BIBLIOGRAPHY ORAS, FREDA P. APRIL 2010....
BIBLIOGRAPHY
ORAS, FREDA P. APRIL 2010. Financial Management Practices of Tocmo
Sabkil Labilab Multi-Purpose Cooopertaive in Tocmo, Loacan, Itogon, Benguet. Benguet
State University
Adviser: David Joseph L. Bognadon, MSc.
ABSTRACT
This study was conducted December 2009 to January 2010 in Tocmo, Loacan,
Itogon, Benguet to determine the fund sources, management practices on budgeting,
internal control, fund allocation and usage, the problems encountered by the cooperative
and suggested solutions and recommendations. The data were gathered through survey
questionnaire, interview, review documents and records. The data were analyzed using
simple statistical tools frequency counts, percentage and descriptive analysis.
The findings show that the cooperative provided the important needed service of
the members. Managing movement of funds in relation to the budget is essential for
business. The main core that makes cooperative attractive is properly managing resources
and finances.
TABLE OF CONTENTS
Page
Bibliography...……………………………………………………………… i
Abstract……………………………………………………………………... i
Table of Contents…………………………………………………………… ii
INTRODUCTION………………………………………………………….. 1
Rationale…………………………………………………………… 1
Statement of the Problem………………………………………….. 3
Objectives of the Study……………………………………………. 3
Importance of the Study…………………………………………… 4
Scope and Delimitation of the Study………………………………. 4
REVIEW OF LITERATURE……………………………………………… 5
Financial Management Level……………………………………… 5
Cooperative Extension Financial Resource
Management Training for Support Groups………………………... 7
Definition of Terms………………………………………………… 9
METHODOLOGY………………………………………………………… 10
Locale and Time of the Study……………………………………… 10
Respondents of the Study………..………………………………… 10
Data Gathering Method…………..………………………………… 10
Data Analysis…………………….…………………………………. 10
ii
RESULTS AND DISCUSSIONS
General information about the respondents……………………….... 11
Services of the cooperative…………………………………………. 13
Sources of funds of the cooperative………………………………… 14
Privileges of the members…………………………………………… 18
Budgeting practices…………………………………………………. 18
Internal control practices……………………………………………. 18
Livelihood project of the cooperative……………………………….. 19
Problems encountered by the cooperative…………………………… 20
Causes of the problem……………………………………………….. 20
Suggested solution to the problem…………………………………… 21
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary……………………………………………………………… 22
Conclusions…………………………………………………………... 23
Recommendations…………………………………………………….
24
LITERATURE CITED…………..………………………………………….. 25
APPENDIX
A. Communication Letter to the Manager ……….………………… 26
B. Survey Questionnaire…………………………………………… 27
C. Financial Statements…………………………………………….. 32
iii
1
INTRODUCTION
Rationale of the Study
After the killer quake that hit Baguio City in July 1990, a great change occurred in
the history of Sitio Tocmo Loacan, Itogon, Benguet that brought forth the birth of Tocmo
Sabkil Labilab Organization. It is a known fact that everyone affected by that earthquake
experienced hardships and struggles. Almost everyone survived through relief goods
from the government and numerous concerned citizens. It is a joy to one’ soul that there
are persons who cared enough to organize a group whose main focus is to promote
synergism in order to reach a common goal – the achievement of a brighter tomorrow.
Among these congregations who were more than willing to help and work together were:
Mary Immaculate Conception (MIC) Sister’s headed by Sr. Fely Tobias and Sr. Azon
Camajalan and the Alay sa Kapwa Foundation (AKAP) headed by Sr. Diane Nieva, Mrs.
Marieta Paragas, Mr. Pablo Abluyen, Miss Nena Olas and Mrs. Ursula Bumacas. With
great determination the group pooled together all their knowledge, efforts and resources
to implement their plan. The group was called then “The Buying Club”. (Profile of the
Cooperative, 1995)
The business operation of the club underwent its trial period on November 1990.
They started with 10 sacks of NFA rice as there starting capital valued at P 5,000. After
three months of operation it was unanimously decifed that the group be registered with
the Securities and Exchange Commission (SEC). So the organization acquired legal
personality on February 15, 1991 as Tocmo Sabkil Labilab Organization (TSLO).
The initial capital of P 5,000 became P 11,000 and the 20 members increased to
93. The 10 sacks of rice that they are selling before increased to 20 sacks and other basic
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
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necessities like sugar, salt, lard and laundry soap were added. Tocmo Sabkil Labilab
organization officers and members underwent various trainings. This assistance were
through the courtesy of MIC and AKAP who continuously facilitate training and
seminars for TSLO in coordination with the other benevolent organization. The
association then became a cooperative in May 25, 1993. The services of the cooperative
to the members had expanded. The P11, 000 capital increased to P 535, 854.09. The
cooperative was able to construct its building, housing its office and store. This building
serves as the monument of the group’s struggle in reaching its goal. The NFA rice that
they sold before was added with commercial rice. The members as of 2009 are 131 after
the officers undertook into screening of active and good members.
Tocmo Sabkil Labilab Multi-Purpose Cooperative (TSLMPC) has also done a
great service to the community. It helped organize the Day Care and Seniors Citizens
group and served as a channel for the dissemination of local government information. It
has also undertaken infrastructure projects coming from both the municipality and
barangay for the benefit of the members and the whole community. TSLMPC is now a
member of the Federation of Itogon Multi- Purpose Cooperatives (FIMCO). FIMCO
extends services such as trainings and seminars that are beneficial to TSLMPC.
