Adherence to financial management policies key to cooperative growth

By Bob Aston

Financial management process and policy adherence is key to growth of Laikipia Produce and Marketing Cooperative Society. Mr. Joseph Chege, Ol-Jorok Sub County Cooperative officer said that the policy serves to establish uniformity in the manner in which sections submit accounts, thereby facilitating consolidation.

He was speaking during a two days Financial and Procurement Policy Workshop organized by Arid Lands Information Network (ALIN) for the cooperative committee members at Ng’arua Maarifa Centre, Laikipia West Sub County on September 10-11, 2015.

Mr. Chege taking the committee through financial management policy

He said that the financial policies adopted by the society should conform, where applicable, to International Financial Reporting Standards and the provisions of the Cooperative Society’s Act, No. 12 of 1997 as Amended, in 2004, and its regulations.

“The accounting procedures used by the society in accounting for assets, liabilities, revenues, expenditure, fund balances and year-end financial statements must follow internationally accepted accounting principles,” said Mr. Chege.

He said that financial policy provides a reference for staff in their daily activities as well as a reference for management and auditors. To operate effectively, he said the cooperative must maintain a liquidity position consistent with normal operating requirements.

He urged the cooperative to ensure that before any payment is made the expenditure is within budget, the activities for which the funds are required has been carried out, the payment request is properly supported and there are sufficient funds available.

He noted that incurred expenditure should further the aims of approved work plan and should be within an approved budget. It is also not advisable to re-allocate cost over runs on individual budget lines to under spent budget lines.

“It is important to minimize cash payments and a third party voucher should be obtained to support all payments to retailers,” said Mr. Chege.

Some committee members during discussions

He said the ownership of all fixed assets remains with the society and must be inventoried and controlled individually by tagging and maintaining detailed records, combined with a periodic physical check. All acquisitions of fixed assets should also receive budget clearance.

He noted that there is no need of a budget clearance for the purchase of low value supplies and consumables or for the hiring of casual labour provided such expenses have received budget approval in principle.

“Periodic monitoring of budgets is important. Budgets should contain a summarized comparison of budgeted and actual expenditure. Changes in the system, procedures, controls, or responsibilities should also be set out in writing,” said Mr. Chege.

The Laikipia Produce and Marketing cooperative society emerged from the work undertaken by ALIN through Ng’arua Maarifa Centre with the support of the Ford Foundation’s Expanding Livelihoods for Poor Households Initiative (ELOPHI).

ALIN has been offering various capacity building trainings to the cooperative members since its formation in 2013. This has enabled the cooperative to be among the leading cereal cooperatives in Laikipia West Sub County.