BIBLIOGRAPHY PILAS,...
BIBLIOGRAPHY
PILAS, DAISYBELLE K. APRIL 2012. Financial Management Practices: A Case
Study of Selected Millionaire Cooperatives in Benguet. Benguet State University, La
Trinidad, Benguet.
Adviser: Jovita M. Sim, MSc
ABSTRACT
This study was conducted with the top five millionaire cooperatives in Benguet
from October to December 2011 to determine the financial management practices as to the
sources of funds, fund utilization practices, capital build-up schemes, factors affecting
financial management and the profile of the selected millionaire cooperatives. The study
also looked at the problems encountered by these cooperative on financial management.
There were a total of 32 respondents which include the officers and staff from the five
millionaire cooperatives. A survey questionnaire was used and secondary data was also
collected and served as reference. The data gathered were analyzed using frequency,
percentage and mean.
All the cooperatives raised their funds from share capital of members and only few
cooperatives depend on external sources. In generating share capital, the cooperatives have
identified recruits of new members and continuous increase of the minimum paid-up share
capital as the easiest and basic ways to increase the cooperatives paid up capital.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Capital build-up schemes were also identified which includes regular payment of
share capital contribution, patronage of store/canteen and payroll deduction for the
cooperative officer and staff.
In the allocation of funds, most of the funds of the cooperative were allocated to
working capital such as purchase of stocks and lending funds.
All the factors identified were not seriously experienced by the millionaire
cooperatives studied except having inadequate financial control policies. Cooperatives
were facing problems such as presence of incompetent officer and staff and lack of
coordination.
It is therefore recommended that small and starting cooperative must look deeper
on their financial management practices and that cooperative leaders as well as
management must help hand and hand to be able to improve their financial management
practices. Small and starting cooperatives must formulate policy concerning the continuous
adding of share capital contribution of members and it should be written and amended by
members. Cooperatives must have policy on stagnant minimum share capital to encourage
members to increase their initial share capital. Management must look for ways in order to
address the problems face in financial management like providing trainings to the officers
and staff.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
INTRODUCTION
Rationale
Experiences in many developing and develop nations have proven that one of the
most effective strategies to attain economic growth and equitable distribution of income
and wealth is through cooperatives. By their nature, purpose, ideology and operation,
cooperatives promote harmony in society by narrowing the gap between the rich and the
poor without necessarily putting the rich down. To development experts, cooperative is a
means toward greater growth and more humane and democratic societies. It means that the
involvement of a large number of people in development and the sharing of the nation’s
material wealth or developmental benefits (Rola, 1988).
Benguet is a landlocked province of the Philippines with an area of 2,826 square
kilometers which is subdivided into 13 municipalities namely: Atok, Bakun, Bokod,
Buguias, Itogon, Kabayan, Kapangan, Kibungan, La Trinidad, Mankayan, Sablan, Tuba
and Tublay. Agriculture, mining and tourism are the major industries in the province.
Because of its temperate climate and high altitude the province became an ideal place for
producing vegetables. Thus, Benguet is often called as the “Vegetable Salad Bowl of the
Philippines”. Mining is another major industry, which is one of the country’s leading gold
producers. Lastly, because of the presence of Baguio City in Benguet it draws a large
number of tourist and would also explore the province especially the strawberry and
vegetable plantation in La Trinidad. Furthermore, cooperatives play an important role in
these three main industries in the province for instance some organized a farmer’s
cooperative which is in relation to the agriculture industry. With the strong determination
of every member to uplift human condition through cooperatives, it was reported that as
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
of 2009, out of the 151 registered cooperatives there are only 54 cooperatives in the
province of Benguet which are considered millionaire cooperatives based on their paid-up
share capital.
On the other hand, cooperative movement in the province is making its mark to the
local economy. According to the statistical data of cooperatives as consolidated by the
Cooperative Development Authority for the year 2009 the province of Benguet have a total
of 151 registered Cooperatives. In addition, as of the 2007 census, cooperative members
numbered to 49,101 which is 13 % of the total population of the province which is 372,533.
Benguet ranked second to Ifugao province in terms of cooperative members in the
Cordillera (CDA, 2009).
Thus, this study aims to identify financial management practices of the top five
millionaire cooperatives in the province which can be a useful tool for the struggling
cooperatives to improve their management practices especially in the financial aspect
because financial aspect is the lifeblood of every organization.
Importance of the Study
This study was conducted to assess the financial management practices of selected
millionaire cooperatives. Through this study the researcher gained more knowledge and
skills on the realities of managing a cooperative especially in the financial aspects. On the
part of the struggling cooperatives, the study helped them evaluate their existing practices
and learned from the experiences of the millionaire cooperatives in Benguet. The result of
the study was used as a guide to the cooperative manager and the officers in planning its
business in order to deliver the appropriate and realistic service to its members by
considering the capacity of the cooperative through adequate financial management.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
The information and knowledge gained in this study will be useful to other agencies
who are directly involved in the operation, growth and development of cooperative.
This also serves as a reference for other students who will be conducting similar
studies in the future.
Statement of the Problem
The study intended to answer the following questions:
1. What is the profile of selected millionaire cooperatives in Benguet in terms of:
a. Cooperative Profile
a.1. Number of regular members
a.2. Number of years of operation
a.3. Services offered
b. Financial Profile
b.1. Total assets
b.2. Total liabilities
b.3. Paid up capital
b.4. Net income/ Net surplus
b.5. Reserve Funds
2. What are the financial management practices of the selected millionaire
cooperatives as to:
a. Fund sourcing/acquisition
b. Capital build-up schemes
c. Fund utilization practices
3. What are the factors affecting the financial management of the cooperatives?
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
4. What are the problems encountered in the financial management of the
cooperatives?
Objectives of the Study
Generally, this study aimed to find out the financial management practices of the
selected millionaire cooperatives in the province of Benguet.
The specific objectives of the study were as follows:
1. To determine the profile of selected millionaire cooperatives in Benguet in
terms of:
a. Cooperative Profile
a.1. Number of regular members
a.2. Number of years of operation
a.3. Services offered
b. Financial Profile
b.1. Total assets
b.2. Total liabilities
b.3. Paid-up capital
b.4. Net income/ Net surplus
b.5. Reserve Funds
2. To identify the financial management practices of the selected millionaire
cooperatives as to:
a. Fund sourcing/ acquisition
b. Capital build-up schemes
c. Fund utilization practices
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
3. To identify the factors affecting the financial management of the cooperatives
4. To determine the problems encountered in the financial management of the
cooperatives.
Scope and Delimitation of the Study
The study was confined to the assessment of the financial management practices of
selected millionaire cooperatives in the province of Benguet. Financial management has a
broad scope but this study specifically focused on the financial management as to the
source of funds, fund utilization practices, capital build-up schemes, factors affecting
financial management and the profile of the selected millionaire cooperatives. The study
also looked at the problems encountered by these cooperative on financial management.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
REVIEW OF LITERATURE
Organization and Management
Starting a cooperative is loaded with problems such as finding sources of financing
and qualified management. Organizational changes should be planned for they affect not
only the people but also the social systems, environment, and decision-making. The success
and failure of any organization business hinges not only upon knowledge, talent, skills of
the people who composed it, but the ability to manage the business effectively for its
continuous operation.
The six S’s in the confident word of Opiano (2010) as cited by Limpayos (2010)
assure the strength of cooperatives to effect economic growth and stability, namely: self-
help, self-administration, self-responsibilities, subsidiary, service oriented, and socially
oriented. Self-help means looking into one’s ability to solve problems; self –administration
trained to handle effectively your own affairs; self-responsibility, we are the one helping
ourselves in administering our own affairs, no other way than to accept the consequence of
our own actions, whether positive or negative and learning how to reverse failure to
success; subsidiary knowing the government assistance is limited only to supervisory role
and not control; service oriented, service is valued over profit; finally, socially oriented
which means gains in the cooperative spreads to the community bringing about economic
prosperity and a social contentment for the greater number if not all, and not just for a
fortunate few. These innate elements in the cooperative are strong pillars that augur well
for the Philippine economy and social amelioration.
On the other hand, Ballaguing (1981) as cited by Limpayos (2010) suggested some
solutions to improve cooperative management as follows:
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
1. Strengthen the management – train them, pay them well, give them power and
moral support
2. Prepare regular monthly reports
3. Up-date your policies
4. Control your delinquency
5. Improve your services
6. Guarantee the maximum allowable dividends on share capital
7. Continuous education
8. Advertise
9. Establish and interlending fund among cooperatives
Financial Management
According to Rao (1997), business organizations cannot produce goods and
services without productive resources or capital. Financial management entails planning
for the future of a person or business enterprise to ensure a positive cash flow. It includes
the administration and maintenance of financial assets. Besides, financial management
covers the process of identifying and managing risk (Riley, 1999).
