BIBLIOGRAPHY LIWAN, ANGELINE B. ...
BIBLIOGRAPHY
LIWAN, ANGELINE B. APRIL 2013. Management of Statutory Fund among
Selected Primary Cooperatives in La Trinidad, Benguet. Benguet State University, La
Trinidad, Benguet.
Adviser: Jovita M. Sim MSc.
ABSTRACT
The study aimed to assess the management of statutory funds in selected primary
cooperative in La Trinidad, Benguet. It focused on the distribution, uses and problems
encountered and their possible solution in managing the statutory fund.
The respondents of the study were from 27 cooperatives operating in La Trinidad,
Benguet. Respondents were the manager, board of directors or the treasurer of the different
cooperatives. The data were collected with the use of survey questionnaire. Data were
analyzed using descriptive statistical tools such as frequency and percentage.
Based on the research in managing statutory fund of cooperatives, most of the
cooperatives were allocating statutory fund and they used this according to its uses
depending on the decision of the Board of Directors and the manager. Some cooperatives
were not following the cooperative code in allocating the appropriate percent of statutory
fund.
Majority of the cooperatives who encountered problems in managing the statutory
fund were not knowledgeable on the policies in using the statutory fund as provided in the
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
cooperative code. This can cause misallocation and utilization of the fund. Possible
solutions recommended by the cooperative were saving the statutory fund in the banks and
strictly implement the policies related to its utilization as to cooperative code.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
INTRODUCTION
Rationale
Cooperative in recent years has focused its resources on the growing needs of its
members. They are responsible to the needs of its members and the community. It has to
be dynamic to satisfy the increasing and changing needs of its members.
Cooperatives are service-oriented because it is organized to serve their members by
providing them the goods and services they need at cost. Members contribute to the capital
of the cooperative in the sense that they do not invest their money in a capitalist enterprise
in which the primary objective is to get the maximum profit from their investment.
Members join cooperatives because they need their services.
Cooperatives is not a charitable organization were in the members are aware that
the benefit they derive from their associations come from their contributions and is the
result of their mutual desire to help one another , as their motto cooperatives are not for
profit but for service.
Cooperatives are owned, managed and patronized by their members. They must
depend on the patronage of their own members and not from non-members although certain
cases a limited patronage by non-members maybe allowed mainly for reasons of business
viability and service to community
The cooperative is engage in different business operations like credit, consumers,
service, producer or a combination of two or more business operations. It is owned and
managed by the members themselves who provided initial investment. The profit earned
in its operations is termed as the net surplus.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Patronizing cooperative services really helps the operations of the cooperative.
Thus, the members who patronize the services of cooperative help in building their
cooperative financially sound and stably by increasing the cooperative net surplus.
Therefore, this study was conducted to find out how the cooperatives in La
Trinidad, Benguet manage their statutory fund.
Statement of the Problem
The study aimed to assess on the management of statutory funds among selected
primary cooperatives in La Trinidad, Benguet.
It ought to answer the following questions:
1.
How do primary cooperatives in La Trinidad, Benguet manage the
distribution of statutory fund?
2.
How do primary cooperatives in La Trinidad, Benguet manage the uses of
statutory fund?
3.
What are the problems encountered by the cooperatives in managing the
statutory fund and what are their possible solutions to their problems?
Objective of the Study
The specific objectives of the study were the following:
1.
To determine how primary cooperatives in La Trinidad, Benguet manage
the distribution of statutory fund;
2.
To determine how primary cooperatives in La Trinidad, Benguet manage
the uses of statutory fund; and,
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
3.
To identify the problems encountered by the cooperatives in managing the
statutory fund and the possible solutions to their problems.
Importance of the Study
This study would serve as baseline information on the management of statutory
funds among the cooperatives in La Trinidad, Benguet. The identification of different
practices in the allocation and distribution of the statutory fund would give idea on what to
capitalize and what needs to be improved.
The information would provide the officers and management staff with helpful
knowledge towards the managing of the statutory fund. This would serve as basis for the
formulation of strategies to improve the management of the statutory fund.
Furthermore, the result of the study would serve as reference for other researcher
who would like to conduct similar research.
Scope and Limitation of the Study
This study concentrated primarily on the management of statutory funds among
primary cooperatives operating in the different barangays of La Trinidad, Benguet.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
REVIEW OF LITERATURE
Cooperatives were viewed by the government as voluntary and self-help
organization capable of securing economies of scale in providing business and other
services to limited resources farmers and individuals. They were also viewed as
organizations that provide employment, improve income distribution, established fair
market prices by promoting private sector competition. They were thus used primarily as
instruments for. (a)improving the economic, social and cultural situations of people with
limited means, (b)increasing personal and national capital resources by encouraging the
thrift-sound use of credit and adoption of improved agricultural technologies, (c) increasing
income and employment by further utilization of available resources and (d) up-social
services in the rural areas (Rola,1988).
