Thursday, November 12, 2015


It is mid-November 2015.  As the year is about to end, it is time to look ahead to 2016.  What comes to mind are at least two (2) regulatory burdens, concerns, if you must.

One is the required submission of credit data/records of the members of credit cooperatives to the Credit Information Corporation (CIC).  This is pursuant to R.A. 9510, the Credit Information Systems Act.

Medium-sized cooperatives, (with assets of at least P50-million) are to meet the December 31, 2016 submission deadline.  Large cooperatives (with at least P100-million assets) are to comply a bit earlier, starting October 30, 2016.

But prior to these, they must have notified their members about this, and they must have proof of such notification.  Also, they need to assign at least an authorized person for the data processing and submission of the updated data, every month, I think. And of course, that person must know the required operational processes.

Some say that a difficulty is  how to notify the members.  The easiest is to have them sign a pro-forma notification, which could be part of the loan documents.  This could be done when the member files for a loan or renews his loan.  However, the loan cycles vary from six months to up to five years for some.

Other ways could be tricky, as the cooperative needs a lot of explaining to do on the whys and wherefores.  And time to run after their members for them to  sign the notification.

The objectives of R.A. 9510 are noble.  Ultimately, the lowly farmer, fisherman and other marginal sectors could be enabled with a credit history.  Supposedly, they can use this when they access loans from banks or other formal lending institutions.  A good payment record might deserve them loans with less or no collateral.

But they are already getting their loan requirements from cooperatives.  Why should they bother to borrow from banks?  Some may need to, but they could be few.

Anyway, the CIC circulars do not yet (or I have not seen any) provide for specific sanctions or penalties for non-compliance.

Another regulatory burden, err.. I mean, concern for cooperatives in 2016 is the CDA-required adoption and implementation of the Philippine Financial Reporting Framework for Cooperatives (PFRFC).

Under CDA Memo Cir. No. 2015-06, starting in 2016 and thereafter, the cooperative's Board of Directors, and the Audit Committee, as well as the cooperative's external auditor shall ensure that the audited financial statements of the cooperative shall be fully compliant with the PFRFC standards.

It is said that if there are inconsistencies with the Standard Chart of Accounts, the PFRFC shall prevail.

This is particularly so for the cooperative's 2016 Audited Financial Statements, which shall be for submission in 2017.

The penalties for non-compliance are clearly set forth in the Circular: first instance of non-compliance -written warning; second instance - non-issuance of Certificate of Compliance (formerly Certificate of Good Standing); and third instance -revocation of the cooperative's certificate of registration.  A bit harsh.

The way I see it, cooperatives have a one-year window not to comply and prepare, with a written warning as penalty.  But after that is another matter.

As the saying goes:  Forwarned is fore-armed.  Let's try to comply.  So there.  (END).

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