Financial Management refers to activities that are concerned with securing money
and using it properly. A financial manager must determine the best ways to raise money or
funds. However, it is also important that money should be used effectively in realizing the
goals of the enterprise or organization. Clearly good financial management requires
planning, thus it starts with the identification of the financial needs of the business (Fajardo,
1994) as cited by (Collado, 2006).
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
On the other hand, according to Medina (1999) as cited by Abiasen (2004), business
firms need funds to finance their operation. To be assured of continuous supply of funds,
there is a need to manage properly finance function. When funds are made available in
right amounts at the right time, the business organization may be expected to function
properly. When funds are not enough to finance planned activities, the risk of failure to
achieve objectives becomes apparent.
The key objectives of financial management are: a) create wealth for the business;
b) generate cash; and c) provide an adequate return on investment bearing in mind the risk
that the business is taking and the resources invested (Riley, 1999).
Key Elements in Financial Management
1. Financial Planning
According to Rao (1997), in an economy that is constantly changing, financial
managers must all times attempt to anticipate future trends in the economy, and their
industry, and in their own firms. It is further explained by Riley (1999) that financial
planning is to ensure that the company’s operating and financial policies are compatible
with corporate goals and that the firm will be on financially firm ground in the future, the
company must have a systematic planning framework.
Financial planning primarily involves anticipating the impact of operating and
financial policies on the firms’ future financial position and instituting remedial measures
as needed (Riley, 1999).
2. Financial Control
Financial control is a critically important activity to help the business ensure that
the business is meeting its objectives. Financial control addresses questions such as:
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
a. Are assets being used efficiently?
b. Are the business assets secured?
c. Does management act in the best interest of shareholders and in accordance
with business rules?
3. Financial Decision-making
The key aspects of financial decision-making relate to investment, financing and
dividends. Investments must be financed in some way however there are always financing
alternatives that can be considered. For example it is possible to raise finance from selling
new shares, borrowing from banks or taking credit from suppliers. A key financing decision
is whether profits earned by the business should be retained rather than distributed to
shareholders via dividends. If dividends are too high, the business may be starved of
funding to reinvest in growing revenues and profits further (Riley, 1999).
Management of Funds
Runkle et al., (1999) as cited by Limpayos (2010) said that excellent record
management of the transaction records of income and expenses is a must to ensure the
profitability and growth of a cooperative. All the necessary documents should be kept and
made available for reference when needed. Punzalan (1999) as cited by Limpayos (2010)
strengthened the statement of the forgoing when she said that regular audit is needed to
maintain genuine financial record or requirement for a cooperative to be able to operate
smoothly.
Abiasen (2004) with respect to fund management practices, the major internal
sources of fund were from the share capital of members, income from operation and
savings deposit of members. Most of the cooperatives generated fund from external sources
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
such as loan and donations/grants. There were more than 80% of the cooperatives that
generated their funds from the internal sources only, while 20% generated their fund from
outside sources. Most of the cooperatives used their fund in their canteen and consumer
operation, as well as for lending to their members. Some of them used their fund to
purchase supplies and materials, for building maintenance, as reserve fund or for payment
of benefits to members.
Sources of Funds
Financial capitals or funds are essential resources to the entrepreneur. These are the
lifeblood of the enterprise; the entrepreneur needs money in starting his business and other
operational costs for the development of his business. In many cases, small entrepreneurs
have adequate capital. Thus, it is important for them to be able to identify sources of funds.
According to Helenel (2009), cooperatives need money to start operations, to
expand and diversify, and to modernize facilities. When the amount of money needed for
the project has been determined, the cooperative should identify the best sources of capital
and the desired amount from each source. These sources include common and preferred
shares, other types of securities, member loans, and loans from financial institutions.
Most cooperatives increase the minimum paid-up share capital of their members
and continuously made savings awareness among the members to increase their funds.
Most of the members add their share capital annually while they add their savings anytime
depending on the availability of money (Collado, 2006).
Limpayos (2010) recommended in her study that internal sources of fund should be
strengthened and maintained in order to restore the image of the Bileng Multipurpose
Cooperative and build or sustain its assets. Sales on credit should be surcharged at a certain
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
percentage and the percentage be added to the share capital for capital build-up. Another
source of income is sales on cash may discounted and the discount shall be added to the
share capital of that member. Furthermore, the management staff is encouraged to source
out funds from external sources but they need to equip themselves with the necessary
knowledge, values and skills in doing so.
On the other hand, Wadasen (2001) in her study of the financial management
practices of St Jude Multipurpose Cooperative, she recommended that cooperative must
intensify the implementation of sound financial management practices to promote the
growth and development of the cooperative. In addition, she identified the financial
management practices of the cooperative like the regular preparation of financial status
report, the regular monitoring of financial assets and regular monitoring of cooperative
business and the implementation of financial control policies.
Uses of Funds
Most funds were used for modernizing and expanding plant and equipment.
Cooperatives have increasingly been involved in handling, processing manufacturing,
packaging, merchandizing, and transportation activities to improve farm supply and
marketing service to members.
Collado (2006) stated in her study that most of the funds of the cooperatives were
allocated to working capital such as for the purchase of stocks and for lending out to
members.
Fajardo (1994) as cited by Medon (2002), uses of funds include purchases of
current fixed assets, repayment of short or long-term debt, repurchase of common or
preferred stock, payment of common and preferred dividends and losses from operation.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Capital Build-up Schemes of Cooperative
Cooperatives are like any other business entities that need capital in order to attain
their objectives of providing goods and services to their members. A cooperative fund as
applied in this study refers to the money available to be budgeted to the different activities
of the cooperative. Money is a resource that fuels the operation of any business entity like
the cooperative. It is therefore important that the cooperative fund should increase every
year so that the business of the cooperative will also increase (Abiasen, 2004).
Mendoza (1970) as cited by Medon (2002) mentioned that financial management
plays an important role in a cooperative enterprise. Generally, a cooperative needs a capital
to meet its principal requirements, which are the organization expenses; working capital;
and the long-term investments. There are two enter twined characteristics of funding
scheme of a cooperative- the inadequate capital and the unsound management of funds. A
typical cooperative in developing countries is so under-capitalized from the very start of
operation so that it has to avail itself from outside financing as it was observed. The serious
predicament confronting cooperatives- in general, practically all cooperative programs in
developing countries provide a package of financial assistance, mostly in the form of loans
from government and private agencies precisely to support the growth and development of
cooperatives from their infant stage. There are more even critical problems that coupled
this under capitalization, which is the inefficient and ineffective utilization of cooperative
capital. The cooperative financial management should be prompted to acquire and make
full use of knowledge as well of skills and understanding of financial management to propel
the cooperative to satisfy quantitatively and qualitatively the needs and demands of the
members.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Moreover, Collado (2006) recommended in her study that cooperatives have to
make programs that would encourage members to add their share capital contribution. The
programs may include giving of prices to members who have the highest share capital.
Effective Financial Management
The building of capital is the concern of every member in the cooperative. Share
capital, fund raising and retention of apportion of the patronage refund are important
element of cooperativism. The amount of loan one could avail of in a credit cooperative
should be proportionate to the member’s fix deposits. The patronage refund is computed
in accordance with the amount of financial transaction a member had done with the
cooperatives business. The principal of receiving and sharing in cooperative are always
related to the participation of members (Limpayos, 2010).
Financial Management Level
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
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
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 (Stanley, 2000) as cited by (Oras, 2010).
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 (Oras, 2010). Strong financial management of 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 or business unit using ratio analyses,
such as the ratio, profit per employee and weighted cost of 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.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Factors Affecting the Cooperative
Financial Management
Medon (2002), stated in her study that the major factors affecting the financial
management are the following: members became oriented for government financial
assistance, members disloyalty, insufficient working capital and lack of education, training
and information and practical know how regarding cooperative management.
Punzalan (1999) as cited by Medon (2002), stated that failure to conduct continuous
education, untrained officers to manage, and members stopped building up their capital
were almost true to cooperatives. Thus, this situation calls for immediate remedial measure
to spare the cooperative from permanently downing and to be able to bring back the
cooperative on track.
Financial Management Problems
Diclas (2005) as cited by Collado (2006), stated that lack of adequate safeguards
against unscrupulous officers who are taking advantage of their position to grant loans to
themselves, to relatives and to acquaintances. Inabilities of the cooperative to secure funds,
limited or indifferent membership are some factors that hinder the growth of cooperative.
