C O O P E R AT I V E

GOVERNANCE
AND MANAGEMENT
For cooperatives, we partner, we share!
OBJECTIVE[S]
 After the session, the participants will be
able to illustrate and explain the
governance and management aspects of
cooperatives as an organization.

Cooperative Development Officers (CDO) Certification Program

TOPICS/ACTIVITIES
 Workshop
 Concept, Elements, and Principles of
Governance and Management
 Strategic Direction
 Structure
 Management Principles and Functions
 Board-Manager Relationship
 Performance and Measurement
 Compliance
 Issues in Cooperative Governance

Cooperative Development Officers (CDO) Certification Program

DEFINITION
 Governance
 is "the process of decision-making and the
process by which decisions are implemented
(or not implemented)".
 Management
 is the administration of an organization,
whether it be a business, a non-profit
o r g a n i z a t i o n , o r g o v e r n m e n t b o d y.

Cooperative Development Officers (CDO) Certification Program

 ELEMENTS
OF
GOVERNANCE
Cooperative Development Officers (CDO)
Certification Program
ELEMENTS OF
GOVERNANCE
▪Fairness
decision made are for the benefit of the majority of
members

derives from an acceptance that members are the

heart of development

the opportunity to improve the design and

implementation of programs and projects

Cooperative Development Officers (CDO) Certification Program

ELEMENTS OF
GOVERNANCE
▪Accountability
Officers of the cooperative must be answerable
for the fate of the cooperative and must be
responsible to its members from which their
authority is derived.
includes financial accountability which covers
accounting systems for expenditure control, and
internal and external audits
Cooperative Development Officers (CDO) Certification Program
ELEMENTS OF
GOVERNANCE
▪Competence
Right knowledge, attitude and skills to
administer the affairs of the cooperative
refers to existence of laws, regulations and
policies and their fair and consistent
application
it compasses both well defined rights and
duties, as well as mechanisms for enforcing
them and settling disputes in an impartial
manner
Cooperative Development Officers (CDO) Certification Program
ELEMENTS OF
GOVERNANCE
▪Integrity

is the qualifications of being honest and having

strong moral principles.

It is generally a personal choice to hold oneself

to consistent moral and ethical standards.

Cooperative Development Officers (CDO) Certification Program

ELEMENTS OF
GOVERNANCE
▪Transparency

refers to the availability of information to the

members and clarify rules, regulations and
decisions

access to accurate and timely information about

the cooperative

Cooperative Development Officers (CDO) Certification Program

 THE ESSENTIALS
COOPERATIVE
GOVERNANCE
PRINCIPLES
Cooperative Development Officers (CDO)
Certification Program
THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 1
 Lay solid foundations for Management
and oversight. Recognize and publish the
respective roles and responsibilities of
officers and management.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 2
 Structure the board to add value. Have a
board of an effective composition, size
and commitment to adequately discharge
its responsibilities and duties.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 3
 Promote ethical and responsible decision-
making.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 4
 Safeguard integrity in financial reporting.
Have a structure to independently verify
and safeguard the cooperative’s financial
reporting.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 5
 Make timely and balanced disclosure.
Promote timely and balanced disclosure of
all material matters concerning the
cooperative.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 6
 Respect the rights of the members.
Respect the rights of members and
facilitate the effective exercise of those
rights.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 7

• Recognize and manage risk. Establish an

sound system of risk oversight and
management and internal control.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 8
 Encourage enhanced performance. Fairly
review and actively encourage enhanced
board and management effectiveness.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 9
 Remunerate fairly and r e s p o n s i b l y.
Ensure that the level and composition of
remuneration is sufficient and reasonable.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 10
 Recognize the legitimate interests of
stakeholders. Recognize legal and other
obligations to all legitimate stakeholders.

Cooperative Development Officers (CDO) Certification Program

THE ESSENTIALS COOPERATIVE
GOVERNANCE PRINCIPLES
Principle 10
 Recognize the legitimate interests of
stakeholders. Recognize legal and other
obligations to all legitimate stakeholders.

Cooperative Development Officers (CDO) Certification Program

COOPERATIVE STRATEGIC
DIRECTION
Development Plan:
• Vision, Mission, Goals
• Plan and Budget
• Services, Programs,Projects
Resources:
• Financial
• Human Resource
• Physical Assets

Cooperative Development Officers (CDO) Certification Program

BASES OF GOVERNANCE
FOR COOPERATIVES
 1987 Constitution  ACBL
 RA 6939  GA Resolutions
 RA 9520  Policies
 Revised IRR  Related Laws
 Circulars/issuances