Management
In all
business and organizational activities is the act of getting people together to
accomplish desired goals and
objectives using available resources efficiently and
effectively. Management c
omprises planning, organizing, staffing, leading or directing,
a
nd controlling a
n organization (a group of one or more people or entities) or effort for the
purpose of accomplishing a goal.
Resourcing encompasses the deployment and
manipulation of human resources, financial resource
s, technological resources a
nd natural
resources.(Fajardo, 2000).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Net Surplus
Cooperative operations incur expenses but generate income. Whatever remains
after expenses have been deducted from income is called net surplus. Net Surplus is the
excess payment made by the cooperative members on their loans or on the goods brought
by them from the cooperatives and for the services rendered to them.
Article 85 of republic Act No. 9520 stated that the provisions of existing laws, the
net surplus of cooperative shall determine in accordance with its by-laws.Every
cooperative shall determine its net surplus at the close of every fiscal year and at such other
times as maybe prescribed by the by laws.
Order of Distribution
The net surplus of every cooperative shall be distributed as follows: 1) Reserve fund
which shall be at least ten percent (10%) of net surplus. 2) Cooperative Education and
training fund shall not be more than ten percent (10%) of net surplus. 3) Community
Development fund which shall not be less than three percent (3%) of net surplus. 4)
Optional fund shall not exceed seven percent (7%) of net surplus.
The remaining net surplus shall be made available to the members in the form ofinterest
on share capital not exceed the normal rate of return on investment and patronage refunds.
The sum allocated for patronage refunds shall be made available at the same rate to
all patrons of the cooperative in proportion to their individual patronage; provided that: a)
In the case of a member patron with paid-up share capital contribution, his proportionate
amount of patronage refund shall be paid to him unless he agrees to credit the amount to
his account as additional share capital contribution. b) In the case of a member patron with
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
unpaid share capital contribution, his proportionate amount of patronage refund shall be
credited to his account until his share capital contribution has been fully paid. c) In the case
of a non-member patron, his proportionate amount of patronage refund shall be set aside
in a general fund for such patrons and shall be allocated to individual non-member patrons
only upon request and presentation of evidence of the amount of his patronage. The amount
so allocated shall be credited to such patron toward payment of the minimum capital
contribution for membership. When a sum equal to this amount has accumulated at any
time within a period specified in the bylaws, such patron shall be deemed and become a
member of the cooperative if he so agrees or requests and complies with the provisions of
the by-laws for admission to membership. d) If within any period of time specified in the
by-laws, any subscriber who has not fully paid his subscribed share capital or any non-
member patron who has accumulated the sum necessary for membership but who does not
request nor agree to become a member or fails to comply with the provisions of the by-
laws for admission to membership, the amount so accumulated credited to their account
together with any part of the general fund for non-member patrons shall be credited to the
reserve fund or to the education and training fund of the cooperative, at the option of the
cooperative.
Patronage Refund
Refers to the refund or return to the members of net savings generated from the
operations of the cooperative.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Computation of Patronage Refund
The basis of patronage refund differs among cooperative. A credit cooperative will
utilize the interest on loans paid by the members in computing the refund. Consumer
cooperative will use the net sales made by cooperative to a member as basis for
computation (Abasolo
et al., 1996).
The formula for the computation of patronage refund is as follows:
Rate of Patronage Refund = Amount available for patronage refund
Total of Basis for Patronage Refund
Rate of Patronage Refund = Amount available for patronage refund
(Credit cooperative)
Total Interest on Loans
Rate of Patronage Refund = Amount available for patronage refund
(Consumers Cooperative)
Total Net sales
Limited Interest on Capital
Refers to the interest earned by the member's paid up to the capitalization of the
cooperative. It is based on the average share capital contribution of members computed
on a per month basis against the preset amount earmarked by the board of directors for
interest on share capital.
Computation for Interest on Capital
After amounts have been allocated to statutory funds, the 70% of the remaining net
surplus shall be distributed to members as interest on their share capital which should not
exceed the normal rate of return on investment determined by the CDA (Abasolo,
et al.,
1996).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Rate of Interest =N x (Net Surplus – Statutory Reserves)
Total average share month
Where:
N- Represent the percentage allocation for interest on capital from the remainder
of the net surplus after deducting the statutory fund.
Dependent Variable
Independent Variable
Uses of the
No. of yrs in
statutory funds of
operation
the cooperative
Type of
Practices of the
Cooperative
Cooperatives in
Composition of
the distribution of
membership
statutory fund
Funds allocated in
the statutory fund
Expected Output
Percentage of
Statutory Fund
Allocated and
Distributed in a
Cooperatives
Rules and
Regulation in
using the statutory
funds.
Systems in the
distribution of
Statutory Fund
Figure1. Conceptual framework
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
METHODOLOGY
Locale and Time of the Study
The study was conducted at the municipality of La Trinidad, Benguet. The study
was conducted from November 2012 to January 2013.
