BIBLIOGRAPHY MARCOS, RACY ...
BIBLIOGRAPHY
MARCOS, RACY ANTONETTE C. APRIL 2013. Finacial Management
Practices: A Case Study of the La Trinidad Multi- Purpose Cooperative Incorporated.
Benguet State University, La Trinidad, Benguet.
Adviser: Normalyn T. Longay, MSc.
ABSTRACT
This research was conducted with the La Trinidad Multi- Purpose Cooperative Incorporated
in La Trinidad, Benguet from December 2012 to January 2013, to determine the financial
management practices of the cooperative as to the sources of fund, fund allocation and
utlization practices, and the factors affecting their financial management. The study also
looked into the problems encountered by the cooperative on financial management and the
possible solutions to it. A survey questionnaire was used and one on one interview were
utilized to gather the data. The data gathered were anlayzed using frequency, percentage,
ratio and descriptive analysis.
The major sources of fund for cooperative are the share capital from the members, the
income from its operation since the cooperative is engaged in computer shop service,
photocopy service, catering services, canteen and grocery store. In generating share
capital, the cooperative identified that the basic way of increasing their paid- up share
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
capital is deducting a certain amount from the salary of the members which is added to
their capital share.
In the allocation of fund, most of the funds of the cooperative were used for fixed assets,
working capital and administrative cost.
All the factors affecting the financial management of the coopertaive were not seriously
experienced by the cooperative except for the inadequate or lack of knowledge on financial
management and the irregular patronage of the members to the cooperative. The
cooperative encountered problems such as the slow processing of payments to the
cooperative on catering service, the delinquency payment to the grocery loans of some
members and the irregular patronage of the members to the servives being offerd by the
cooperative.
It is therefore recommended that the members must be encouraged to patronize the services
offered by the cooperative to assure the cooperative’s economic growth and stability. The
cooperative must be very strict in the collection of the grocery loans and collect it in
advance. The management should also conduct trainings and seminars regarding financial
management among its members specifically to its officers and staffs to be more
knowledgeable on financial management practices. The cooperative must also have a
general manager who will take charge of all the phases of the business’ entire operations
of the cooperative thereby requiring a full- time management of the cooperative.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
INTRODUCTION
Rationale
"Co-operative enterprises provide the organizational means whereby a significant
proportion of humanity is able to take into its own hands the tasks of creating productive
employment, overcoming poverty
and achieving
social integration."
-- Boutros Boutros-Ghali
Cooperative in the Philippines started in the 19th century when Filipinos travelling
in the world have been impressed with the success of a new economic movement in
effecting a gradual metamorphosis of the economic and social life of the people in those
countries. At the turn of the century, Filipinos, in increasing number, travelled and studied
abroad and brought home with them new ideas. It was this group of Filipinos who were in
close contact with the new economic movement in Europe. Since then numbers of
cooperatives in the Philippines spread in the country (Ocenar, 2011).
La Trinidad Municipal Employees Multi-Purpose Cooperative Incorporated is
primarily a non-agricultural multi-purpose cooperative created in 1991 and later registered
at the Cooperative Development Authority (CDA) on July 17, 1992 with the objective and
purpose under R.A 6938. Its members are the employees of the Municipal Government of
La Trinidad, Benguet and other national employees directly connected with this Local
Government Unit and are working within the area of its operation. The cooperative has
been in operation for almost twenty years. However, it had slept for years due to some
troubles. Some of the major problems that caused the dormancy of the cooperative are the
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
members not actively participating and some are delinquent payers of their loans; lack of
information dissemination to the members; and the cooperative have limited funds for it
only generates its capital from the interests on loans and on the small income from the
cooperative’s canteen.
The delinquent payment happened because the members are not paying their
obligations on time and the member officers did not monitor and were not strict on
implementing their policies regarding loans. One member could avail a loan as much as
thrice his or her capital share and a payment time of one year to three years with one percent
interest monthly.
On October 2007 through the initiative of the members, with the able leadership of
the Board of Directors headed by Ms. Imelda Obidos, Chairman of the Board, the
cooperative slowly and painstakingly arose from the long slumber and steadily headed
towards its present status. From a less than one hundred (100) members in 1992- 2007, the
cooperative’s membership grew and at present have a total of two hundred eighty five (285)
active members participating in all activities and operations of the cooperative. In the past
five years, the cooperative kept going on its journey towards its pursuit for success. The
cooperative at present is engage in retail business (grocery store), a computer shop services,
a catering business, with a much improved canteen’s operation and loan services.
Republic Act 6938 states that: “The primary objective of every cooperative is to
provide goods and services to its members and thus enable them to attain increased income
and savings, investments, productivity, and purchasing power and promote among them
equitable distribution of net surplus through maximum utilization of economies of scale,
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
cost-sharing and risk-sharing without, however, conducting the affairs of the cooperative
for eleemosynary or charitable purposes”.
The objectives of the cooperative are: to encourage thrift and savings mobilization
among the members for capital formation; to create funds in order to grant loans for
productive and providential purposes to its members; to provide goods and services and
other requirements of the members; to promote the cooperative as a way of life for
improving the social and economic well- being of the people; to do any related activity for
the members self- government, improve social and/or economic well- being; to undertake
agricultural and/or industrial production purposes, under a truly just democratic society; to
work with the cooperative movement, non- government and government
organizations/entities in the promotion and development of cooperatives and in carrying
our government policies; and to undertake activities for the effective and efficient
implementation of the provision of the Cooperative Code.
Cooperatives are businesses that play a significant role in the global economy while
ensuring a sustainable development. It gets people actively involved in the economy and
helps generate the growth required for collective prosperity. It is undeniable that, when
cooperative is considered as a whole, it represents a social, human and economic global
powerhouse.