Cooperative Development Officers (CDO) Certification Program

COOP ORGANIZATIONAL STRUCTURE
GENERAL ASSEMBLY

ELECTION BOARD OF AUDIT

COMMITTEE DIRECTORS COMMITTEE
SECRETARY
TREASURER

MEDIATION AND ETHICS OTHER

CONCILIATION COMMITTEE COMMITTEE/S
COMMITTEE
MANAGEMENT
STAFF
Cooperative Development Officers (CDO) Certification Program
THE GENERAL ASSEMBLY
 Kinds of membership  Composition of the
 Govt Officers and General assembly
employees  Powers of the
 Application General Assembly
 Liability of members  Meetings
 Te r m i n a t i o n o f  Quorum
Membership  Vo t i n g s y s t e m
 Refund of interests

Cooperative Development Officers (CDO) Certification Program

BOARD OF DIRECTOR
a. C o m p o s i t i o n a n d Te r m
b. Powers Qualifications h. Compensation
c. Meeting and Quorum i. Dealings of
d. Va c a n c y i n t h e B o a r d o f Directors, officers or
Directors committee members
e. O f f i c e r s o f t h e C o o p e r a t i v e j. Disloyalty of a Director
f. F u n c t i o n s , r e s p o n s i b i l i t i e s k. Illegal use of
and training requirements confidential information
g. L i a b i l i t y o f D i r e c t o r s l. Removal
officers and committee
members

Cooperative Development Officers (CDO) Certification Program

SECRETARY
Appointment
Te r m
Function
a. K e e p a n u p d a t e d a n d c o m p l e t e r e g i s t r y o f a l l m e m b e r s ;
b. R e c o r d , p r e p a r e a n d m a i n t a i n r e c o r d s o f a l l m i n u t e s o f
meetings of the Board of Directors and the
General/Representative Assembly;
c. E n s u r e t h a t t h e n e c e s s a r y a c t i o n s a n d d e c i s i o n s o f t h e
Board of Directors are transmitted to the management for
compliance and implementation;
d. I s s u e a n d c e r t i f y t h e l i s t o f m e m b e r s w h o a r e e n t i t l e d t o
vote as determined by the Board of Directors;
e. P r e p a r e a n d i s s u e S h a r e C e r t i f i c a t e s a n d m a i n t a i n t h e s h a r e
and transfer book;
Cooperative Development Officers (CDO) Certification Program
SECRETARY

f. Serve notice of all meetings called and certify the presence

of quorum in the conduct of all meetings of the Board of
Directors and the General/Representative Assembly;
g. K e e p c o p i e s o f t h e T r e a s u r e r ’ s r e p o r t s a n d o t h e r r e p o r t s ;
h. S e r v e a s c u s t o d i a n o f t h e c o o p e r a t i v e s e a l .

Cooperative Development Officers (CDO) Certification Program

TREASURER
Appointment
Te r m
Function
a. H a v e c u s t o d y o f f u n d s , s e c u r i t i e s , a n d d o c u m e n t a t i o n s
relating assets, liabilities, income and expenditures;
b. M o n i t o r a n d r e v i e w t h e f i n a n c i a l m a n a g e m e n t o p e r a t i o n s o f
the cooperative, subject to such limitations and control as
may be prescribed by the Board of Directors;
c. E n s u r e t h e m a i n t e n a n c e o f f i l l a n d c o m p l e t e r e c o r d s o f c a s h
transactions
d. E n s u r e m a i n t e n a n c e o f a P e t t y C a s h F u n d ;
e. M a i n t a i n a D a i l y C a s h P o s i t i o n R e p o r t ; a n d
f. P e r f o r m s u c h o t h e r f u n c t i o n s a s m a y b e p r e s c r i b e d i n t h e
By-Laws or authorized by the Board of Directors.
Cooperative Development Officers (CDO) Certification Program
ELECTION COMMITTEE
Composition
Term
Functions
a.Formulate election rules and guidelines and recommend to the GA for
approval;
b.Recommend necessary amendments to the election rules and
guidelines, in coordination with the BODs, for the GA’s approval;
c. Implement election rules and guidelines duly approved by the GA;
d.Supervise the conduct, manner and proceeding of election and other
election-related activities and act on the changes thereto;
e.Canvass and certify the results of the election;
f. Proclaim the winning candidates;
g.Decide election and other election-related cases except those involving
the ELECOM or its members; and
h.Perform such other functions
Cooperative Development Officers (CDO) Certification Program
as prescribed in the By-laws or authorized
AUDIT COMMITTEE
Composition
Te r m
Functions
a. Audit performance of the coops and its various
responsibility centers;
b. Monitor adequacy and effectiveness of the coops
management and internal control system;
c. Review continuously and periodically the books of account,
financial records, and policies governing internal control,
accounting and risk management to ensure that these are in
accordance with the cooperative principles and generally
accepted accounting procedures;
d. Review the internal audit report of the cooperative;