Respondents of the Study
There were 27 respondents of the study. These respondents were the manager,
BOD’s or treasurer of the different cooperatives operating in La Trinidad, Benguet. One
respondent is selected from each cooperative.
Collection of Data
The data and information were collected through interview with the use of interview
schedule and supplemented with the cooperative records.
The researcher explained the importance and objectives of the study to the respondents to
ensure complete and accurate answers from them.
Data Gathered
The data gathered were the management, distribution and the uses of statutory fund of
primary cooperatives in La Trinidad, Benguet and the problems encountered by the
cooperatives in managing the statutory fund and possible solutions to their problems.
Data Analysis
The data were tabulated and analyzed based on the objectives of the study and
analyzed using frequency and descriptive analysis.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
RESULTS AND DISCUSSION
Cooperative Profile
Table 1 shows the profile of the different cooperatives operating in La Trinidad, Benguet.
The types of cooperative operating were multipurpose agriculture (41%), majority (52%)
were multi-purpose non-agriculture and credit (7%). The number of years in operation
shows that 30% are operating 1 to 10 years, 48% are operating 11 to 20 years and 22% are
operating 21 to 30 years.
Table 1. Cooperative profile
PROFILE
FREQUENCY
PERCENTAGE
Types of Cooperative
Multi-purpose Agriculture
11
41
Multi-purpose Non- Agriculture
14
52
Credit
2
7
TOTAL
27
100
Number of years in operation
1-10 yrs.
8
30
11-20 yrs.
13
48
21-30 yrs.
6
22
TOTAL
27
100
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 2. Allocation of statutory fund
ALLOCATION
FREQUENCY
PERCENTAGE
Coop allocate statutory funds
26
96
Coop do not allocate statutory funds
1
4
TOTAL
27
100
Allocation of Statutory Fund
Table 2 shows that 96% or 26 cooperatives are allocating statutory funds and 4% or 1
cooperative is not allocating statutory fund because they are just starting or building their
cooperative.
Amount Allocated for General Reserve Fund
Table 3 shows the allocated general reserve fund of statutory fund of the different
cooperatives. Out of the 27 respondent 23 cooperatives indicate the amount of the allocated
fund on their cooperatives. The 4 cooperatives did not indicate amount allocated because
they said that it is confidential.
On the allocation of general reserve fund there were 17% who allocated less than
P5,000, 17% allocated P5,001-15,000, 4% allocated P15,001-30,000, 9% allocated
P50,001-80,000 and 52% allocated more than P100,001. This implies that the accumulated
amount for the general reserve fund as of 2011 can be utilized by the cooperative.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 3. Amount allocated for general reserve fund
GENERAL RESERVE FUND
FREQUENCY
PERCENTAGE
Less than 5,000
4
17
5,001-15,000
4
17
15,001-30,000
1
4
30,001-50,000
0
0
50,001-80,000
2
9
80,001-100,000
0
0
Above 100,001
12
52
MEAN ALLOCATED
4.6
Amount Allocated for Education and Training Fund
On the allocation of fund for cooperative education and training fund there were 22% of
the cooperative respondent who allocated less than P5,000, 22% allocated P5,001-15,000,
22% allocated P15,001-30,000, 9% allocated P30,001-50,000, 4% allocated P50,001-
80,000, 13% allocated P80,001-100,000, and 9% allocated P100,001. This implies that the
accumulated fund for education and training fund as of 2011 can be utilized by the
cooperative (Table 4).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 4. Amount allocated for CETF
EDUCATION AND TRAINING FUND
FREQUENCY
PERCENTAGE
Less than 5,000
5
22
5,001-15,000
5
22
15,001-30,000
5
22
30,001-50,000
2
9
50,001-80,000
1
4
80,001-100,000
3
13
Above 100,001
2
9
MEAN ALLOCATED
3.28
Amount Allocated for Community Development Fund
On the allocation of Community Development Fund there were 39% who allocated less
than P5,000, 4% allocated P5,001-15,000, 13% allocated P15,001-30,000, 9% allocated
P30,001-50,000, 22% allocated P50,001-80,000, 13% allocated more than P100,001. This
implies that the accumulated fund for community development fund as of 2011 can be
utilized by the cooperative (Table 5).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 5. Amount allocated for CDF
COMMUNITY DEVELOPMENT FUND
FREQUENCY
PERCENTAGE
Less than 5,000
9
39
5,001-15,000
1
4
15,001-30,000
3
13
30,001-50,000
2
9
50,001-80,000
5
22
80,001-100,000
0
0
Above 100,001
3
13
MEAN ALLOCATED
3.83
Amount Allocated for Optional Fund
On the allocation of the Optional Fund there were 17% who allocated less than P5,000,
13% had allocated P5,001-15,000, 9% had allocated P15,001-30,000, 9% had allocated
P30,001-50,000, 13% allocated P50,001-80,000, 39% had allocated more than P100,001.