Thus, it is once again proven that if there is teamwork among people, with God’s
divine presence, the goal set will gradually and eventually be met. As one of the speakers
of the cooperative seminar Miss Raneil Custodio once said, “the cooperative shall surely
perish if Christ is not in its midst”.
It is common notion that people in rural areas lacks sophisticated knowledge in
business management and organization, more so on complex matters like financial
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
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management. And there are lot of peoples’ organizations and cooperative that went into
bankruptcy because of their limitations on specialized knowledge and skill on financial
management. It is therefore, so rare to witness a rural organization like TSLPMC that
thrived and became successful given the many challenges that beset the organization,
members and organizers. This study would like to assess how the organization manages
its scanty resource. The study will look into the financial management practices of the
cooperative.
Statement of the Problem
The study documented and addressed the following questions:
1. What are the sources of funds of the cooperative?
2. What are the cooperative management practices in terms of:
a. Budgeting
b. Internal control system
c. Fund usage and allocation
3. What are the financial management problems encountered by the cooperative?
4. What are the possible solutions and recommendations?
Objectives of the Study
Generally the study document the financial management practices of TSLMPC,
specifically it aimed to:
1. To determine the sources of funds of the cooperative
2. To described the financial management practices of TSLMPC in terms of:
a. Budgeting
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b. Internal control system
c. Fund usage and allocation
3. To identify and analyze the financial management problems of the cooperative
4. To come up with possible solutions and recommendations of the problems
Importance of the Study
This study was conducted to evaluate the financial management practices of
TSLMPC. Through this study the researcher gained more knowledge and skill on the
realities of managing a cooperative. The results of the study like success factors;
contributions and effects of cooperative will serve as a reference to future researchers. On
the part of the cooperative, it will serve as a reference to further improve their financial
management system.
Scope and Delimitation of the Study
This study looked into the financial management practices of TSLPMC their
policies on source of funds, allocation and usage. The study looked also on the internal
control system and practices that provide safeguard and protection of their properties.
Various monitoring and reporting systems were also documented as part of their
management systems.
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REVIEW OF LITERATURE
According to the Coop Herald (2009), financially speaking our members already
knew thrift, savings, credit and pay back as requirements to the cooperative investment
and mobilization. One reason why more and more Filipinos have begun to turn to
cooperatives goes beyond its image as an alternative source of income and benefits, truth
is, the main core that makes cooperative attractive is on the way their finances and
resources are properly managed.
Financial Management Level (Stanley, 2000)
Broadly speaking, the process of financial management takes place at two levels.
At the individual level, financial management involves tailoring expenses according to
financial resources of an individual. Individuals with surplus cash or access to funding
invest their money to make up for the impact of taxation and inflation. Else, they spend it
on discretionary items. They need to be able to make the financial decisions that are
intended to benefit them in the long run and help them to achieve their financial goals.
From the organizational point of view, the process of financial management is associated
with financial planning and financial control. Financial planning seeks to quantify various
financial resources available and plan the size and timing of expenditures. Financial
controls refer to monitoring cash flow. Inflow is the amount of money coming into a
particular company, while outflow is a record of the expenditure being made by the
company. Managing this movement of funds in relation to the budget is essential for the
business.
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At the cooperative level, the main aim of the process of managing finances is to
achieve the various goals a company sets at a given point of time. Businesses also seek to
generate substantial amounts of profits, following a particular set of financial processes.
Besides, they control the functioning on money put in by external investors. Providing
investors with sufficient amount of returns on their investments is one of the goals that
every company tries to achieve. Efficient financial management ensures that this becomes
possible. Strong financial management the business area requires managers to be able to:
1. Interpret financial reports including income statements, profit and loss, cash
flow statements and balance sheet statements.
2. Improve the allocation of working capital within the business operations
3. Review and fine-tune financial budgeting, and revenue cost forecasting.
4. Look at the funding options for business expansion, including both long and
short term financing.
5. Review the financial health of the company o r business unit using ratio
analyses, such as the ratio, profit per employee and weighted cost o capital.
6. Understand various techniques using in project and asset valuations.
7. Apply critical financial decision making techniques to assess whether to
proceed with an investment.
8. Understand the various frameworks for business, portfolios and intangible
assets.
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Cooperative Extension Financial Resource
Management Training For Support Groups
(Anonymous, 2005)
Some of the practices of Support Groups in keeping records:
Record - Keeping
1. Detailed records should be kept on all funds collected and/or spent.
2. The use of a computer software package with adequate built-in controls is
recommended any time a bank account is involved.
3. Record multiple copied pre-numbered cash receipts immediately upon receipt.
Depositing funds on a daily basis is desirable, however, it is suggested all funds be
deposited within three working days or when the funds exceed $200.
4. Prepare a list of all remittances received and make comparisons of this list with
subsequent bank deposits.
5. Where county support staff collects and receipts funds, there should always be
a signed transmittal in duplicate for the collected funds from the support group
representative upon transfer of funds.
6. Adequate physical facilities should be provided for safeguarding funds in the
possession of individuals authorized to handle funds (Safe, locked cabinet, etc.).
7 Main Factors Contributing to the Survival Rate
of Cooperative(Anonymous, 2001)
Four factors indicate that higher survival rate is specifically due to inherent
structure of the coo-op model:
1.The focus on the member service as opposed to profit, which has an impact
on business decision.
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2. The central role of the member who is both investor and consumer in the
cooperative.
