Job Appraisal

A little boy went into a drug store, reached for a soda carton and pulled it over to the telephone. He climbed onto the carton so that he could reach the buttons on the phone and proceeded to punch in seven digits (phone numbers).  The store-owner observed and listened to the conversation.

Boy: Lady, can you give me the job of cutting your lawn?

Woman: (at the other end of the phone line): I already have someone who cuts my lawn.

Boy: Lady, I will cut your lawn for half the price of the person who cuts your lawn now.

Woman: I’m very satisfied with the person who is presently cutting my lawn.

Boy: (with more perseverance) : Lady, I’ll even sweep your curb and your sidewalk, so that on Sunday you will have the prettiest lawn in all of Palm beach, Florida.

Woman: No, thank you.

With a smile on his face, the little boy replaced the receiver. The store-owner, who was listening to all this, walked over to the boy.

Store Owner: Son… I like your attitude; I like that positive spirit and would like to offer you a job.

Boy: No thanks.

Store Owner: But you were really pleading for one.

Boy: No Sir, I was just checking my performance at the Job I already have. I am the one who is working for that lady I was talking to!’

Lesson to Co-operatives: Can the management committee/board of directors confidently say they give their members best of service that they can vehemently refuse to leave the society for any other competitor?

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EFFECTIVE INTERNAL CONTROL IN SACCOS

Internal control can be defined as the whole system of controls, financial and otherwise established by the management committee in order to carry on the business of the society in an orderly and efficient manner,

Why don’t we take this relationship to the next level and you lend me some money? 🙂

ensure adherence to management and financial policies, safeguard assets and secure as far as possible the completeness and accuracy of the records.

The individual components of an internal control system are known as controls of “Internal Controls.”

Internal control could be enhanced within the organization by:

• Organization structure
• Job description of
• Physical locations of departments or sections
• Information, accounting and documentation
• Authorisation and approval
• Supervision, personnel and general management
• Routine checks, verification and examination
• Scrutiny and physical checks including stock taking
• Control of documents, filing and movement of documents and files
• Vocation and rotation of duties
• Security of assets
• Ensuring efficient and effective discharge of society’s goals, vision, mission and objectives

However, Sacco and business organizations need to have continuous application of accounting (records/books). This may include the following:-

• Cash journal/Petty cash journal
• General ledger
• Payment vouchers/Petty cash vouchers
• Receipt book, member statements
• Cheque book, asset register, member register, loan application forms, payroll deduction list
• Invoices, Delivery note, expenditure receipts
• Deposit slips, bank statements
• Cheque counter foils, cheque registers, etc

Other essential financial statements include:-

• Trial balances
• Income/expenditure statements or surplus and loss A/C
• Balance sheet
• Budgets

Why internal Control?

• Minimizes chances of errors and fraud
• Safeguard society’s assets
• Boots efficiency in the society towards members services
• Having up-to-date data for managerial decision making
• Control of work and avoid duplication of efforts/duties
• Facilitates efficient statutory audits
• Facilitates identification of inefficiency and outdated policies
• Encourages specialization
• Allow society to grow at a reasonable rate
• Acts a motivator

ELEMENTS OF INTERNAL CONTROL

EMPLOYEES	Hire qualified people with good reference
	Require annual leave
	Bond employees in position of trust
	State conflict of interest policy
CLEAR DELEGATION AND SEPARATION OF DUTIES	Develop organization chart
	Separate record keeping from custody of assets
	Separate authorization from record keeping
	Separate purchasing from receiving
PROPER PROCEDURES FOR PROCESSING OF TRANSACTIONS	Ensure proper authorization of transactions
	Sign cheques only with proper support
	Approve all non-cash entries on returns, discounts and write offs
	Review past due and uncollectable accounts
SUITABLE DOCUMENTS AND ACCOUNTING RECORDS	Pre-number important documents
	Develop comparative financial statements
	Describe accounting methods in manuals or systems
	Prepare budget of anticipated results
CONTROL OVER ASSET RECORDS	Limit access to inventory
	Safeguard all important records
	Deposit cash receipts intact daily
	Keep all voided cheques
INDEPENDENT VERIFICATION OF PERFORMANCE	Reconcile bank statement independently
	Pre-list cash receipts
	Have an annual audit by CPA frim
	Take complete inventory regularly

DETECTION AND PREVENTION OF MISTAKES (General Control Techniques)