This implies that the accumulated fund for optional fund as of 2011 can be utilized by the
cooperative (Table 6).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 6. Amount allocated for optional fund
OPTIONAL FUND
FREQUENCY
PERCENTAGE
Less than 5,000
4
17
5,001-15,000
3
13
15,001-30,000
2
9
30,001-50,000
2
9
50,001-80,000
3
13
80,001-100,000
0
0
Above 100,001
9
39
MEAN ALLOCATED
3.83
Distribution of Statutory Fund
Table 7 shows how the different cooperatives allocate their net surplus to general
reserve fund, cooperative education fund, community development fund and optional fund.
General reserve fund. Philippine Cooperative Code of 2008 Republic Act 9520
stated that allocation for GRF shall be at least ten percent (10%) of net surplus. The result
shows that 96% of the cooperative allocated 9-10% and 4% allocated 11-15%.
Cooperative education and training fund. Philippine Cooperative Code of 2008
Republic Act 9520 stated that the allocation of CETF shall not be more than ten percent
(10%) of net surplus. The result shows that 8% allocated 1-3%, 23% allocated 4-6% and
69% allocated 7-10%.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Community development fund. Philippine Cooperative Code of 2008 Republic Act
9520 stated that the allocation of CDF shall not be less than three percent (3%) of net
surplus. The result shows that 92% allocated 3-4% and 8% allocated 5-7%.
Optional fund. Philippine Cooperative Code of 2008 Republic Act 9520 stated that
the allocation of OF shall not exceed seven percent (7%) of net surplus. The result shows
that 23% allocated 1-5%, and 77% allocated 6-10%. This implies that some cooperative
are not following RA 9520 since 20 of the cooperatives are allocating more than 7%.
Table 7. Distribution of statutory fund
PARTICULAR
FREQUENCY
PERCENTAGE
Percent allocated for GRF
9-10%
25
96
11-15%
1
4
TOTAL
26
100
MEAN = 13%
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 7. Continued…
PARTICULARS
FREQUENCY
PERCENTAGE
Percent allocated for CETF
1-3%
2
8
4-6%
6
23
7-10%
18
69
TOTAL
26
100
MEAN = 8.67%
Percent allocated for CDF
3-4%
24
92
5-7%
2
8
TOTAL
26
100
MEAN = 13%
Percent allocated for OF
1-5%
6
23
6-10%
20
77
TOTAL
26
100
MEAN = 13%
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Distribution of the Remaining Excess
of the Statutory Fund
Table 8 shows the distribution of the remaining excess on the statutory fund to the
patronage refund and interest on share capital.
Patronage refund. Cooperative code of RA 9520 stated that the amount allocated for
patronage refund shall not be less than 30% of the net surplus after deducting the statutory
reserves based on the principle of equity. There were 2 of the cooperative allocated less
than 20%, 14 allocated 30-40%, 10 allocated 50-70%. This implies that some cooperatives
are violating the cooperative code since 24 of the cooperative allocating more than 30%.
Interests on share capital. There were 25 respondents out of 26 cooperatives response
because one cooperative is not allocating interest on share capital because of the type of
service they are offering which is diagnostic laboratory, radiologic services and drug
testing. 1 or 4% allocated less than 20%, 5 or 20% allocated 30-40% and 19 or 76%
allocated 50-70%.
Table 8. Distribution of the remaining excess on the statutory fund
DISTRIBUTION
FREQUENCY
PERCENTAGE
Patronage Refund
Less than 20 %
2
8
30-40 %
14
54
50-70 %
10
38
TOTAL
26
100
MEAN = 8.67%
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 8. Continued…
DISTRIBUTION
FREQUENCY
PERCENTAGE
Interest on Share Capital
Less than 20 %
1
4
30-40 %
5
20
50-70 %
19
76
TOTAL
25
100
MEAN = 8.33%
Affiliations of Cooperatives to other Business
Organization and Cooperatives
Table 9 shows that in managing the statutory fund of the different cooperatives in La
Trinidad, Benguet, there were 59% cooperatives affiliated because they want to learn from
other cooperative (31%), it is a requirement (6%), to have trainings and seminars which is
very helpful in the improvement of their cooperative (38%), to create contact and business
partnership (6%), and to avail services and for additional investment (13%). Most of them
are affiliated in Benguet Provincial Cooperative Union (BPCU), Northern Luzon
Federation of Cooperatives and Development Center (NORLU CEDEC), Cooperative
Bank of Benguet (CBB), Cordillera Administrative Region Cooperative Union (CARCU),
Benguet Credit Surety Fund, and National Confederation of Cooperatives (NATCO) and
41% cooperatives are not affiliated because they are afraid or not interested (27%), others
are still planning to affiliate (18%), it’s not suitable on their current services (9%), they are
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
just building again their cooperative due to bankruptcy (9%), lack of funds for membership
(9%), they are planning to build their own federation (9%), they want to stand alone as a
cooperative (9%) and because they do not have a similar cooperative that has the same
line of business (9%).