Cooperative Development Officers (CDO) Certification Program

AUDIT COMMITTEE
Composition
Term
Functions
a.Audit performance of the coops and its various
responsibility centers;
b.Monitor adequacy and effectiveness of the coops
management and internal control system;
c.Review continuously and periodically the books of
account, financial records, and policies governing internal
control, accounting and risk management to ensure that
these are in accordance with the cooperative principles
and generally accepted accounting procedures;
d.Review the internal audit report of the cooperative;
Cooperative Development Officers (CDO) Certification Program
AUDIT COMMITTEE
e. Follow up actions on the internal and external audit
recommendations;
f. Discuss the result of the internal audit with the Board of
Directors;
g. Submit reports in the result of the internal audit and recommend
necessary changes on policies and other related matters in
operation to the GA;
h. Review, approve or amend the report and recommendation of the
Ethics Committee involving violations of the Code of Governance
and Ethical Standards if the remaining members of the Board of
Directors fail to act on said report and recommendation within a
period of thirty (30) days, or the violation is committed by the
majority of the Board of Directors; and
i. Perform such other functions as may be prescribed in the By-laws
or authorized
Cooperative byCertification
Development Officers (CDO) the GA Program
MEDCON COMMITTEE
Composition
Te r m
Functions
a. C o n d u c t m e d i a t i o n - c o n c i l i a t i o n p r o c e e d i n g a n d s e r v i c e s ;
b. F o r m u l a t e , d e v e l o p a n d i m p r o v e t h e C o n c i l i a t i o n - M e d i a t i o n
policies, guidelines and program and ensure its proper
implementation;
c. M o n i t o r C o n c i l i a t i o n - M e d i a t i o n p r o g r a m a n d p r o c e s s e s ;
d. S u b m i t s e m i - a n n u a l r e p o r t s o f c o o p e r a t i v e c a s e s t o t h e
Authority within fifteen (15) days after the end of every
semester;

Cooperative Development Officers (CDO) Certification Program

MEDCON COMMITTEE

e. A c c e p t a n d f i l e E v a l u a t i o n R e p o r t s ;
f. S u b m i t r e c o m m e n d a t i o n s f o r i m p r o v e m e n t t o t h e B O D s ;
g. R e c o m m e n d t o t h e B O D s a n y m e m b e r o f t h e c o o p e r a t i v e f o r
C oncil iation-Medi ati on Trai nings as C ooperati ve C oncil i ator-
Mediator;
h. I s s u e t h e C e r t i f i c a t e o f N o n - S e t t l e m e n t ( C N S ) ;
i. A c t a s c o n c i l i a t o r - m e d i a t o r d u r i n g t e r m , p r o v i d e d t h e
persons who will mediate are mutually selected by both
parties.

Cooperative Development Officers (CDO) Certification Program

ETHICS COMMITTEE
Composition
Term
Functions
a.Formulate, develop, implement and monitor the Code of Governance
and Ethical Standards (CGES) to be overserved by the members,
officers and employees of the cooperative subject to the approval of
the BODs and ratification by the GA;
b.Conduct initial investigation of inquiry, upon receipt of a complaint
involving violations of the CGES.
c.Submit report on its recommendation together with the appropriate
sanctions, to the BODs for its proper action, or to the remaining
members of the BODs, if the violation is committed by any members
of the BODs. Provided, that if the remaining members of the BODs fail
to act on the report within a period of thirty (30) days, or the violation
is committed
Cooperative by
Development Officers the
(CDO) majority
Certification Program of the BODs, the Audit committee shall
OTHER COMMITTEE
The by-laws shall provide for the creation of XXX and such
other committees as may be necessary for the conduct of
the affairs of the cooperative.

Other committees that may be created shall assist in the

formulation of policies and rules and in the implementation of
the service of the cooperative. Their powers, functions, and
responsibilities shall be defined in the By-laws.

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT
Composition(Structure)
Functions
Human resource policies
Business Policies
System and procedures

The process of planning, organizing, staffing, directing and

controlling the efforts of organization members and of using all
organizational resources to achieve organizational goals.

Cooperative Development Officers (CDO) Certification Program

 MANAGEMENT
PRINCIPLES

Cooperative Development Officers (CDO)

Certification Program
MANAGEMENT OF PRINCIPLES
Division of Work - segregating the work in the workforce
will enhance the quality of work;

Authority - Facilitates the management to work efficiently

and make them responsible for the work done;

Discipline - without this, nothing can be accomplished.

Good performance makes the management job easy and
comprehensive;

Cooperative Development Officers (CDO) Certification Program

PRINCIPLES OF MANAGEMENT
Unity of Command - employee should only have one boss
and follow his command;

Unity of Direction - employees have the a unified goal;

Subordinates of individual - this indicates that a

cooperative should work unitedly towards the interest of
the coop rather than personal interest;

Remuneration - can be monetary or n o n - m o n e t a r y. It

motivates the workers of a cooperative.

