Cooperative Capitalization and Accounting Quiz

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Questions and Answers

Where can cooperatives derive their capital from according to the given text?

Member’s share capital, loans, subsidies, revolving capital, and individual donations

Member’s share capital, loans, subsidies, and donations

Member’s share capital, loans, revolving capital, and subsidies, donations, legacies, grants, aids (correct)

Member’s share capital, loans, revolving capital, and subsidies

What is the limitation on share capital holdings by a member of a primary cooperative?

No more than 5%

No more than 15%

No more than 20%

No more than 10% (correct)

Which of the following is NOT a source from which cooperatives can derive their capital?

Loans and barrowings

Dividends from profits (correct)

Subsidies

Interest on share capital

What does the term 'revolving capital' consist of?

Deferred payment of patronage refunds or interest on share capital Signup and view all the answers

Which statement is true about the treatment of capital derived from subsidies and donations?

It forms part of the donated capital or fund of the cooperative Signup and view all the answers

What is the basis for governing the capitalization of cooperatives and their accounting procedures?

Provisions of this Code and the regulations to be issued Signup and view all the answers

What happens to the shares of a deceased member of a cooperative?

The shares will be transferred to the heir, provided the total shareholding does not exceed 10% of the share capital. Signup and view all the answers

Who is responsible for conducting the financial audit of cooperatives?

An independent external auditor Signup and view all the answers

What qualifications must an external auditor have to conduct the financial audit of a cooperative?

Independence from the cooperative and membership in PICPA Signup and view all the answers

Who is responsible for conducting the social audit of cooperatives?

An independent social auditor accredited by the Authority Signup and view all the answers

What happens if the total shareholding of a deceased member's heir exceeds 10% of the share capital?

The excess shares will revert to the cooperative upon payment to the heir of the value of such shares. Signup and view all the answers

What is required for an external auditor to conduct the financial audit of a cooperative?

Independence from the cooperative and membership in PICPA Signup and view all the answers

What is the role of the board of directors in relation to audit reports?

Presenting the complete audit report to the general assembly Signup and view all the answers

Who is responsible for accrediting social auditors of cooperatives?

The Authority Signup and view all the answers

What happens if a deceased member's heir fails to qualify as a member?

The share or shares excess will revert to the cooperative upon payment to the heir of the value of such shares. Signup and view all the answers

Study Notes

Sources of Capital for Cooperatives

Cooperatives can derive their capital from members' shares, loans, subsidies, and donations.

A member of a primary cooperative is limited to holding no more than 10% of the share capital.

Sources of Capital

Cooperatives cannot derive capital from public issue of shares or stock exchanges.

Revolving Capital

Revolving capital consists of shares, deposits, and loans.

Treatment of Capital from Subsidies and Donations

Capital derived from subsidies and donations is treated as non-distributable reserve and cannot be distributed among members.

Capitalization of Cooperatives

The basis for governing the capitalization of cooperatives and their accounting procedures is the Cooperative Societies Act.

Shares of a Deceased Member

Upon the death of a member, their shares are transferred to their heir, who must then qualify as a member.

Financial Audit of Cooperatives

The external auditor is responsible for conducting the financial audit of cooperatives.

Qualifications for External Auditors

External auditors must be certified public accountants (CPAs) or registered with the relevant professional bodies.

The social audit of cooperatives is conducted by the social auditor.

Shareholding of a Deceased Member's Heir

If the total shareholding of a deceased member's heir exceeds 10% of the share capital, the excess shares must be sold.

Requirements for External Auditors

External auditors must be certified and have no conflict of interest to conduct the financial audit of a cooperative.

Role of the Board of Directors in Audit Reports

The board of directors is responsible for ensuring the reliability of audit reports and implementing audit recommendations.

Social auditors of cooperatives are accredited by the relevant national cooperative association.

Failure to Qualify as a Member

If a deceased member's heir fails to qualify as a member, their shares are forfeited.

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Description

Test your knowledge of cooperative capitalization and accounting procedures governed by the provisions of the Code. Explore the sources from which cooperatives may derive their capital.