FINANCIAL REPORTING FOR COOPERATIVE SOCIETIES HILTON HOTEL - PowerPoint Presentation

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FINANCIAL REPORTING FOR COOPERATIVE SOCIETIES HILTON HOTEL

REPORTING STATUS FOR SACCOSPRESENTED BY:CPA/CS EVANS MOTURION 12TH MAY 2016Slide2

OUTLINE

Reference DocumentsImportant Quotes

Important statisticsWhat is Financial Reporting?Purpose- Financial ReportingCurrent reporting statusOverview of published Financial statement

Sacco Societies Act regulations

Significance of full compliance with IFRSs for SACCOs

Emerging Issues:Mwongozo requirement on Financial reportingQuestions and AnswersSlide3

Reference Documents

Financial Reporting in saccos is facilitated by the following:The constitution of Kenya section 226 The cooperative societies Act cap 490

The SACCO ocieties Act No 14 of 2008The SACCO by laws.International financial reporting standards (IFRS)Mkopo SACCO Ltd reporting Template-ICPAK

Mwongozo

The existence of reliable accounting and information system

Any other relevant lawsSlide4

Important quotes

People suddenly know how to use money when there are none left” ― Bangambiki

Habyarimana

If you want to reap financial blessings, you have to sow financially.

Joel Osteen.

"Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are." - James W. FricksSlide5

Important statistics for deposit taking savings and credit cooperatives (DTSs)

Key trends in performance of Deposit Taking Savings and Credit cooperatives (DTSs)

Indicator

2013

Kes.Billions

2014

Kes.Billions

2015*

Kes.Billions

Growth in 2015 (%)

Assets

257,368

301,537

338,246

12,2

Deposits

182,683205,974236,05814.6Loan and Advances197,409228,524248,934 8.9Capital Reserves 32,991 43,086 61,90843.6

Source:Sacco

Society Regulatory Authority (SASRA)

*ProvisionalSlide6

What is Financial Reporting?

Financial reporting includes the following: the external financial statements (balance sheet, income statement,

statement of cash flows, and statement of  stockholders' equity)the notes to the financial statementspress releases and conference calls regarding quarterly earnings and related informationquarterly and annual reports to stockholdersfinancial information posted on a corporation's websitefinancial reports to governmental agencies including quarterly and annual reports to the Securities and Exchange Commission (SEC)

prospectuses pertaining to the issuance of

common stock

and other securitiesSlide7

What is Financial Reporting (continuation)

Financial reporting involves the disclosure of financial information to management and the public (if the company is publicly traded) about how the company is performing over a specific period of time. Financial reports are usually issued on a quarterly and annual basis. This

is different from management reporting, which is financial information that is disclosed to those inside the company to be used to make decisions within the company. Financial reports are included in a public company's annual reports"Don't tell me where your priorities are. Show me where you spend your money and I'll tell you what they are." - James W.

FriSlide8

Purpose –Financial reporting

Financial reporting serves two primary purposes.a) It helps management to engage in effective decision-making concerning the company's objectives and overall strategies. The data disclosed in the reports can help management discern the strengths and weaknesses of the company, as well as its overall financial health

.b) It provides vital information about the financial health and activities of the company to its stakeholders including its shareholders, potential investors, consumers, and government regulators. It's a means of ensuring that the company is being run appropriately. You

should note that if a company is publicly traded, it is subject to some very strict reporting regulations enforced by the Securities and Exchange Commission (SEC

). Slide9

Current Reporting

Status : Requirements of co-op society cap 490

 Section 25(1) requires every society to keep proper accounts which shall Be prepared in accordance with international accounting standardsReflect the true and fair state of the cooperative society’s affairs andExplain the cooperative society’s transactions including All sums of money received and paid by the cooperative society and the reasons there to

All

sales and purchase of goods and service by the coop society and

All assets and liabilities of the cooperative societySlide10

Current Reporting Status:Requirement of Societies Act Cap 490 cont.

