DFID Accounting Policies & Procedures Manual EDITED Fair Dra

M M MO O OD D DE E EL L L A A AC C CC C CO O OU U UN N NT T TI I IN N NG G G

P P PO O OL L LI I IC C CI I IE E ES S S A A AN N ND D D

P P PR R RO O OC C CE E ED D DU U UR R RE E ES S S M M MA A AN N NU U UA A AL L L

F F FO O OR R R S S SA A AC C CC C CO O Os s s I I IN N N U U UG G GA A AN N ND D DA A A

Model Financial and Accounting Policies and Procedures Manual For SACCOs in Uganda

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Section CHAPTER Page C CH HA AP PT TE ER R O ON NE E: : I IN NT TR RO OD DU UC CT TI IO ON N

1.1 Foreword 8 1.2 Background of SACCOs 8 1.3 Objectives of the Accounting Manual 8 1.4 Finance Department, giving its set-up and functions 8 1.5 Summary of Policy Statements 10 1.6 Duties of the Accounting and Finance Department 11

C CH HA AP PT TE ER R T TW WO O: : B BO OO OK KS S O OF F A AC CC CO OU UN NT T A AN ND D F FI IN NA AN NC CI IA AL L R RE EP PO OR RT TI IN NG G

2.1 Policy statements on Books of Account 15 2.2 Chart of Accounts 15 2.3 Proper Books of Account 17 2.4 The Trial Balance 24 2.5 Comparative information 24 2.6 Related Parties 24 2.7 Income Statement 25 2.8 Balance Sheet 26 2.9 Cash flow Statement 26 2.10 Statement of changes in equity 27 2.11 Notes to the Financial Statements 27

C CH HA AP PT TE ER R T TH HR RE EE E: : B BU UD DG GE ET TI IN NG G

3.1 Policy Statement 28 3.2 The Budgeting Process 28 3.3 Budgetary Performance and Control 29

C CH HA AP PT TE ER R F FO OU UR R: : C CA AS SH H M MA AN NA AG GE EM ME EN NT T

4.1 Policy Statement 30 4.2 Cashiering 30 4.3 Safe/Vault Cash Management 33


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4.4 Transferring Cash 34

Section CHAPTER Page

C CH HA AP PT TE ER R F FI IV VE E: : B BA AN NK K P PR RO OC CE ED DU UR RE ES S

5.1 Policy Statement 35 5.2 Opening of Bank Accounts 35 5.3 Bank Signatories 35 5.4 Cheque book maintenance and Cheque Payments 35 5.5 Cash/Cheque deposits and Cheque clearance 36 5.6 Cash Withdrawals from the Bank 39 5.7 Bank Reconciliation 39 5.8 Presentation in the Financial Statements 40

C CH HA AP PT TE ER R S SI IX X: : L LO OA AN NS S R RE EC CE EI IV VA AB BL LE E

6.1 Policy Statement 41 6.2 Types of Loans 41 6.3 Loan Disbursement 41 6.4 Loan Repayments 42 6.5 Recording 42 6.6 Loan loss Provisioning 43

C CH HA AP PT TE ER R S SE EV VE EN N: : A AC CC CO OU UN NT TS S R RE EC CE EI IV VA AB BL LE E

7.1 Policy Statement 48 7.2 Interest Receivable on Loans 48 7.3 Interest Receivable on Investments 49 7.4 Prepayments 49 7.5 Staff loans and Advances 49 7.6 Sundry Debtors 51

C CH HA AP PT TE ER R E EI IG GH HT T: : I IN NV VE EN NT TO OR RY Y

8.1 Management Policies 52 8.2 Procurement 53 8.3 Obsolete stationery 53


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C CH HA AP PT TE ER R N NI IN NE E: : P PR RO OP PE ER RT TI IE ES S, , P PL LA AN NT T A AN ND D E EQ QU UI IP PM ME EN NT T

9.1 Management Policies 54 9.2 Physical Control 55 9.3 Revaluation 57

C CH HA AP PT TE ER R T TE EN N: : A AC CC CO OU UN NT TS S P PA AY YA AB BL LE E

10.1 Members' Savings 59 10.2 Loans and Balances due to Banks 64 10.3 Other Borrowed Funds 64 10.4 Capital Grants 65 10.5 Interest Payable 66 10.6 Payroll Liabilities 66 10.7 Accruals 68 10.8 Other Accounts Payable 68 10.9 Corporation Tax 68

