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P.E.S.O.S.
The Performance Standards for
Philippine Credit and Other Types of
Cooperatives with Credit Services
Learning Tips:
Keep a single focus. Concentrate.
Take notes. Compose your questions.
Never comment without any
suggestion.
Share your knowledge and experiences.
Mobile phones at discrete/silent mode.
Watch your sitting posture.
Rub your palms to warm the eyes.
Coffee (two cups a day only)
Speaker’s Assumptions:
Effective Internal and other Accounting
Controls are existing in the respective
cooperatives.
Participants are equipped with basic
accounting and bookkeeping skills.
Participants have understood the Standard
Chart of Accounts (Memorandum Circular No.
02-04)
Participants clearly understand the contents
of their Financial Statements.
Issues and Concerns on the Results of
the Workshop:
These are standards for Credit
Cooperatives. (No standards yet for other
type of coop’s businesses)
Financial Statements used in the
computation may not be SCA-compliant.
Schedules and other data may not be
available or if any, may not be reliable (un-
audited).
Lack of objective basis for allocating funds
and assets for coops with several projects
including credit.
Session Topics:
Agreement to Work on a Common
Performance Standards: A Background
COOP - Indicators of Compliance to
Administrative Requirements and
Management
PESOS - Indicators on Financial
Performance
Workshops and Open Forum
Background on
Performance Standards
A call establishment of a viable and
sustainable financial market to ensure basic
sector access to credit – an important role for
cooperatives
Lack of necessary information infrastructure
for coops addressed by NCC and CDA
The Standard Chart of Accounts was
approved on December, 2000
Ensure protection of cooperative members
and the sustainability of operations through
transparent information
Transparent Information: A must for effective
regulation and efficient management
Clear – understandable for sound decisions
and timely actions
Fairly Stated – accounting policies and
properly defined and rules consistently
applied
Timely – available on regular basis
Accessible and Usable – easily available to
concerned users and structured in a form
useful to management and board of directors
Comparable – results over time and among
peer institutions
Purposes of Performance Standards
Supervisory and regulatory tool
External
To make sure cooperatives have the necessary
operational and financial discipline that ensures
the safety and soundness of the institution, hence
providing growth to the sector
Financing Institutions and award-giving and
regulatory bodies
Management Tool
Internal
To ensure the cooperative is operating effectively
and efficiently
To determine how it fares with other credit
cooperatives of similar size
Indicators on Compliance to Administrative
requirements and Management
Compliance with Administrative and Legal
Requirements
CDA, BIR, LGU and DOLE
Organizational Structure and Linkages
Governance and Membership Structure, affiliation and
linkages with federations
Operation and Management
Systems, policies and procedures
Plans and Programs
V-M-G, business plans and budgets and performance
reviews
Indicators on Financial Performance
Portfolio Quality
Loan portfolio and Protection of Assets
Efficiency
Operation and administrative efficiency to generate
income to cover expenses
Stability
Meeting financial needs and sustainable delivery of
services
Operations
Membership growth and trend of external borrowings
Structure of Assets
Quality Structure and Effective Use of Assets to
Generate revenues
Overall Rating System
96-100 Very Good
90-95 Good
80-89 Fair
70-79 Poor
Below 70 Very Poor
Definition of Terms
Portfolio at Risk – failure to receive
payment one day after due date of
amortization, makes the entire loan
balance at risk
Allowance for Probable Losses on Loans
– allowance provided for the unpaid
entire loan balance based on PAR with
grace period of 1-30 days.
Definition of Terms
Loans Restructured – are past due loans
whose terms have been extended or renewed
after full payment of interests/surcharges due
thereon.
Current when there is a good tracking record of
continuous payment as agreed
• 3 installments for monthly
• 4 installments for semi-monthly
• 6 installments for weekly
• 10 installments for daily
Past Due when it is not performing, i.e., no
payments received after restructuring.