Inadequate capital in the cooperatives is the attributes of low participation among
members leading to very low collections on capital shares, annual dues and other fees, or
due primarily to indifference and lack of concern of members for the cooperative growth.
Poor liquidity of the cooperatives that can be traced to the values and negative attitudes of
the members as well as lack of proper training on its duly assigned or designated offices,
record keeper, and finance manager. Mismanagement of cooperatives can be traced to
inadequate training and managerial capabilities of the officers (Collado, 2006).
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
The study of Collado (2006) identified the mostly encountered problems of a
cooperative were the high rate of uncollected loans and credit of the members and the lack
of cooperative’s programs on capital build-up.
Definition of Terms
Management. Is the organizational process that includes strategic planning, setting
of objectives, managing resources deploying the human and financial assets needed to
achieve objectives and measuring result.
Financial management. It is concerned with the financial goal setting. This is
necessary in a cooperative to carry on business and maximize future financial requirements.
Fund sourcing practices. This refers to the ways and means of generating funds for
the cooperative.
Fund utilization practices. This refers to the ways and means of how the cooperative
funds are being used of liquidated for the welfare of the cooperative and its member.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
METHODOLOGY
Time and Locale of the Study
The study was limited to the top five millionaire cooperatives in the province of
Benguet according to the paid up share capital based on the Annual report submitted to the
Cooperative Development Authority in 2009. These include: Philex Community Credit
Cooperative, Benguet Government Employees Multipurpose Cooperative, Bad-ayan
Buguias Development Multipurpose Cooperative, Philex Mines Community Consumers
Cooperative and Multipurpose Cooperative of COA-CAR Employees.
The study was conducted from October to December2011.
Respondents of the Study
The respondents of this study were the officers and staffs of the cooperative directly
involved in the financial management of the organization and some members.
Data Gathering Procedure
A survey questionnaire was used as the main instrument in gathering data on the
financial management practices of the cooperatives studied. The survey was supplemented
with personal interview. Secondary data was also collected.
Data Gathered
The data gathered were the profile of the millionaire cooperatives, financial
management practices, sources of funds, fund utilization practices, capital build up
schemes, factors affecting the financial management and the problems encountered by the
selected millionaire cooperatives in Benguet province.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Data Analysis
The data gathered were tabulated and analyzed using descriptive and frequency
analysis and other appropriate statistical tool.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
RESULTS AND DISCUSSION
Cooperatives Studied
Table 1 presents the name of cooperative studied and the number of respondents
from each cooperative. The table shows that as to the number of respondents, Bad-ayan
Buguias Development Multipurpose Cooperative had the highest number with 10
respondents (31%), followed by Philex Community Credit Cooperative with 7 respondents
(22%). MPC of COA-CAR Employees had the least number of respondents with only 4
(12%).
Table 2 presents the position and gender of respondents per cooperative studied. It
shows that most of the respondents were female which numbered 25 while there are only
7 male respondents. This shows that most of the cooperatives recognized the right of
women to participate in any activities and even hold position in any organization like
cooperatives.
The respondents were classified according to their position in the cooperative which
shows that all the manager of the cooperative were surveyed and interviewed. On the other
hand, some officers and staff of the cooperative that are directly involved in the financial
management of the organization were also included in the study, this includes the
secretary, treasurer and even the chairman of the board of director of the Bad-ayan Buguias
Development Multipurpose Cooperative. Bookkeepers, accountant, loan officers/loan
disbursing officer, cashiers and posting clerk were also surveyed. Two members for each
cooperative were surveyed.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 1. Number of respondents per cooperative
NAME OF COOPERATIVE
FREQUENCY
PERCENTAGE
Philex Community Credit Cooperative (PCCC)
7
22
Benguet Government Employees Multipurpose Cooperative (BGEMPC)
6
19
Bad-ayan Buguias Development Multipurpose Cooperative (BABUDEMCO)
10
31
Philex Mines Community Consumers Cooperative (PMCCC)
5
16
Multipurpose Cooperative of COA-CAR Employees (MPC of COA-CAR)
4
12
TOTAL
32
100
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 2. Position and gender of respondents per cooperative
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA TOTAL
M
F
M
F
M
F
M
F
M
F
BOD Chairman
1
1
Secretary
1
1
Treasurer
1
1
2
Manager
1
1
1
1
1
5
Bookkeeper/Accounting Clerk
2
2
1
1
1
7
Loan Officer/Loan
1
1
1
3
Disbursing Officer
Posting Clerk
1
1
Cashier
1
1
2
Member
1
1
2
1
1
2
2
10
TOTAL
1
6
3
3
2
8
1
4
0
4
32
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Profile of Cooperative
Table 3 to Table 9 present a background of the five millionaire cooperatives
considered in this study including the years of operation, number of regular members, type
of cooperative, services offered, membership increase and financial data.
Cooperative background. Most of the cooperatives were in operation for almost
forty years. Philex Mines Community Consumers Cooperative was the oldest among the
cooperatives studied with 48 years of existence followed by the Philex Community Credit
Cooperative operating for 47 years and the youngest but millionaire cooperative was the
MPC of COA-CAR employees operating for only thirteen years.
Philex Community Credit Cooperative had the highest number of regular members
with a total of 2273, followed by Bad-ayan Buguias Development Multipurpose
cooperative with 2248 regular members while MPC of COA-CAR Employees had the least
number of regular members with only 372 individuals but already a millionaire
cooperative. Furthermore, Table 4 shows the increase of membership from 2008 to 2011
and in the case of MPC of COA-CAR Employees although there was a 12.59% decrease
from 2009 to 2010 in the membership Table 7 shows that in terms of their paid-up capital
there was 11. 52% increase. In the total assets (Table 5), it was also observed that there
was 16.40% increase in the same year even though there was a decrease in the membership.
This implies that the number of members was not the indicator for a cooperative to become
a millionaire instead the cooperation and support of each member will make a cooperative
successful. Moreover, the principle of receiving and sharing in a cooperative are always
related to the participation of members which were visible in the financial contribution of
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
each member in the cooperative (Limpayos, 2010) which can be evident in their paid-up
share capital.
Furthermore, Table 3 shows that three of the cooperatives studied were
multipurpose cooperative, a cooperative which combines two (2) or more of the business
activities of the different types of cooperative (RA 9520, 2008). Two of which were non-
agricultural which includes Benguet Government Employees Multipurpose Cooperative
having businesses such as lending and canteen while Multipurpose Cooperative of COA-
CAR Employees have lending services. On the other hand, Bad-ayan Buguias
Development Multipurpose Cooperative was the only cooperative studied that engaged in
agricultural-related business like selling farm inputs and as well as engaging in trading
business but still their major source of income was that of lending services. Two
cooperative studied were engage in credit and consumer operation alone.
Table 4 shows the increase in membership in each of the cooperative studied in
which data presented mostly showed a positive increase. On the other hand, two
cooperatives were observed to have decrease in membership in the year 2011 which
includes the Philex Community Credit Cooperative and Philex Mines Community
Consumers Cooperative. The highest percentage increase was observed in the case of MPC
of COA-CAR Employees with 20.97% increase in the year 2010 to 2011.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 3. Cooperatives profile
NAME OF COOPERATIVE
YEARS OF
REGULAR
TYPE OF
BUSINESS
OPERATION
MEMBERS
COOPERATIVE
ACTIVITIES
Philex Community Credit Cooperative
47
2273
Credit
Lending
Benguet Government Employees MPC
37
780
MPN
Lending, canteen
Bad-ayan Buguias Development MPC
39
2248
MPA
Lending, Farm
Inputs, Trading
Philex Mines Community Consumers
48
1824
Consumers
Retail trade
Cooperative
MPC of COA CAR Employees
13
372
MPN
Lending
Table 4. Increase in membership
COOPERATIVE
2008
2009
2010
2011
F
%
F
%
F
%
F
Philex Community Credit Cooperative
2493
(6.72)
2336
0.21
2341
(2.99)
2273
Benguet Government Employees MPC
614
(0.82)
609
7.31
657
15.77
780
Bad-ayan Buguias Development MPC
1752
5.50
1854
5.65
1965
12.59
2248
Philex Mines Community Consumers
1778
(0.57)
1768
3.12
1825
(0.05)
1824
Cooperative
MPC of COA CAR Employees
327
1.21
331
(12.59)
294
20.97
372
TOTAL
6964
(1.40)
6898
3.71
7082
46.28
7497
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Cooperatives financial data. Table 5 to Table 9 shows the financial data of
the millionaire cooperatives studied. Total assets, total liabilities, paid-up capital,
income/surplus and reserved funds were recorded based on the financial data of the
cooperatives from the year 2008 until 2010. Percentage increase was also presented in the
table.
