FA 3 2015 Protected

Download as pptx, pdf, or txt
Download as pptx, pdf, or txt
You are on page 1of 39

CHAPTER XI

Government Accounting

PRESENTED BY GROUP 11
Definition
• It is a business organization owned and operated by a group of
individuals for their mutual benefit.

• It is a business owned and controlled equally by the people who use


its services or by the people who work there.

“It is an autonomous associations of persons united voluntarily to meet their


common economic, social, and cultural needs and aspirations through
jointly owned and democratically controlled enterprises.“

-International Co-operative Alliance's Statement on the Co-operative Identity


TYPES OF COOPERATIVES
Consumer Cooperatives
Producer Cooperatives
Marketing Cooperatives
Credit Cooperatives
Farming Cooperatives
We aim to create businesses which belong to
the people who use them, providing
valuable services and save consumers
money. Since the primary goal of
cooperatives is to meet needs, not generate
profits, we can serve our members at low
cost.

Ang Gawad Pinoy Consumer’s Cooperative

These are formed to protect and strengthen the specific interests of


ordinary consumers of society by making consumer goods available at
a fair price.

CONSUMER COOPERATIVES
These are formed by producers and manufactures. Marketing
cooperatives eliminate exploitation of the middlemen when marketing their
product.

MARKETING COOPERATIVES
These societies are set up to strengthen producers who operate on a
small scale who face challenges related to resources for raw
material and available markets for finished goods.

PRODUCER COOPERATIVES
These societies are formed to provide financial help to its members.

CREDIT COOPERATIVES
These are formed by small farmers who carry on work together to operate on a
larger scale and thereby share the benefits of large scale farming.

FARMING COOPERATIVES
CHARACTERISTICS
Members Voluntary Association
Service Motive
Membership
Body Corporate
Democratic Set Up
Sources of Finances
Return on capital
Members Voluntary Association
Individuals with common interest may come together to form a co-operative
society. Any person can become a member of such a co-operative.

Service Motive
The main motive of any co-operative organization is to provide specific
services to its members in particular and to the society in general.

Membership
The minimum number of individuals required to form a co-operative society is
ten and the maximum number is unlimited.
Body Corporate
Registration of a society under the Co-operative Societies Act is a must.
Once it is registered, it becomes a body corporate and enjoys certain
privileges just like a joint stock company.

SOME OF THE PRIVILEGES ARE:


• It can sue others in court of law.
• It can enter into contract with others
• It has its own common seal.
• It can own property in its name.
• The society enjoys perpetual succession
Democratic Set Up
Every member has a right to take part in the management of the society.
Each member has one vote. The Executive Committee, who is elected
and responsible to members, look after the daily operations of the
organization.

Sources of Finances
Organizations have units of investments called shares which are
contributed by members It can also raise loans and obtain grants from
the government.

Return on capital
Profit earnings on capital subscribed by the members is in the form of a
fixed rate of dividend after deduction from the profit of the cooperative.
• To encourage savings among its members
• To create pool of such savings from which loans for
productive or provident purposes may be granted to its
members
• To provide related services to its members to maximize
the benefits from such loans.

OBJECTIVES
OF A COOPERATIVE
1. A well-conceived chart of accounts and general ledger
system.
2. Clearly laid out procedures for keeping accounting records
accurate and up to date.
3. Skilled personnel, whose primary responsibility is to track,
update and report financial information.
4. A sound system for monitoring loan disbursements,
collections and deposit transacting.
5. Appropriate accounting safeguards and controls to provide
reasonable assurances that accounting are complete and
accurate.

COMPONENT OF A GOOD
ACCOUNTING SYSTEM
CONCEPTS AND
GENERAL PRINCIPLES
Separate Enterprise
Each cooperative are separate business enterprise requiring the
maintenance of comprehensive accounting records and financial
reporting practices.

Going Concern
Accounts are maintained as a “going concern” on the basis that its
operations will continue indefinitely.

Monetary Basis Of Accounting


Accounts should be recorded in terms of the peso amounts involved at
the time the transactions occur. Recording in terms of peso units
provides the best possible indicator of its relative impact on the overall
operations of the credit cooperatives.
Consistency In Accounting Practice From Period To Period
Consistent accounting practices should be followed by each cooperative
from one accounting period to the next. In case of material changes,
such changes must be disclosed together with the peso effect upon the
Statement of Financial Condition and the changes in the net surplus for
the period.

Timely Recognition In Accounting Records


Accounting transactions should be recorded on timely basis.

Materiality
A statement, fact or item is material if its disclosure or its treatment
would likely influence or make a difference in the judgement and
conduct of a reasonable person.
Principle Of Disclosure
All the members and users of financial statements should be informed
of the material and relevant information about the economic and
financial affairs of the cooperative

 FULL DISCLOSURE requires reporting of all facts that can make a


difference in the decision of the users and that the disclosure makes
the financial statements more relevant and useful and less subject
misinterpretation.
a. Accounting methods used in preparing the financial statements.
b. Changes in the use of accounting methods during the current
period
c. Terms of major borrowing arrangements
d. Existence of large contingent liabilities
e. Major proposed asset acquisitions
f. Contractual provisions relating to lease arrangements, employee
pension and bonus plan
g. Significant events affecting financial position (major contracts for
sale of services & pending legislation)
h. Other material and significant events which are relevant to the user

DISCLOSURES
Principle Of Conservatism
It should make reasonable provisions in the accounts for probable losses
on assets and for the settlement of liabilities.
Accounting Basis
Cooperatives are prescribed to use Modified Cash Basis which is a
combination of accrual basis and cash basis

 CASH BASIS
• Based on actual receipts and disbursements of the credit cooperative.

