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.

BUDGET AND BUDGETARY CONTROL

Budgeting

A budget is an estimate of income and expenditure for an immediate future period. in co-operative societies, a budget is normally prepared to cover one financial year. there are two types of budgets. They are:

•   the operational budget which shows the income and expenditure of the daily business
operations of the society.

•   the cash budget which shows how money will be raised and how it will be used to finance the items which are not expenses.

Does running out of money count as exercise? :-)

The Annual Operational Budget

This budget is prepared according to the activities that the society is dealing in. The core activity in SACCOs is savings and credit.  The core activity is the activity that the society was established to handle.  It has got direct dealings with members.

Secondary activities are those that are established, normally later, to support the main activity and to offer more services to members.

STEPS

•   The society should have decided on what activity or activities it wants to handle during the year.

•   Always start by budgeting for the expected income. income is the money that the society  earns from its operations.  It includes; interest from loans to members, sale of stationery, interest from bank, any fines etc.

•   The budget for expected expenditure.   this is the money that the society will pay out for expenses in the course of its operations.  the items of the expense may include; purchase of stationery, office rent, salaries, sitting allowance, bank charges, interest on borrowed money, education and training, travel and subsistence, audit fees etc.

•   The expected income should be more than the budgeted expenditure. this is to avoid the society operating at a loss. the excess of income over expenditure will be the surplus/profit for the year.

•   Budgeted figures should be as realistic as possible and income should not be inflated in
order to justify expenses.

•   Past performance and any future expectations will assist to arrive at more realistic budget figures.

•   The annual figures should be broken down into quarterly figures. This will later assist the management in comparing budgeted amounts with actuals. But income and expenditure can vary according to the trend of operations during the year.

•   When expected income is less than expenditure, expenses should be reduced accordingly. Never budget for a loss in income generating activity.

The Cash Budget

A cash budget shows how the society intends to get finance and how it will use the funds mainly for capital items and other cash outflows.

The source of funds in SACCOs will include; entrance fees, members shares and savings, repayment of members loans, disposal of assets, sales of investments, external borrowings etc.

The application/uses of funds will include; issuing loans to members, refund of shares, acquiring fixed assets, investments, repayment of external loans.

STEPS

While pre-preparing the cash budget, the society should have decided and identified, probably from its long term plans, what developments and other cash outflows will fall within the year.   it should also list down the liabilities that will be repaid during the year.

Budgeting for Cash/Sources of Funds

•   Start by getting the figure for the cash that will be available both in hand and bank at the start of the year.

•   Get the figure for any surplus expected from the previous year and which will be available at the start of the year.

•   Get provision for depreciation during the year as part of the funds that will be available.

•   Get all other monies that you expect to flow in during the year, including loan repayments from members, members’ savings contributions/shares, entrance fees and any borrowed funds.

•   The total of all these will be the funds/cash available.

Budgeting for Cash Outflows/Uses of Funds

•   Get the money that will be used to pay loans and to settle other liabilities

•   Indicate the amount you intend to lend to members

•   Indicate the money that will be used to refund members who are withdrawing membership

•   Indicate the money that will be used for investments

•   Budget for any dividends related to the year and that will be paid to members

•   The total will be cash needed during the year

•   the figure for cash available should be higher than the cash needed

•   the annual figures for cash budget should be broken into quarters to show what will be
available and what will be used during each quarter

OTHER IMPORTANT STEPS

After the committee is satisfied that the budget is exhaustive and proper, it should be presented to the members in a general meeting for their approval before use.

After approval by the general meeting, the final draft should be typed and enough copies produced for distribution to relevant offices. the society copy should be filed for use in budgetary control.

The budget should be signed by the officials authorized to sign documents on behalf of the society.

It is the duty of the committee to ensure that the society budget has been prepared and approved by members in a general meeting at least three months before the start of the year in which it is going to be used.

Budgetary Control

This involves comparing budgeted amounts with actuals and noting the differences.    the differences can be either favorable or unfavorable.

When actual income is more than what was budgeted for, the difference is favorable. the society is doing well. But when actual income is less than budgeted, then the society has not achieved its expected target.

When actual expenditure on any item is more than what was budgeted for, then the difference is unfavorable.   But when the actual expenditure is less, the difference is favorable. the society has been able to save money on that item.

Budget figures are found in the society’s annual operational budget prepared for that year.  Actual figures are found in the society’s trial balance prepared from the books of accounts. the trial balance shows the actual income and expenditure of the society on each item as at a particular period from the start of the financial year.