Cooperative Development Officers (CDO) Certification Program

PRINCIPLES OF MANAGEMENT
Centralization- the management in the decision-making
should be neutral

Scalar chain (Line of Authority)-hierarchy steps should

be from the top to the lowest

Order- maintain a well-defined work to have a favorable

work culture.

Equity- All employees should be treated equally and

r e s p e c t f u l l y.

Cooperative Development Officers (CDO) Certification Program

PRINCIPLES OF MANAGEMENT
S t a b i l i t y / Te n u r e o f P e r s o n n e l - a n employee delivers
best if they feel secure in their job.

Initiative - encourage the employees to take initiatives in

an organization. It will help them to increase their interest

Esprit de Corps - motivate employees and be supportive

o f e a c h o t h e r r e g u l a r l y. T r u s t a n d m u t u a l u n d e r s t a n d i n g
will lead to a positive work environment

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT FUNCTIONS
Planning

Organizing

Staffing

Directing

Controlling

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT FUNCTIONS
Planning

It is the process of determining an organization’s goals and how to

achieve them. In this phase, managers brainstorm different alternatives
and then choose the best course of action. They help in making strategic
decisions that set a direction for the group. To plan effectively, the
management often conducts in-depth research on the group's current
affairs, considering its mission while evaluating if the available
resources are enough to execute the plans and achieve objectives.

While planning, the managing director can allocate resources as per the
project needs. They also set achievable deadlines for the completion of
the tasks.

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT FUNCTIONS
Organizing

As a manager, it's important that you have organizational skills to help

you plan and improve your workflow. Excellent organizational skills help
you reduce stress, meet deadlines, and stay on top of your work. In this
phase, a manager organizes people and resources to implement the set
plans.

Organizing involves delegating tasks, keeping in mind your

organization's strengths and weaknesses. It may also mean reassigning
tasks or adding more members to achieve a specific goal. Having
organizational skills ensures that goals get achieved without any
challenges or internal conflicts

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT FUNCTIONS
Staffing

It is the process of hiring eligible candidates in the organization or

company for specific positions. In management, the meaning of staffing
is an operation of recruiting the employees by evaluating their skills, and
knowledge and then offering them specific job roles accordingly.

Cooperative Development Officers (CDO) Certification Program

MANAGEMENT FUNCTIONS
Controlling

In this phase, managers consistently monitor if the organization meets

its objectives. They may do this by controlling every stage from planning
to execution. As a manager, it's crucial that you monitor employees'
quality of work, performance, and use of resources. You can do so by
conducting performance reviews and giving feedback on areas that may
need improvement.
a

Cooperative Development Officers (CDO) Certification Program

 BOARD – MANAGER
RELATIONSHIP (ADHERE
TO GOOD GOVERNANCE
PRINCIPLES &
PRACTICES)

Cooperative Development Officers (CDO)

Certification Program
What is the Source of Board Authority?

 The members (GA) of the cooperatives of

w h a t e v e r t y p e , c l a s s i f i c a t i o n o r c a t e g o r y.

Cooperative Development Officers (CDO) Certification Program

What is the Source of Board Authority?

Reasons for the

Board Authority

LINK BRIDGE
Board authority arises
when members are too
numerous to direct &
control the cooperative
membership

Cooperative Development Officers (CDO) Certification Program

What is the Source of Board Authority?

 Link between members and management

• directing & controlling in behalf of the members

 Bridge between owners and management

 Board authority arises when members are too

numerous to direct & control

Cooperative Development Officers (CDO) Certification Program

 1) Highest Authority 2) Initial Authority 3) Accountable Authority

Nature of Board Authority

4) Group Authority 5) Empowering Authority

Cooperative Development Officers (CDO) Certification Program

 What are the Nature of Board Authority?
A. The Board as the highest authority

 At the top in the chain of accountability

 Has the power to command

 Direct & control

 Has obligation to command

Cooperative Development Officers (CDO) Certification Program

 What are the Nature of Board Authority?
B. The Board as initial authority
 Proactive initial authority (not just reactive final authority)
 Supreme authority after the GA (flagship/prescribing and stipulating
authority)
 Must be in full control of its own job before presuming to control
anything else
 Responsible from
o its actions
o its omissions
o its agenda
o the delegation it makes
o the cooperative values it imposes.
Cooperative Development Officers (CDO) Certification Program
 What are the Nature of Board Authority?
C. The Board as accountable authority.
 Accountable to members from its own accomplishments & that of the
cooperative

Note: Poor Chair performance indicates

a poor board
Poor committee performance
indicates a poor board
Poor management performance
indicates a poor board
Poor cooperative performance
indicates a poor board

Cooperative Development Officers (CDO) Certification Program

 What are the Nature of Board Authority?
D. The Board as group authority.
 ONLY as a group

 Individual directors, including the Chairperson, have NO authority

unless specifically given it by the group

 Board authority is GROUP AUTHORITY

Cooperative Development Officers (CDO) Certification Program

WHAT ARE THE BASIC BOARD FUNCTIONS?

