Cooperative societies are autonomous associations of people that come together democratically to cater for their needs and interests. They are ways of conducting forms of businesses other than companies and they must register with the registrar of cooperatives after fulfilling all the requirements.
These organizations exist in different forms or type; There are consumer, producer, finance, savings, housing, Farming, traders and multipurpose cooperative societies most of which are formed on the basis of promoting members’ interest.
Cooperatives stabilize communities because they are community-based anchors; they distribute, recycle, and multiply local expertise and capital within a community. They pool limited resources to achieve critical mass and progress. They also enable their owners to generate income, jobs and accumulate assets. Cooperatives provide affordable, quality goods and services; and also develop human and social capital, as well as economic independence.
Since cooperative businesses are community-owned private enterprises they combine consumers with owners, and buyers with sellers in a democratic governance structure. Cooperatives solve the general economic problem of under or overproduction through regulation, business uncertainty and excessive costs.
Cooperative societies when properly managed apart from raising members’ welfare, increase savings they are the most profitable organizations because it is simple for them to mobilize funds and finances to run their operations and fulfill obligations and they are contributors to many economic activities.
They are useful for the economic and social structure transformation of a country since they use local initiative and local economic strength. Cooperatives are also well equipped to combine the advantage of local activities with national and regional networking.
Though there have been many benefits and gains from cooperatives there are also many to be achieved depending on the nature of the cooperative as they vary across countries.
Fraud in cooperatives proves that there are difficulties involved in managing them because managing cooperatives is challenging and difficult. It not only involve managing resources and business operations as in other businesses but also dealing with problems that emanate from cooperative’s distinctive characteristics because the cooperative members are both owners and patrons.
Therefore special relationship and problems arise concerning members and member of director roles and responsibilities. Internal auditors in a cooperative are also part of the managerial tools therefore there is a need for professional independent auditors.
Further, also there is lack of professional management in these organizations, this leads to resource and funds being misallocated to other instances for which the organization were not formed.
If cooperatives are to stand the test of time and benefit members more, there are standards and changes that need to be implemented within their day-to-day running of these organizations.
Management of cooperatives like as in other business must be concerned with reports if it is a public cooperative society. If there is to be public understanding and acceptance of the cooperative the public must have information on its objectives, what to be achieved, reporting systems, benefits and limitations.
Independent auditors must periodically verify the accuracy of the cooperative business records with support documents and evidence since most of these organizations operate large funds. This is especially important for directors in performing their controlling and planning functions. It helps the board of directors determine the extent to which management has followed the financial policies of the cooperative.
Since the business of cooperative quite differs from those of stock companies, thorough checks and audits has to be undertaken to see to it that by-laws, laws acts and rules have not been infringed on. Auditors must ascertain the correctness of all accounts (accounts receivables and payables) and that loans are made fairly and to proper periods. Also to be audited are the papers and securities of cooperative societies. Every officer of the society shall furnish such information in regard to the transactions and working of the organization as the person making such control may require.
Relevant advisory services and assistance in arranging finances will help the cooperatives.
Like other profit-making organizations, cooperative societies that make profits should have financial reports. They should make financial statements (the balance sheet, income statement, the statement of cash flow and notes).
Training and other educational Programs in place may favor and enlighten cooperative members’ higher awareness of government programs and how to access such programs. The implication is that cooperative societies with more enlightened members stand better chances of accessing such programs and be aware of their rights.
If cooperative societies are to meet their full potential in the future, however, there is need for transformation of most of the cooperatives laws and policies. The task being to focus back on the key cooperative principle that coops are owned and controlled by their own members. The purpose of coops is, above all, to fulfill their economic, social needs, empower members in their broad-based economic progress and development.