TECHNIQUES	REASON FOR TECHNIQUES
CASH DISBURSEMENT
Use only pre-numbered cheques for disbursement	To ensure all cheques are accounted for
Have proper support for cheques	Only pay properly authorised and justified expenditures
Cancel supporting documents when paid	To only pay once for proper expenditures
Cheque signing by management with no access to records/Alter but keep voided cheques	To ensure accounting records accurately reflect cheques written
Mail cheque directly to payee	To ensure that payee and only payee receives disbursement
Use imprest petty cash fund with one custodian	To ensure authority over petty cash and review periodically
CASH RECEIPTS
Use cash register and cheque register daily	To ensure all cash receipts are recorded
Deposit cash receipt intact	To ensure all cash receipts are deposited
Reconcile bank statements monthly	To ensure all cheques are authorised and recorded and receipts deposited
ACCOUNTING RECORDS
Use pre-numbered invoices	To ensure invoices are accounted for
List mail collections compare with journal	To ensure all mail collections are retained by Sacco
Review monthly comparative financial statements reports	Check any unusual revenue, expense or liability amounts
Approve all entries to general journals	To ensure only authorised and proper journal entries are made

INVENTORY CONTROL TECHNIQUES

1. PURCHASING

1. Centralize under responsible staff
2. Attach purchase invoices to cheques for payment
3. Cancel support documents when cheque is paid
4. Supervise all returned purchases
5. Use requisitions to initiate purchases

2. CUSTODY

1. Separate purchasing from receiving
2. Separate receiving from store keeping
3. Take physical inventory regularly
4. Use independent employees for physical inventory
5. Physically control access to inventory

3. RECORD KEEPING

1. Separate record keeping from custody
2. Require all documents to be pre-numbered e.g. ledgers, journals, passbooks, receipts, vouchers, etc
3. Use a perpetual system if possible
4. Compare results of physical inventory to records

DEFALCATION OF CASH

AREA OF DEFALCATION	HOW TO OBTAIN CASH	HOW TO COVER IN ACCOUNTING RECORDS
CASH DISBURSEMENT	-Issues cheques to others-Appropriate the cheques	Create false invoices
		Use invoices twice for supporting cheques
		‘Pad’ the payroll
		Pocket unclaimed wages and dividends
	Issue cheques to yourself	Incorrectly foot the cash disbursement journal
		Increase recorded amount of another cheque
	-Overpay vendor-appropriate refund	Allow asset or expense to remain overstated
PETTY CASH	Remove cash from petty cash fund	Increase amount on vouchers
		Create false vouchers
		Submit vouchers twice
		Allow fund to remain short
CASH RECEIPTS	Take cash from cash sales or receipts	Record no amount
		Record less than was received
	Take cash payment on account receivable	Bill for full amount but record sale at lower amount
		Record cash receipt but manipulate bank reconciliation
		Record cash receipt but incorrectly use the journal
		Do not record cash receipt but create credit memo to write off the amount
		Pocket payment on account which has been written off

Great Business Ideas for Youths

With the launching of Uwezo Fund, youths in Kenya need to sit down and brainstorm on what kind of business they want to start. The Uwezo Fund is interest free and youths will have a four month grace period….nothing comes this easy. This is your opportunity to kick-start your lives. Probably in your lifetimes you will never see anything like this. Below are some business ideas you can consider!!

1. Baby-sitting service
2. Baking
3. Bicycle repair
4. Birthday party coordinator
5. Book-keeping for families
6. Breakfast delivery to office workers
7. Build and sell computers
8. Bulk mailing service
9. Button making
10. Cake decorating
11. Calligraphy
12. Candle-making
13. Candy sales
14. Car detailing
15. Car repair/servicing
16. Car washing
17. Carpentry
18. Catering
19. Caulking and weather-stripping
20. Clean aquariums
21. Clean awnings
22. Clean boats
23. Clean rain gutters
24. Clean vacant lots
25. Cleaning services (for home and office)
26. Clothing alterations
27. Clothing design
28. Coach/teach: basketball, gymnastics, music, bowling, tutoring, baseball, cooking, juggling, bike repair, fishing, soccer, photography, auto mechanics, art, science
29. Computer help service
30. Cookie decorating
31. Copying services
32. Crafts
33. Deliver papers
34. Delivery service
35. Design bumper stickers
36. Design greeting cards
37. Distributing flyers
38. DJ
39. Dog walking
40. Errand Services
41. Exercise instructor
42. Formatting and graphic design
43. Gardening
44. Gift baskets
45. Graffiti removal
46. Hot dog stand
47. House painting
48. Ice creame
49. Ironing service
50. Jewelry-making
51. Kitchen organizing
52. Laundry service
53. Lawn care
54. Meal delivery
55. Messenger service
56. Milk bar
57. Music lessons
58. Office organizer
59. Painting addresses on curbs and
60. mailboxes
61. Painting/refinishing furniture
62. Performing/entertaining
63. Personal shopper
64. Pet care
65. Photography/videotaping
66. Plant care
67. Selling cosmetics
68. Selling Novelties
69. Selling T-shirts
70. Shine shoes
71. Small home repairs
72. Software installation
73. Songwriting
74. Sweep sidewalks
75. Telemarketing
76. Translating
77. T-shirt design
78. Tutoring
79. Typing service
80. Umpire or referee
81. Wake-up service
82. Wallpapering
83. Web site design
84. Window washing

The funds of the Sacco Society

Sources of funds consist of:

(i)    An admission fee which may be reviewed from time to time by the General Meeting.