Cooperatives, as self- help organizations, contributes to the eradication of poverty
through the economic and social progress of their members and employees and by
stimulating the economies and enhancing the social fabric of the communities in which
they operate. It helps create, improve and protect the income and employment opportunities
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
of their members by pooling the limited individual resources of members to create business
enterprises that enable them to participate in the production, profit- sharing, cost- saving or
risk- taking activities.
Cooperatives promote social integration and cohesion in the face of inequalities in
social capabilities by empowering and giving voice to the poor as well as marginalized
groups and by promoting the organization of federations and alliances. It also works
towards fair globalization- one that is fundamentally inclusive, sustainable and people-
centered- by creating business entities that promote solidarity among peoples, greater
accountability, deeper partnership and fairer rules and standards that offers equitable
opportunities for all.
Statement of the Problem
The study was conducted to answer the following questions:
1. What are the fund sourcing practices of the cooperative?
2. What are the policies of the cooperative as to their budgeting; in terms of
internal control system, and fund usage and allocation?
3. What are the problems encountered by the cooperative?
4. What are the possible solutions to the identified problems of the
cooperative?
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Objectives of the Study
Generally, the study documented the financial management practices of the cooperative,
it specifically sought to:
1. Identify the fund sourcing practices of the cooperative;
2. Identify the policies of the cooperative as to their budgeting; in terms of internal
control system; and fund usage and allocation;
3. Determine and analyze the problems of the cooperative; and
4. Identify the possible solutions to the problems of the cooperative.
Importance of the Study
The result of the study served as an instrument to evaluate and further improve the
financial management practices of the cooperative. Through the study, the researcher
gained knowledge on the realities of managing a cooperative. The result of the study served
as a reference to other organization as well as those planning to establish cooperatives.
Finally, it provides an idea on the stability of the cooperative to help investors and
individuals deciding whether to join the cooperative or not.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Scope and Delimitation of the Study
The study focused on the financial management practices of the cooperative, the
sources of its funds; capital usage and application; internal control system; and, budgeting
of the La Trinidad Municipal Employees Multi- Purpose Cooperative
Incorporated in La Trinidad, Benguet.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
REVIEW OF LITERATURE
Financial Management Concepts
Financial management is the management and control of money related operations
within a business. It refers to the things the company finance officer and the finance
department does. These activities include keeping records, paying employees, receiving
payments from customers, borrowing, purchasing assets, selling stock, paying dividends
and others (Lasher, 2008).
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 identification of the financial needs of the business (Fajardo,
1994 as cited by Collado, 2006).
The key objectives of financial management are: a) creation of wealth for the
business; b) generate cash; and c) provide an adequate return on investment bearing in mind
the risk the business is taking and resource invested (Riley, 1999).
Areas of Financial Management
According to Martin and Petty (1996), there are three areas of financial
management. These are: (a) Acquisition, it is the adequacy of funds to be used in the
business. It is the internal sourcing of funds; (b) Financing, it is the external and alternative
sourcing of funds to be used in the business; and (c) Management, it refers to the payment
of liabilities and efficient management of capital for profit maximization.
Key Elements in Financial Management
According to Block and Hirt (2002), there are two key elements in financial
management.
Financial Planning. Financial planning primarily involves anticipating the impact of
operating and financial policies on the firm’s future financial position and instituting
remedial measures as needed (Riley, 1999). Management need to ensure that enough
funding is available at the right time to meet the needs of the business (Block and Hirt,
2002). Financial control is a critical but important activity to help the business ensure that
the business is meeting its objectives.
Financial Decision-making. Financial decision-making, its key aspects 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.
Scopes of Financial Management
Financial management, at present is not confined to raising and allocating of funds. Some
of the functional areas covered in financial management are:
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Determining financial needs. A finance manager is supposed to meet financial needs of
the enterprise. For this purpose, he should determine the financial needs of the concern.
Funds are needed to meet promotional expenses, fixed and working capital. Choosing the
sources of funds. A number of sources may be available for raising funds. A concern may
be resort to issue of share capital and debentures. Financial institutions may be requested
to provide long- term funds. The working capital needs may be met by getting cash credit
overdraft facilities from commercial bands.
Financial analysis and interpretation. The analysis and interpretation of financial
statements is an important risk of a finance manager, he is expected to know about the
profitability, liquidity, position, short- term and long- term financial position of the
concern.
Working capital management. It refers to that part of firm’s capital required for financing
short- term current assets such as cash, receivables, and inventories. It is essential to
maintain proper level of these assets.
Dividend policy. Dividend is the reward of the shareholders for investments made by them
in shares of the company. It is an important area of financial management because the
interest of the shareholders and the needs of the company are directly related to it.
Capital budgeting. It is the process of making investment decisions in capital expenditures.
It is an expenditure on the benefits of which are expected to be received over a period of
time exceeding one year. It is vital to any organization.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Two Basic Aspects of Financial Management
1.
Procurement of funds. Funds can be obtained from different sources, thus their
procurement is always concerned as a complex problem by business concern. These funds
procured from different sources have different characteristics in terms of risk, cost and
control.
Funds are raised through (a) the Issue of Equity Shares. They are best from risk point of
view for the company, as it has no repayment liability except on winding up the company
but from cost point of view, it is most expensive as dividend expectations of shareholders
are higher than prevailing interest rates and dividends are appropriation of profits and not
allowed a expense under the income tax act; (b) Banks and Financial Institutions, they
provide funds subjected to certain restrict covenants. These covenants restrict freedom of
the borrower to raise loans from other sources. Such restrictions are essential for the safety
of funds provided by institutions and investors.
2.
Effective use of funds. The finance manager is responsible for effective utilization
of funds. He must point out situations where funds are kept idle or are used improperly.
All funds procured at a certain cost and after entertaining a certain amount of risk. If the
funds are not utilized in the proper manner so that they generate an income higher than cost
of procurement, there is no meaning in running business.
