold their General Assemblies and annual elections within this period, when such compliance reports are ready for submission to CDA.
To some cooperatives who hold their Christmas Special General Assembly in December, they are able to get the mandatory, prior approval from their members for such things as developmental plan; operational budget, declaration of interest on share capital, etc.
However, Special Christmas General Assemblies, are now costly to many cooperatives, hence, they are now discontinued to cut down on costs.
The March General Assemblies continue. But the many important cooperative matters which should have been given prior approval by the General Assembly, are being implemented (at least for 3 months) without complying with such requirement.
HOW TO CORRECT
Maybe to correct this, the co-ops' General Assembly and elections could be held before the end of the fiscal year, say in December. The cut-off date for the operational data could be in September of the year, and the data for the next three months (income, for example) could be projected.
When data after December 31 are available, the reports can be adjusted, in time for the submission of compliance reports to CDA within 120 days after the end of the fiscal year (Dec. 31).
Does this happen in your cooperative? What can you suggest? Your comments are welcome. (END)