The accounts referred to above shalla) Conform with international financial standardsb) Include the following

I) A balance sheet ii) An income and expenditure account and iii) A cash flow statement iv) Be approved by the committee v) Be authenticated by at least three committee members including the chairman of the co-op societyThe accounts are then submitted to the commissioning of co-operative for approval and registration.The auditor will present the annual accounts in the AGM.Slide11

Current Reporting Status:SACCOs Societies act no.14 of 2008

Section 52 of the act requires that a Sacco shallSubmit to the authority by the 15th day of each month, a return of the statement of the income and expenditure and statement of financial position showing results for the operations for the preceding month

Submit to the authority(Sacco regulatory authority) financial statement in the prescribed format for the month, the quarter to-date and the year to datePresent its accounts and associated description as set out in form 6, 7 and 8 in the second scheduleIn preparing the required returns the Sacco must comply with the followingSlide12

Current Reporting Status:SACCOs Societies act no.14 of 2008 -Continuation

Complex instructions issued to ensure uniformity of reporting by all licensed Sacco societies.Shall prepare the accounts in compliance with international reporting standards.

All figures should be shown in thousands and in Kenyan shillingsAll the rows should be published irrespective of whether they are licensed Sacco has a figure to report or notCash return should be signed by at least two signatures before submission to the authoritySasra has the responsibility of enforcing the SACCO societies act of 2008

The reporting requirement is more stringent in the SACCO societies act of 2008 than it was in the cooperative societies act cap 490 Slide13

Overview of published Financial statements

Sacco Act No.14 of 2008 forms 6-Statement of Financial position Form 7 –Statement of comprehensive income and Form 8-other disclosures

eg Non performing loans, insider lending etcICPAK Template Illustrative Annual report and Financial statement for savings and credit societies(saccos)Illustrative Financial statement for an established SACCOSlide14

SACCO Societies Regulations

The SACCO Societies Act regulations enforce/strengthen Financial reporting requirement.The sacco

Act regulations require sacco societies to report regularly in predetermined intervals and in compliance to set guidelines through the Sacco Society Regulatory Authority.Saccos Act regulations ensures Good corporate governance in managing resources through regular reporting .The saccos Act regulations provides templates for reporting which enhance efficiency and reliability in reporting by Sacco's.

The SACCO regulations has increased reliability in current reporting

The SACCO regulations support IFRS in recording and reporting financial transactions.

Prudential standards set in the sacco societies regulations has increased frequency and quality of financial reports. Slide15

SIGNIFICANCE OF FULL COMPLIANCE WITH IFRS FOR SACCOS  

Ensures compliance with the Sacco society’s act 2008Uniformity in financial reporting for SACCOsFacilitates comparability of financial reports for Sacco and other institutionsEnhances public confidence in the management of SACCOsEnsure reliable recordsFacilitates international recognition especially where a Sacco requires cheap funds from international institutionsIt enhances competitiveness of Saccos

Supports transparency, accountability and full compliance with applicable financial

requirementsSlide16

SIGNIFICANCE OF FULL COMPLIANCE WITH IFRS FOR SACCOS (continuation)

It facilitates the work of independent regulatory structures for auditing and financial reporting practice of public interest including saccos

It facilitates strengthening of national and international financial reporting architectureIt enhances investors’ confidence.Reduce conflict among the Sacco members which may arise when the financial reports are not reliable.Ensure quality in recording and reporting of financial transactions. To act as a guide in recording and reporting financial transactions.Facilitate taking advantage of global investment opportunities.

Non Kenyan stakeholders in Kenya institutions demand the use of IFRS.

Cross border capital raising activities frequently require the use of IFRS.Slide17

Emerging

issues:Mwongozo requirement for financial reporting The Board should disclose:

(a) In the annual report, the Management discussion and Analysis which sets out:i. The assessment of Management of the factors that affected the organization’s financial condition and results of operation over the

period under review and

ii. Known trends which are reasonably likely to

have a material effect on the financial condition and results of operations in the future.(b) That it has complied with applicable financial reporting standards in preparing the financial statements.(c) Any deviation from financial policies.(d) Related party transactions.Slide18

Emerging issues:Mwongozo

requirement for financial reporting (continuation) Report in the annual financial statements and half yearly management Accounts that the organization is a going concern, with supporting

assumptions or qualifications as necessary.Slide19

Emerging issues: Sustainability reporting

The Board should:Include a commentary on sustainability in the half-yearly and Annual Report.

(b) Disclose if the organization is a going concern based on the Triple Bottom Line concept.(c) Disclose to stakeholders the major sources of revenue and items of expenditure.Slide20

Accurate and reliable financial reporting will enhance good corporate governance, financial stability and confidence from the SACCOs ‘stakeholders.Finance

is the blood of the entity (SACCO).Slide21

Let us unite in managing

sacco

resources efficiently and effectively with an objective of improving the welfare of our members:

Thanks