Sources of funds
Financial capitals or funds are essential resources to the entrepreneurs. These are the
lifeblood of the enterprise.The entrepreneur needs money in starting his business and other
operational cost for the development of the business. In many cases, small entrepreneurs
have inadequate capital. Thus, it is important for them to be able to identify source of funds.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
In relation to the procurement of funds, there are ten sources of capital (as cited by
Brigham and Gapenski, 1997).
Trade or supplier credit, payment terms offered by your suppliers are potential source of
credit. Trade credit is effectively used by large business to buy products at lower cost than
small firms. Life insurance policies, a standard creature of most life insurance policies
(except term insurance) is the owner’s ability to borrow against the cash value of the policy.
The money can be used for any business or personal need. Other sources of capital
Brigham and Gapenski cited are friends and relatives; customers. Customers, when
customers pay for work in instalment as it is completed or provide some of the materials,
they are, in effect financing the business. Leasing companies, everything from office
furniture to food processing equipment can be obtained from leasing companies or
commercial finance companies. Leasing is generally more expensive than bank financing
and is limited to items that have a long serviceable life, widespread use, and are easily
repossessed in the event of default.
Commercial finance companies, these are generally seen as the place to go when you are
unable to secure financing from a bank. Commercial finance companies, like banks, are
concerned with your ability to repay the loan; however, they are more willing to rely in the
quality of the collateral rather than your track record or profit projections. Commercial
banks are far the most viable lenders and make the greatest number and variety of loans.
However, banks are generally conservative lenders. Small Business Administration (SBA)
is an independent government agency formed in 1953 to help small business. It provides
loan guarantees, participates with bank loans, and if funds are available, makes limited
number of direct loans.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Small Business Investment Companies are privately owned companies that are licensed
and regulated by SBA. They were created to supply equity capital, long- term loan funds
and management help to small business; and Rural Economic and Community
Development Agency which guarantee term loans to non- farming business in rural areas.
Financial Management
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 the impact of taxation and inflation. Else, they spend it on
discretionary items. They need to be able to make up the financial decisions that are
intended to benefit them in the long run and help them achieve their financial goals. From
the organizational point of view, the process of financial management is associated with
financial planning and control. Financial planning seeks to qualify various financial
resources available and plan the size and timing of expenditures. Financial control refers
to monitoring cash flow. Inflow is the amount of money coming into the 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).
At the cooperative level, the main aim of the process of managing finance is to
achieve the various goals of a company set at a given point of time. Business also seeks to
generate substantial amount of profits, following a particular set of financial processes.
Besides, they control the functioning of money invested by external investors. Providing
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
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.
In order for the business to sustain strong financial management, it requires
managers to be able to interpret financial reports including income statements, profit and
loss, cash flow statements and balance sheet statements; improve the allocation of working
capital within the business operations; review and fine- tune financial budgeting and
revenue cost forecasting; look at the funding options for business expansion including both
long and short term financing; review the financial health of the company or business unit
using ratio analyzes, such as the ratio, profit per employee and weighted cost or capital;
understand various techniques using in project and asset valuations; apply critical financial
decisions making techniques to access whether to proceed with an investment or not; and
understand the various frameworks for business, portfolios and intangible assets.
Role of Financial Management in Organizing Resources
According to Wright (1970), the part played by financial management can be
divided into three main parts. First, the decision on the capital structure which relates to
decisions on the volumes and sources of funds to be used. Second is the allocation of the
available funds. Considerations of the profitable employment of funds is prime important
here. The financial management role will be to apply forecasting and appraisal expertise to
the ideas of management. Third is the analysis and appraisal of problems. Day to day
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
problem will arise in managing activity without the framework set by the uses of funds
decided upon.
Effective Financial Management
Good financial management is essential for the expansion of your business. Getting
your finances in order means your business can work more efficiently and puts you in a
better position when seeking funding for growth.
The building of capital is the concern of early member in the cooperative. Share
capital, fund raising and retention of apportion of the patronage refund are important
elements of cooperativism. The amount of loan one could avail of in credit cooperative
should be proportionate to the member’s fix deposits. The patronage fund is computed in
accordance with the amount of financial transaction of 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).
Cooperative Concepts
A cooperative is organized to serve necessary common needs of members, which
will improve and uplift their living conditions within the context of the universal accepted
cooperative principles on membership, democratic, administration, interest on share
capital, savings, disposal, education and inert cooperative cooperation (Mendoza, 1980).
Since the ownership belongs to them, the destiny of any cooperative enterprise is then
charted by its members planning and managing their own affairs (Rimes, 1987).
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Cooperative is an autonomous association of persons united voluntarily to meet their
economic, social and cultural needs and aspiration through jointly- owned and
democratically controlled enterprises (ICA News, 1995) as cited by Tagarino, (2005). A
cooperative is a duly registered association of persons, with a common bond of interest that
have voluntarily joined together to achieve a lawful common social of economic end,
making equitable contributions to the capital required and accepting a fair share of risks
and benefits of the undertaking in accordance with universally accepted cooperative
principles (R.A. 6938).
A cooperative is a business and social organization that espouse the spirit and value
of self- help and working together in the pursuit of social and economic ends. The name
was derived from the word “co- operative” which means “working together”.
Cooperative as an Enterprise
Cooperatives as business enterprise provide experiences for members’ systematic
production and marketing as well as the development of creativity, resourcefulness, risk-
taking and efficient ways of doing things. People empowerment from within its
membership becomes doubly significant. For unless and until people learn to recognize
their own needs and learn to recognize that through their own united determination to
address these needs, they become freed from the bondage of being beholders to external
powers and forces- they shall not have become truly empowered. Consequently, until they
have become truly empowered can the people truly become competitive. This
competitiveness, however, becomes strengthened when weaker cooperatives solidify with
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
stronger cooperatives thereby facilitating stronger bargaining power and rendering healthy
interdependence among themselves (Coloma, 1996).