C CH HA AP PT TE ER R E EL LE EV VE EN N: : C CA AP PI IT TA AL L A AN ND D R RE ES SE ER RV VE ES S 11.1 Members' Contributions 70 11.2 Handling Members' Applications and Payment for Share Capital 70 11.3 Equity Grants Applied 71 11.4 Reserves 73

C CH HA AP PT TE ER R T TW WE EL LV VE E: : I IN NC CO OM ME E 12.1 Management Policies 74 12.2 Types of Revenue 74 12.3 Interest Income 75 12.4 Operating Grant Income 75 12.5 Other Income 76 12.6 Disclosure in the Financial Statements 76

C CH HA AP PT TE ER R T TH HI IR RT TE EE EN N: : E EX XP PE EN ND DI IT TU UR RE E 13.1 Management Policies 77


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13.2 Types of Expenses at SACCOs 78 13.3 Accounting Procedure 79 13.4 Payroll Costs 82


C CH HA AP PT TE ER R F FO OU UR RT TE EE EN N: : A AU UD DI IT T A AN ND D S SU UP PE ER RV VI IS SI IO ON N

14.1 Management Policy 86 14.2 Internal Audit and Supervision 86 14.3 Appointment of External Auditors 86 14.4 Suitability of External Auditors 86 14.5 The Audit Process 87 14.7 Distribution of Audited Accounts 88 14.8 Removal of External Auditors 88

A AP PP PE EN ND DI IC CE ES S: :

• Committee’s Statement of Responsibility • Model Chart of Accounts • Sample Accounting Books, Forms and Documents • Worked-out Examples


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ACRONYMS

CGAP - The Consultative Group to Assist the Poor AGA - Annual General Assembly GAAPs - Generally Accepted Accounting Principles AMFIU - Association of Micro Finance Institutions in Uganda FSDU - Financial Sector Deepening Uganda Project GL - General Ledger LL - Loans Ledger SL - Savings Ledger ITA - Income Tax Act UCSCU - Uganda Cooperative Savings and Credit Union Ltd TB - Trial Balance UCA - Uganda Cooperative Alliance LPO - Local Purchasing Order MCAP - Matching Grant Capacity Building Program NSSF - National Social Security Fund PAYE - Pay As You Earn PSDPC - Private Sector Development Promotion Centre PMT - Performance Monitoring Tool SACCO - Savings and Credit Cooperative Society Rural SPEED - Rural Savings Promotion and Enhancement of Enterprise Development URA - Uganda Revenue Authority


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CHAPTER ONE: INTRODUCTION

1.1 INTRODUCTION

An Accounting Manual is a set of Accounting Policies and Procedures set up by Management as a tool to foster an organized Internal Control Environment. This Manual was Funded by Financial Sector Deepening Program Uganda (FSDU) that contracted Kisaka & Company Certified Public Accountants and Management Consultants.

This Manual gives applicable Accounting and financial Policies that management uses as a guiding tool in making financial and accounting decisions. It also contains step by step procedures derived from the policies above to assist management in capturing, analyzing, recording, summarizing and reporting accurate, reliable, relevant and timely financial information. The Manual also describes the effective, economical and efficient ways of financial management, as well as the responsibilities of planning, reviewing, monitoring, supervision and control of financial resources.

It takes care of all compliance issues with Uganda Revenue Authority (URA), the Cooperative Societies Statute 1991, the Cooperative Regulations 1992, the Consultative Group to Assist the Poor (CGAP) and applicable Generally Accepted Accounting Principles (GAAPs), and addresses the General framework within which individual Savings and Credit Cooperative Society (SACCO) Bye Laws are formulated.

This Manual is a model or exemplary/illustrative that has not been written for a specific SACCO but in view of a number of industry players. It has been written in consultation with Post Bank Uganda (PBU), Uganda Cooperative Alliance (UCA), Uganda Cooperative Savings and Credit Union Limited (UCSCU), Rural SPEED, GTZ, and the Ministry of Finance. It can therefore be used as a benchmark and then customized to suit particular a SACCO needs.

1.2 BACKGROUND OF SACCOs

SACCOs are one form of cooperative societies whose business is to provide financial services to its members. SACCOs are owned by their members through subscription for share capital and membership fees.