Philex Community Credit Cooperative had the highest total asset making them the
top 4 cooperative in terms of total asset in the whole Cordillera Administrative Region as
presented during the Cooperative Month Celebration last October 2011. All the
cooperatives had increasing total asset in terms of the amount yet only two cooperatives
have increasing percentage rate while the other 3 cooperatives were observed to have a
decrease in the percentage increase. The highest increase was in the case of MPC of COA-
CAR Employees with 28.61% increase in the year 2008 to 2009.
Table 5. Total assets of the cooperatives
COOPERATIVE
2008
2009
2010
PHP
%
PHP
%
PHP
PCCC
200,438,297.87 6.02 213,272,440.07 8.24 232,424,506.53
BGEMPC
32,242,025.53 15.15 37,997,384.85 12.19 43,273,793.88
BABUDEMCO
59,346,654.72 6.63 63,563,785.84 21.22 80,681,737.69
PMCCC
38,492,271.49 8.98 42,289,986.28 6.28 45,125,923.07
MPC of COA-
17,809,180.95 28.61 24,946,410.48 16.40 29,838,617.03
CAR
TOTAL
348,328,430.56 8.83 382,070,007.52 11.42 431,344,578.20
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 6. Total liabilities of the cooperatives
COOPERATIVE
2008
2009
2010
PHP
%
PHP
%
PHP
PCCC
32,590,270.77
9.86
36,154,135.84 15.21
42,641,248.49
BGEMPC
3,246,644.80 12.36
3,704,586.98
6.52
3,962,898.25
BABUDEMCO
27,597,497.41
7.69
29,895,378.87 31.31
43,522,340.07
PMCCC
10,084,728.36 18.15
12,321,011.12 13.91
14,311,271.75
MPC of COA-
4,089,619.75 37.41
6,534,502.10 25.38
8,757,360.84
CAR
TOTAL
77,608,761.09 12.41
88,609,614.91 21.72 113,195,119.40
As to the total liabilities, all the cooperatives had an increasing accountability. And
the highest increase was that of MPC of COA-CAR Employees with 37.41% increase in
the year 2008 to 2009 (Table 6).
The study selected the top five millionaire cooperatives in the province of Benguet
based from the paid-up share capital of the regular member of each of the cooperative and
it was shown in Table 7 that Philex Community Credit Cooperative had the highest paid
up share capital followed by the Benguet Government Employees Cooperative, Bad-ayan
Buguias Development Multipurpose Cooperative, Philex Mines Community Consumers
Cooperative and MPC of COA-CAR Employees respectively. It shows that all the
cooperatives have an increasing paid-up share capital based from the percentage increase
presented and the highest percentage increase 26.89% was in the year 2008 to 2009 of MPC
of COA-CAR Employees. Furthermore, based on the overall total of the assets of the
cooperatives studied there was more or less 8% increase in the paid-up capital for the three
years.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 7. Total paid-up share capital of the cooperatives
COOPERATIVE
2008
2009
2010
PHP
%
PHP
%
PHP
PCCC
151,116,546.72
4.98
159,043,858.04
6.38 169,881,458.73
BGEMPC
25,847,927.05 16.53
30,964,887.98 13.35
35,737,616.60
BABUDEMCO
22,138,756.19
8.17
24,107,474.79 10.94
27,068,521.88
PMCCC
23,768,731.37
2.86
24,467,560.42
3.52
25,360,382.53
MPC of COA-
12,685,496.82 26.89
17,350,974.14 11.52
19,609,602.10
CAR
TOTAL
235,557,458.15
7.96
255,934,755.37
7.82 277,657,581.84
Moreover, as to the net income or net surplus of the cooperative, Table 8 shows
that there was an increase except for the Philex Community Credit Cooperative in the year
2008 to 2009 which decreased 4.52%. Highest income increase was in the case of Bad-
ayan Buguias Development Multipurpose Cooperative with 39.22% increase in the year
2009 to 2010.
Table 8. Income/surplus of the cooperatives
COOPERATIVE
2008
2009
2010
PHP
%
PHP
%
PHP
PCCC
19,073,520.56 (4.52)
18,249,467.61
5.81 19,376,075.60
BGEMPC
993,550.68 19.92
1,240,748.87 21.96
1,589,924.93
BABUDEMCO
1,027,905.79 17.52
1,246,232.43 39.22
2,050,264.73
PMCCC
4,600,494.01 14.49
5,380,254.61 15.21
6,345,173.59
MPC of COA-
1,299,198.63 33.10
1,941,985.43 24.61
2,575,749.09
CAR
TOTAL
26,994,669.67
3.79
28,058,688.95 12.14 31,937,187.94
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 9. Reserved funds of the cooperatives
COOPERATIVE
2008
2009
2010
PHP
%
PHP
%
PHP
PCCC
14,931,024.29 10.89
16,755,971.04 10.37 18,693,578.60
BGEMPC
2,243,444.81
5.24
2,367,519.70
6.31
2,526,867.17
BABUDEMCO
1,063,883.90 15.08
1,252,816.09 13.72
1,452,015.92
PMCCC
2,912,780.47 15.59
3,450,805.93 15.53
4,085,323.29
MPC of COA-
477,703.93 28.90
671,902.48 27.71
929,477.39
CAR
TOTAL
21,628,837.40 11.72
24,499,015.24 11.52 27,687,262.37
Philex Community Credit Cooperative had a high reserve fund amounting to Php.
16,793,524.64 which implies that the cooperative was more stable than the other
cooperatives studied because higher reserved funds implies that the cooperative had
sufficient funds. Table 9 presents that the cooperatives reserved fund was increasing and it
was observed that in terms of percentage increase, MPC of COA-CAR Employees have
the highest increase with 28.90% increase in the year 2008 to 2009 while the Benguet
Government Employees Multipurpose Cooperative have the least percentage increase with
5.24%.
Furthermore, the total reserved fund of all the cooperatives was also presented and
it shows that there was almost 12% increase every year.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Financial Management Practices
Generally, Table 10 presents the financial management practices of the selected
millionaire cooperatives. Most of the practices like preparation of financial plan or budget,
formulation and implementation of internal control policies and regular preparation of
financial status report were being practiced by the cooperative which shows a 100%
response from the respondents in each of the cooperative. Some cooperatives regularly visit
their cooperative business unlike the MPC of COA-CAR Employees (100%) as well as
Benguet Government Employees Multipurpose Cooperative (17%) which does not
regularly visit their cooperatives business. Moreover, four cooperatives mention that they
had regular audit and inventory of cooperative financial assets except for MPC of COA-
CAR Employees.
These findings supports the recommendation of Wadasen (2001) in her study of the
financial management of St Jude Multipurpose Cooperative wherein she explained that
cooperatives must intensify the implementation of sound financial management practices
to promote the growth and development of the cooperative. In addition, she identified the
financial management practices of the cooperative like the regular preparation of financial
status report, the regular monitoring of financial assets and regular monitoring of
cooperative business and the implementation of financial control policies which are also
visible in the selected millionaire cooperatives studied.
It is therefore recommended for small and starting cooperative to look deeply on
their financial management practices as identified in this study and that cooperative leaders
as well as management must help hand and hand to be able to improve their financial
management practices.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 10. Financial management practices
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of
COA-CAR
F
%
F
%
F
%
F
%
F
%
Preparation of Financial Plan/Budget
7
100
6
100
10
100
5
100
4
100
Formulation /Implementation of financial control
7
100
6
100
10
100
5
100
4
100
policies
Regular visits to the cooperatives business
Visit regularly
7
100
5
83
10
100
5
100
Do not visit regularly
1
17
4
100
Regular audit/inventory of cooperative financial assets
Audit regularly
7
100
6
100
10
100
5
100
Do not audit regularly
4
100
Regular preparation of financial status report
7
100
6
100
10
100
5
100
4
100
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Financial Plan
The cooperatives studied identified some of their policy in budgeting such as the
use of comparison of previous data, based on actual expenses and having an annual review
and preparation. Most of the cooperatives have identified policies in budgeting yet some
cooperatives explained that these policies were not formal because there was no written
policy. It shows that these were verbally disseminated without any written basis. Thus,
recognizing the fact that financial planning or budgeting is very important in an
organization it is recommended that the studied cooperatives as well as other existing
cooperatives must have a specific written policy amended by members regarding financial
aspects.
Table 11 shows that 4 (80%) of the cooperatives have been implementing their
policies in budgeting except for Benguet Government Employees Multipurpose
Cooperative (50%) wherein some officers and staff recognized the fact that the cooperative
policies in budgeting are still weak.