People empowerment is a strategy point towards three elements. First, capability
building to enable the mass- based to participate in development (technical, managerial and
entrepreneurial skills, organization, and communication). Second, access to development
and productive resources (financial, land and natural resources, markets). And third,
ownership/co-ownership of enterprises which is a policy direction with development
modalities (divestment schemes in favour of workers, use village corporation, employee
ownership scheme of prioritized government- owned and controlled corporations
entrepreneurship people enterprises and technology incubation or development (Versoza,
1995).
Members voluntarily bond together in cooperatives to address common needs, to
promote common interests through pooled resources (share capital) and efforts, and to the
share risks and benefits in the pursuit of their socio- economic enterprise activities
(Coloma, 1996).
Republic Act 6938, Article 23 categorized cooperatives depending on their applicability,
relevance and appropriateness to the needs, interest, and cooperation of the society. They
may fall under any of the following types (a) Credit Cooperative, it promotes thrift among
its members and creates fund in order to grant loans for productive and provident purposes;
(b) Consumer Cooperative which primarily aims to procure and distribute commodities to
members; (c) Producers’ Cooperative, undertakes joint production, whether agricultural or
industrial endeavours; (d) Marketing Cooperative which engages in the supply of
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
production inputs to member and market their products; (e) Service Cooperatives, engage
in medical and dental care hospitalization, transportation, insurance, housing labour,
electric light and power communication and service; and (f) Multi-purpose Cooperative,
is an organized group that combines two or more business activities of these different types
of cooperatives.
With the built- in legal provisions for cooperative members’ continuing education and
training, and reserve funds, for capital needs, cooperatives offer comparative advantage for
human resource development and capability building for more relevant and significant
participation in productive activities. Moreover, it offers a mechanism for mobilizing
savings and promoting thrift among the members thereby generating funds from within for
productive and providential purposes.
Cooperatives are among the most potent ways of allowing people to share in the economic,
social and political power currently situated in the hands of the few and in so doing, bring
about a society where there is equity and progress. The government is vigorously using
cooperatives as channels of services to the clients. The support extended to the cooperatives
is important for the capability building of the organization, particularly of the new ones.
The spirit of self- help and cooperation, however, should be extended to cooperatives for
their growth and development as cited by (Castillo, 1983).
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Factors Affecting the Cooperative
Financial Management
The major factors affecting the financial management are the following: members become
oriented for the government assistance; members’ disloyalty; insufficient working capital
and lack of education, training and information and practical know how regarding
cooperative management (Medon, 2002).
Punzalan (1999) as cited by Medon (2002) stated that failure to conduct continuous
education, unstrained officers to manage and members stopped building up their capital
were almost true to cooperatives. Thus, this situation calls for immediate remedial to spare
the cooperative from permanently downing and to be able to bring back the cooperative on
track.
Definition of terms used in the study
Financial management. It deals with the financial decisions and problem solving and also
handling financial situation in a responsible manner to achieve financial independence.
Internal control system. It comprises the plan of organizational and all of the coordinate
methods and measures adopted with in a business to safeguard its assets and reliability of
its accounting data.
Budget. It is generally a list of all planned expenses and revenues. It is a plan express in
quantitative terms on how to acquire and use resources of an entity during a certain future
period of time.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
METHODOLOGY
Locale and Time of the Study
The study was conducted with the La Trinidad Municipality Employees Multi- Purpose
Cooperative Incorporated in La Trinidad, Benguet. The research was conducted from
December 2012 to January 2013.
Respondents of the Study
The respondents of the study were 14 officers and 2 staffs of the cooperative directly
involved in the financial management of the organization. This includes the
Board of Directors, Purchasing or Merchandise Committee, Audit Committee, Election
Committee, the Treasurer, and the Secretary.
Data Gathering Procedure
The data were gathered through setting an appointment with the officers and staffs of the
cooperative. Questionnaires were administered to the respondents followed by a one on
one interview with them to validate their written answers on the questionnaires.
Data Gathered
The data gathered were focused on the financial management practices, sources of funds,
employed policies on fund utilization and allocation, problems encountered by the
cooperative and the possible solutions to address these identified problems.
Data Analysis
The data gathered were tabulated and analyzed using frequency and ratio.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
RESULTS AND DISCUSSIONS
This chapter of the study deals on the findings, analysis, and interpretation of the
results on the financial management of the La Trinidad Municipal Employees Multi-
Purpose Cooperative Incorporated. The findings and results were based on the
information’s gathered from the officers and staffs of the cooperative through
questionnaires and personal interview.
Socio- Demographic Profile of the Respondents
Table 1 shows the socio- demographic profile of the respondents such as their age, sex,
occupation, number of terms and position, and civil status.
Age. As shown in Table 1, half (50%) of the respondents belonged to the age bracket of
45- 50. Whereas, some belonged to the age bracket of 35- 40 (18. 75%) and from 40- 45
(18. 75%) years of age respectively. Only one (6.25%) belonged to the age bracket of 50-
55 and 25- 30. There was no respondent who belonged to the age bracket of 30- 35.
Therefore, most of the officers and staffs belonged to middle-age group.
Sex. Among the 14 officers and 2 staffs as respondents, a great majority (62.5%) were male
and many (37.5%) were female. According to the respondents, males are greater in number
than the females in the cooperative organizational structure for the reason that males are
more active than the females, the males desire to be involved and be exposed to the
cooperative management and operations.
Civil status. Table 1 shows that most (75%) of the respondents were married; and some
(25%) were single.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Occupation. The cooperative was founded by the Municipal employees; therefore, all
(100%) of the respondents were government employees.
Terms and position. As shown in the table, some (18. 75%) of the respondents have been
in the position of being one of the Board of Directors for 2 terms, while the other one
(6.25%) of them stayed for 3 terms and the other for 1 term. On the other hand, some (18.