Table 9. Affiliations of cooperatives to other business organization and cooperatives
RESPONSE
ORGANIZATIONS
FREQUENCY
PERCENTAGE
WHERE
AFFILIATED
Affiliated
BPCU, NORLU
16
59
CEDEC
CBB, CARCU,
NATCCO
Benguet Credit Surety
Fund
Not affiliated
11
41
TOTAL
27
100
Reasons for affiliations
Have trainings and seminars which
be helpful in the improvement of
the cooperative
6
38
To learn from other cooperative
5
31
For additional investment
2
13
Create contact and business
partnership
1
6
To avail services
1
6
Requirement
1
6
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 9. Continued…
REASONS FOR NON-AFFILIATION
FREQUENCY
PERCENTAGE
Afraid or not interested
3
27
Still planning to affiliate
2
18
Not suitable on their current business
1
9
They are building again their cooperative
due to bankruptcy
1
9
Lack of funds for membership
1
9
They are planning to build their
own federation
1
9
They want to stand alone as a cooperative
1
9
They do not have a similar cooperative
that has the same line of business
1
9
Affiliated Cooperatives that Remits Due to CETF
to the Secondary Cooperatives
Table 10 shows that 94% of the affiliated cooperative that are remitting their fund due to
CETF on the secondary cooperatives because it is required (94%), they remit at least 50%
of the CETF or it will depend on the decision of the BOD’s and 6% are not remitting
because they do not have enough cash to be remitted (6%).
In case that they are affiliated in several secondary cooperatives in remit their due to CETF
but depend on the decision of the BOD’s and it will depend on the services they availed
from secondary cooperatives or they will divide equally their remittance.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 10. Affiliated cooperatives that remits fund due to CETF
RESPONSE
FREQUENCY
PERCENTAGE
Remit fund
15
94
Do not remit fund
1
6
TOTAL
16
100
Reason for remitting fund
It is required
15
94
Reason for not remitting fund
They do not have enough cash
to be remitted
1
6
Management on the Uses of General Reserve Fund
In managing the uses of general reserve fund of the different cooperatives there were 15
or 58% response that they will use for the stability of the cooperatives and to meet its losses
in its operation, 8 or 31% response that they will deposit on the banks as an investment, 1
or 4% response that they will reserve for the benefits of employees and members, 1 or 4%
response that they will set aside to purchase equipment for the cooperative, 1 or 4%
response that they will reserve for the future projects of the cooperative and 1 or 4%
response that they add as capital of the cooperative (Table 11).
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 11. Management on the uses of general reserve fund
PARTICULARS
FREQUENCY
PERCENTAGE
Used for the stability of the cooperative
and to meet net losses in its operation
15
58
It is deposited on the banks as an
investment
8
31
It is reserve for the benefits of employees
and members
1
4
Set aside to purchase equipment
for the cooperative
1
4
Reserve for the future projects of
the cooperative
1
4
It is added as capital of the cooperative
1
4
Management on the Uses of Cooperative
Education and Training Fund
Table 12 shows on how the different cooperatives manage the uses of cooperative
education and training fund. There were 24 cooperatives responses that they will use for
the trainings and seminars for their members and employees and half of fund will be
remitted to secondary cooperative they are member with, and two (2) cooperatives stated
that they will deposit on the banks.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 12. Management on the uses of cooperative education and training fund
PARTICULAR
FREQUENCY
PERCENTAGE
Used for the trainings and seminars for
their members and employees and the
half of fund will be remit on the
affiliated cooperative
24
92
They will deposit on the banks
2
100
TOTAL
2
100
Management on the Uses of Community
Development Fund
Table 13 shows how the different cooperatives manage the uses of community
development fund. There were 63% cooperative responses that they will used it for the
projects and activities that will benefit the community, 4% response that they will used it
for medical session, 8% response that they will deposit on the bank, 4% response that they
use it for donations and solicitations of local groups, 4% response that they will used it for
building improvement or rentals, 4% response that they will donate to the community
activities related to environment, 4% response that they will spent for the general cleaning
around the business area, 4% response that they set aside for social responsibility, 4%
response that they will used for scholarship, 4% response that they will set aside to purchase
equipment for the cooperative.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 13. Management on the uses of community development fund
PARTICULAR
FREQUENCY
PERCENTAGE
Used for the projects and activities that
will benefit the community
16
62
Used for medical session
1
4
They will deposit on the bank
2
8
Used for donations and solicitations
of local groups
1
4
For building improvement or rentals
1
4
They will donate to the community
activities related to environment
1
4
Spent for the general cleaning around
the business area
1
4
Set aside for social responsibility
1
4
For scholarship
1
4
Set aside to purchase equipment
for the cooperative
1
4
Management on the Uses of Optional Fund
Table 14 shows on how the different cooperatives manage the uses of optional fund. There
were 54% response that they will used for land and building funds and other necessary
expenses, 8% response that they will used for the renovations of buildings, 4% response
that they will used for trainings and fieldtrips, 8% responses that they will deposit on the
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
bank, 4% response that they will used for mortuary and cooperative guarantee fund, 4%
response that they will set aside for future projects, 12% response that they will used for
retirement and management benefit fund and 8% response that they will add to purchase
equipment for the cooperative.