Prime
Decision Advisory Symbolic
Function Trustee Perpetuating Function
Center Function
• Mgmt Function •Symbol of
• Policies • Coms • Fiduciary
• Continuity
• Strat Plan strength &
• Membership
Leadership

Cooperative Development Officers (CDO) Certification Program

CONCLUSION:
THE BOARD OF DIRECTORS:
 The highest
 Initial & accountable authority
 Accountable to the members
 Group Authority
 Translate members’ desires into cooperative
performance

Cooperative Development Officers (CDO) Certification Program

Defining a General Member
1. Is accountable for making all the parts in the cooperative
come together in an acceptable whole.
2. Is the Board’s single management employee.
3. Is the topmost single person through whom all upwardly
accumulating accountability flows.
4. Is the link in the chain of command that connects the Board to
the rest of the Management.
5. Enables the Board to avoid the intricacies and short-term
focus of staff management and to work exclusively on the
holistic, (long-term focus of governance).

Cooperative Development Officers (CDO) Certification Program

General Manager’s Authority
1. Came from the Board as one group voice.
2. Is accountable only to the Board as ONE
VOICE and neither to officers of the Board no
to individual board member.
“Board deliberate in many voices but govern in ONE”
By : Dawn Oparah
Peach Tree City, Georgia

Cooperative Development Officers (CDO) Certification Program

General Manager’s Accountability
1. Accountable for the cumulative total of all the
responsibilities within the cooperative (other than the
responsibility of the board for its own conduct)

1.1 The cooperative achieves whatever of members’ value or other benefit for
owners that the board has decided and
1.2 The cooperative avoids unacceptable risks, methods, conduct and situations.

2. Is responsible for his or her own job contributions &

compliance & also accountable for the total contributions
& compliance of his or her team.
3.

Cooperative Development Officers (CDO) Certification Program

General Manager’s Job Contributions
1. Sees to it that the cooperative achieves the ends the
board has established and avoids the unacceptable
means the board has identified.
• Responsible – for the achievement to produce
• Accountable – obligation for compliance

2. Responsible for interpreting the policies, while the Board

is responsible for writing them.

Cooperative Development Officers (CDO) Certification Program

The Board – General Manager Relationship
 Board’s relationship with the General Manager be formed
around the accountability of the position, not its
responsibility.
 Relationship between the manager and any individual
board member is collegial not hierarchical.
 Board should not intrude into management by trying to
help or advise staff in operational areas.

Cooperative Development Officers (CDO) Certification Program

 Prime Decision Center

Symbolic Function Basic Board Functions Advisory Function

Perpetuating Function Trustee Function

Cooperative Development Officers (CDO) Certification Program

 Planning &
Budgeting

Motivating & Organizing &

Inspiring Basic Management Functions Staffing

Controlling & Directing &

Problem Solving Aligning
People

Cooperative Development Officers (CDO) Certification Program

 BASIC MANAGEMENT FUNCTIONS

Directing
• Implementation Controlling Motivating
Planning Organizing
• Day to day • Monitor Inspire to keep
•
• Short-term • Staffing
• Operational operation
kee Results people moving
targets • Policies, • Problem in right
• Resources Structure
directives, Solving direction
instructions

Cooperative Development Officers (CDO) Certification Program

SIMILARITIES BETWEEN BOARD
AND MANAGEMENT:
 Both are involve in deciding what needs to be done.
 Both create networks of people and relationships that can
accomplish an agenda.
 Both try to ensure that people involved actually get the
job done.
 Both are complete action systems; neither is simply an
aspect of the other.

Cooperative Development Officers (CDO) Certification Program

WHAT THE BOARD WANTS IN MANAGER:
 Committed to coop ideals
 Respectful of Board
 A communicator
 Results-oriented
 Innovative
 Leader
 Listener
 Open-minded
 A team player
 An educator
 Career-minded
Cooperative Development Officers (CDO) Certification Program
THE MANAGER – BOARD RELATIONSHIP
WHAT THE MANAGER WANTS IN A BOARD:
 Understands and respects the respective roles of the Board and
Manager
 Sets management goals and evaluation criteria
 Gives fair and honest periodic evaluations
 Comes to the meeting prepared
 Supports, trusts and respects the Manager
 Provides resources to get the job done
 Sets firm but clear policies and controls and reviews them
periodically
 Allows management to participate as full partners in planning
and goal-setting
 Is available when needed
Cooperative Development Officers (CDO) Certification Program
THE MANAGER – BOARD RELATIONSHIP
 Recognizes the Manager and staff members for a job well done
 Visits the coop office occasionally
 Avoids taking over the Manager ’s role
 Listens to the Manager
 Avoid seeking special favors for himself or on behalf of
relatives and friends
 Is motivated and interested in growing through educational
opportunities
 Is ready to innovate
 Asks: What needs to be done
 Acts without being pushed