75%) had been part of the Election Committee for 1 term. Moreover, 18.75% of the
respondents stayed as Auditing Committee for 1 term, and 18.75% of the respondents
stayed as Merchandise Committee for 1 term, too. Meanwhile, one of the respondent or 6.
25% of the respondents had become the secretary for 1 term. The table also shows that 6.
25% of the respondent became the treasurer for 3 terms and another 6.25% of the
respondent stayed as auditor for 1 term. This means that only few stayed in their positions
for longer years because as embodied in their cooperative law, officers are to be in their
positions for only two years unless they wish to be re- elected for the above mentioned
positions.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Table 1.Socio-demographic profile of the respondents
PARTICULARS
FREQUENCY
PERCENTAGE
Age
50- 55
1
6.25
45- 50
8
50.0
40- 45
3
18.75
35- 40
3
18.75
30- 35
1
25- 30
6.25
TOTAL
16
100
Sex
Male
10
62. 5
Female
6
37. 5
TOTAL
16
100
Occupation
Government Employee
16
100
Private Employee
TOTAL
16
100
Civil Status
Married
12
75
Single
4
25
TOTAL
16 100 Table 1. Continued...
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
PARTICULARS
FREQUENCY
PERCENTAGE
Terms and Position Board
of Directors
Terms: 3
1
6.25
2
3
18.75
1
1
6.25
Merchandise Committee
Terms: 3
2
1
3
18.75
Audit Committee
Terms: 3
2
1
2
12.50
Election Committee
Terms: 3
2
1
3
18.75
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Table 1. Continued...
PARTICULARS
FREQUENCY
PERCENTAGE
Terms and Position
Secretary
Terms: 3
2
1
1
6.25
Treasurer
Terms: 3
1
6.25
2
1
-
-
Auditor (Bookkeeper)
Terms: 3
-
-
2
-
1
-
1
6.25
TOTAL 16 100
Legend:
3 terms- 6 years
2 terms- 4 years
1 term- 2 years
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Sources of Fund of the Cooperative
There are three sources of funds of the cooperative: the share capital from the
members, the generated income from the cooperative’s business (the catering service being
offered, the canteen, the store and the computer shop) and their outside borrowings. The
cooperative through its officers and members, formulate and adopt policies for proper
management operation of the cooperative.
Paid up share capital. Table 2 shows that the paid up share capital was increasing from
2008 to 2012. The paid- up share capital of 175 regular members and 23 associate members
in 2008 was Php1, 379, 921. 59. Whereas the paid- up share capital of 189 regular members
and 34 associate members in 2009 was Php2, 556, 997. 31 while Php3, 837, 917. 24 was
the accumulated share capital from 199 regular members and 46 associate members in
2010.The total share capital of 228 regular members and 57 associate members as of
December 2012 were Php9, 723, 895. 27. There was a decrease in the increment of the
share capital in the years 2010 and 2012.
The factors that caused the decreasing increment of the paid- up share capital was
some of the members do not add to their share capital for the reason that they are no longer
employees of the Municipal Government. Some of the not re- elected officials and retirees
opted to withdraw their share capital. Others also decreased the amount they voluntarily
add to their share capital.
The minimum amount of share capital is Php2, 500. 00. Members’ dividend or
interest on share capital is not given to members who fail to meet the minimum share capital
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
required. No member of the cooperative shall own or hold more than ten percent of the
share capital of the cooperative.
Table 2. Total paid up share capital
YEAR
PAID - UP SHARE CAPITAL
INCREMENT (%)
2008
1, 379, 921. 59
2009
2, 556, 997. 31
46
2010
3, 837, 917. 24
33
2011
6, 593, 435. 43
42
2012
9, 723, 895. 27
32
AVERAGE RATE OF INCREASE 38
As of December 31, 2012, the cooperative has a total of 285 members, 228 of which
are regular members while 57 of it are associate members. The regular members are
categorized as permanent, casual, job orders, contractual employees and the elected
officials of the municipality of La Trinidad. Whereas the associate members are the
national employees connected with the Local Government Unit and are working within the
area of operation. Among these 285 members, there are 269 members who completed
paying their capital share. According to the officers and staffs, 95% of the total members
of the cooperative are continuously increasing their capital share. If members are not
adding to their capital share, this means that they are no longer employees of the
Municipality of La Trinidad.
The cooperative has internal sources of fund. It gets fund from the share capital of
members of about 70%; 22% from the income of the coop store, the canteen and from the
computer shop. The cooperative also gets an average of 8% from the net surplus. On the
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
other hand, the cooperative acquire an additional 4% of its fund from their loans and
borrowings as its external source of fund.
According to the officers of the cooperative, the cooperative doesn’t avail loans
from banks for the reason that the banks offer a high interest rate. The cooperative, too,
does not yet offer time deposit services to the members but is in the process.
Total Asset
The asset of the cooperative includes the account receivables from the members,
the loan receivables, the cash and cash equivalent, and cash advances. The cash and cash
equivalent includes cash on hand, checks and cash in bank, and petty cash fund. These are
short term highly liquid investment that are readily convertible to known amount of cash
and which are subject to an insignificant risk of changes in value. Account receivables are
valid claims of the cooperative from its members as per general ledger. On the other hand,
loan receivables are composed of regular loans, petty cash loans, productivity and rice loan.
Table 3 shows that the assets of the cooperative had been fast increasing from 2008
to 2012. The total asset in 2008 was Php3, 324,822.36. There was an increase of the
increment of the total asset from 2008 to 2011, however, the increment decreased in 2012.
The total asset in 2009 was Php4, 430,119. 83 while Php6, 134, 205. 05 in year 2010. In
2011, the cooperative was able to get hold of a total asset amounting to Php9, 775, 020, 36.
