SECURITY FOR LOANS

Unless the loan applied for is equal or less than a member’s total savings, it must be secured by guarantors. The total shares and deposits of the borrower and those of the guarantors must be equal to or more than the loan applied for.

Why don't we take this relationship to the next level and you lend me some money? :-)

•   The society may still require a member to have his loan application secured by guarantors even though what is applied for may be less than or equal to his savings if those savings have been pledged as security for other members loans.

•   No member will be allowed to guarantee more than three loans. All guarantors must be members of the society.

•   Members of the management and supervisory committee shall not guarantee loans among themselves.

•   The obligation of the previous guarantors shall cease upon change of guarantors subject to the new guarantors being accepted by the society.   the obligation of the guarantors shall also cease when loans guaranteed have been reduced to less than the members total savings.

•   The society shall maintain a record of all guarantors in each members file.

Other Security

•   The society officials approving loans may ask for such additional security as it deems
necessary.    Pledges in the form of articles like share certificates, land title deeds, vehicle log books and insurance policy up to surrender value may be accepted as security.

•   Confirmation as regards the validity of the articles so pledged has to be obtained from the issuing authority before such documents can be accepted as security for a loan.

•   All expenses related to valuation and charging of security shall be met by the applicant.

Procedure for Recovery of Defaulted Loans

In case a loan is not repaid for a month, the society shall inform the borrower/loanee     immediately in writing with copy to each of the guarantors. if no repayment is effected
during the second month, the guarantors shall be informed of this fact and notified that
they will be called upon to honour their obligations if no repayments are effected at the end of three months.  However, the society will still maintain efforts to recover the defaulted loan from the loanee.

Withdrawal from Membership

•   Where a member wishes to withdraw from the society’s membership he may be required to give the society at least 60 (sixty) days written notice of his intention to withdraw.

•   No member shall be allowed to withdraw from the society membership unless the member’s loan is repaid in full or the loan balance can be fully offset by the member’s savings. Such member will also have to satisfy that all loans guaranteed have been paid in full or the balance does not exceed the savings of the members whose loans were guaranteed.

•   A member who voluntarily withdraws from the society membership and wishes to rejoin later will be required to pay a rejoining fee of 2,000.00 to the society.

Amendment

•   the loan policy may be amended by the management committee from time to time, provided that such amendments are communicated to all members before taking effect.

•   Any difficulties encountered in the implementation of this loan policy shall be referred to the management committee for clarification or interpretation.

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

THE ROLE AND RESPONSIBILITIES OF SUPERVISORY COMMITTEE

MANAGEMENT COMMITTEE

o   They make decisions regarding the day- to-day management for operations of the society.

o   They arc directly responsible to the share- holders for giving accurate and dependable accounting information in investment decisions without a doubt of its reliability or validity,

o   Management committees are responsible to the general public, government etc on behalf of the shareholders.

o    In other words, they are the responsibilities of the society to the outside world.

SUPERVISORY COMMITTEE/INTERNAL AUDIT 

·         The supervisory committees are the watchdog of the members on the work performance of the management committee.

·                  The committee is answerable to the members.

·                  Their main duty is to ensure that the society is run according to the directions given at the AGM/SGM and in accordance with the co-operative laws and regulations in force. The supervisory committee is not an alternative management body but complimentary to the functions of the management committee.

·                  It serves the same purpose as an internal Audit department in an organization.

WORK PROGRAMME

The supervisory committees meet at least once every quarter to review the activities of the preceding quarter and then report its findings to the management committee. The report covers administrative and financial performance.

   The quarters are:

Jan   -    March        -      1st   Quarter.

April -   June           -      2nd Quarter.

July   - September  -     3rd  Quarter

Oct   -    Dec                -  4th  Quarter

DUTIES

Their duties include checking if the acquisition of assets, recruitment of the staff, record keeping and the general management of the society is done in a manner that would best serve the interest of the members and no loss accrues that could be avoided.

SPECIFIC DUTIES;

o   Periodically evaluate the programme of the society as to their cost effectiveness, Impact on the members’  income, compliance with the AGM/SGM directions and Cooperative Societies Act,  Rules and the By-Laws of  the society.

o   Check the effectiveness of the management committee, e.g. recording and filling of the minutes of AGM/SGM and committee's.

o    Compliance with the cooperative principles.

o    Regularity of committee and general meetings.

o   Check whether cash is regularly verified and bank reconciliations done.

o   Regularly check the performance ratios of the society, e.g. cash ratios, solvency ratios.

o   Check whether members' personal Accounts (shares) arc regularly and accurately updated.

o   Verify whether investments are properly accounted for e.g. Share Certificates are securely kept.

o   Ensure that adequate accounting policies are in place and are working.

o   Check on the presence and the effectiveness of the internal controls in the society.

o   Take note and inform the Management Committee of complaints from the

        members which might be channeled through the committee.

o   Ensure and verify that theeconomic report is prepared and discussed.

o   Check whether the Management Committee is taking any remedial action on any shortcomings revealed.

o   Liaise with the external auditor in areas that the committee would need assistance in carrying out their duties.

o   Ensure that the Management Committee adequately acts on any observations and notes raised by the external auditor.