1.3 OBJECTIVES OF THE ACCOUNTING MANUAL

To define the Accounting Policies of SACCOs both in general and specific nature

To ensure that SACCOs carry out their business activities and contracts, in compliance with Ugandan law and Generally Accepted Accounting Principles

To provide a reference for staff in their day-to-day work and ensure that accounting policies are well defined and formally documented


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To ensure quality and consistency of accounting records

To act as a training manual especially for new staff recruited in the accounting function of SACCOs

As far as practicable, each Component has been written to show the Policies, Accounting, Internal Controls and Financial Reporting Disclosures

1.4 ORGANISATION STRUCTURE OF A MODEL FINANCE DEPARTMENT

a) Financial Year

Each SACCO shall decide on when its financial year ends, preferably 30 June 0r 31 December.

Finance Committee

Audit and Supervision Committee

Manager

Accountant

Accountants Assistant

Annual General Assembly

Cashier


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b) The Finance Hierarchy

The Finance Committee of the Board is charged by the Byelaws and the Cooperative Societies Statute 1991 with the overall authority to direct the affairs of a SACCO (both accounting and financial). It is required to ensure that true and accurate books, records and accounts are kept of the SACCO’s money, property, capital, reserves, liabilities, incomes and expenses. Where the SACCO has employees, the same committee may delegate to an official or employee (Manager) of the Society such powers as it deems fit.

1.5 SUMMARY OF POLICY STATEMENTS

1.5.1 Policy Statement on Compliance

SACCOs will devise all means to comply with the Cooperative Societies Statute 1992, all applicable Laws and Regulations of Uganda, the Generally Accepted Accounting Principles, the Cooperative Regulations 1992 and guidelines for financial institutions and any other applicable laws and regulations as may be communicated from time to time.

1.5.2 Policy statement on Books of Account

Proper books of Account as defined by the Laws and regulations of Uganda and the Generally Accepted Accounting Principles shall be kept at all times.

1.5.3 Policy statement on Financial Reporting

SACCO Management shall ensure that proper books of account are maintained and kept, to enable the preparation of relevant, reliable, consistent and comparable information to assist it in assessing the financial position and performance of the SACCO and to make accurate and timely economic decisions and comply with all the relevant Regulations and Guidelines.

1.5.4 Policy statement on Budgets

Management shall prepare short, medium and long term budgets using a participative bottom-up approach as a basic tool for defining a SACCO’s periodic goals and objectives and against which results will be compared to permit performance evaluations and considerations in change of strategies.

1.5.5 Other Accounting, Operational and Administrative Policies and Procedures

Operational and Administrative Policies and procedures covered in other manuals shall be complied with such other manuals include the Administration Manual, Personnel Manual, Liquidity Manual, procurement Manual, Security Manual, Credit Manual and any other manuals approved by management.


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Other Accounting Policies have been detailed-out in the respective Sections of this Manual.

1.6 DUTIES OF THE ACCOUNTING AND FINANCE DEPARTMENT

1.6.1 Duties of the Audit and Supervision Committee

a) Perform such functions as the AGA may, from time to time specify in relation to ensuring sound management of a SACCO’s business

b) Carrying out the Internal Audit Function

c) Overall supervision of the Accounting and Finance Department of a SACCO

1.6.2 Duties of the Finance Committee

a) Perform such functions as the Committee may specify in relation to establishing broad guidelines for a SACCO’s tolerance for risk and expectations from investments.

b) Review and recommendation of a SACCO’s budget for approval by the Committee /Annual General Assembly

c) Introduce measures that may serve to enhance the credibility and objectivity of financial statements and reports prepared with reference to the affairs of the SACCO.

Such measures shall include but not limited to;

Limits on loan to deposit ratio; Limits on loan to capital ratio; Limits on exposure to single or related customers; Flexible limits on the percentage reliance on a particular deposit liability

category; Limits on maximum and minimum maturities for existing categories of assets

and liabilities; Limits on the sensitivity of the net interest margin on changes in market interest

rates; Maximum percentage imbalance between rate sensitive assets and liabilities; Limits on minimum liquidity provision to be maintained to sustain operations

while longer term adjustments are made Primary sources of meeting Funds that should be quantified.