The total asset of 2012 was Php13, 259, 873. 24. As shown in Table 3, the average rate of
increase in the total asset of the cooperative was 29%.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Table 3. Total asset
YEAR
TOTAL ASSET
INCREMENT (%)
2008
3, 324, 822. 36
2009
4, 430, 119. 83
25
2010
6, 134, 205. 05
28
2011
9, 775, 020. 36
37
2012
13, 259, 873. 24
26
AVERAGE RATE OF INCREASE 29
The paid- up share capital of the members are part of the total asset of the
cooperative, therefore it affects the increments of the total asset. The decreased of the
increment in 2012 was due to the decrease of the paid –up share capital of the members
with the same year as 2012 (Table 2).
Fund Sourcing Practices of the Cooperative
Since the cooperative raised more its fund from its members, there were various
practices and policies employed by the cooperative. In coordination to the Local
Government of Unit (LGU) of the Municipality of La Trinidad, a minimum of Php50.00 is
being deducted in the salary of the members monthly. Another practice being done is
deducting 50% of the members’ annual interest on capital and patronage refund and atleast
3% of the amount loaned by the members which are added to the member’s share capital.
Each member of the cooperative is also contributing an amount of Php5. 00 per month
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
which serves as a contribution to be given as birthday gift to every co- member celebrating
his or her birthday for the month.
Ratio of Share Capital to Total Asset
The share capital is one of the common sources of the total asset of the cooperative.
Table 4 presents that the share capital contributed almost half (41.50%) of the total asset in
2008, and increased more than a few (57.72%) in 2009 and numerous
(62.57%) in 2010.The ratio increases of about quite grander (67.45) in 2011 and greatest
(69.94%) in 2012. The increasing increment indicates the percentage contributed by the
share capital to the total asset increases and that implies that the cooperatives’ major source
of fund is the paid- up share capital.
Table 4. Ratio of share capital to total asset
YEAR RATIO OF SHARE CAPITAL TO TOTAL ASSET (%)
2008
41.50
2009
57.72
2010
62.57
2011
67.45
2012
69.94
Net surplus. Table 5 shows that the net surplus of 2008 was Php530, 188. 45. Net surplus
was increased from 2008 to 2012. The net surplus for 2009 was Php680, 503. 86 and
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
increased to Php844, 803. 57 in 2010. In 2011, the cooperative was able to get hold of net
surplus amounting to Php1, 313, 98. 45 in 2011 and increased to Php1, 483, 785.55in 2012.
The ratio to total asset indicates the increment of amount contributed by the net surplus to
the total asset. While ratio to share capital implies the amount contributed of the share
capital to the increment of the net surplus.
Table 5. Net surplus
YEAR
AMOUNT OF NET SURPLUS
RATIO TO
TOTAL ASSET SHARE CAPITAL
2008
530, 188. 45
0.16
0.16
2009
680, 503. 86
0.15
0.15
2010
844, 803. 57
0.14
0.13
2011
1, 313, 298. 45
0.13
0.19
2012
1, 483, 785 .55
0.11
0.15
Allocation of Net Surplus
The net surplus of the cooperative as of December 2012 before the allocation was Php1,
483, 785. 55. The mandatory (25%) Php370, 946. 3875 reserve from the net surplus is
subdivided mostly (10%) into general reserve fund Php148, 378. 55, almost half (10%)
Php1, 483, 785. 55 are allocated for the cooperative educational and training fund (CETF),
few (3%) was allocated to the community development fund which is
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Php44, 513. 57 and still few (2%) Php29, 675.71 avail to the optional fund (building fund,
etc.). (After deducting the mandatory reserves, the remaining net surplus was made
available to the members in the form of interest on share capital not to exceed the normal
rate of return on investments prescribed by the Cooperative Development Authority
(CDA) and patronage funds.
Liabilities
The cooperative, through the Board of Directors with the approval of the general
assembly, may borrow money from any sources at the best terms and conditions available
and in such amounts as may be needed by the cooperative. The liabilities of the cooperative
include the account payables, the interest on share capital and patronage refund, loan
payables (“Isang Milyon, Isang Produkto” for members’ livelihood), loan redemption fund,
cooperative guarantee/social fund and trust fund.
Table 6 shows that the increment rate of the liabilities of the cooperative had been
fast increasing from 2010 to 2012. The total liabilities in 2008 was Php1, 590, 587. 92, this
was decreased to Php1, 372, 300. 62 in 2009.
The increasing increment of the liability of the cooperative was for the reason that
the cooperative loaned Php1, 000, 000. 00 from Malacanang for its program “Isang
Milyon, Isang Produkto” which was added to their working capital’s livelihood
fund. In addition, some of the cooperative’s liabilities were used as additional fund in their
fixed asset which is used in the procurements of the production inputs and supplies,
consumer goods, and machineries and equipments used in their business operations. The
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
cooperative is engaged in computer shop services and have ventured to catering services
in 2010 and later a grocery store and xerox services in 2011. Also, the interest on share
capital and patronage fund had increased including the account payables.
Interest on share capital and patronage fund. These are the residual surplus after deducting
the fund allocation as mandated by the cooperative code and as declared by the board of
directors has been declared as available for payment of interest on share capital and
patronage fund to the members.
Account payables. These are obligations of the cooperative in relation to providing
services to its members.
Table 6. Total liabilities
YEAR
TOTAL LIABILITIES
INCREMENT (%)
2008
1, 590, 587. 92
2009
1, 372, 300. 62
(16)
2010
1, 567, 368. 94
12
2011
2, 142, 136. 58
27
2012
2, 310, 953. 24
17
Debt ratio. As shown in Table 7, the liabilities in 2008 was almost half (47.84%) of the
total asset and some (30.98%) in the year 2009 and limited (25.55%) in 2010 as the total
asset from the liabilities. The liabilities were decreased by several (21.91%) in 2011 then
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
again by few (17.43%) in 2012. The ratio indicates that the cooperative has more assets
compared to their liabilities. Thereby, indicating that the cooperative is practicing
conservative financing with an opportunity to borrow in the future at no significant risk.