Definition of Terms
Liquid Assets – include Cash, Cash in Bank,
Investment in Marketable Securities (those
easily convertible to cash within 30 days)
Short-Term Payables – liabilities payable
within 30 days except deposits
Problem Assets – are investments in closed
banks, cooperatives and other institutions
Non-Earning Assets – are assets that do not
give direct revenues to the cooperative, ie.
Cash on Hand, Non-Interest bearing checking
accounts, Accounts Receivable, Assets in
Liquidation, Fixed Assets, Prepaid Expenses
and other Deferrals, and problem assets.
Computations
Average Members’ Share – Beginning
Members’ Share + Ending Members’ Share
divided by 2
Average Total Loans Outstanding – Beginning
Total Loans Outstanding + Ending Total
Loans Outstanding divided 2
Average Total Assets – Beginning Total
Assets + Ending Total Assets divided by 2
Compliance with Administrative and
Legal Requirements (20%)
Cooperative Development Authority
(CDA) (9)
Updated Bond of Accountable Officers (1)
Registration of Amendments (1)
Allocation of Net Surplus (1)
Issuance of Share Capital Certificates (1)
Submission of Annual Reports, Audited
Financial Statements, Information Sheet
within the prescribed period (5)
Compliance with Administrative and
Legal Requirements (20%)
Bureau of Internal Revenue (BIR) (5)
Registration as Non-EVAT (1)
Filing of Account Information (1)
Withholding of Appropriate Taxes (includes
taxes on Honorarium) (1)
Certificate of Tax Exemption (1)
Registration of Books of Accounts (1)
Compliance with Administrative and
Legal Requirements (20%)
Local Government Unit (LGU) (1)
Business Permit/Licenses (1)
Department of Labor and Employment
(DOLE) (5)
Minimum Wage and 13th Month Pay (1)
SSS (1)
Philhealth (1)
HDMF (PAG-IBIG) (1)
Retirement Benefits (1)
Organization (26%)
Governance and Membership Participation (15)
Gender Integration (presence of sex-disaggregated
data on officers, staff, loan borrowers, depositors (1)
Attendance of the majority of members in
• Annual General Assembly (2)
• Membership Education/Consultation (2)
Capital Build-up
• 70% of members (regular & associate) regularly contribute to
Share Capital (2)
• At least 70% of the total members are depositors (2)
Acceptance of Audited FS by the GA (2)
Approval of development plan by the GA (2)
Adoption of Proper Procedures for the election of the
Board of Directors (2)
Organization (26%)
Conduct of regular pre-membership education (2)
Affiliation/Linkages (9)
Laboratory cooperative (1)
Community Services/Involvement (3)
Participated actively in the federation/union’s activities
and programs (1)
Paid annual dues, CETF, loans and other accounts to the
federation/union (1)
Business Alliance with
• Federation (1)
• Other cooperatives (1)
Submission of Audited FS using SCA and annual report to
the federation/union (1)
Operation and Management (40%)
Manual of Operational Policies with specific
provisions on the following: (24)
Membership (2)
Loaning (4)
Savings/Time Deposit (4)
Financial Management
• Asset/Liability (2)
• Accounting (3)
• Internal Control (4)
Human Resources Development
• Hiring, Promotion and Firing (1)
• Staff Development (1)
• Compensation/Benefits (1)
• Performance Appraisal (1)
• Job Description (1)
Operation and Management (40%)
Board of Directors (8)
Board composition in accordance with by-laws (2)
Meetings of the Directors (1)
Meetings of the Committees (1)
Periodic Review of Policies (2)
Updated Minutes of Meetings (1)
Updated Committee Reports (1)
Operation and Management (40%)
Management (8)
Full-time Qualified Manager (3)
Policy on succession of manager and other top
positions (3)
Personnel File (1)
Organizational Structure (1)
Plans/Programs and Performance (14%)
Presence of: (7)
Vision, Mission and Goal (1)
Development Plan (2)
Approved Annual Plan and Budget (2)
Code of Ethics (2)