Table 14. Management on the uses of optional fund
PARTICULAR
FREQUENCY
PERCENTAGE
Used for land and building funds and other
necessary expenses
14
54
For the renovations of buildings
2
8
For trainings and fieldtrips
1
4
They will deposit on the bank
2
8
For mortuary and cooperative guarantee
fund
1
4
Set aside for future projects
1
4
Retirement and management benefit fund
3
12
Add to purchase equipment for the
cooperative
2
8
Presence of Policy in Using the Statutory Fund
Table 15 shows that 21 cooperatives have a policy in using their statutory funds and 6
cooperatives do not have a policy in using their statutory funds.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 15. Presence of policy in using the statutory fund
PRESENCE OF POLICY
FREQUENCY
PERCENTAGE
Have a policy
21
78
No policy
6
22
TOTAL
27
100
Transparency of the Policies in Using the
Statutory Fund
Table 16 shows the transparency of the policy in using the statutory fund, majority of the
respondents are using the policy transparent to their members and this policies are
transparent presented in the General Assembly.
Table 16. Transparency of the policies in using the statutory fund on their members
RESPONSE
FREQUENCY
PERCENTAGE
Transparent
21
100
Not transparent
0
0
TOTAL
21
100
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Persons Involved in Implementing the
Uses of Statutory Fund
Table 17 shows the persons responsible in implementing the policies in using the statutory
fund. There were 69% of the respondents who pointed the BOD and 31% respondents
pointed the manager. This implies that most cooperatives tasked the BOD and the manager
in implementing the practices in using statutory fund.
Implementation of the Policies in Using
Statutory Fund
Table 18 shows that there were 95% implementing their policies in using the statutory fund.
In implementing their policies, it is strictly implemented upon the approval of the board of
directors on the actual expenses and according to its purpose so that it will not divert to
another usage like misallocation and it must be properly documented with the strictly
compliance of the Internal Accounting Control in managing the fund that will benefit the
community and 5% are not implementing their policies because they will use this on the
future if it is needed.
Table 17. Persons involved in implementing the uses of statutory fund
PERSON INVOLVE
FREQUENCY
PERCENTAGE
Board of Directors
18
69
Manager
8
31
TOTAL
26
100
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 18. Implementation of the policies in using statutory fund
RESPONSE
FREQUENCY
PERCENTAGE
Implementing
20
95
Not implementing
1
5
TOTAL
21
100
Management on the Uses of General Reserve
Fund in Case of Dissolution
Table 19 shows the management on the uses of general reserve fund of the different
cooperative in case of dissolution. There were 19% response that they will distribute and
divide equally to the members according to the amount of their common shares, 35%
response that they will remit to the union or federation to which the cooperative are
affiliated with ,19 % response that they will donate, contribute or otherwise dispose to the
benefits of the community where it operates, 15% response that they will use to meet the
losses of the cooperatives and 12% response that they will follow the mandated
cooperative code the RA 9520.
Table 19. Management on the uses of general reserve fund in case of dissolution
PARTICULARS
FREQUENCY
PERCENTAGE
Distribute and divide equally to the
members according to the amount
of their common shares
5
19
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 19. Continued…
PARTICULAR
FREQUENCY
PERCENTAGE
Remitted to the union or federation they
are member with
9
35
Donate or contribute or otherwise dispose
to the benefits of the community where it
Operates
5
19
Used to meet the losses of the cooperative
4
15
Follow the cooperative code
3
12
Management on the Uses of Cooperative
Education and Training Fund in
Case of Dissolution
Table 20 shows how the different cooperatives manage the uses of cooperative education
and training fund in case of dissolution. There were 77% response that they will credited
to the affiliated union or federation, 8% response that they will used for payment of outside
loans of the cooperative, 4% response that they will distribute equally to members
according to the amount of common shares and 12% response that they will follow what
are the mandated cooperative code of RA 9520.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 20. Management on the uses of CETF in case of dissolution
PARTICULARS
FREQUENCY
PERCENTAGE
Credited to the affiliated union or
federation
20
77
Used for payment of outside loans of the
cooperative
2
8
Distribute equally to members according
to the amount of common shares
1
4
Follow the cooperative code
3
12
Management on the Uses of Community Development
Fund in Case of Dissolution
Table 21 shows on how the different cooperatives manage the use of community
development fund. There were 50% response that they will used for projects and activities
that will benefit the community where the cooperatives operates, 4% response that they
will donate to the market associations, 27% response that they will donate to the union or
federation they are affiliated with, 8% response that they will used for the payment of loans
to other cooperative or business organization of the cooperative, 12% response that they
will follow the mandated cooperative code of RA 9520.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 21. Management on the uses of CDF in case of dissolution
PARTICULARS
FREQUENCY
PERCENTAGE
Used for projects and activities that will
benefit the community
13
50
Donate to the market associations
1
4
Donate to the union or federation they are
affiliated with
7
27
Used for payment of outside loans of the
cooperative
2
8
Follow the cooperative code
3
12
Management on the Uses of Optional Fund
in Case of Dissolution
Table 22 shows on how the different cooperatives manage the uses of optional fund in case
of dissolution. There were 15% response that they will distribute to the cooperative
members in addition to the GRF, 8% response that they will used for other necessary
expenses of the cooperative, 8% response that they will used for the payment of loans to
the other cooperative or business organization of the cooperative, 35% response that they
will donate to the federation or union they are member with, 12% response that they will
donate or contribute where the cooperative operates, 8% response that they will dispose or
sale the land and building and it will proceeds to the members according to their share
capital, 4% response that they will distribute as benefit of staffs and 12% response that
they will follow the cooperative code.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Problems Encountered in Managing the
Statutory Fund
Table 23 shows that out of the 27 respondent only 14 cooperatives encountered problems
in managing their statutory fund. There were 3 or 21% who encountered misallocation of
the statutory fund, 1 or 7% cooperative mentioned that they lack knowledge in computing
statutory fund, 9 or 64% response that they don’t have a proper policies to be followed, 1
or 7% response that they do not have enough funds to be allocated.