3. The democratic nature, the return of the profits to the members and the open
governance structure of co-ops.
4. The presence of a group of promoters rooted within the communities.
Three factors also indicate a historical advantage, as well as the business environment of
co-ops:
1. Strong representation in economic sectors that fulfill basic human needs,
including agriculture, forestry, residential services and education.
2. The majority of the coops operating both regional and sectorial networks.
3. Support of primary and secondary organizations.
According to Certo (2000) essentially the role of managers is to guide
organizations toward goal accomplishment. All organizations exist for certain purposes
or goals, and managers are responsible for combining and using organizational resources
to ensure that their organizations achieve their purposes. Management moves an
organization towards its purposes or goals by assigning activities that organization
member perform. “There is no idea more important to managing than goals.
Management has no meaning apart from its goals.”
According to Erickson (1987) the ultimate goal of budgeting is to predict and
control inputs to increase the returns from resources available to the agribusiness.
Preparing a budget for even a small firm is not a one-person job. Key people, advisors,
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and information sources should all be involved; bankers, accountants or auditors,
suppliers, and even customers, members may be involved.
Abiasen (2004) enumerated various practices of cooperatives in raising cash for
working capital. Some of these practices are loan availment from other institutions, ask
for donations or grants, conduct of fund raising activities, giving incentives to regular
members who add to their share capital, network recruit of new members, offer savings
service with higher interest rate and promotional selling of products.
Some cooperatives also have capital build-up programs such as raffle promo, loan
retention, kiddy savings plan and one peso per day savings. The program help the
cooperative raised more funds for their operation.
Definition of Terms
Financial management. It deals with the financial decisions and problem solving
and also handling financial situation in a responsible manner to achieve financial
independence.
Internal control system. It comprises the plan of organization and all of the
coordinate methods and measures adopted within a business to safeguard its assets, check
the accuracy and reliability of its accounting data.
Budget. It is generally a list of all planned expenses and revenues. It is a plan
express in quantitative terms on how to acquire to use resources of an entity during a
certain future period of time.
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METHODOLOGY
Locale and Time of the Study
The study was conducted at Tocmo Sabkil Labilab Multi-Purpose Cooperative in
Tocmo, Loacan, Itogon, Benguet from November to December, 2009. Tocmo is a
mountainous place and it is far from the city.
Respondents of the Study
The respondents of this study were the officers and staff of the cooperative
directly involved in the financial management of the organization. Some members were
interviewed to validate data from the cooperative records and officers. There were 17
officers and 10 members as the respondents.
Data Gathering Method
The study made use of secondary data like history of the coop, financial
documents reports and records as well as primary data. Primary data were gathered
through personal interview and with survey questionnaire.
Data Analysis
The data gathered were tabulated, analyzed, and interpreted using simple
statistical tools such as frequency counts, percentages, descriptive analysis and financial
ratios.
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RESULTS AND DISCUSSION
General Information about the Respondents
Table 1 presents the age, sex, occupation, years in the position and civil status of
the respondents.
Age. As shown, 35.29 % of the respondents belonged to the age bracket of 40-49 years
old. Some 23.53% belonged to the age bracket of 30-39 years old, 17.66% belonged to
the age bracket of 60-69 years old and 11.76% belonged to the age bracket 50-59 and
11.76% belonged to age bracket 70-79 years old.
Sex. Among the 17 officers as respondents, 64.71% were female and 35.29% were male.
According to many of the respondents, females are greater in number than the males in
the cooperative activities the male on the other hand, were always busy on their business
transactions on the field especially for the farmers and also for the miners.
Civil Status. Table 1 shows that 94.11% of the respondents were married, 5.89% was
single.
Occupation. Most of the respondents, 35.29% were farmers, 23.53% were miners and
23.53% housekeepers and 17.65% are teachers.
Years in the Position. Most of the officers as the respondents 41.17% belonged to the
bracket of 6-10 years in the position, 29.41% belonged to the bracket of 1-5 years in the
position, 17.66% belonged to the bracket of 11-15 years in the position and 16.20%
belonged to the bracket of 16-20 years in the position.
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Table 1. General information about the respondent
PARTICULARS FREQUENCY PERCENTAGE
AGE
30-39 4 23.53
40-49 6 35.29
50-59 2 11.76
60-69 3 17.65
70-79 2 11.76
TOTAL 17 100.00
SEX
Female 11 64.71
Male 6 35.29
TOTAL 17 100.00
CIVIL STATUS
Single 1 5.89
Married 16 94.11
TOTAL 17 100.00
OCCUPATION
Farmer 6 35.29
Miners 4 23.53
Housekeeper 4 23.53
Teacher 3 17.65
TOTAL 17 100.00
YEARS IN THE POSITION
1-5 5 29.41
6-10 7 41.17
15-20 3 17.66
16-20 2 11.76
TOTAL 17 100.00
Services of the cooperative.
The services of the cooperative are consumers’ store and credit services. The
consumers’ store services policies are: no charge sales to non-members; charge account
for the members only. Merchandise is sold to non-members on account with a term of
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
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one-month credit period. “Bayad-utang” system is adopted and the credit limit is 75% of
member’s share capital.
On the credit policy on loans transaction, a member can avail loan from the
cooperative if they meet the following requirement: A member-farmer in good standing
must have a share capital of P3,500; no delinquent loans and a member for at least one
year; for non-farmer member the same policy applies but the member must have engaged
in any business. The service fee is 0.01% every six months for the farmers and every
quarter for the non-farmers. Interest rate is 1.55 per month or 18% per year pre- deducted.