(ii)    A re-admission fee which is payable by individuals who withdraw and reapply for admission and which may be reviewed from time to time by the General Meeting.

(iii)  An unlimited number of shares whose value and minimum amount may be revised from time to time by the General Meeting.

(iv)  Deposits or loans from members and/or non-members.

(v)   Any surplus resulting from operation of the Society.

(vi)  A reserve fund as provided under the Act, and any other reserve approved by the management.

(vii)  Any donations grant or gifts from other bodies, organizations or individuals.

(viii) Deposit Protection Funds.

(ix)  Funds obtained from fines and/or penalties as may be prescribed by the management from time to time as authorised by the Authority.

(x)   Funds obtained from other lawful miscellaneous sources.

(xi)  Income from interest, fees and charges and commissions as authorized.

(xii)  Liabilities, which include deposits from members and borrowings from other sources.

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• 65 Saccos risk losing their front office status over capital (businessdailyafrica.com)
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• Compliance Issues as per the Act and Rules (funnyardstick.wordpress.com)
• Loan Policy (funnyardstick.wordpress.com)
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• Model By-laws for Saccos (funnyardstick.wordpress.com)

 

Division of Co-operative Societies

Division of Co-operative Societies is also permitted under the Co-operative Societies Act Cap 490 of the Laws of Kenya Section 30. With Co-operatives, the bigger the better; economies of scale is easily realized and taken advantage of. Division is also not an easy process as it can be seen from the process below from the excerpt of the Act. Its advisable not to recommend division but look at other ways of improving the society capacity or find lasting solutions to the problems that are leading to division.

Section 30 Division of co-operative societies

(1) (a) A co-operative society (hereinafter referred to as the existing society) may, by special resolution (in this section referred to as the preliminary resolution), resolve to divide itself into two or more co-operative societies
(hereinafter referred to as the new societies).
(b) The preliminary resolution shall contain proposals for the division of assets and liabilities of the existing society among the new societies in which it is proposed to be divided and may prescribe the area of operation of, and specify the members who will constitute, each of the new societies.

Money can’t buy happiness, however it can rent it 🙂

(2) A copy of the preliminary resolution shall be sent to all the members and creditors of the existing society, and to all other persons whose interests will be affected by the division of the existing society.

(3) Any member of the existing society may, notwithstanding any by-law to the contrary, by notice in writing given to the society within two months of the receipt of the copy of the preliminary resolution, intimate his intention not to become a member of any of the new societies.

(4) Any creditor of the existing society may, notwithstanding any agreement to the contrary, by notice in writing given to the existing society within two months after his receipt of the copy of the preliminary resolution, intimate his intention to demand the payment of any money due to him.

(5) Any other person whose interest will be affected by the division may, by notice in writing given to the existing society within two months of the receipt of the preliminary resolution, object to the division.

(6) After the expiry of three months after the date of the preliminary resolution, a further special general meeting of the existing society shall be held to consider the preliminary resolution and any notices received under this
section.

(7) At the special general meeting held under subsection (6), provision shall be made by a further resolution of the society for—
(a) the repayment of the share capital of any member who has given notice under subsection (3);
(b) the satisfaction of any claims by creditors who have given notice under subsection (4);
(c) the satisfaction of the claims of such other persons who have given notice under subsection (5) or the securing of their claims as the Commissioner may determine, or direct: Provided that no member or creditor or other person shall be entitled to such repayment or satisfaction until the preliminary resolution is confirmed as
provided in subsection (8).

(8) The society may, by further resolution passed by a two-thirds majority of the members present and voting, confirm the preliminary resolution, with or without changes as in the opinion of the Commissioner are not substantial, and the decision of the Commissioner as to whether any changes are or are not substantial shall be final.