Cooperative Development Officers (CDO) Certification Program

THE KEY TO GOOD BOARD – MANAGER
RELATIONSHIP LIES ON THE MOTIVATION FOR…

 Efficiency – doing things right

 Effectiveness – doing the right things
 Excellence – doing right things right

Cooperative Development Officers (CDO) Certification Program

 PERFORMANCE AND
MEASUREMENT
(Balance Scorecard)

Cooperative Development Officers (CDO)

Certification Program
DEFINITION

Is a strategic planning and management system that is

used extensively in business and industry, government,
and nonprofit organizations worldwide:

• to align business activities to the vision and strategy of

the organization
• improve internal and external communications
• monitor organization performance against strategic
goals

Cooperative Development Officers (CDO) Certification Program

4 PERSPECTIVE OF BALANCE SCORECARD
a. Financial: The strategy for growth, profitability, and risk
viewed from the perspective of the shareholder.

b. Customer: The strategy for creating value and

differentiation from the perspective of the customer.

c. Internal Business Processes: The strategic priorities for

various business processes, which create customer and
shareholder satisfaction.

d. Learning and Growth: The priorities to create a climate that

supports organizational change, innovation, and growth.
Cooperative Development Officers (CDO) Certification Program
THE BALANCE SCORECARD

Cooperative Development Officers (CDO) Certification Program

 COMPLIANCE

Cooperative Development Officers (CDO)

Certification Program
LABOR LAWS

a. Social Security Law

b. PHILHEALTH
c. Pag-ibig
d. Retirement Act

Cooperative Development Officers (CDO) Certification Program

OTHER LAWS

a. BMBE Law
b. Local Tax
c. Business Permit
d. and other related Laws

Cooperative Development Officers (CDO) Certification Program

Compliance with CDA

1. Cooperative Annual Performance Report

2. Audited Financial Statement
3. Performance Audit Report
4. Social Audit Report
5. List of Trainings Attended by Officers

Cooperative Development Officers (CDO) Certification Program

Compliance with the BIR
REVENUE MEMORANDUM ORDER NO. 012-10
Documentary Requirements for Application of Certificate of Tax Exemption
 Application Letter
 BIR Form 1945
 Cert ified True copy of the new Cert if icat e of Registration issued by the CDA
under the new Cooperative Code
 Cert ified true copy of the Art icles of Cooperat ion and By-Laws of the
Cooperat ive
 Certified true copy of the current Cert ificate of Compliance from CDA, effective
on t he dat e of application
 Certified true copy of the BIR Cert ificat e of Regist ration of Cooperative
 Original copy of Certificat ion under oat h of t he List of Cooperative
Members with their respect ive TIN (Taxpayer I dent ification Number) and
their capital contributions prepared by authorized official of the
cooperat ive
Cooperative Development Officers (CDO) Certification Program
Requirements for Renewal of Certificate of Tax Exemption

 BIR Form No. 1945

 Certified True Copy of the Certificate or Registration issued by the
CDA
 Certified True Copy of the Latest Articles of Cooperation and the
Latest By-laws
 Certified True Copy of the current Compliance from CDA, effective
on application
 Certified True Copy of the Latest Financial Statements of the
immediately preceding year duly audited by a BIR-accredited
independent Certified Public Accountant

Cooperative Development Officers (CDO) Certification Program

Validity of CTE/Ruling

 5 years from the date of issue

Renewal of Certificate of Tax Exemption/Ruling

 Filed at least two (2) months before the date of expiration

of the existing Certificate of Tax Exemption/Ruling

Cooperative Development Officers (CDO) Certification Program

Section 60. Tax Treatment of Cooperatives

Duly registered cooperatives which DO NOT transact any

business with NON-MEMBERS or the general public shall NOT
be subject to taxes.