Penalties or surcharge for delinquent loans is 5% per month and the collateral
requirements are co-maker, spouse signature if married, parent’s signature if single and
the appliances. The purposes of loan are classified agricultural and business. The loan
term or duration is up to six months for farmers and three months for the non-farmers.
Although credit service was operated with written policy, according to the officers
and some members interviewed, the policy had been the subject of argumentation among
members and officers. There are member- borrowers who are not aware of their accounts.
It is acknowledged by the officers also that they are not knowledgeable to operate credit
services. These instances eventually led to the closure of their business service after 13
years in operation.
The consumer service operation was sustained as the members and officers
mentioned that this service is very important for their daily needs. This service provides
the satisfaction to the members, and generates profit as for the cooperative to continue its
operation.
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Sources of Fund of the Cooperative. There are three sources of funds of the cooperative:
share capital from the members, donations/ grants, and the net surplus. The cooperative
through its officers and members, formulate and adopt policies for proper management
operation of the cooperative.
Paid-up share capital. The table 2 shows that the paid- up share capital in 2005
was P 275,709.59. The total share capital as of December 31, 2008 was P276,732.76. The
average share capital per member was P2, 112.5 as of December 31, 2008.
The minimum amount of share capital is P1,000 per member, dividends or interest
on share capital are not given to member who fails to meet the minimum share capital
required. The increasing paid- up share capital in 2008 was due to the increase number of
members. The caused for the decreasing of paid-up share capital in 2006 to 2007 was due
to the some members withdrawn their share capital.
Total Asset. The table 3 shows that the asset had been decreasing from 2005 to 2008. The
total asset in 2005 was P 543,550.59, this increased by about 6% in 2006. The following
years were then decreasing a little bit lower like the paid- up share capital, due to the
some members withdrawn their share capital.
Table 2. Total paid-up share capital
YEAR PAID-UP SHARE CAPITAL RATE OF INCREASE
2005 275, 550.59
2006 261, 557.91 -5.1
2007 270, 865.35 3.6
2008 276, 732.76 2.2
Average rate of increase 0.2
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Table 3. Total asset
YEAR TOTAL ASSET RATE OF INCREASE
2005 543, 550.59
2006 578, 038.37 6.3
2007 562, 516.49 -2.7
2008 550, 556.19 -2.1
Average rate of increase 0.5
Ratio of share capital to total asset. The share capital of members is one source of the
total asset of the cooperative. The table 4 presents that the share capital contributed was
50.73% of the total asset in 2005 and 2008. The ratio decreases about 45% in 2006 and
40% in 2007.
Net Surplus. The table 5 shows the net surplus for 2005 was P 18, 516.54. Net surplus
increased in 2006 and 2007 but decreases in 2008. The return to asset ratio shows that net
surplus from 2005to 2007 increased but in 2008 it decreased. The return to asset had been
decreased for the same period, also for the share capital. This shows that the earning
ability of their asset had been decreasing.
Table 4. Ratio of share capital to total asset
YEAR RATIO OF SHARE CAPITAL TO TOTAL ASSET (%)
2005 50.73
2006 45.25
2007 48.15
2008 50.26
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Table 5. Net surplus
YEAR AMOUNT OF NET SURPLUS RATIO OF NET SURPLUS TO
TOTAL ASSET SHARE CAPITAL
2005 18, 516.54 0.03 0.67
2006 53,965.84 0.09 0.21
2007 54, 764.62 0.09 0.20
2008 38, 160.63 0.07 0.14
Allocation of net surplus. The net surplus of the cooperative as of December 31, 2008
before the allocation was P54, 515.19. The mandatory 30% reserve from the net surplus
of P23, 470.17, subdivided into 10% general reserve fund P5, 451.52, 10% to the optional
fund (building, donations), 10% or P5, 452.52 also for the continues educational training
fund (CETF), 5% or P2, 725.76 for coop educational and training fund- local and 5% also
for due apex organization. After deducting the mandatory reserves, the remaining net
surplus of P38, 160.63 was distributed 60% for the patronage refund and 40% for the
share dividends of the members.
Liabilities. The table 6 shows that the ratio of liabilities from 2005 to 2008 was
decreasing, but the liabilities were still higher obligation of the cooperative.
Table 6. Total liabilities
YEAR TOTAL LIABILITIES RATE OF INCREASE
2005 127, 371.13
2006 115, 852.22 -0.09
2007 72, 615.32 -1.4
2008 68, 353.58 -0.05
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Debt ratio. As shown in the table 7 the liabilities in 2005 was 23.43% of the total asset
and 20.04% in the year 2006 as the total asset from the liabilities. The liabilities
decreased 12.91% in 2007 and 12.42% in 2008.
Table 7. Debt Ratio (Ratio of total liabilities to total asset)
YEAR RATIO OF TOTAL LIABILITIES TO TOTAL ASSET (%)
2005
23.43
2006 20.04
2007 12.91
2008 12.42
Donations. The donations/ grants as of December 31, 2008 was P67, 500, the 66%
or P44, 550 of the donations have been used as working capital in the livelihood project
of the cooperative like swine raising. The 34% or P22, 950 was added to the working
capital of the cooperative.
Privileges of members. A member in good standing is entitled to share dividend and
patronage refund; death aid amounting P2, 000. Members with incomplete share capital
of P1, 000 but patronizing the coop are entitled to patronage refund to be added to his/her
share capital.