As to the preparation of financial budget of the selected millionaire cooperative, all
the cooperatives were preparing their budget every beginning of the year. Most of the
cooperatives identified management as the one who prepares the budget specifically the
accountant and manager while for Philex Mines Community Consumers Cooperative the
budget was being prepared by the budget committee. After the preparation of the budget it
is passed to the Board of Directors for further study and for approval. If the budget is
approved by the Board of Directors then it will be presented during the general assembly
meeting to be approved by the members with the right to vote.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 11. Policies on budgeting
PARTICULAR
PCCC BGEMPC BABUDEMCO PMCCC
MPC of
COA CAR
F
%
F
%
F
%
F
%
F
%
Implementation of
policies
Implemented
7 100 3
50
10
100
5 100
4
100
Not implemented
3
50
Preparation of
budget
Prepare
7 100 6
100
10
100
5 100
4
100
The results gathered support the statement of Riley (1999) that financial planning
is to ensure that the company’s operating and financial policies are compatible with
corporate goals and that the firm will be on financially firm ground in the future.
Sources of Funds
Generally, cooperatives may derive their funds from either internal or external
sources. The internal sources were those provided by the members in the form of share
capital, savings and time deposit, income from operation and capital build-up schemes. On
the other hand, the external sources were from the loans, grants and donations. Table 12
shows the sources of funds of the cooperatives.
As to internal sources, it was noted that all cooperatives (100%) raised their funds
from the share capital of the members. Savings and time deposit were also identified by 3
cooperatives (100%) as one of their internal sources of funds. While capital build-up
schemes as internal source shows that majority of the cooperatives have lower than 50%
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
results which imply that some cooperatives were not recognizing the importance of
continuously raising their share capital. These findings were in accord with Collado (2006)
in which she emphasizes that cooperatives increase the minimum paid-up share capital of
their members and must have continuously made savings awareness among the members
to increase their funds.
On external sources, it was observed that only few cooperatives sourced out their
funds from loans or borrowings. On the other hand, only Bad-ayan Buguias Development
Multipurpose Cooperative sourced their funds through grants and donation as well as from
cooperative awards. This implies that millionaire cooperatives do not depend on external
sources instead sourced their funds within the organization. Thus, the study supports the
recommendation of Limpayos (2010) that internal sources of funds should be strengthened
and maintained in order for the cooperatives to restore their image through financial
stability.
Furthermore, the result of the study defy the findings of Abiasen (2004) that most
of the cooperatives generated fund from external sources such as loan and donations/grants.
This implies that the millionaire cooperatives studied were not classified as one of those
cooperative programs in developing countries provided with a package of financial
assistance, mostly in the form of loans from the government and private agencies precisely
to support the growth and development of the cooperatives from the infant stage but in the
end the cooperative go bankruptcy or if not in stagnant stage (Mendoza, 1970) as cited by
(Medon, 2002).
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 12. Sources of funds of the millionaire cooperatives
PARTICULARS
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Internal Sources
Share Capital
7
100
6
100
10
100
5
100
4
100
Savings and Time Deposits
7
100
10
100
4
100
Net Surplus
2
33
7
70
5
100
2
50
Capital Build up Schemes
3
43
4
67
3
30
5
100
2
50
External Sources
Loans/ Borrowing
3
43
1
17
10
100
4
100
Donation/grants
10
100
Cooperative Awards
10
100
*Multiple respons
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Fund Sourcing Practices
Since all cooperatives raised their funds from the share capital of the members,
there were various practices employed by these cooperatives in fund sourcing. In
generating share capital, all the cooperatives have identified recruits of new members and
continuous increase of the minimum paid-up capital as the easiest and basic ways to
increase the cooperatives paid-up share capital. On the other hand, 3 cooperatives deducted
certain percentage from the amount loaned by the members that is added to the member’s
share capital while 2 cooperatives continuously conduct seminars on capital build-up in
order to encouraged members to increase their share in the cooperative (Table 13). Another
practice done by some of the cooperative was the deduction of a certain percentage from
the per diem/ honorarium or salary of the officers and staff of the cooperative to be added
to their share capital contribution to the cooperative.
Money was a resource that fuels the operation of any business entity like the
cooperative. It is therefore important that the cooperative fund should increase every year
so that the business of the cooperative will also increase (Abiasen 2004). Thus, member’s
continuous addition of their initial share capital was also an important practice as shown in
the results of this study.
Thus, in organizing a cooperative and even in the recruitment of members, officers
and staff must emphasize to the aspiring members that they must continuously add their
share capital. Based on the study, it is also recommended that the cooperative must have
policy on stagnant minimum share capital to encourage members to add their initial share
capital.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 13. Fund sourcing practices
PRACTICES
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of
COA CAR
F
%
F
%
F
%
F
%
F
%
Recruits new members
7
100
5
83
10
100
5
100
4
100
Increase the minimum paid-up share capital
6
86
4
67
10
100
5
100
4
100
Conducts continuous seminar to members on
9
90
5
100
capital build-up
Deducts certain percentage from the amount loan
6
86
6
100
10
100
by the members
Per diem/honorarium and salary deduction
3
50
8
80
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Capital Build-up Scheme
The capital build-up schemes of the cooperative were identified in Table 14. All
five cooperatives stated that payment of the share capital contribution regularly was the
most efficient and basic way of capital build-up. Benguet Government Employees
Multipurpose Cooperative also identified some of their capital build up scheme like
patronage of their store/canteen (67%) and payroll deduction for the cooperatives officer
and staff (17%).
On the other hand, Bad-ayan Buguias Development Multipurpose Cooperative also
identified some of their capital build-up scheme such as raffle draws (80%), birthday gift
contribution among the cooperative officers and staff amounting to Php. 50.00 each to be
added to the account of the celebrant (100%), patronage of the cooperative store (90%),
credit deposit (10%) and payroll deduction (10%). Payroll deduction was being practiced
by two cooperatives studied wherein in the salary of cooperative staff and even the
honorarium of cooperative officers, a certain percentage would be deducted from their
salary/honorarium to be added in their share capital accounts.
The result implies that there were lot of ways in order to increase the share capital
contribution of every member and it is the responsibility of the officers, staff as well as
members to think and create unique but applicable capital build-up schemes. As stated by
Abiasen (2004) cooperatives are like any other business entities that need capital in order
to attain their objectives of providing goods and services to their members. Money is a
resource that fuels the operation of any business entity like the cooperative. It is therefore
important that the cooperative fund should increase every year so that the business of the
cooperative will also increase.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
In addition, according to Fajardo (1994) as cited by Collado (2006) financial
management refers to activities that are concerned with securing money and using it
properly. A financial manager must determine the best ways to raise money or funds.
However, it does not end in raising funds but it is also important that the money should be
use effectively in realizing the goals of the enterprise or organization. Thus, when
idealizing a capital build-up scheme, it must be planned thoroughly before implementing
it in the cooperative.
Therefore, the study supported the recommendation made by Collado (2006) that
cooperatives have to make programs that would encourage members to add their share
capital contribution.
Policy on Adding Share Capital
All of the cooperative studied have policies on adding share capital (100%),
however, for MPC of COA-CAR Employees only 3 respondents (75%) believes that there
were policies on adding share capital. As to the implementation, all cooperatives are
implementing the policies on adding share capital (Table 15). Some policies were identified
such as; (1) strictly implement payment of subscribed capital by visiting and collecting
Php. 50.00 monthly for individuals under policies including any voluntary amount, (2) 50%
of patronage refund and dividend to be deposited as capital build up and (3) 1% loan
retention to be added to the share capital.
This result implies that all the 5 millionaire cooperatives studied had a clear policy
on adding share capital which makes them more financially stable than the other
cooperatives in Benguet. It is therefore recommended that small and starting cooperatives
must formulate policy concerning the continuous adding of share capital contribution.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 14. Capital build-up schemes
SCHEME
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Payment of share capital
7
100
5
83
10
100
5
100
4
100
Raffle draws
8
80
Birthday gift contribution
10
100
Patronage of cooperative store
4
67
9
90
Credit deposits
1
10
Payroll deduction
1
17
1
10
*Multiple response
Table 15. Policy on adding share capital
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of
COA CAR
F
%
F
%
F
%
F
%
F
%
Presence of policy on adding share capital
With policy
7
100
6
100
10
100
5
100
3
75
Without policy
1
25
Policy implementation
Strictly followed
7
100
6
100
10
100
5
100
3
75
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Frequency of Adding Share Capital
Table 16 shows how often the members add their share capital in the cooperative.