Comparison between the actual and the budgeted figures and noting the differences is called variance analysis.  Management should get reasons for the unfavorable differences on every item of income and expenditures.

The analysis of differences above and the reasons for the unfavorable ones is then presented and discussed in the society management committee meeting.  this is in form of an economic report.

The management committee should then discuss the report and make decisions on how the negative situations will be addressed and turned to positive conditions.

EXCERPT FROM: Savings and Credit Co-operative Societies; Start-up Kit (by Swiss Contact and Department of Co-operatives)

THE DEPARTMENT OF CO-OPERATIVE DEVELOPMENT AND MARKETING – RANGE OF SERVICES AT SUB-COUNTY (DISTRICTS)

(i) Education and Training

We will conduct education and training to members, management committees and staff of the movement in collaboration with stakeholders. We shall use resources allocated by the Government and the movement will chip in from education budgeted resources. We shall give other extension services pertaining to administration and management of Co-operatives.

(ii) Co-operative Policy and Implementation

We will attend leaders meetings, Special/Annual general meeting of Co-operative Societies and shall at all times give appropriate advice. We shall also articulate the Government policy on Co-operative management.

(iii) Co-operative Financial Policy

We will at all time advice the societies in prudent financing, Credit and Banking Services policy aimed at improving the welfare and interests of the members of the movement.

(iv) Co-operative Governance

We through Co-operative Education and Training will endeavor to insist on good management practices among the Co-operative leaders aimed at good Co-operate Governance. We shall also annually ask the Co-operative leaders to declare their assets and liabilities and file indemnity bonds as required by law.

(v) Settlement of Disputes

We will at all times arbitrate on co-operative disputes outside the court system and for those cases beyond, we will advice complainants to file disputes in the Co-operative Tribunal. The clients will be advised on the filing fees.

(vi) Co-operative College

We will advise the movement on courses offered by the Co-operative College and update them on regular basis.

(vii) Co-operative Marketing Including Value Addition Processing.

We will at all times articulate the Government Policy on Marketing of Agricultural produce, value addition and other Co-operative ventures.

(viii) Promotion of Co-operative Ventures.

We will at all times advice the Co-operative movement on general aspects of investments to create wealth in Co-operatives.

(ix) Inquiries and Inspections.

We will advise on inquiry/inspection processes where necessary and we shall conduct inspections within the Sub-County as need arises. The inspections will be presented to management committee for appropriate action in accordance with the law.

(x) Surcharge

We will undertake to enforce surcharges and inquiry report as recommended by inquiry officers.

(xi) Rule of Law

We will at all times operate within the provisions of the Co-operative Societies Act, the Rules and the By-Laws of co-operative societies and policy documents issued from time to time by the Commissioner of Co-operative Development.

(xii) Audits

We shall ensure that audits are carried out and presented as stipulated in the Act in accordance with International Accounting Standards and Co-operative Societies Act.

(xiii) Monitoring and Evaluation.

To monitor and evaluate all Co-operative activities in the Sub-County.

(xiv) The Sub-County Co-Operative Officer will Advise and Support Co-Operative Officers.

To give advisory services to Co-operative officers and others staffs to enable them perform their duties efficiently.

(xv) Financial Resources

A thief broke into my house last night looking for money, so I woke up and started searching with him :-)

To ensure that all financial resources allocated to the Sub-County are utilized for intended purposes and in accordance with the Government accounting procedures and procurement regulations.

(xvi) Visitors and Delegations

To ensure that all delegations to the Sub-County Co-operative Office are attended to promptly.

OBLIGATION OF CO-OPERATIVE MOVEMENT

1)    To observe and operate within provisions of the Co-operative Societies Act, Rules, Society By-law and the various policy documents.

2)    Operate within the budget, and avail the Trial Balances and Economic reports to the respective Government offices.

3)    To provide efficient, timely and quality services to their members.

4)    The members have obligation to elect leaders who are transparent and accountable.

5)    Committee have obligation of providing minutes of Management, Special and Annual General Meetings to the Sub-County Co-operative Officer at all times.

6)    The committees have an obligation to invite the Co-operative Officers to all their meetings.

7)    The society has an obligation to provide accurate, timely and up to date information to the Sub-County Co-operative Officer.

8)    The society has an obligation to pay audit and supervision fee to the Ministry of Industrialization and Enterprise Development Department of Co-operative Development and Marketing.