Budgeting practices. It is the policy of the cooperative as embodied in there by laws that
budget is to be prepared by the BOD annually. The budget is prepared by the cooperative
to project the source and usage of resources during certain period of time or to plan their
expenses and revenues.
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The cooperative do not prepare budget, the reason as pointed out by that some
officers and members was they have no time to prepare the budget and that those who are
supposed to prepare were not knowledgeable. The advantage of having a financial budget
as members and some officers mentioned were it is for the cooperative to plan the profit,
the members to be aware of the business cost. Most officers and some members pointed
that the disadvantage of having a financial budget is to limit the decision making of the
cooperative and it is time consuming.
Internal control practices. Under the Cooperative laws, cooperative management are
required to maintain internal control like administrative and accounting control which
concerned mainly in the safeguarding the assets and reliability of financial records. Some
of the internal controls are: internal auditing; separation of duties concerned with records
and assets custody. Administrative control concerned with the operational efficiency and
usually related only indirectly to financial records like performance reports.
The TSLMPC has a bookkeeper to prepare the financial statements. The official
receipt and disbursement voucher are used by the TSLMPC to document their
transactions, and the sales journal, purchase journal, cash disbursement journal, cash
book are books of accounts used to record their transactions. The cooperative conducts its
audit quarterly and avail external audit service annually from external auditors. The
financial statement and other required report from cooperative are submitted to the CDA
annually. The TSLMPC is far from the city so the cash collections were not deposited to
the bank. It is kept by the treasurer and recorded in the cashbook.
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Livelihood project of the cooperative. The grant fund of P50, 000 given by Congressman
Samuel Dangwa to the cooperative was used for the livelihood project swine raising. The
purpose of having this project is to increase the capital of the cooperative and for the
beneficiaries.
.
The policies of the project are: project applicants are required to accomplish
application form with a co-maker from the member of the family. First come, first serve
basis. The beneficiary must be a member of the cooperative with a complete share capital
and must have a pigpen. The first eight (8) beneficiaries must provide P5, 000 cash as
payment of two (2) piglets worth (P4, 000) and P1, 000 for feeds as the beginning. The
lump sum of P5, 000 will be payable within one year and an interest of 500. The
collections of principal and interest will be revolved to the next batch of beneficiaries.
The project was successful as it benefited four batches of beneficiaries.
Problems encountered by the cooperative
Table 8 shows the two major problem of the cooperative are lack of capital and
the lack of knowledge on financial management. The 9 respondents stated lack of capital
is the problem in the cooperative while 8 respondents says it is lack of knowledge on
financial management.
Table 8. Problems Encountered by the Cooperative
PROBLEMS FREQUENCY PERCENTAGE
Lack of Capital 9 52.94
Lack of Knowledgeable 8 47.06
TOTAL 17 100.00
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
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Causes of the Problem
Most of the officers and members mentioned that the causes of the problem of
the cooperative were bad debts from the 50 members, no enough capital build-up. Some
members mentioned that due to seasonal income. The manager also mentioned that it is
because of the unstable cost of goods in the markets. The officers also mentioned that the
cause of lack of knowledge was due to some officers had informal education.
Suggested Solution to the Problem
The manager mentioned that to avoid the shortage of goods they would purchase
goods in consignment as good to pay for 1-2 weeks. The cooperative should increase the
capital build-up from five pesos per month to ten pesos per week. The officers mentioned
that the bad debts from the members must be collected by advance payment of P 250 per
week for the cooperative to be able to operate. The cooperative must undergo training
and seminar of the officers also for the members.
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Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This research was conducted to determine the financial management practices of
Tocmo Sabkil Labilab Multi-Purpose Cooperative. It focuses on the financial
management practices of TSLMPC particularly their internal control, fund allocation
and usage, monitoring and reporting and the problems encountered by the cooperative
and the suggested solutions and recommendations.
The respondents were the officers, staffs of the cooperative and some members
were interviewed. The data were collected through survey questionnaire. The data was
analyzed using descriptive analysis, frequency counts and percentages.
The financial management practice on budgeting was then the cooperative were
not preparing budget and the reason mentioned were no one is knowledgeable to prepare
the budget and no time in preparing the budget.
The cooperative major sources of funds were the share capital of the members,
donations/grants and income from the operation. The grant fund of P50, 000 given by
Congressman Samuel Dangwa to the cooperative was used for the livelihood project as
swine raising. The purpose of having this project is to increase their capital of the
cooperative.
The official receipt and disbursement voucher were use by the TSLMPC to
document their transactions, and the books of accounts like sales journal, purchase
journal, cash disbursement journal and cashbook were used by TSLMPC to record their
transactions. The TSLMPC is far from the city so the cash collections were not deposited
to the bank. It is kept by the treasurer and recorded in the cashbook.
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Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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The financial statements and other records of the cooperative are available for the
members who want to examine for them to be aware of the operation of their cooperative.
The cooperative conducts its audit quarterly and avail external audit service annually
from external auditors.
Most of the respondents 52.94% pointed out that the problem of the cooperative
was lack of capital and 47.06% of the problem of the cooperative was the lack of
knowledge on financial management practices like the financial plan on budgeting as
mentioned of some officers and members.
Most of the officers and some members mentioned that the causes of the problem
of the cooperative were; bad debts of the members, some mentioned it was because of
seasonal income due natural calamities no enough capital build-up and unstable cost of
goods from the market.