1.6.3 General Duties of the Manager


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a) General supervision of the Accountant

b) Approving transactions that are above the authority limits of the Accountant and the Cashier

c) Budgeting, budgetary controls for the operations and capital projects and budgetary performance appraisal for the SACCO.

d) Provision of inputs and participation in the preparation of a SACCO’s periodic and strategic plans.

e) Custody, management and control of assets and records thereof.

f) Management of loans, Grants and any other lending and borrowings.

g) Reporting to a SACCO’s stakeholders like UCA, UCSCU, AMFIU, shareholders, employees, management, government etc of any required accounting and financial information.

1.6.4 Duties of the Accountant (some may be delegated to the Accounts Assistant)

The overall duties shall include but limited to the following;

a) Maintenance of Proper Books of Account

To keep proper Books of Account as defined by the Laws and regulations of Uganda and the Cooperative Statute.

b) Reliable Financial Reporting

To ensure that proper books of account are maintained and kept, to enable the preparation of relevant, reliable, consistent and comparable information to assist it in assessing the financial position and performance of the organisation and to make accurate and timely economic decisions and comply with all the relevant Regulations and Guidelines.

c) Budgetary control

To prepare short, medium and long term budgets using a participative bottom-up approach as a basic tool for defining SACCO’s periodic goals and objectives and against which results will be compared to permit performance evaluations and considerations in change of strategies.

d) To communicate between the Manager, the Staff, the auditors and other superiors of financial and operational affairs.


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e) Fixed Assets Management – To maintain a comprehensive Fixed Assets Register; Identify fixed asset needs; carry out semi-annual physical asset counts of all assets.

f) Planning – design monthly activity plans, perform monthly budget variance reviews and carry out operational and strategic plans.

g) Loan Portfolio Management – Ensure that all loan disbursements are properly documented, posted, monitored in terms of quality and accuracy and correctly reported on a daily basis.

h) Savings Portfolio Management – Manage all the documentation, recording, and verification and follow up of all accounts.

i) Procurent- Ensure that SACCOs gets value for money and keeps proper procurement records.

j) Security and internal controls- Jealously guard all SACCO records and software from unauthorized people by employing appropriate control. Such internal controls will include, reviewing and validating all batch postings, reports, access controls etc.

k) General supervision of the Cashier

l) Any other duties as may be determined from time to time.

1.6.5 Duties of the Cashier (Teller)

The overall duties shall include but limited to receiving and paying-out cash and preparing the relevant documents. Such duties include.

a) Ensuring the safety of the Cash, Cheques, Books, vouchers, stamps and all assets that are still in his/her control

b) Ensuring adequate Cash levels in the Till c) Receiving all SACCO Cash and cheques irrespective of their sources. d) Issuing receipts in respect of the Cash and cheques received to the customers,

members and to fellow staff in case of refunds or other payments e) Ensuring that the physical Cash or value of the cheques received are in agreement

with the documents to support such transactions f) Ensuring that the physical Cash or cheques received are genuine g) Updating client and members pass-books with all Cash transactions h) Maintaining orderliness in the Till. The till must be free of unnecessary things i) Paying authorized persons and ensuring that the recipients acknowledge receipt of

the payment j) Ensuring that payments are made to the right people by verifying their identities and

mandate


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k) Promptly informing/consulting the immediate supervisor on any extra ordinary events or activities and not to take any decisions on such matters without their consent

l) Accounting for all of the till transactions by preparing the Till Sheet m) Any other duties assigned by the supervisor

C CH HA AP PT TE ER R T TW WO O: : B BO OO OK KS S O OF F A AC CC CO OU UN NT T A AN ND D F FI IN NA AN NC CI IA AL L R RE EP PO OR RT TS S

2.1 POLICY STATEMENTS ON BOOKS OF ACCOUNT

2.1.1 SACCO books of Account shall be kept for a minimum of 10 years

2.1.2 Financial reports namely; Balance sheet, Income Statement, Cash Flow Statement, Statement of Changes in Equity and Notes to the Financial Statements shall be produced annually and as and when required by Management

2.1.3 Underlying Documents

1) All transactions will conform to the internal control objectives.

2) All transaction will be supported by appropriate vouchers and other sources documents to provide an audit trail through the accounting system, eliminating redundant writing of documents wherever possible that identify the business reason for the transaction, who originated the transaction, who authorized the transaction, who verified the transaction, and archived in such a manner as they are manageably retrieved.