Table 22. Management on the uses of optional fund in case of dissolution
PARTICULARS
FREQUENCY
PERCENTAGE
Distribute to the members in addition to
the general reserve fund
4
15
Used for other necessary expenses of the
cooperative
2
8
Used for payment of outside loans of the
cooperative
2
8
Donate to the union or federation they are
affiliated with
9
35
Donate to the community where it
operates
3
12
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 22. continued …
PARTICULARS
FREQUENCY
PERCENTAGE
Dispose or sale the land and building and
it will proceeds to the members
according to their share capital
2
8
Distribute as benefit of the staff
1
4
Follow the cooperative code
3
12
Possible Solutions in Managing the Statutory Fund
Table 24 shows the possible solutions in managing the statutory fund. There were 29%
responses that they will save the statutory fund on the banks, 64% response that they will
make a policy in using the statutory fund, 7% response that they will compute the statutory
fund based on the cooperative code of RA 9520.
Table 23. Problems encountered in managing the statutory fund
PROBLEMS
FREQUENCY
PERCENTAGE
Misallocation of the Statutory Fund
3
21
Lack of Knowledge in Computing
1
7
Statutory Fund
There are no proper policies in using
9
64
Statutory Fund
Limited funds to be allocated in the
1
7
statutory fund
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
Table 24. Possible solutions to problems encountered
POSSIBLE SOLUTIONS
FREQUENCY
PERCENTAGE
29
Save on the Banks or other Cooperatives
4
Make Policies to be followed
9
64
In computing statutory fund must based
1
7
on the RA 9520
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS
Summary
This research was conducted to determine the management of statutory fund among
selected primary cooperatives in La Trinidad, Benguet. It focused on the distribution, uses
and problems encountered and their possible solution in managing the statutory fund.
The respondents were the manager, board of directors or the treasurer of the
different cooperatives. The data was collected with use of survey questionnaire. The data
was analyzed using descriptive statistical tools such as frequency and percentage.
In managing the statutory fund, most of the cooperative are allocating statutory
fund according to the order of distribution based on the cooperative code. Most of the
cooperative allocated in general reserve fund more than 10%, in cooperative education and
training fund allocated less than 10%, in community development fund allocated not less
than 3% and in the optional fund allocated not exceeding the 7%. In allocating the
remaining excess of the statutory fund most of the cooperative distribute it in the patronage
fund and the interest on share capital.
In utilizing their statutory fund it is based according to its distribution, the general reserve
fund used for the stability of the cooperatives and to meet its losses in its operation, they
deposited in the banks as an investment, they reserve for the benefits of employees and
members, they set aside to purchase equipment for the cooperative, they reserve for the
future projects of the cooperative and they add as capital of the cooperative. The
cooperative education and training fund they used for the trainings and seminars for their
members and employees, they remit to the cooperative they are member or affiliated with,
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
and they deposited in the banks. The community development fund they used for the
projects and activities that will benefit the community, they used for medical mission
activities, they deposited in the bank, they used for donations and solicitations of local
groups, they used for building improvement or rentals, they will donate to the community
activities related to environment conservation, they spend for the general cleaning around
the business area, they set aside for social responsibility, for scholarship, and they set aside
to purchase equipment for the cooperative and the optional fund they used for land and
building funds and other necessary expenses, they used for the renovations of buildings,
for trainings and fieldtrips, they will deposited in the bank, they used for mortuary and
cooperative guarantee fund, they set aside for future projects, they used for retirement and
management benefit fund and they add to purchase equipment for the cooperative.
