Cooperative societies are undertakings, primarily concerned with the creation of commonwealth. That Commonwealth is the aggregation of wealth and funds mutually owned by members. Today, we will talk about an essential part of cooperative practice; Record Keeping. Record-Keeping ties closely to the management; investment and disbursement of the commonwealth.
Cooperatives have failed in a dire situations and sailed on getting appropriate oversight.
Either fate is influenced by the degree of transparency and accountability. These, in turn, are grounded on record keeping.
So, what is Cooperative Accounting?
It is the systemic method of recording and reporting the financial results of cooperative business transactions and shows the assets owned by the cooperative balanced against its liabilities and member equity.
The mode of recording may be either computerized or manual record entry.
What does Cooperative Accounting entail?
Cooperative accounting entails the systematic arrangement of cooperative financial information in their completeness. It presents, at a glance, the analysis of the business condition of Co-operative, in all its phases. It has the advantage of presenting such information at the end of a period.
The need for complete information about the cooperative and analysis of the business condition of the Co-operative at a glance is based on Cooperative Accounting. Thus, it is possible for empowered admins to keep their fingers on the pulse business.
Where the records are diligently kept, the system makes it possible for an efficient Control Committee to know as much or more about the business than the cooperative manager. By checking the records, certifying to the invoices, recording changes in prices, making up the Weekly Statement for the Board of Directors, taking stock, etc., they become thoroughly acquainted with the business procedure of the Co-operative. As the personnel of the committee changes from time to time, it happens that many members of society develop very valuable experience.
It provides for the timely recording of facts and figures in regular columnar form as the transactions occur, by the manager which should be done without delay,-as goods are ordered, as they are received, returned, as waste occurs, or changes in prices are decided upon. This is all done in such a way that as the figures pile up in the various records, they present complete and systematic information without revision.
For example, the totals of the figures at the end of every week, portrays the transaction trend to the Control Committee; i.e. it informs of the amount of goods ordered, goods received, goods re turned, damaged or destroyed, total sales, the amount of merchandise on hand, and other details. It excludes all guess work and shows the downgrades and leaks in proper time. A summary of this information makes up the weekly report by the Control Committee. At the end of the quarter or other period, the sum total of these weekly report, makes up the final or complete report for the period.
Structurally, there are two categories to the documentation; the detailed accounting books and basic cooperative records.
Now, let’s peep into the detail accounting cooperative record keeping books.
Essential supplementary books of book-keeping include:
1. Cash Book
3. Purchase Book
5. Stock Capital Ledger.
The foregoing records comprise the details of the accounting.
On the other hand, basic cooperative record keeping file has 12 related records, namely:
- Order Record.
- Receiving Record.
- Change of Price Record.
- Record of Stores Credits.
- Sales Record.
- Disbursement Record.
- Invoice Record.
- Weekly Summary and Statement.
- Weekly Stock Statement.
- Stock Balance Sheet.
- Inventory Sheet, or Stock Sheets.
- Turnover Register.
- Margin Classification.
Let us engage in descriptive narratives for each of the basic records.
- Order Record keeps the manager posted on the quantities ordered, prices and terms quoted
- Receiving Record deals with incoming merchandise Change of Price Record.
The document provides for the recording and listing of goods on hand in creased or decreased in value by market changes.
- Record of Stores Credits provides for goods destroyed, goods returned and shortage and error.
- Sales Record & Disbursement Record documents daily sales totals, whether for cash and including possible credit.
Disbursement Record: This records the disbursements of cash by the manager; these are classified as to wages, sundries and merchandise. Wherever possible, they should be backed up by original cash vouchers and numbered for identification.
Merchandise bought for cash is not synonymous with expense items.
- Invoice Record registers all incoming invoices and shows the gross and net amount of same with the deductions and allowances.
- Weekly Summary and Statement is a summary of the weekly transactions as detailed in the different records.
- Weekly Stock Statement groups the totals of the respective columns into debits and credits and shows the amount of merchandise stock on hand at the closing of the records.
- Stock Balance Sheet is a debit and credit Statement of the totals involved in ascertaining the true condition of recorded values.
- The Inventory or Stock is numerical arrangement form for easy and quick stock taking.
- Turnover Register takes care of the actual turnover, both of volume and its quantity relationship to the total turnover, and the time rate, or speed of turnover.
- Margin Classification records gross profit obtainable on all articles. The “mark-up” on an article is determined by the prevailing retail price in the neighborhood, or current market rate. Essentially, Margin classes differ according to neighborhoods.
Last in the segments, we’ll now dwell on the endpoint of record-keeping; report generation.
Reports generation are useful for understanding trend and are useful for analysis, diagnosis of the business (whether healthy, or otherwise). Predicting trend and consequences. Reports present basis for data comparison with prior periods and forecast projections.
There are various reports in cooperative accounting. The periodic operations report generated include:
- Operational Reports
- Daily collection report
- Summary of Daily collection report
- Monthly collection report
Pre-collection list include:
Collection efficiency report Daily cash disbursement report Over-payment/withdrawal report Monthly loan released report Schedule of delinquents’ report Schedule of payments report Repayment report
- General Ledger Reports Trial balance report, Financial condition report, Financial condition monthly Comparative Financial condition Yearly comparative
- Subsidiary Ledger Reports Members’ master list, Members’ statement of account Members’ Subsidiary ledger statement, Subsidiary ledger status
- Computation Reports
- Savings interest computation report
- Distribution of dividend and patronage refund report
The foregoing reports type are by no means exhaustive. In all, they help to put a hand on the pulse of the company and determine its states of well-being of the cooperative enterprise.