(9) If, the Commissioner is satisfied within such time as he considers reasonable that the provisions of the secondary resolution and the provisions of this section have been complied with, he may, register the societies into which the existing society has been divided and the by-laws of such societies and thereupon—
(a) the registration of the existing society shall stand dissolved;
(b) the registration of the new societies shall be sufficient to vest the assets and liabilities of the existing society in the new societies in the manner specified in the preliminary resolution, as confirmed;
(c) the remaining members of the existing society shall become members of one or other of the new societies, as is provided by the preliminary resolution, as confirmed; and
(d) any share holders or creditors of the existing society and any other persons who have claims against the existing society and whose claims were not satisfied in accordance with the secondary resolution, may pursue such claims against one or other of the new societies, as is provided by the preliminary resolution, as confirmed.

(10) Where the Commissioner refuses to approve the division of an existing society under subsection (9), the society may appeal to the Minister within thirty days of the communication to it of the refusal.

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CO-OPERATIVE PRINCIPLES

7 CO-OPERATIVE PRINCIPLES

(a) Voluntary and open membership

The society shall always be guided by the principle of voluntary and open membership in its member recruitment drive without political, ethnic, religious, gender or social discrimination.

(b) Democratic member control

The society will be fully controlled by members who will have equal voting rights on the basis of one member one vote.

(c) Economic participation by member

Members shall contribute equitably to the capital of the society and share in the results of its operations.

(d) Autonomy and independence

The society shall operate on mutually acceptable terms with its stakeholders who will ensure its autonomy and independence.

(e) Education, training and information

The society shall foster reciprocal, on–going education programmes for members, leaders, staff and the community so that they can teach and learn from each other or from the appropriate resource persons in understanding and carrying out their respective roles.

(f) Co-operation among co-operatives

In order to better serve the interests of the members and the community, the society shall actively co-operate with other co-operatives locally, regionally, nationally and internationally.

(g) Concern for community in General

The society shall show concern to the community in which it exists and operates.

Related articles

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• Cooperative Societies: Untapped investment opportunities (vanguardngr.com)

 

How to become a member of a Sacco

All co-operatives in the country have By-Laws the defines the area of operation of the co-operatives and how to become a member of that society.

Save and Borrow

QUALIFICATION FOR MEMBERSHIP

1. You have to be within the area of operation of that society that you want to join. This means that you have to be in say Uasin Gishu County or to be more specific Eldoret East District. However the area of operation is defined in the By-Laws of the society. Some co-operatives have a whole country as their area of operation and some don’t so find out the area of operation of a society you want to join.
2. You have have to be within the field of membership with a certain defined common bond. That is to say, you can be an employee of a certain company, a member of a certain church or own land or business within the society’s area of operation or doing business within the area of operation of the society you want to join.
3. You must be 18 years and over
4. You must be of good character and of sound mind
5. You will also be required to pay an entrance fees and minimum share capital as required by the By-Laws of the society you want to join.

Saccos are a great way of saving and borrowing.

Once you become a member i.e. when you have been presented with membership application form and you being accepted by the society, you will be required to start your monthly contributions immediately which must be consecutive for you to qualify for any loan after usually six months.

Once you sign the membership application form and accepted by the society, you will now be bound by the By-Laws of the society and policies and resolutions of the general meetings of the society. You will be subjected to a fine not exceeding Ksh. 20,0000.00 for any volition of By-Laws.

 

Rights and Obligations of a Member

Rights and Obligation of Members.

Rights of a Member

A right is what a member of a co-operative deserves to be given, or is entitled to get, enjoy or feel. In order to enjoy these rights, a member must have paid the necessary membership fees and purchased at least one minimum share and also have deposits in the Sacco Society.

These rights are:-

• to attend and participate in general meetings.
• to elect and be elected to the organs of the society subject to this by-laws.
• to enjoy the use of all facilities and services of the society subject to the by-laws.
• to receive periodically and regularly or upon request a statement of account in respect of transactions with the society.
• to access all legitimate information relating to the society including: internal regulations, registers, minutes of general meetings, annual accounts, inventories and investigation reports at the registered office of the society subject to any regulations in force.
• to transfer shares.
• to share in the profits of the society, if any.
• to vote on all matters put before the general meeting of the society.
• to appoint a nominee.
• to ask for a special general meeting subject to the rules and the society by-laws.

Members Obligations/Duties

The conferment of rights to a member also demands that a certain obligations be fulfilled. A member’s obligation is what the society expects from a member. As much as a member enjoys rights from the society, he has an obligation to:-

• attend and participate in passing resolutions at general meetings.
• observe and comply with all the society’s by-laws and decisions made by organs of the society in accordance with the by-laws.
• buy and pay-up for shares or make any payments as provided for in the by-laws of the society.
• patronize the society’s products.
• attend members’ education meetings.
• repay loans as per the agreement.
• promote the society and its service or products.
• pay for the debts of the society at the time of liquidation where the assets are insufficient to meet liabilities.
• support projects of the society approved by the relevant authority.