• MEMBERS ONLY

Cooperative Development Officers (CDO) Certification Program

Section 61. Tax and Other Exemptions

Cooperatives transacting business with both MEMBERS and

NON-MEMBERS shall NOT be subject to tax on their
transactions to MEMBERS.

a. Cooperatives with accumulated reserves and undivided net

savings of NOT more than P10,000,000.00 shall be
EXEMPT from all national internal revenue taxes
b. Cooperatives with accumulated reserves and undivided net
savings of MORE THAN P10,000,000.00 shall be liable at
the FULL RATE

▪NON-MEMBERS
Cooperative Development Officers (CDO) Certification Program
REVENUE MEMORANDUM CIRCULAR NO. 012-10
Joint Rules and Regulations Implementing RA 9520
Section 7. Tax Exemptions of Duly Registered Cooperatives Which Transact
Business with MEMBERS ONLY.
Exempt from paying any taxes fees, including but not limited to:
 I n c o m e Ta x
 Va l u e A d d e d Ta x ( VAT )
 P e r c e n t a g e Ta x
 D o n o r ’s Ta x
 E x c i s e Ta x
 D o c u m e n t a r y S t a m p Ta x
 Annual Registration Fee
 Ta x e s o n t r a n s a c t i o n s w i t h i n s u r a n c e
companies and banks (Final tax 20% income on deposit)
 VAT o n r e v e n u e s o n s y s t e m l o s s
Cooperative Development Officers (CDO) Certification Program
REVENUE MEMORANDUM CIRCULAR NO. 012-10
Joint Rules and Regulations Implementing RA 9520
Section 8. Taxability/Exemption of Duly Registered Cooperatives Which
Transact Business with MEMBERS AND NON-MEMBERS
a. Cooperatives with accumulated reserves and undivided net
savings of NOT MORE THAN TEN MILLION
EXEMPT FROM –
 I N C O M E TA X
 VAT
 E X C I S E TA X
 P E R C E N TA G E TA X
 ANNUAL FEE OF 500
 D O N O R S TA X
 F I N A L TA X 20% INCOME ON DEPOSIT
 VAT O N R E V E N U E S O N S Y T E M L O S S

Cooperative Development Officers (CDO) Certification Program

REVENUE MEMORANDUM CIRCULAR NO. 012-10
Joint Rules and Regulations Implementing RA 9520
Section 8. Taxability/Exemption of Duly Registered Cooperatives Which
Transact Business with MEMBERS AND NON-MEMBERS
b. Cooperatives with accumulated reserves and undivided net savings of MORE than TEN
MILLION (Php 10,000,000.00)
b.1 Business transactions with MEMBERS – EXEMPT
2. Business transactions with NON-MEMBERS
Subject to the following taxes:
 Income Tax
 Documentary Stamp Tax
 VAT
 Percentage Tax
 Excise

Cooperative Development Officers (CDO) Certification Program

Business Activities not listed in the Articles of
Cooperation

• Cooperatives engaged in business activities NOT

RELATED to its PRIMARY/SECONDARY PURPOSE shall
be subject to:
–Income Tax
–VAT
–Percentage Tax
–Documentary Stamp Tax
–Excise Tax
–Other Internal Revenue Taxes

Cooperative Development Officers (CDO) Certification Program

Cooperative as WITHHOLDING Agent
 Cooperatives are considered as withholding agents and
are required to file withholding tax returns and remit
withholding taxes on all income payment that are
subject to withholding.
 If cooperative fails to withhold and remit such tax or
account, the coop shall be liable upon conviction to a
penalty equal to the total amount of the tax not withheld
or not accounted for and remitted.
 Section 251 of the NIRC

Cooperative Development Officers (CDO) Certification Program

DIRECTOR’S FEE
 IF THE DIRECTOR IS AN EMPLOYEE OF THE
COOPERATIVE: CONSIDERED AS COMPENSATION
INCOME

 IF THE DIRECTOR IS NOT AN EMPLOYEE OF THE

COOP: TREATED AS PROFESSIONAL INCOME
SUBJECT TO CREDITABLE WITHHOLDING TAX

Cooperative Development Officers (CDO) Certification Program

RMC No. 124-2020[Nov. 25, 2020]
Question No. 3 Last Paragraph

• The non-submission by the cooperatives of the members’

TIN requirement within six (6) months from the issuance
of the CTE, without justifiable reason/s, shall be a ground
for the revocation of the CTE pursuant to RMC No. 102-
2016.

Cooperative Development Officers (CDO) Certification Program

RMC No. 93-2016
Processing of Issuance of TIN

• A person who is not employed or engaged in business or

practice of profession, may apply for a TIN by filing a duly
accomplished BIR Form (1904) together with other
requirements and identification issued by an authorized
government body (e.g. birth certification, voter ’s ID,
community tax certificate or cedula, passport, driver ’s
license, etc.) which shows the name, address and birth
date of the person

Cooperative Development Officers (CDO) Certification Program

RMC No. 124-2020[Nov.25, 2020]
Question No. 6

Who are considered INACTIVE members?

The following are considered inactive members, as defined by CDA:

1. Members who are declared not in good standing;
2. Members whose whereabouts are not known for the last continuous
period of 6 months;
3. Members who do not have transaction or not patronizing any
business of the cooperative for the continuous period of at least 6
months;
4. Members who are not participating in the activities of the cooperative
held within the period of 6 months.

The cooperative need not secure the TINs of inactive members.