Three of the cooperatives mentioned that many of the members were adding their share
capital. Moreover, for Benguet Government Employees Multipurpose Cooperative 3
respondents (50%) believed that there were many members adding while the remaining
stated that there were just few of them adding their share capital. On the other hand, on the
case of the Multipurpose Cooperative of COA-CAR Employees, 3 respondents (75%)
mentioned that few members were adding while only one respondent (25%) believed that
many were adding their share capital. These data was supported by the financial data
presented as to paid-up share capital (Table 7).
Reasons Why Members do not Add/Increase
Their Share Capital
Since the frequency shows that not all members are adding their share capital
contribution the reasons of not adding share capital were also studied. All the cooperatives
studied mentioned lack of money as the reason why members did not add to their share
capital. Two cooperatives mentioned that their members preferred to deposit their money
as savings deposit rather that as share capital. This is because share capital cannot be
withdrawn anytime while the savings deposit can be withdrawn anytime the members need
the money. Fifty percent of the respondents of Bad-ayan Buguias Development
Multipurpose Cooperative also mentioned that one of the reasons of not adding share
capital was that members are out of the country or have transferred to other provinces while
amortization on loans is too big because of the prioritization scheme was identified by
Philex Community Credit Cooperative as one of the reasons (Table 17).
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 16. Frequency of adding share capital
PARTICULAR
PCCC
BGEMPC
BABUDEMCO PMCCC
MPC of
COA CAR
F
%
F
%
F
%
F
%
F
%
Frequency of adding share capital
Many
7
100
3
50
10
100
5
100
1
25
Few
3
50
3
75
TOTAL
7
100
6
100
10
100
5
100
4
100
Table 17. Reasons why members do not add/increase their share capital
PARTICULAR
PCCC
BGEMPC
BABUDEMCO PMCCC
MPC of
COA CAR
F
%
F
%
F
%
F
%
F
%
Want to add but lack of money to add to share capital
5
71.43
6
100
10
100
5
100
4
100
They prefer to deposit as savings rather that add to
4
57.14
3
30
their share capital
Members are out of the country or transferred to
5
50
other provinces
Amortization on loan balance is to big
2
28.57
(prioritization scheme)
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Promotion of Savings and Time Deposits
Table 18 shows that only Benguet Government Employees Cooperative do not have
savings and time deposit services and the rest promotes saving and deposits through giving
higher interest rate as indicated by 3 cooperatives. Two cooperatives considered
information dissemination during general assembly and during pre-membership seminar
can also be an effective way on promoting savings and time deposit aside from the
advertisement made on radios and posters.
In addition, recruitment of new savers and ‘pakulo’ or prizes on deposit scheme
were being practiced by Bad-ayan Buguias Development Multipurpose Cooperative while
the Philex Mines Community Consumers Cooperative identified payroll deduction as their
strategy in promoting savings and time deposits.
According to Jose Tomas, the general manager of Tam-an Multipurpose
Cooperative which we visited during our educational field trip in Nueva Viscaya, he
mentioned to us that in a credit business or organization, savings deposit is very important.
Thus, continuous savings awareness must be administered by the cooperative so that
members would be encouraged saving in the cooperative. In addition, cooperative members
must also posses the value of self-responsibility in which members must be the one helping
themselves in administering their own affairs (Opiano, 2010) as cited by (Limpayos, 2010).
Therefore, members must patronize the services provided by the cooperative if they wanted
to assure the strength of their cooperatives to effect economic growth and stability.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 18. Promotion of savings and time deposits
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Do you have savings and time deposit
services
With
7
100
10
100
5
100
4
100
Without
6
100
TOTAL
7
100
6
100
10
100
5
100
4
100
Strategies in promoting savings and time deposits
Provide higher interest rate
3
42.86
6
60
1
25
Pakulo- Prizes on deposit schemes
1
10
Recruit new savers
1
10
Information dissemination
2
28.57
3
30
Payroll deduction
5
100
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Raising Funds through Loans
One of the external sources of capital in a cooperative was through loans. Faced by
the notion that cooperatives were organized just because they wanted loan grants from
financial institutions, it is therefore a challenge for cooperative initiator or organizer to look
deeper on the common need of the community and not on their personal interest.
Table 19 shows where the five cooperatives availed of their loans and their reasons
in availing loans. Three cooperatives responded that they have not availed any loans from
external source. Philex Community Credit Cooperative (57%) mentioned that they have
availed loans from private lenders. It is also presented in Table 19 that only Bad-ayan
Buguias Development MPC is the only cooperative studied who have been borrowing
loans from different financial institution such as cooperative banks (100%), commercial
bank (10%) and Land Bank of the Philippines (10%).
Moreover, on the financial data as to total liabilities (Table 6) it was observable
especially on the year 2010 that Bad-ayan Buguias Development Multipurpose
Cooperative had the highest obligation which supports the findings that BABUDEMCO
was one of the cooperatives that depend on external source.
Moreover, the cooperatives especially in the case of BABUDEMCO reasons for
availing loans on the presented data was because the institution provides lower interest
(100%), fast release of loans (60%) and longer term of payment (10%). The result implies
that even though they have been borrowing loans from different financial institution as
long as it was properly manage cannot be a hindrance in cooperatives success.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 19. Raising funds through loans
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Sources of loans
Cooperative bank
10
100
Commercial bank
1
10
Private lender
4
57
Land Bank of the Philippines
1
10
Did not avail any loans
3
43
6
100
5
100
4
100
Reasons for availing loan
Lower interest
10
100
Long term payment
1
10
Fast release of loans
6
60
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Donation and Grants Received
by the Cooperative
Table 20 presents that only two cooperative have received donation and grants.
BABUDEMCO have received grants from foreign aid (40%), CDA-JICA (20%) and
provincial government (10%) while Benguet Government Employees Cooperative
received grants from the provincial government (33%) with the temporary office provided
for them in the Benguet Provincial Capitol. According to the Philippine Cooperative Code
of 2008 (RA 9520) cooperatives organized among government employees notwithstanding
any law or regulation to the contrary, shall enjoy the free use of any available space in their
agency, whether owned or rented by the Government. Thus, Benguet Government
Employees Multipurpose Cooperative was enjoying this privilege of having their
temporary office in the Benguet Provincial Capitol.
It also shows that Bad-ayan Buguias Development Multipurpose Cooperative aside
from the financial assistance (10%) also received materials and equipment (100%),
building (50%) and cash awards (50%). The manager of BABUDEMCO stated that these
cash awards they have received were given by the Cooperative Development Authority
during the celebration of Cooperative Month Celebration which the cooperative was
chosen for an exemplary performance.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 20. Donations and grants received by the cooperative
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Did you receive donation and grants
Received assistance
2
33
10
100
No assistance received
7
100
4
67
5
100
4
100
TOTAL
7
100
6
100
10
100
5
100
4
100
Sources of grants/ donation
Foreign aid
4
40
CDA JICA
2
20
Provincial Government
2
33
1
10
Items donated to the cooperatives
Financial assistance
1
10
Materials and equipment
10
100
Building
5
50
Cash awards
5
50
Temporary office
2
33
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Fund Utilization by the Cooperatives
There are 3 main areas where cooperatives allocate their funds: for fixed asset,
working capital and administrative cost/overhead cost. All the cooperatives studied
allocate most of their funds for the working capital of the cooperative. Table 21 presents
the allocation of funds of the cooperative according to the 3 main areas.
For fixed asset, cooperatives specifically allotted their fund for facilities and
equipment, buildings, lands and in the case of Philex Mines Community Consumers
Cooperative have allotted some of their funds for transportation vehicle which was very
important in transporting the goods from its market source. On the other hand, the fund for
working capital was mostly allocated by the cooperatives for the purchase of stocks for
cooperatives with consumer services and lending funds for cooperatives with credit
services while 4 of the cooperatives studied recognized that honorarium and salary of
officers and employees were also decreasing their working capital fund.
The result was in accord with the findings of Collado (2006) that most of the funds
of the cooperatives were allocated to working capital such as for the purchase of stocks and
for lending out to members.
