In our last issue I discussed on some salient features of the Performance Standards of Cooperatives based on the CDA M.C. 2013-15. Social Development Plan is one of the required plans that the cooperative must craft and forms part of the document to be assessed during the performance evaluation of the cooperative. Moreover, some plans that should be prepared by the cooperative include Cooperative Training Plan/Program, Succession Plan, Development Plans (Annual Plan and Budget, medium and long term), Human Resource Management Program, Job Rotation Program and Retirement Plan.
In addition, CDA inspectors look into the Manual of Operations/Policies, Election Code, Code of Governance and Ethical Standards, Accounting Manual, Codified Approving and Signing Authority, Organizational Structure, Share Certificates, Share and Transfer Book, Members’ Registry, Signage, and Payroll of cooperatives. Presence of such documents in the cooperative can be an indicator that the cooperative complies with the provisions of the law and CDA issuances at the same time a yard stick in the determination of performance and maturity level of the organization.
With the above list of required plans and documents, the Board of Directors of cooperatives must consider in the strategic planning, direction setting and policy making. As CDA conducts annual inspection of cooperatives and monitors the cooperative compliance to issuances and recommendations, maintaining a checklist of the needed plans and programs and conduct of periodic updating or assessment on semi-annual or annual basis contributes to effective and efficient operations.
On the financial aspects of the performance report, due diligence on the part of the Audit Inventory Committee/Compliance Officer or Accountant to compute for the financial ratio specifically PISO for all types of cooperatives. P stands for Profitability Performance wherein the Profitability Ratio, Earning per Share Ratio, Profitability Growth Rate, Asset Efficiency Rate, Rate of Interest on Share Capital are computed. I connote Institutional Strength that looks into the Net Institutional Capital, Adequacy of Provisioning (more than 1 year and 31 days-1 year). S is for Structure of Assets specifically Percentage of Non-Earning Assets, Members’ Equity to Total Assets, Deposit Liabilities to Total Assets, External Borrowings, and Receivables to Total Assets. O represents Operational Strength (Staying Power) that measures Volume of Business to Total Assets, Solvency, Liquidity, Cost per Volume of Business, Administrative Efficiency, and Turn-over Ratio.
To non-accountants like me the terms used are somewhat foreign or nosebleed as children today call it. The best way to understand these ratios is to familiarize ourselves with the account titles under the Standard Chart of Accounts used by cooperatives, become active members of cooperatives that we can look into audited financial statements, attend trainings and do the computation with the help of persons knowledgeable on cooperative accounting.
To be continued…
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