The higher the ratio, the greater the risk associated with the cooperative’s operation.
Table 7. Debt ratio (ratio of total asset to total liabilities)
YEAR RATIO OF TOTAL LIABILITIES TO TOTAL ASSET (%)
2008
47.84
2009
30.98
2010
25.55
2011
21.91
2012
17.43
Donations. The donation/grant and financial assistance as of December 31, 2012 was
Php60, 000. 00. The entirety (100 %) Php60, 000. 00 of the donations have been added to
the working capital of the livelihood fund of the cooperative. These donations and financial
assistance came from private individuals here in Benguet (confidential). Budgeting
practices. It is the policy of the cooperative as embodied in their laws that the annual budget
shall be prepared by the Board of Directors. The annual budget is prepared to allocate the
funds and usage of resources during certain period of time and to plan their expenses and
revenues. The cooperative has no certain policy on their budgeting; the Board of Directors
based their strategic planning and annual budget projections from the results of the
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
projected budget for the past year. The bookkeeper together with the Audit Committee
assists the Board of Directors in the preparation of their annual budget.
As mentioned by some of the officers and members, the importance of having a financial
budget plan is that it is for the cooperative to plan the profit and to be aware of the business
costs.
Internal control system. Under the Cooperative laws, cooperative management are
required to maintain internal control like administrative and accounting control which
concerned mainly in the safeguarding of the assets and reliability of financial records. Some
of the internal controls implemented are internal auditing which is done atleast once a year,
separation of duties concerned with records and assets custody. Administrative control
concerned with the operational efficiency and usually related only indirectly to financial
records like performance reports.
The LATMEMPCI has a bookkeeper to prepare the financial statements. The official
receipt and disbursement voucher are used by the LATMEMPCI to document their
transactions, and the sales journal, purchase journal, cash disbursement journal, cash book
are book of accounts used to record their transactions . The bookkeeper presents a monthly
report about the cooperative financial operations and conditions to the board of directors
monthly, and then presents it to the members during the annual general assembly of the
cooperative or as may be required. The financial statement and other reports required by
the cooperative are submitted to the Cooperative Development Authority (CDA) annually.
The cooperative deposits its money to the Land Bank of the Philippines.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Fund Usage and Allocation
The cooperative allocate its fund in three areas: for fixed asset, working capital, and
administrative cost.
For fixed asset, the cooperative specifically allocate its fund for building, land and
facilities and equipment used in their business operation since the cooperative is engaged
in catering services, computer shop services, grocery store, and canteen. On the other hand,
the working capital is allocated for the purchasing of stocks being sold in their store and
canteen and for the lending fund of the cooperative. On the other hand, others are being
used for the honorarium of the board of directors.
The administrative cost is specifically allocated for office supplies. Some of it was
used for transportation and advertisement expenses and for the Board of directors meeting
and in the conduction of the training on how to operate the xerox machine to the
cooperative members.
Factors Affecting the Cooperative
Financial Management
Financial management refers to activities that are concerned with securing money
and in using it properly. Table 8 shows the factors affecting the cooperative’s financial
management and the degree of its seriousness.
The factors affecting the financial management of the cooperative were identified
which includes the purchasing on account, irregular patronage of the members to the
cooperative, non- payment of the share capital instalment, lack of knowledge on financial
management,inadequate time to monitor the cooperative, unimplemented financial control
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
policies, inadequate financial control policies, and no financial management training
conducted.
Table 8 shows that the two major factors affecting the financial management of the
cooperative are the irregular patronage of the members to the cooperative and the lack of
knowledge on financial management by the members. This intensifies the findings of Pilas
(2011) that the major factor faced by cooperatives in their financial management is the lack
of knowledge on the financial management by the members. According to the officers,
though they have formal education, only few of them have the knowledge on the technical
knowhow of managing a cooperative. Some of them only adapted the management
practices of their past officers. This shows the importance of having knowledge on the
financial management of a cooperative.
Problems Encountered by the
Cooperative
Table 9 shows that the three major problems being encountered by the cooperative are the
slow processing of cooperative payment of caterings and delinquent members and the
irregular patronage of the services being offered by the cooperative. According to the
officers, there was a dawdling in the processing of the payment of the cooperative catering
service for mainly, the cooperatives’ customer is the Municipality of La Trinidad and it is
given that processing of vouchers to government agencies really takes time. It was observed
also that though the cooperative has sufficient fund allocated for the stocks or inputs for
their canteen, the merchandise committee failed to buy the items. There were also
delinquent members who were not paying their loans and grocery loans regularly.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Table 8. Factors affecting the financial management of the cooperative
FACTORS DEGREE OF SERIOUSNESS
NS
S
VS
Purchasing on account
Irregular patronage of the cooperative
2
14
Non- payment of the share capital instalment
14
2
Lack of knowledge on financial management
2
14
Inadequate time to monitor the cooperative
16
Unimplemented financial control policies
16
Inadequate financial control policies
16
No financial management training conducted
16
Legend:
VS- Very Serious (60%)
NS- Not Serious
S- Serious (30%)
Suggested Solutions to the Problems
The chairman of the Board of Directors mentioned that all members should continuously
patronage all the services that their cooperative is offering. Some of the members and staffs
mentioned that the delinquent members’ payment to their loans must be collected in
advance. Regarding the slowness of the payment on the catering services offered by the
cooperative, they cannot do anything about it since the processing of disbursement voucher
in the government agency is really slow.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
Table 9. Problems encountered by the cooperative
PROBLEMS
FREQUENCY PERCENTAGE
Presence of the officers
Delinquent members
3
18.75
Lack of coordination among officers and members
Insufficient cooperative capital
Others:
Slowness in the payment of the cooperative caterings
5
31.25
Irregular patronage of the services being offered
by the cooperative
8
50. 0
TOTAL
16 100 SUMMARY, CONCLUSIONS AND
RECOMMENDATIONS
Summary
This research was conducted to determine the financial management practices of the La
Trinidad Municipal Employees Multi- Purpose Cooperative Incorporated. It focuses on the
financial management practices of LATMEMPCI particularly on their budgeting, internal
control system, fund allocation and usage, the problems encountered by the cooperative,
and the suggested solutions and recommendations.
