FINANCIAL ACCOUNTING II

COOPERATIVE ACCOUNTING 

1. What is co-operative society?

Co-operative is an organization set up to assist its members in advancing their economies according to co-operative laws. Any group of members of the public who wishes to form a  co-operative should contact their nearest Malaysia Co-operative Societies Commission (Suruhanjaya Koperasi Malaysia) office to get the advice on the establishment of a co-operative. SKM is a body entrusted by the government to govern the co-operative sector in Malaysia. Co-operative sector is governed by various Acts such as:

Malaysia Co-operative Societies Commission Act 2007

CO-OPERATIVE SOCIETIES ACT 1993 (amendment) 2007

Co-operative Societies Regulations 2010

2. Co-operative financial management

Part VII of the Co-operative Act outlines the account and audit of a co-operative.

Every registered society shall cause to be maintained such accounting and other records as will sufficiently explain the transactions and financial position of the registered society.

Every registered society shall cause appropriate entries to be made in the accounting and other records as soon as possible but not later than thirty days of the completion of the transactions to which they relate

3. Financial management

Co-operative financial management:

process, procedures, guidelines in planning, managing and controlling co-operative finance. (JPK, 1993)

Co-operative financial management involves:

Managing and providing solutions for financial management problems, Safeguarding co-operative’s assets, Ensuring good investment return for members

4. Internal Control

A process, effected by the co-operative’s board of directors, management, and other personnel, designed to provide reasonable assurance regarding, achievement of objectives on effectiveness and efficiency of operations, reliability of financial reporting and compliance with applicable laws and regulations.

5. Control Environment Factors

-Integrity and ethical values

-Commitment to competence

-Management philosophy and operating style

-Organizational structure

-Human resource policies and practices

-Assignment of authority and responsibility

6. Control Activities

Performance reviews – review performance report, investigate unusual items

Information processing – check accuracy, completeness and authorization of transactions

Physical controls – physical security of assets e.g. equipment, inventories, securities, cash and other assets.

Segregation of duties - Segregate authorization, recording and custody of assets