Cooperative Development Officers (CDO) Certification Program

RMC No. 124-2020[Nov.25, 2020]
Question No. 7

How does the status of an inactive member revert into an active

member?

The status of an inactive member reverts into an active member

as soon as he transacts business, patronizes and/or
participates with the activities of the cooperative and his
whereabouts are known. Accordingly, the cooperative shall
apply for the TIN of such active member.

Cooperative Development Officers (CDO) Certification Program

Credit Surety Fund Cooperative Act
(RA No. 10744)

Section 9. Tax Treatment of CSF Cooperatives. A CSF

Cooperative registered with the CDA shall enjoy the tax
privileges of cooperatives under RA No. 9520, Provided That
the members of the CSF Cooperatives which are not regular
cooperatives shall be subject to taxes under the NIRC, as
amended and other tax laws.

Cooperative Development Officers (CDO) Certification Program

Credit Surety Fund Cooperative Act
(RA No. 10744)

Section 9. Tax Treatment of CSF Cooperatives. A CSF

Cooperative registered with the CDA shall enjoy the tax
privileges of cooperatives under RA No. 9520, Provided That
the members of the CSF Cooperatives which are not regular
cooperatives shall be subject to taxes under the NIRC, as
amended and other tax laws.

Cooperative Development Officers (CDO) Certification Program

 ISSUES in Cooperative
Governance

Cooperative Development Officers (CDO)

Certification Program
Issues in Cooperative Governance

1. No formal strategic planning and management processes;

2. No clear understanding of the actual duties,
responsibilities, accountabilities and liabilities of the
Board of Directors as a body and as individual Directors;
3. Diverse backgrounds of Directors; knowledge,
experience, training are not business-related;
4. Lack of sufficient knowledge in finance;
5. Incomplete and/or insufficient reports and data for
Directors’ decision-making e.g. Reports and other
required data not given in advance during the scheduled
meetings;

Cooperative Development Officers (CDO) Certification Program

Issues in Cooperative Governance

6. Too many meetings and discussions without anything

getting resolved;
7. Insufficient discussion of complex issues;
8. No free exchange of ideas and opinions;
9. Lack of knowledge of the business, statutory requirements,
current and best business practices;
10.Lack of time devoted to Board work;
11.Lack of clear definition of the roles and responsibilities of
the Board and management
12.Conflict of Interest
13.Nepotism
14.Cronyism.
Cooperative Development Officers (CDO) Certification Program
Issues in Cooperative Governance

15.Remuneration
16.Transportation
17.Communication
18.Travel
19.Training
20.Entertainment
21.Non-market interest rates on Dividends, loan and
savings;
22.Commissions (kickbacks);
Cooperative Development Officers (CDO) Certification Program
Issues in Cooperative Governance

21.Waiver of fees;
22.Loan renewals, extensions etc.;
23.Inflated collateral guarantees ;
24.Loan charge-offs
27.Paying dividends at the expense of creating loan loss
provisions and/or building capital;
28.charging-off, instead of collecting delinquent loans;
29.excessive spending for non-earning assets (building,
cars, computers etc.);

Cooperative Development Officers (CDO) Certification Program

Issues in Cooperative Governance

27.falsifying financial information

28.charging-off, instead of collecting delinquent loans;
29.excessive spending for non-earning assets (building,
cars, computers etc.);
30.falsifying financial information
31.Absence of clear duties and responsibilities;
32.Board interference in management duties;
33.Double standards (elitism);
34.Large salary disparities (CEO & others);

Cooperative Development Officers (CDO) Certification Program

Issues in Cooperative Governance

35.Concentration of power: strongman leadership;

36.Creative accounting
37.Lack of formal strategic planning and management
processes
38.Lack of clear understanding of the actual duties,
responsibilities and accountabilities of the board of
directors and other officers either as a body or as an
individual officer
39.Lack of knowledge of the industry and current best
business practices
Cooperative Development Officers (CDO) Certification Program
Issues in Cooperative Governance

40.The diverse background of

directors’ knowledge, experience,
and training not related to the
cooperative and its business
41.Lack of sufficient knowledge in
finance, marketing, production,
and human resource
management
42.Incomplete or insufficient reports
and information for making
decision
Cooperative Development Officers (CDO) Certification Program
Issues in Cooperative Governance

43.Reports and other required

data not given in advance
of scheduled meetings
44.Insufficient discussion of
complex issues
45.Lack of time devoted to
Board work

Cooperative Development Officers (CDO) Certification Program

Issues in Cooperative Governance

46.Lack of clear definition of the roles

and responsibilities of the Board on
one hand and Management on the
other hand
47.Lack of knowledge of the legal and
statutory requirements
48.Insufficient oversight in audit and
risk management

Cooperative Development Officers (CDO) Certification Program

THANK YOU!
For cooperatives, we partner, we share!