 PROVISIONS SHOULD BE MADE FOR THE FOLLOWING:


a. Liabilities which are not paid when due
b. Unpaid interest on share capital and patronage refunds
applicable to the accounting period
c. Deferred credits and charges that are applicable to future
periods
d. Estimated losses on loans outstanding and other risk assets
e. The depreciation of property and equipment
• Cash Basis
Revenue is recorded when collected and expenses are accounted when
paid

• Accrual Basis
Records revenue when earned and expenses and liabilities as they are
incurred

Two Accounting Bases


Accounting Safeguards And Control
Each credit cooperative should adopt appropriate
accounting safeguards and controls to provide its members
and the general public reasonable assurance that records are
complete and accurate.

Accounting Period
It shall be 12-month period from January 1 to December 31
Statement of Financial Condition/Balance Sheet
Presents three major categories: a) assets, b) liabilities, c)
equity (total assets – total liabilities).

Statement of Operation/Net Surplus


Presents the revenues, expenses, gains, losses and net
surplus(net loss) recognized during the period

FINANCIAL STATEMENTS
Statement of Cash Flows
Summarizes all operating, investing, and financing
activities of a cooperative. It provides information about
cash receipts and cash payments of a cooperative during a
period.

FINANCIAL STATEMENTS
Related Schedules such as:
• Bank reconciliation
• Aging of loans receivables
• Property and equipment
• Members’ loans receivables, savings/time deposits, subscribed and
paid-up capital
• Investments
• Accounts payable
• Loans payable
• Uses of:
a) Reserve fund
b) Optional fund
c) Education and training fund – APEX, Local

FINANCIAL STATEMENTS
Revolving Fund
An amount set up to meet immediate cash operating requirements

Change Fund
Set up to take care of loose change in the store

Advances To Officers And Employees


Debited for duly approved advances to officers and employees

ACCOUNTS PECULIAR TO A
COOPERATIVE
Due From Officers And Employees
Debited for shortages and other losses sue to the fault/negligence
of accountable officers and employees

Investment In Cooperative
Long-term investment in other cooperatives in the form of stock
and bonds

Interest On Share Capital Payable


Credited for the amount allocated for interest on share capital
payable to members

ACCOUNTS PECULIAR TO A
COOPERATIVE
Patronage Refund Payable
Credited for the amount allocated by the board of directors for
patronage refund from the cooperative’s yearly net surplus

CETF- Due To Apex Organization


Credited for ½ of the amount allocated for Education and
Training set up from net surplus

Revolving Capital Payable


Credited for the deferment of interest in capital and patronage
refunds payable to members

ACCOUNTS PECULIAR TO A
COOPERATIVE
General Reserve Fund
Credited for at least 10% of the cooperative’s yearly net surplus

Cooperative Education And Training Fund


Credited for ½ of the amount allocated education and training
fund from net surplus

Optional Fund
Credited for the amount allocated for land and building,
community development and any other necessary fund the total
of which may not exceed 10% of net surplus as prescribed in the
cooperative code

ACCOUNTS PECULIAR TO A
COOPERATIVE
RA 9520
"Philippine Cooperative Code of 2008"
Net Surplus
An excess of payments made by the members for the loans
borrowed, or the goods and services availed by them from
the cooperative or the difference of the rightful amount due
to the members for their products sold or services rendered
to the cooperative including other inflows of assets resulting
from its other operating activities.

ART. 86, Sec. 3


ALLOCATION AND DISTRIBUTION OF NET SURPLUS
Reserve Fund
• At least ten per centum (10%) of net surplus
• Provided, That, in the first five (5) years of operation after
registration, this amount shall not be less than fifty per
centum (50%) of the net surplus

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


Cooperative Education And Training Fund

An amount for the education and training fund, shall not be more than
ten per centum (10%) of the net surplus.

• Half of the amounts transferred to the education and training fund


annually under this subsection shall be spent by the cooperative for
education and training purposes; (LOCAL)
• while the other half may be remitted to a union or federation chosen
by the cooperative or of which it is a member. (APEX)

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


Community Development Fund
• An amount for the community development fund, which
shall not be less than three per centum(3%) of the net
surplus.

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


Optional Fund
• An optional fund, a land and building, and any other
necessary fund the total of which shall not exceed seven
per centum (7%).

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


Optional Fund
• An optional fund, a land and building, and any other
necessary fund the total of which shall not exceed seven
per centum (7%).

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


The remaining net surplus shall be made available to the
members in the form of interest on share capital not to
exceed the normal rate of return our investments and
patronage refunds: Provided, That any amount remaining
after the allowable interest and the patronage refund have
been deducted shall be credited to the reserve fund.

ALLOCATION AND DISTRIBUTION OF NET SURPLUS


"The sum allocated for patronage refunds shall be made
available at the same rate to all patrons of the cooperative in
proportion to their individual patronage.”

ALLOCATION AND DISTRIBUTION OF NET SURPLUS

You might also like