The respondents were 14 officers and 2 staffs of the cooperative. The data were collected
through survey questionnaires with an interview. The data was analyzed using descriptive
analysis, frequency counts, percentages, and ratios.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
It was found out that the cooperative does not have a budgeting policy; the board of
directors base their projections from the actual expenditures and budget estimates from the
past year. The cooperative prepares its budget to allocate the funds and usage of their
resources. The board of directors prepare the annual financial budget of the cooperative
assisted by the treasurer, the bookkeeper and the auditing committee.
The cooperative’s major sources of funds were the share capital from the members; the
income from the catering services, computer shop services, photocopying services (xerox);
income from the canteen operations and retail services (grocery store); and their outside
borrowings (Php1,000,000.00 from Malacanang). The donation or financial assistance
received by the cooperative from private individuals here in Benguet amounting to Php60,
000. 00 was added to the working capital of the livelihood fund of the cooperative.
The official receipt and disbursement voucher were used by the LATMEMPCI to
document their transactions. The cooperative, too, uses books of accounts like sales journal,
purchase journal, cash disbursement journal, and cash book to record their transactions.
The cooperative deposits its money to the Land Bank of the Philippines. The financial
statements and other records of the cooperative are made available to the members who
want to examine and be aware of the cooperative’s financial standing and operation. These
financial statements and other records are submitted to the CDA annually. The committee
on audit submit its reports to the board of directors concerning the financial condition and
status of the cooperative during the BOD’s monthly regular meeting as its internal audit.
As an added audit measure, they avail services of an external independent auditor which
certifies to the veracity and correctness of the financial statements which are presented
during the annual general assembly.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
The major factors affecting the financial management of the cooperative were the irregular
patronage of the members to the cooperative, and their lack of knowledge on financial
management.
Most of the members and staffs pointed out that the major problems faced by the
cooperative were the slow processing of payments of catering services and the delinquent
payments by members on their grocery loans and the irregular patronage of the services
being offered by the cooperative.
It was observed further that the cooperative does not have a general manager. The Board
of Directors act as the management team or management committee of the cooperative. It
has only two Audit Committee members and a bookkeeper.
The researcher was able to gain knowledge about the realities of managing a cooperative,
is not easy. It requires a large amount of capital from lot of members and that money is
considered as the lifeblood of the cooperative to be able to be functional. Managing a
cooperative requires its members and officers to be at least knowledgeable about financial
management and be equipped in its application. The researcher also observed that in a
cooperative, no man is an island.
Conclusions
Based on the findings of the study, the following conclusions were made:
1.
The major source of fund of the cooperative was the share capital from the
members, the income generated in their business operations, and their borrowings. There
were various practices employed by the cooperative in fund sourcing. In coordination with
the Local Government of Unit of the Municipality of La Trinidad, a minimum of Php50.00
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
is being deducted from the salary of the members monthly. Another practice being done is
deducting 50% of the members’ annual interest on capital and patronage refund and atleast
3% of the amount loaned by the members which are added to the member’s share capital.
Each member of the cooperative is also contributing an amount of Php5.00 per month
which serves as a contribution to be given as birthday gift to a member celebrating his or
her birthday for the month;
2.
The cooperative does not have a budgeting policy; the board of directors base their
projections from the actual expenditures and budget estimates from the past year. The
committee on audit submit its reports to the board of directors concerning the financial
condition and status of the cooperative during the BOD’s monthly regular meeting. During
the annual general assembly, they submit and present to the members the comprehensive
annual audit report;
3.
The cooperative allocates its fund for three main areas: for fixed asset, working
capital and administrative cost; and
4.
The cooperative encounters problems on the slow processing of cooperative
payment of catering services, delinquent payments by some members of grocery loan, and
the irregular patronage of the services being offered by the cooperative.
Recommendations
In order to improve the financial management and status of the cooperative the
recommendations were made based on the following findings:
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
1.
Although the common source of fund of the cooperative is the share capital from
its members, the cooperative should still motivate the members to add more share capital
regularly so as to have more funds to be used in the business operations. The cooperative
must have a policy on stagnant minimum share capital to encourage the members;
2.
The cooperative should also increase their capital build- up as the members should
deposit Php150.00 monthly, given that the members are having their salary twice a month,
and adopt more business investments;
3.
The cooperative must be very strict in the collection of the payment of loans and
other collectibles from the officers and members;
4.
The cooperative can also conduct a seminar for the members to be aware of their
importance to the coopertive and to the improvement of the cooperatives’ current position;
5.
Members should patronize the services provided by their cooperative such as loans,
savings, and deposit to assure the cooperative’s economic growth and stability;
6.
The cooperative must be responsive with the bad performance of their purchasing
committee that the cooperative must look for ways to motivate them to be functional and
perform their job well. Make them aware of their importance as elected members of the
Purchasing or Merchandise Committee;
7.
The management should conduct trainings and seminars regarding financial
management among its members specifically to its officers and staffs to be more
knowledgeable on financial management practices; and
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
8.
The cooperative should have a general manager who will take charge of all the
phases of the business operations of the cooperative to ensure the full- time management
of the operations of the cooperative.
Finacial Management Practices: A Case Study of the La Trinidad Multi- Purpose
Cooperative Incorporated | MARCOS, RACY ANTONETTE C. APRIL 2013
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