3) The Accountant is responsible for the correctness and reliability of all transactions.

4) Transaction authorization limits will be set by the Audit and Supervision Committee and advised to individuals charged with this authority in writing. “Limits” refers not only to amounts, but also to the types of transactions individuals may exercise that authority on.

5) All transactions will be recorded at the time they occur, or batched for end of day processing. In any event, the day’s activities will be posted on the day they occur, and will be checked for authorization and reconciled to authorized amounts.

The objectives of the above policy will be to show a true and fair view of a SACCO’s state of affairs and to explain its transactions and financial position to enable the stakeholders to determine whether the SACCO is operating in line with its set objectives and in compliance with the relevant laws and guidelines.

2.2 THE CHART OF ACCOUNTS


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A Chart of Accounts is the coding elements used to classify, record, budget and report financial transactions. Every transaction must be properly coded to be a valid posting to a ledger.

A SACCO’s Chart of Accounts should ensure the liquidity reporting sequence to govern the structure of the general ledger as shown below. See (Appendix 2) for a detailed Chart of Accounts.

2.2.1 Basis of Formulation of the Chart of Accounts

The Chart of Accounts has been developed on the basis of three types Ledgers namely;

• General Ledger (GL) – Ledger 1 • Savings Ledger (SL) – Ledger 2 • Loans Ledger (LL) – Ledger 3

2.2.2 General Structure of Account Numbers

All Account numbers shall comprise of a seven-digit number separated by dashes as follows; XX-X-XXXX. The first digit represents the type of Ledger; the next digit represents the product, the next digit (in between the dashes) represents the Account-type and the last four digits represent the specific Account Number. This is illustrated in the table below.

Ledg

er-t

ype

Prod

uct

Acc

ount

type

Spec

ific

A/C

No.

X X -X- XXXX

This manual suggests five Account-types for all the ledger-types as summarized in the table below

Account-type General Ledger Loans & Savings Ledgers -1- Assets Females -2- Liabilities Males -3- Equity Groups -4- Income Institutions -5- Expenses Others


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This structure therefore supports the tracking of both Savings and Loans according to the various products and also according to the Nature of the Account holder (Male, Female, Group, Institutions, and Others)

2.2.3 The General Ledger (GL)

General ledger shall comprise of all impersonal accounts for the SACCO and shall also contain Control accounts for the personal Ledgers and sub-ledgers.

The GL shall have five major categorizations as follows.

10-1-XXXX Assets 10-2-XXXX Liabilities 10-3-XXXX Equity 10-4-XXXX Revenue 10-5-XXXX Expenses

2.2.4 The Savings Ledger (SL)

All SL accounts shall comprise of a seven digit number separated by dashes as follows; 2X-X-XXXX.

The first digit represents the Savings Ledger (Ledger 2); the digit represents the savings product, the next digit (in between the dashes) represents the nature of the account holder and the last four digits represent the specific account number.

For example:

The structure of the Savings Account numbers may cater for up to nine Product- types and five other categorizations according to the nature of the account- holder(s). This is illustrated in the tables below

Structure of Savings Account numbers according to Product

Account No. Structure Classification 21 -X- XXXX Savings Product 1 A/C Numbers 22 -X- XXXX Savings Product 2 A/C Numbers 23 -X- XXXX Savings Product 3 A/C Numbers 24 -X- XXXX Savings Product 4 A/C Numbers 25 -X- XXXX Savings Product 5 A/C Numbers 26 -X- XXXX Savings Product 6 A/C Numbers 27 -X- XXXX Savings Product 7 A/C Numbers 28 -X- XXXX Savings Product 8 A/C Numbers 29 -X- XXXX Savings Product 9 A/C Numbers


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Structure of Savings Account numbers according to the nature of the Account-holder

Account No. Structure Classification 2X -1- XXXX Female Savers’ A/C Numbers 2X -2- XXXX Male Savers’ A/C Numbers 2X -3- XXXX Group Savers’ A/C Numbers 2X -4- XXXX Institutional Savers’ A/C Numbers 2X -5- XXXX Other Savers’ A/C Numbers

The SL shall have sub-ledgers to cater for the distribution of Savings either according to Product or according to the nature of the account-holder

There shall be Control accounts to correspond to the respective sub-ledgers so that the Trial Balance shall reflect the distribution of savings accordingly.