The TSLMPC to be able to operate the officers the manager mentioned that to
avoid the shortage of goods they will purchase goods in consignment as good to pay for
1-2 weeks. The officers mentioned that the bad debts should be collected from the
members who failed to pay. Collect the bad debts from the members by advanced
payment of P 250 per week, and increase their capital build-up. The cooperative should
avail trainings and seminar especially for the officers for them to be more knowledgeable.
Conclusions
Based on the findings of the study, the cooperative should enhance a
member’s way of living by providing the important needed service as the financial
management level stated. The finding shows that there are other important sources of the
total asset aside from the share capital of the members. The financial management
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
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23
practice of TSLMPC on the aspect of budgeting was then the officer’s lacks knowledge
in doing the budget, thus the cooperative should review the financial budgeting, revenue
and expenses.
This finding implies that the bad debts should be avoided by the cooperative, thus
the members should be aware of their obligations towards the cooperative as to give also
time for the improvement of their cooperative. It was stated by Coop herald that the
cooperative image was the alternative source of income and benefits, the truth was the
cooperative makes more attractive on the way their finances and resources are properly
managed. The TSLMPC should conduct fund raising activities and promotional selling
products except asking for donations or grants and capital build-up. The program help the
cooperative raised more funds for their operation.
Recommendations
In order to improve the financial management practices of the cooperative the
recommendations were made on the basis of the findings, though the share capital is the
common source of funds the cooperative should motivate the members to add their share
capital regularly so as to have more funds to use in the business operations. The
cooperative should increase their capital build-up as the members should deposit 5 pesos
per day and adopt some livelihood projects like making baskets out of pine needle,
bamboo, selling products or vegetables to increase their capital. The cooperative should
avail trainings and seminars especially for the officers to be more knowledgeable on
financial management practices. The cooperative should conduct pre- membership
education seminar in order that the members will be aware of their important role of the
cooperative in improving the cooperative situation.
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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LITERATURE CITED
ABIASEN, M. 2004. Fund management practices of primary cooperatives in Bakun,
Benguet.BS Thesis. Benguet State University, La Trinidad, Benguet. P. 3
ANONYMOUS. 2001. Survival Rae of Cooperatives. Retrieved December 13, 2009 from
http:/ontario coops. word press. com/ reports
ANONYMOUS. 2005. Cooperative extension financial resource management training
for support groups
CERTO, S. 2000. Modern management and policy. Eleventh edition. P. 4
COOP HERALD. 2009. Uplifting the lives of Filipinos, first quarter p.4
ERICKSON, S. 1987. Agribusiness management. Second edition. P. 6
STANLEY, S. 2000. Financial management examples, tips financial management excel
templates. www. Financialmodelingguide.com
Profile of the Cooperative. 1995
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Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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APPENDIX A
Department of Agricultural Economics and
Agribusiness Management (DEAEM)
Benguet State University
La Trinidad Benguet
DECEMBER 2009
Julia Simon
Manager
Tocmo Sabkil Labilab Multi-Purpose
Cooperative
Tocmo, Loacan, Itogon, Benguet
Ma’am:
Warm greetings!
I am a student of Benguet State University taking up Bachelor of Science in
Agribusiness major in Cooperative Management. I am presently conducting a research
titled “Financial Management Practices Case Study of Tocmo Sabkil Labilab Multi-
Purpose Cooperative” as a requirement for the degree.
In connection, may I request permission to conduct my study and float
questionnaire to the staff and officers. Rest assured that the data to be obtained from you
will keep confidential.
Thank you for your kind consideration.
Respectfully yours,
FREDA P. ORAS
Researcher
Noted:
David Joseph Bognadon
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Adviser
APPENDIX B
Tocmo Sabkil Labilab Multi-Purpose Cooperative
Survey Questionnaire
Name:_____________________ Age:____________ Sex:_________________
Civil Status: ________________ Position/occupation: _________________
Position in the Coop:_____________________
Number of Years in the position;________________
A) FINANCIAL PLAN
1. What are the services of the cooperative?
_______________________________________________________________
_______________________________________________________________
2. What are the cooperative policies in budgeting?
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
_______________________________________________________________
3. Are the policies implemented? ___________ yes ___________ no
If no, why? __________________________________________________
__________________________________________________
4. What do you think the advantage of having a financial budget?
______________________________________________________________
______________________________________________________________
5. What do you think the disadvantages of having no financial budget?
______________________________________________________________
______________________________________________________________
6. What are the financial goals of the cooperative?
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
_____________________________________________________________
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B.FINANCIAL SOURCES
1. What are the sources of funds of the cooperative for the past five years?
_____________share capital ______________savings deposit
_____________ time deposit ______________loans payable
_____________ donations ______________ net surplus
2. What are the policies of the cooperative on these fund
sources?_____________________________________________________
____________________________________________________________
3. Are there policies that encourage continuous members’ capital
contributions?
_________Yes __________No
4. What are their policies?
____________________________________________________________
____________________________________________________________
____________________________________________________________
5. Are they implemented?
___________Yes _____________No
Ifno,
why?_______________________________________________________
________________________________________________________
6. How many members continuously deposit or increase their deposit in the
cooperative?
____________________________________________________________
____________________________________________________________
7. What do you think are reasons why members do not increase their share or
deposit in the cooperative?
____________________________________________________________
____________________________________________________________
____________________________________________________________
8. What promotional activities are implemented by the cooperative to
increase funds?