Lastly, all the cooperatives allocated their funds for administrative services in terms
of trainings and seminars and office supplies. On the other hand, only 4 cooperatives
mentioned that they were also allocating their administrative fund for communication and
GA/ BOD meetings.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 21. Fund utilization by the cooperatives
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Fixed Asset
Buildings
4
67
10
100
5
100
Transport vehicles
5
100
Land
1
17
2
20
Facilities/Equipment
7
100
5
83
5
100
4
100
Working Capital
Honorarium/salaries of employees
3
50
1
10
5
100
1
25
Stocks of sale
5
83
10
100
5
100
Utilities such as water, electric bills, fuel
1
10
5
100
Lending funds
7
100
5
83
9
90
4
100
Administrative / overhead items
Office Supplies
7
100
5
83
10
100
5
100
2
50
Transportation
2
33
2
20
5
100
Communication expense
2
29
2
33
1
10
5
100
Advertisement expense
2
29
5
100
GA/BOD meetings
2
29
6
100
8
80
5
100
Trainings and seminar
2
29
2
33
10
100
5
100
2
50
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Practices on Acquisition of Facilities and Equipment
Practices on acquisition of facilities and equipment like assistance of reliable
technician, canvassing and providing trainings on proper handling were presented in Table
22. It was observed that although 3 of the respondent mentioned that they do not ask for
assistance of reliable technician, all the cooperatives asked for assistance and do canvassing
before acquiring facilities and equipment. The results shows that all the millionaire
cooperatives studied do not just invest their money on facilities and equipment without
asking assistance of reliable technician and canvassing. These practices were very
important because cooperatives must consider the life span of each of the facilities and
equipment acquired.
On the other hand, all the cooperatives provided trainings on proper handling
although few respondents told otherwise. The trainings provided includes how to operate
and maintain equipment, food handling and safe handling of equipment and materials.
Furthermore, after the acquisition of the facilities and equipment, staff must be
oriented on the proper handling of these acquired assets of the cooperative. Trainings are
also essential in prolonging the life span of facilities and equipment because even though
you have acquired the best facilities and equipment through the assistance of reliable
technician if the cooperative staff using do not know how to handle those, it will also
decrease the life span of each equipment.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 22. Practices on acquisition of facilities and equipment
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Assistance of Reliable Technician
Ask for assistance
7
100
5
83
10
100
5
100
2
50
Do not ask for assistance
1
17
2
50
TOTAL
7
100
6
100
10
100
5
100
4
100
Canvassing of materials and equipment
Canvass before buying
7
100
6
100
10
100
5
100
4
100
TOTAL
7
100
6
100
10
100
5
100
4
100
Trainings on Handling Facilities and
Equipment
Provide trainings
2
29
5
83
10
100
5
100
2
50
Do not provide trainings
5
71
1
17
2
50
TOTAL
7
100
6
100
10
100
5
100
4
100
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Internal Control Practices
Financial control is critically important activity to help the business ensure that the
business is meeting its objectives. Table 23 presents the internal control practices of the
cooperatives. These were the use of official receipt and disbursement voucher to document
their transactions, the use of books of accounts or other records to record their transaction
and the persons involved in the internal control of the cooperative.
Use of official receipt and disbursement voucher. The table presents that all the 5
cooperatives used official receipt and disbursement voucher to document their business
transactions. This implies that all the transactions of the cooperatives are transparent
because they are documented.
Use of books or records. The finding shows that all the cooperatives used Cash
Receipts Journal, Cash Disbursement Book, General Journal, General Ledger as well as
the Individual Deposit/Loan Ledger. Two cooperatives were using Sales and Purchase
Journals for their consumer services. On the other hand, Benguet Government Employees
Multipurpose Cooperative was using Loan Journals. This finding shows that at least all the
cooperatives used all the books of accounts to record their transactions.
Runkle et al., (1999) as cited by Limpayos (2010) said that excellent record
management of the transaction records of income and expenses is a must to ensure the
profitability and growth of the cooperative. In addition, she said that all the necessary
documents should be kept and made available for reference when needed. Through these
practices transparency of records can be noticed which is a very important characteristic a
cooperative must have. Thus, record keeping is indeed very important from the source
documents, book of records and with the financial statements of the cooperative.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Furthermore, the accountant or the bookkeeper of the cooperative shall be
responsible for the maintenance and safekeeping of the books and records of account of
the cooperative in accordance with generally accepted accounting principles. He shall also
be responsible for the production of the same at the time of audit or inspection (RA 9520).
Transparency of records of cooperatives was also essential for members to establish their
trust in the cooperative in order for them to increase their investment.
Officers and staff involved in internal control. Given the fact that financial control
is critically important activity to help the business ensure that the business is meeting its
objectives (Riley, 1999), officers and staff that are directly involved in the financial
management of the cooperative must be visible such as the treasurer/cashier who is
responsible in holding cash, bookkeeper/accountant who was responsible in record keeping
and the supervisory committee who were responsible in the internal audit of the
cooperative.
The table shows that all the cooperatives had this important officers and staff as
part of their organizational structure. All cooperatives mentioned that their audit and
inventory committee were all functioning or doing their duties and responsibilities.
Moreover, cooperatives must have a clear policy stating the duties and
responsibilities of each of the officers and staff of the cooperative to avoid overlapping
duties which could weaken the financial control of the cooperative because of personal
interest.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 23. Internal control practices of the millionaire cooperatives
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA CAR
F
%
F
%
F
%
F
%
F
%
Use of OR and CDV
7
100
6
100
10
100
5
100
4
100
Record Used
Cash Receipt Book
7
100
6
100
10
100
5
100
4
100
General Journal
7
100
6
100
10
100
5
100
4
100
Sales Journal
5
83
10
100
5
100
Individual Deposit/Loan Ledger
7
100
6
100
10
100
5
100
4
100
Cash Disbursement Book
6
86
6
100
10
100
5
100
4
100
General Ledger
7
100
6
100
10
100
5
100
4
100
Purchase Journal
2
33
10
100
5
100
Loan Journal
1
17
Officers and staff involved in Internal control
Treasurer/cashier
7
100
6
100
10
100
5
100
4
100
Bookkeeper/ accountant
7
100
6
100
10
100
5
100
4
100
Supervisory committee
7
100
6
100
10
100
5
100
4
100
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Frequency of Audit
Table 24 presents the frequency of audit practiced by the cooperative. Auditing as
defined is the examination of financial statements of any entity whether profit oriented or
not and with a view to expressing an opinion thereon has two types as to who will perform
the audit. Internal audit was an examination conducted by the cooperatives audit committee
while external audit was conducted by independent auditors outside the organization.
Furthermore, Philippine Cooperative Code of 2008 (RA 9520) stated that the financial
audit shall be conducted by an external auditor who satisfies two important qualification;
(1) he is independent of the cooperative or any of the subsidiary that he is auditing and (2)
he is a member in good standing of the Philippine Institute of Certified Public Accountants
(PICPA) and is both accredit by both the Board of Accountancy and the Authority. This is
to avoid connivance of some group of individuals.
Internal audit. Table 24 shows that 4 cooperatives were conducting their internal
audit monthly while only one cooperative mentioned that they only have internal audit on
a yearly basis. However, some respondents also mentioned that they were conducting
internal audit anytime they want like quarterly and even daily because of the emergence of
computer programs which can automatically prepare financial reports and even audit it
using some software programs.
External audit. The table further shows that all the cooperatives were conducting
their external audit every end of the year or annually although BABUDEMCO also
conducts external audit semi-annually. Annual external audit is indeed very important
because audited financial reports were being submitted to the agency as a requirement for
them to monitor the cooperative.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 24. Frequency of Audit
PARTICULAR
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA
CAR
F
%
F
%
F
%
F
%
F
%
Internal Audit
Daily
2
33
Monthly
7
100
5
83
10
100
5
100
Quarterly
2
20
Annually
4
100
External Audit
Semi-annually
2
20
Annually
7
100
6
100
10
100
5
100
4
100
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Factors Affecting Financial Management
Financial management refers to activities that are concerned with securing money
and using it properly (Fajardo, 1994) as cited by (Collado, 2006). Table 25 and Table 26
present the factors affecting the financial management of the cooperatives and the degree
of seriousness from the mean rating presented.
Factors affecting the financial management practices were identified which
includes purchasing on account, irregular patronage of the cooperative, non-payment of
share capital installment, lack of knowledge on financial management, inadequate time to
monitor the cooperative, unimplemented and inadequate financial control policies and no
financial management trainings conducted. The respondents have varied responses as to
the degree of seriousness (Table 25).
Generally, as presented in Table 26, all the factors identified were not seriously
experienced by the millionaire cooperatives studied except having inadequate financial
control policies having 1.61 mean rating which signifies that this factor was seriously
experienced by the cooperatives. This implies the importance of financial control policies
in any organization like cooperatives.