RELATIONSHIP WITH THE MANAGEMENT COMMITTEE

The supervisory committee and the management committee play a complimentary role in the management of the society and  to ensure that harmony is maintained in between the two committees, the following is to be adhered to: -

o   Work schedules are prepared and presented to the management committee early.

o    Request documents required and working space in time and in writing.

o   Carry out the work expeditiously bearing in mind that the documents are still

o   in use.

o   Prepare written reports detailing the shortfalls noted, the progress made since the last report, and the steps that can be taken to rectify the shortfalls.

o    Always avoid confrontations

o   Never report on unverified information.

o   Report to the management Committee first.

o   Report only those areas not implemented in an AGM/SGM.

o   Do not interfere with the day to day running of the society as this is the

responsibility of the management committee of the society.

THE SUPERVISORY COMMITTEE

1. DEFINITION

Section 2 (a) of the Co-operative Society Act, No. 12 of 1997 (as amended in 2004) has the following simple definition:-

Supervisory Committee

"Supervisory Committee" means an oversight committee elected at a General Meeting.

2. ESTABLISHMENT

The Supervisory Committee is established under Rule 28 of the Co-operative Society Rules (Legal Notice No. 123 of 2004) which states as follows:-

28. (1) Every society shall have a supervisory committee consisting of three members
each elected at a general meeting for a period of three years and one member of the
supervisory committee shall retire annually.
(2) Notwithstanding the provision of sub-rule (1), any member of the supervisory
committee may be removed by a resolution of a general meeting.
(3) The duties of the supervisory committee shall include—
(a) verification of all transactions of the society;
(b) writing periodic reports of its findings to be tabled at management
committee meetings;
(c) submission of its reports to the Commissioner;
(d) presenting its reports to the general meeting.

(4) Notwithstanding the provisions of sub-rule (3), the supervisory committee shall not perform the duties or exercise any of the powers of the Committee of the society.

3. ELECTION 

The election of the Supervisory Committee is conducted in accordance with the Rule 28 and relevant By-laws of the society.

4. QUALITIES OF THE SUPERVISORY COMMITTEE

a) The members of the Supervisory Committee shall meet the same qualifications as those of the members of the Management Committee

b) In addition at least one member of the member of the committee shall have basic bookkeeping, accounting, auditing or financial management knowledge. Where no such person is elected, those elected may be taken for basic accounting training.

5. POSITION OF THE SUPERVISORY COMMITTEE

a) The Committee is elected directly by the members at a General Meeting. It occupies the same position as the Management Committee in the organization structure of the society.

b) The Committee is independent

c) The Committee is not a Sub-Committee of the Management Committee

6. ROLE OF THE SUPERVISORY COMMITTEE

The Supervisory Committee is the Internal Audit Committee of the Society. Its role is complimentary to that of the Management Committee which is mainly to ensure that there is an effective control system in the Society.

The main objective is that of assisting the Management Committee in ensuring that adequate checks and balances are put in place that the principles of transparency and accountability are observed for the good of the Society and its members. There should be no antagonizing between the two committees.

7. DUTIES OF THE SUPERVISORY COMMITTEE

The main duties of the Supervisory Committee are provided for under respective By-laws of each society and include the following:-

1. Making an investigation into the affairs of the Society at least once every quarter and presenting a written report to the Management Committee and the Commissioner.
2. Carrying out an Audit of the Society at least once every quarter and presenting a report as above.
3. From time to time and at least every years cause the Pass Book or Payslips or Statements of accounts of all members to be compared with the Members' Personal Accounts maintained by the Society.
4. Make annual reports to the Annual General Meeting with copies to the Management Committee and the Commissioner.
5. In order to accomplish the main duties above, the Supervisory Committee is required to undertake the following specific tasks among others:-

• Scrutiny of minutes of all committees and General Meetings.
• Scrutiny of members' cheques/loan registers.
• Verify receipts and disbursement of society funds.
• Verify the assets of the society against the assets register from time to time.
• Scrutinize the acquisition and disposal of goods and services and adherence to the procurement and disposal regulations.
• Verify deductions through the check off system, cash and bank standing order remittances.
• Confirm cash regularly and reconcile it with the records.
• Check out bank accounts monthly and their reconciliation.
• Check delinquent loans among the Committee, staff and members and ensure appropriate action is taken.
• Verify society investments.
• Analyze expenses of the society.
• Check loan applications and note anomalies.
• Check balance sheets and income and expenditure statements to ensure their accuracy.
• Ensure the books of the society are kept in accordance with the internationally accepted standards.
• Make regular review of budgets against actual performance.
• Attend to member' complaints.
• Assist the management committee in seeking to problems facing the society.
• Generally ensure that the society is operating according to the law and working towards the achievement of the stated goals and objectives.
• Carry out any other duties as may be prescribed in the Act and the Rules.

8. MEETINGS OF THE SUPERVISORY COMMITTEE

1. Routine meetings of the Supervisory Committee shall be held as provided for in the By-Laws and approved budget of the society.
2. The Supervisory Committee should hold at least one quarterly joint meeting with the Management Committee to discuss their reports.
3. Minutes of all Supervisory Committee meetings should be recorded and maintained as permanent records of the society.
4. The Internal Auditor of the society may participate in the deliberations of the Supervisory Committee as an ex-official member. Where the society has no internal auditor, the accountant/bookkeeper/manager may participate in the same capacity.
5. The manager or Management Committee of the society shall at all times make available to the Supervisory Committee all books of account and all other records of the society for inspection.
6. Joint meetings are normally chaired by the chairman of the Management Committee.

9. ALLOWANCES

The Supervisory Committee should draw sitting and any other allowances as provided for in the budget approved by the General Meeting.