____________________________________________________________
____________________________________________________________
____________________________________________________________
9. What are the effects or results of the promotional activities?
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____________________________________________________________
____________________________________________________________
____________________________________________________________
C. INTERNAL CONTROL
1. What financial document are utilized by the cooperative?
____________________________________________________________
____________________________________________________________
2. What are the financial records used by the cooperative?
____________________________________________________________
____________________________________________________________
____________________________________________________________
3. What measures are adopted by management to safe guard its cash collection?
_______deposit to bank __________cash vault
_______deposit to other coop. __________deposit box
_______others, please specify ___________________________________
4. Do the cooperative have a bookkeeper?
_______yes ________no
If no, why?__________________________________________________
5. Do the cooperative have a treasurer or cashier?
______yes ________no
If no, why?__________________________________________________
6. Are the supervisory committee of the cooperative functional?
_____yes _______no
If no, why?__________________________________________________
7. How often does the supervisory committee conduct their audit?
________monthly _______weekly
________quarterly _______semi-annually
________annually _______ none
8. Are these reports submitted by the supervisory committee?
_______yes ______no
If no, why?__________________________________________________
9. Do the cooperative avail external audit services?
_______yes _____no
If no, why?__________________________________________________
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10. If yes, how often is the external audit?
_________quarterly _______semi-annually
________annually _______ none
D. FUND UTILIZATION
1. What are the projects of the cooperative for the last five years?
_______________________________________________________________
_______________________________________________________________
2. Are there written policies of the cooperative in the implementation of projects?
_____yes _____no
3. What are the policies?
____________________________________________________________
____________________________________________________________
____________________________________________________________
4. Who prepares policies of projects?
___________________________________________________________
5. Are your funds enough to finance your present operation?
_____yes _____no
If no, what particular services you need finances?____________________
6. What are the causes for the shortage of funds?
____________________________________________________________
7. Is the net surplus of the cooperative distributed to the members?
_____yes _____no
If yes, how is the distribution of net surplus done?
_______________________________________________________
8. What is there rate in patronage refund and dividends of members for the past
five years?
____________________________________________________________
E. MONITORING AND REPORTING
1. Are members allowed to examine financial records of the cooperative?
___yes _____no
If yes, how?__________________________________________________
2. What financial reports are prepared by the cooperative?
____________________________________________________________
____________________________________________________________
____________________________________________________________
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3. What is the frequency of report submission?
___________________________________________________________
___________________________________________________________
4. Are the financial reports presented to the BOD and assembly?
_____yes _____no
How?_______________________________________________________
_______________________________________________________
5. What are the financial performances of the cooperative for the period of 5
years? __________________________________________________________
___________________________________________________________
___________________________________________________________
6. What are the problems encountered on financial management?
____________________________________________________________
____________________________________________________________
7. What are the causes of these problems?
____________________________________________________________
____________________________________________________________
8. What are the possible solutions and recommendations to the problems?
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
____________________________________________________________
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APPENDIX C
TOCMO SABKIL LABILAB MULTI-PURPOSE COOPERATIVE
Tocmo Loacan, Itogon,Benguet
STATEMENTS OF FINANCIAL OPERATIONS
For the Year Ended December 31
2006 2005
Sales 1,506,308.75 1,402,789.65
Less: Cost of Sales:
Inventory Beginning 33,497.86 31,121.60
Add: Purchase 1,331,802.14 1,265,009.10
Freight In 6,388.00 4,698.10
Total Goods Available for Sale 1,371,688.00 1,300,828.80
Less: Inventory End 41,112.29 1,330,575.71 33,497. 60 1,267,330.94
Gross Income from Sales 175,733.04 135,458.71
Less: Operating Expenses
Salaries and Wages 40,837.61
Honorarium 58,375.91 7,450.00
Store Supplies 2,458.70 2,836.50
Office Supplies 778.00 896.25
Travel and Transportation 3,355.00 3,701.50