2.2.5 The Loans Ledger (LL)

The Account-number structure, sub-ledgers and Control-accounts for the Loan shall be similar to those explained in respect of Savings except that the Loan account numbers shall start with 3 to signify the Loans ledger (Ledger 3); in other words their general structure shall be 3X-X-XXXX.

2.3 PROPER BOOKS OF ACCOUNT

Section 21 of the Cooperative Societies Statute requires the auditor to express an opinion as to whether proper books of Account have been kept and whether or not the business administration of the Society has been conducted efficiently, in line with the corporative principles, and in accordance with the objectives and byelaws of a SACCO.

A full set of Books of Account that ought to be maintained by a SACCO will include, but not limited to the following.

Books General Ledger Savings Account Ledger (Female A/Cs) Savings Account Ledger (Male A/Cs) Loan Ledger (Female A/Cs) Loan Ledger (Male A/Cs) Dormant Savings Account Ledger Register of Members

Books Fixed Asset Register Savings Registers per Ledger


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Loan Registers per ledger Reserve Book (Cash book) Incoming Cheque Register Outgoing Cheque Register Cash count book Minute Books for each Committee and Staff meetings Correspondences files (as appropriate) Certificate of Registration Byelaws Memorandum of Association Such other books and records as the committee or registrar

may decide from time to time.

The contents and formats of these books and records are set out in the respective appendices where necessary.

2.3.1 Basis of Preparation of Books of Account

Section 12 of the Cooperative Regulations 1992, requires that a SACCO’s Books of Account shall be prepared in Compliance with GAAPs. GAAPs include:

1) Principle of regularity: Regularity can be defined as conformity to enforced rules and laws. This principle is also known as the Principle of Consistency.

2) Principle of sincerity: According to this principle, the accounting unit should reflect in good faith the reality of the SACCO’s financial status.

3) Principle of permanence of methods: This principle aims at allowing the coherence and comparison of the financial information published by the SACCO.

4) Principle of non-compensation: One should show the full details of the financial information and not seek to compensate a debt with an asset, revenue with an expense, etc.

5) Principle of prudence: This principle aims at showing reality “as is”. One should not try to make things look better or worse than they actually are. Typically, revenue should be recorded only when it is certain and a provision should be entered for an expense which is probable.

6) Principle of continuity: When stating financial information, one should assume that the business will not be interrupted. This principle is mitigating the previous one about prudence: assets do not have to be accounted at their disposable value, but it accepted that they are at historical value (See depreciation).

7) Principle of periodicity: Each accounting entry should be allocated to a given period, and split accordingly if it covers several periods. If a client pre-pays a subscription (or


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lease out, etc), the given revenue should be split to the entire time span and not counted for entirely on the date of transaction.

2.3.1 Ledgers

1) A Ledger, in the context of this manual is a collection of Ledger Cards that relate to a similar activity or aspect of accounting for example, Savings, Loans etc. Ledgers that relate to personal Accounts e.g. Savings and Loans must have a Control Account and shall be categorized into sub Ledgers.

2) SACCOs shall maintain the following ledgers namely; Savings ledger, Loan Ledger, and General Ledger (GL).

3) A General Ledger is a collection of Ledger cards that relate to impersonal Accounts e.g. Fixed Assets, Equity, Bank, Income and Expenditure etc. It also contains Control Accounts for the Savings and Loan Ledgers and its structure is governed by the Chart of Accounts.

4) Both the Savings and Loan Ledgers shall be categorized into Sub Ledgers for the different types of Accounts (Females, Males Groups and Institutions). The purpose is to facilitate the generation of qualitative information that will be used for updating the PMT.

5) A sub Ledger is a collection of personal Ledger cards that relate to a specific operational activity and arises out of the need to reclassify the main Ledger so as to generate more qualitative information

6) A Control Account is an accounting record that contains the daily totals of transactions of a particular set of Accounts; for example total savings withdrawals/deposits, total loan disbursements/repayments and so on. The source of information for updating Control Accounts is the Day Sheets1 (DOC15)

7) A Ledger Card is an accounting record that is maintained in respect of a particular Account Title. Each Account Title must have a unique Account number derived from the structure of the Chart of Accounts for example all Savings Accounts will comprise of seven digits starting with 2 and structured as 2X-X-XXXX

2.3.2 Updating Savings and Loan Ledgers (Posting the transactions)

1) This activity shall be performed by the Accountant or Accounts Assistant and will be supervised by the Manager or the most immediate supervisor. Where resources permit, the Official in charge of updating the Ledgers should be different from the Cashier so as to uphold the ‘Segregation of Duties’ Control.