In case that their cooperative will dissolve the statutory fund will be distributed on the
following; The general reserve fund they will distributed and divided equally to the
members according to the amount of their capital shares, they will remit to the union or
federation to which the cooperative is affiliated with, they will donate, contribute or
otherwise dispose to the benefits of the community where it operates, they will used to
meet the losses of the cooperatives and they will follow the mandated cooperative code (
RA 9520). The Cooperative Education and Training Fund they will credited to the affiliated
union or federation, they will used for payment of outside loans of the cooperative, they
will distribute equally to members according to the amount of capital shares and they will
follow what are mandated in cooperative code (RA 9520). The community development
fund they will used for projects and activities that will benefit the community where the
cooperatives operates, they will donate to the market associations, they will donate to the
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
union or federation they are affiliated with, they used for the payment of loans to other
cooperative or business organization of the cooperative, they will follow the mandated
cooperative code (RA 9520). The optional fund they will distribute to the cooperative
members in addition to the GRF, they used for other necessary expenses of the cooperative,
they will used for the payment of loans to the other cooperative or business organization
of the cooperative, they will remit to the federation or union they are member with, they
will donate or contribute where the cooperative operates, they will disposed or sale the land
and building and it will be distribute to the members according to their share capital and
will be distributed as benefit of staffs.
Majority of the cooperatives are affiliated in other cooperatives, they are affiliated with
Benguet Provincial Cooperative Union (BPCU), Northern Luzon of Cooperatives and
Development Center (NORLU CEDEC), Cooperative Bank of Benguet (CBB), Cordillera
Administrative Region Cooperative Union (CARCU), Benguet Credit Surety Fund,
National Confederation of Cooperative (NATCCO) and they are some are not affiliated
because they do not like to take risk or not interested, other cooperative are still planning
to affiliate, it’s not suitable on their current services as a farm supply because they conduct
business directly to their suppliers and members, they are just building again their
cooperative due to bankruptcy, lack of funds for membership, other cooperative are
planning to build their own federation, they want to stand alone as a cooperative and
because they do not have a similar cooperative that has the same line of business. Majority
of the cooperative are affiliated and remitting their statutory funds to their affiliated
cooperatives. The cooperatives remit at least 50% of their CETF or it will depend on the
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
decision of the BOD’s and some cooperative are not remitting their statutory fund because
they do not have enough cash to be remitted.
Majority of the cooperative have a policy in using their statutory funds, the persons
responsible in implementing the practices in using the statutory fund were the board of
directors and the manager. Majority of the cooperatives used the policies in statutory fund
are transparent to their members. In implementing their policies it is strictly implemented
upon the approval of the Board of Directors on the actual expenses and according to its
purpose so that it will not be diverted to another usage like misallocation and it must be
properly documented with the strictly compliance of the Internal Accounting Control in
managing the fund that will benefit the community.
Majority of the cooperatives, who met problems in managing the statutory fund were on:
misallocation, lack knowledge on computing statutory fund, do not have proper policies to
be followed and do not have enough funds to be allocated. As possible solution perceived
by the cooperative are; save the statutory fund in the banks, make a policy in using the
statutory fund, and will compute the statutory based on the cooperative code of RA 9520.
Conclusions
Based on the findings of the study, the following conclusions were derived;
1. In managing their statutory fund, most of the cooperative are allocating statutory fund
and they used this according to its uses and depend on the decision of the Board of directors
and manager. Some cooperatives are not following the cooperative code in allocating the
appropriate percent to be allotted;
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
2. Majorities of the affiliated cooperatives are remitting their fund on their affiliated
federation or union; and,
3. Majority of the cooperatives who encountered problems in managing the statutory fund
are not knowledgeable on the policies in using the statutory fund in the cooperative code.
Recommendations
In order to improve the management of statutory fund among selected primary
cooperatives in La Trinidad, Benguet, and the following recommendations were made on
the basis of the findings;
1. Since some cooperatives encountered problems in managing the statutory fund the
cooperatives must formulated a policy on the utilization of statutory fund;
2. The cooperative should strictly implement the uses of statutory based on the mandated
cooperative code of RA 9520; and,
3. The management staff of their cooperatives must be aware on the utilization of the
statutory fund and they must attend seminars and trainings.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013
LITERATURE CITED
ABASOLO, A.A, MA.U. RUIZ and F.B BERTOL, 1996. Cooperatives in the Philippines
Manila: GIC Enterprises and Co. Inc. P.56.
FAJARDO, F. P. 2000. Management. Rex Publishing and Book Store Manila, P. 74.
ROLA, L.R. 1988. The Integrated Cooperative System of the Philippines: Status, Thrusts
and Directions, University of the Philippines at Los Baños, Laguna, Pp.1-2.
ZUBIRI, J M.F. 2008. Philippine Cooperative Code of 2008 Republic Act 9520.Senate of
the Philippines, Pp. 66-69, 153-154.
Management of Statutory Fund among Selected Primary Cooperatives in La Trinidad,
Benguet | LIWAN, ANGELINE B. APRIL 2013