Professional Fee 1,500.00 2,500.00
Power, Light and Water 15,839.18 9,797.85
Interest Expense on Borrowing 4,559.50 17,898.00
Taxes and Licenses 1,377.00 2,547.00
General Assembly Expenses 2,070.00 2,581.50
Bank Charges 514.89 3,697.20
Depreciation Expense 9,269.60 9,269.60
Miscellaneous 721.21 3,369.50
SSS Contributions - 1,696.00
Total operating Expenses 100,053.99 109,078.51
Net Surplus Before Other Income 75,679.05 26,380.20
Add: Other Income 600.00 72.00
Net Surplus Before Allocations 77,094.05 26,452.20
Less: Statutory Allocations
General Reserve Fund 7,709.41 2,645.22
Coop Educational and Training Fund- Local 3,854.70 1,322.61
Coop Educational and Training Fund- National 3,854.70 1,322.61
Optional Fund 7,709.41 2,645.22
Total Allocations 23,128.22 7,935.66
Net Surplus Available for Distribution 53,965.84 18,516.54
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Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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TOCMO SABKIL LABILAB MULTI-PURPOSE COOPERATIVE
Tocmo Loacan, Itogon,Benguet
STATEMENTS OF FINANCIAL OPERATIONS
For the Year Ended December 31
2008 2007
Sales 2,041,509.00 2,027,265.00
Less: Cost of Sales:
Inventory Beginning 65,665.18 41,112.29
Add: Purchase 1,884,452.68 1,855,794.86
Freight In 6,983.00 7,798.00
Total Goods Available for Sale 1,957,100.86 1,904,705.15
Less: Inventory End 53,748.00 1,903,352.86 65,665.18 1,839,039.97
Gross Income from Sales 138,156.14 188,255.03
Less: Operating Expenses
Honorarium 49,246.84 67,440.34
Store Supplies 2,997.50 3,233.00
Office Supplies 941.50 778.50
Travel and Transportation 4,123.00 3,355.00
Professional Fee 1,500.00 1,500.00
Power, Light and Water 12,940.51 19,167.92
Interest Expense on Borrowing 200.00 599.00
Taxes and Licenses 1,605.00
General Assembly Expenses - 3,000.00
Depreciation Expense 9,269.60 9,269.60
Miscellaneous 1,437.00 2,246.50
Total operating Expenses 84,260.95 110,598.86
Net Surplus Before Other Income 53,895.19
77,635.17
Add: Other Income 620.00 600.00
Net Surplus Before Allocations 54,515.19 78,235.17
Less: Statutory Allocations
General Reserve Fund 5,451.52 7,823.52
Coop Educational and Training Fund- Local 2,752.76 3,911.76
Coop Educational and Training Fund- National 2,725.76 3,911.76
Optional Fund 5,451.52 7,823.52
Total Allocations 16,354.56 23,470.55
Net Surplus Available for Distribution 38,160.63 54,764.62
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TOCMO SABKIL LABILAB MULTI-PURPOSE COOPERATIVE
Tocmo Loacan, Itogon, Benguet
STATEMENT OF FINANCIAL CONDITION
As of December 31
ASSETS 2006 2005
Current Assets:
Cash on Hand 54,832.00 41,591.91
Accounts Receivable 281,698.34 264,671.50
Loans Receivable 40,187.35 40,187.35
Merchandise Inventory 41,112.29 33,497.86
Total Current Assets 417,829.98 379,948.62
Investment 12,673.51 6,797.49
Property and Equipment
Building 140,000.00 140,000.00
Store Equipment 38,038.00 38,038.00
Office Equipment 6,384.00 6,384.00
Utensils 925.00 925.00
Total 185,392.00 185,392.00
Less: Accumulated Depreciation (37,857.12) (28,587.52)
Total Property and Equipment 147,534.88 156,804.48
TOTAL ASSETS 578,038.37 543,550.59
LIABILITIES, FUNDS AND MEMBERS’ EQUITY
Liabilities:
Accounts Payable 22,484.00 22,315.00
Loans Payable 68,881.25 63,095.91
CETF-National 5,177.31 1,322.61
Accrued Expenses 19,309.66 40,637.61
Total Liabilities 115,852.22 127,371.13
Members’ Equity
Paid-up Share Capital 261,557.91 275,709.59
Undivided Surplus 53,965.84 18,516.54
Donations 67,500.00 67,500.00
Total Members’ Equity 383,023.75 354,226.13
Funds:
General Reserve Fund 57,512.00 275,709.59
Coop Educational and Training Fund- Local 6,049.10 18,516.54
Optional Fund 15,601.11 8,291.70
Total Statutory Funds 79,162.40 61,953.33
TOTAL LIABILIATES, MEMBERS’ 578,038.37 543,550.59
EQUITY AND RESERVES
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
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TOCMO SABKIL LABILAB MULTI-PURPOSE COOPERATIVE
Tocmo Loacan, Itogon, Benguet
STATEMENT OF FINANCIAL CONDITION
As of December 31
ASSETS 2008 2007
Current Assets:
Cash on Hand 54,991.32 73,822.08
Accounts Receivable 259,069.42 232,303.09
Loans Receivable 41,087.27 39,787.35
Merchandise Inventory 53,748.00 65,665.18
Total Current Assets 408,887.00 411,577.18
Investment 12,673.51 12,673.51
Property and Equipment
Building 140,000.00 140,000.00
Store Equipment 38,038.00 38,038.00
Office Equipment 6,384.00 6,384.00
Utensils 925.00 925.00
Total 185,392.00 185,392.00
Less: Accumulated Depreciation (56,396.32) (47,126.52)
Total Property and Equipment 128,995.6 138,265.28
TOTAL ASSETS 550,556.9 562,516.49
LIABILITIES, FUNDS AND MEMBERS’ EQUITY
Liabilities:
Accounts Payable 38,530.00 22,305.00
Loans Payable 18,008.75 25,721.25
CETF-National 11,814.83 9,089.07
Accrued Expenses - 15,500.00
Total Liabilities 68,353.58 72,615.32
Members’ Equity
Paid-up Share Capital 276,732.76 205,865.35
Undivided Surplus 38,160.63 54,764.62
Donations 67,500.00 67,500.00
Total Members’ Equity 382,393.75 393,129.97
Funds:
General Reserve Fund 70,787.23 65,335.71
Coop Educational and Training Fund- Local 6,610.86 8,010.86
Optional Fund 22,411.12 23,424.62
Total Statutory Funds 99,809.21 96,771.20
TOTAL LIABILIATES, MEMBERS’ 550,556.29 562,516.49
EQUITY AND RESERVES
Financial Management Practices of Tocmo Sabkil Labilab Multi-Purpose
Cooopertaive in Tocmo, Loacan, Itogon, Benguet / Freda P. Oras. 2010
Document Outline
- Financial Management Practices of TocmoSabkil Labilab Multi-Purpose Cooopertaive in Tocmo, Loacan, Itogon, Benguet
- BIBLIOGRAPHY
- ABSTRACT
- TABLE OF CONTENTS
- INTRODUCTION
- REVIEW OF LITERATURE
- METHODOLOGY
- RESULTS AND DISCUSSION
- SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
- LITERATURE CITED
- APPENDIX