The result further identified some of the factors affecting the financial management
of the cooperative in addition to the findings of Medon (2002) that the major factors
affecting the financial management were the following, members became oriented for
government financial assistance, members disloyalty, insufficient working capital and lack
of education, training and information and practical know how regarding cooperative
management.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 25. Factors affecting financial management of the cooperatives
FACTORS
PCCC
BGEMPC
BABUDEMCO
PMCCC
MPC of COA-
CAR
VS S
NS
VS S
NS
VS S
NS
VS S NS VS S NS
Purchasing on account
-
-
7
3
-
3
-
9
1
-
-
5
-
1
3
Irregular patronage of the cooperative
-
-
7
-
-
3
-
9
1
-
-
5
-
1
3
Non-payment of share capital installment
-
-
7
-
1
2
-
9
1
-
-
5
-
1
3
Lack of knowledge on financial
-
-
7
-
1
2
1
8
1
-
-
5
-
1
3
management
Inadequate time to monitor the cooperative
-
-
7
-
-
3
1
8
1
-
-
5
-
1
3
Unimplemented financial control policies
-
-
7
-
-
3
9
-
1
-
-
5
-
1
3
Inadequate financial control policies
-
-
7
3
-
3
9
-
1
-
-
5
-
1
3
No financial management trainings
-
-
7
-
1
2
9
-
1
-
-
5
-
1
3
conducted
*Multiple response
Legend: NS = 1 (Not serious)
S = 2 (Serious)
VS = 3 (Very serious)
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in Benguet | PILAS, DAISYBELLE K. APRIL 2012
Table 26. Mean rating of the factors affecting financial management
FACTORS
MEAN
SIGNIFICANCE
Purchasing on account
1.43
not serious
Irregular patronage of the cooperative
1.13
not serious
Non-payment of share capital installment
1.16
not serious
Lack of knowledge on financial management
1.18
not serious
Inadequate time to monitor the cooperative
1.15
not serious
Unimplemented financial control policies
1.31
not serious
Inadequate financial control policies
1.61
serious
No financial management trainings conducted
1.34
not serious
Range: 1.5 and below = not serious
1.6 – 2.5
= serious
2.6 – 3.0
= very serious
Problems Encountered by the Cooperative
in Financial Management
Table 27 shows the problems usually encountered by the cooperatives in financial
management. Three cooperatives were facing problems such as presence of incompetent
officer and staff and lack of coordination. Diclas (2005) as cited by Collado 2006) stated
that lack of adequate safeguards against unscrupulous officers who are taking advantage of
their position to grant loans to themselves, to relatives and to acquaintances can greatly
affect the financial management of the cooperative.
Other problems faced by the cooperative which in one way or another affects the
financial management of the cooperative were presence of past due accounts, delinquent
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
borrowers and on the case of BABUDEMCO the problem on marketing their vegetable
products.
In line with this problems identified, management must look for ways in order to
address the problem like providing trainings to the officers and staff. This agrees with the
statement of Collado (2006) wherein mismanagement of cooperatives can be traced to
inadequate training and managerial capabilities of the officers.
Furthermore, Punzalan (1999) as cited by Medon (2002) stated that failure to
conduct continuous education, untrained officers to manage, and members stopped
building up their capital were almost true to cooperatives. Thus, this situation calls for
immediate remedial measure to spare the cooperative from permanently downing and to
be able to bring back the cooperative on track.
Table 27. Problems encountered by the cooperative in financial management
PROBLEMS
BGEMPC
BABUDEMCO
PMCCC
F
%
F
%
F
%
Presence of incompetent
3
50
10
100
officer
Presence of incompetent staff
10
100
1
20
Lack of coordination
1
16.67
1
10
*Multiple response
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This study was conducted with the top five millionaire cooperatives in Benguet
based on the paid-up share capital as stated in their Annual report submitted to the
Cooperative Development Authority in 2009 from October to December 2011. Financial
management has a broad scope but this study specifically focused on the financial
management as to the sources of funds, fund utilization practices, capital build-up schemes,
factors affecting financial management and the profile of the selected millionaire
cooperatives. The study also looked at the problems encountered by these cooperative on
financial management.
There were a total of 32 respondents which include the officers and staff from the
five millionaire cooperatives. A survey questionnaire was used and the survey was
supplemented with personal interview. Secondary data was also collected and served as
reference for the researcher. The data gathered were analyzed using frequency, percentage
and mean.
Most of the cooperatives have identified policies in budgeting yet some
cooperatives explained that these policies were not formal because there is no written
policy. It shows that these were verbally disseminated without any written basis. As to the
preparation of financial budget, all the cooperatives were preparing their budget every
beginning of the year.
All the cooperatives raised their funds from share capital of members and only few
cooperatives sourced out their fund from external sources. Only two cooperatives sourced
their funds from loans or borrowings from private lenders as well as other financial
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
institutions. Only Bad-ayan Buguias Development MPC and Benguet Government
Employees MPC sourced their funds from donation and grants such as materials and
equipment, building, office and cash award.
In generating share capital, all the cooperatives have identified recruits of new
members and continuous increase of the minimum paid-up share capital as the easiest and
basic ways to increase the cooperatives paid up capital. Capital build-up schemes were also
identified which includes regular payment of share capital contribution, patronage of
store/canteen and payroll deduction for the cooperative officer and staff.
All the cooperative studied have policies on adding share capital and most of the
respondents mentioned that many of the members were adding their share capital but some
were not adding because of lack of money. Furthermore, only Benguet Government
Employees Cooperative does not have savings and time deposit services and the rest
promoted savings and deposits by providing higher interest rate.
Most of the funds of the cooperative were allocated to working capital such as
purchase of stocks and lending funds. Cooperatives recognized that honorarium and salary
of officers and employees were also decreasing their working capital fund.
Most of the respondents affirms that the cooperative ask for assistance and do
canvassing before acquiring facilities and equipment. All the cooperatives provide
trainings on proper handling which includes how to operate and maintain equipment, food
handling and safe handling of equipment and materials.
All the cooperatives used official receipt and disbursement voucher as well as the
different books of accounts to document their business transactions. All the important
officers and staff such as treasurer/cashier, bookkeeper/accountant and supervisory
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
committee were all part of their organizational structure. Most cooperatives conducted their
internal audit monthly and only one cooperative on a yearly basis while for the external
audit, all cooperatives were conducting it every end of the year.
All the factors identified were not seriously being experienced by the millionaire
cooperatives studied except having inadequate financial control policies. Cooperatives
were facing problems such as presence of incompetent officer and staff and lack of
coordination. Other problems faced by the cooperative were presence of past due accounts,
delinquent borrowers and problem on marketing their vegetable products.
Conclusions
Based on the findings of the study, conclusions were drawn. The number of
members was not the indicator for a cooperative to become a millionaire instead the
cooperation and support of each member and proper management of finances contributed
to the success of the cooperative. This is evident in almost all the cooperatives studied that
despite of decrease in membership assets increased. Higher reserved fund signifies that a
cooperative had sufficient funds which mean the cooperative is more financially stable.
The easiest and basic way to increase the cooperatives paid up capital is recruitment
of new members and cooperatives clear policy on adding share capital makes them more
financially stable.
Cooperatives studied do not just invest their money on facilities and equipment
without asking assistance of reliable technician and canvassing. Trainings on the operation
of equipments are essential in prolonging the life span of facilities and equipment.
Furthermore, cooperatives used official receipt and disbursement voucher as well as the
different books of accounts to document their business transactions. Cooperatives are
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
conducting their internal audit monthly and external audit is on a yearly basis or for some
they do it anytime.
Inadequate financial control policies are considered a serious factor affecting
financial management and major problems faced by cooperatives are presence of
incompetent officer and staff and lack of coordination.
Recommendations
In order to improve the financial management of the selected millionaire
cooperative studied as well as other cooperative in the province of Benguet
recommendations were made based on the findings such as small and starting cooperative
must look deeper on their financial management practices and that cooperative leaders as
well as management must help hand and hand to be able to improve their financial
management practices. Furthermore, recognizing the fact that financial planning or
budgeting is very important in an organization, the studied cooperatives as well as other
existing cooperatives must have a specific written policy amended by members regarding
financial aspects.
Small and starting cooperatives must formulate policy concerning the continuous
adding of share capital contribution of members and it should be written and amended by
members. In addition, cooperatives must have policy on stagnant minimum share capital
to encourage members to add their initial share capital. When idealizing a capital build-up
scheme, it must be planned thoroughly before implementing it in the cooperative.
Moreover, members must patronize the services provided like loans, savings and
time deposits by the cooperative if they wanted to assure the strength of their cooperatives
to effect economic growth and stability and cooperative must be transparent in all of their
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
records to establish members trust in the cooperative in order for them to increase their
investment.
Cooperatives must also have a clear policy stating the duties and responsibilities of
each of the officers and staff of the cooperative to avoid overlapping duties which could
weaken the financial control of the cooperative because of personal interest. Finally,
management must look for ways in order to address the problems face in financial
management like providing trainings to the officers and staff.
Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012
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Financial Management Practices: A Case Study of Selected Millionaire Cooperatives in
Benguet | PILAS, DAISYBELLE K. APRIL 2012