1 Represents the daily Trial Balance of all Accounts that have been operated


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2) The Ledgers must be updated on daily basis so as to ensure that their balances are as current as possible

3) The process of updating the Savings and Loan Ledgers

i. The sources of information used to update the Ledgers are set out in the table below.

Information source Ledger cards that are Updated 1. Savings deposit slips 2. Savings Withdrawal Slips 3. None Cash Savings vouchers

-Saving Ledger cards

4. Loan repayment slips 5. None Cash loan vouchers 6. Disbursements vouchers

-Loan Ledger cards

ii. Prior to this, the Teller processes (see Cashiering) must be completed and the Day Sheet must have been prepared and approved

iii. The Savings Ledger cards (DOC12) should be updated before the close of each day so that they have up-to-date information at all times.

The following should be observed.

All Cash deposits must be recorded/posted in the Credit column of the Savings Ledger card while Cash withdrawals must be recorded/posted in the Debit column. The corresponding entries shall have affected Teller Cash and must not be passed again.

The double entry for none cash transactions shall be written on the face of the vouchers and must be respected while posting

All Cash deposit and withdrawal vouchers must be stamped ‘POSTED’ and initialed by the Official who posted them before they are filed or kept


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None Cash transactions must be approved by the manager before they are posted to the Ledger Cards and thereafter they should be stamped ‘POSTED’ and filed or kept.

iv. The Loan Ledger cards shall be updated after a split (principal, interest income, Interest arrears, surcharge etc) of the total amount paid by the client or transferred from the client’s savings account has been done and written on the face of the voucher preferably in red ink.

v. The split of the repayment shall be symbolized as in the table below

Item of the Split Symbol Account to credit Principal P Principal loan Current Interest I interest Income Accrued Interest AI Interest Receivable Surcharge/Penalty S Other Loans Income (as per Chart of Accounts)

2.3.3 Updating the General Ledger (Posting GL transactions)

1) This activity shall be performed by the Accountant or Accounts Assistant and will be supervised by the Manager or the most immediate supervisor.

2) The Ledger cards must be updated on daily basis so as to ensure that their balances are as current as possible

3) The process shall start by having the Day Sheet prepared by the Accountant and approved by the Manager. The preparation of the Day Sheet is as follows.

All of the day’s cash vouchers, none cash vouchers, receipts (for income and shares), and payment vouchers shall be categorized according to their respective Ledgers

Expenditure vouchers shall be categorized by Account code and recorded in the debit column of the Day Sheet

Disbursement vouchers shall be categorized by Ledger and recorded in the debit column of the Day Sheet


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4) The Accountant or designated official shall prepare and sign the Day Sheet (DOC15) by classifying and totaling all of the day’s vouchers and receipts and deriving appropriate accounting entries. A Day Sheet represents the daily Trial Balance of all Accounts that have been operated and therefore must balance.

5) The Manager shall approve the Day Sheet after checking it against underlying documents before its contents are used to update the respective GL accounts

6) The figure of the Day Sheet are then used to update the GL and afterwards both the Day Sheet and underlying documents are stamped ‘POSTED’ and filed

The sources of information used to update the Ledgers are set out in the table below.

Information source Ledgers that are Updated

1. The Day Sheet

-Income Ledger cards -Expenditure Ledger cards -Equity Accounts -Ledger Control Accounts

2. Cheque Payment vouchers 3. None Cash vouchers (bank charges) Bank Accounts

2.3.4 Balancing the Savings and Loan Ledgers

1) This activity shall be performed by the Accountant or Accounts Assistant and will be supervised by the Manager or the most immediate supervisor.

2) Balancing the Savings and Loan Ledgers shall be done regularly as management may decide.

3) The process of Balancing the Ledgers

Each Ledger must have a Control Account in the GL that shall be up-dated from the Day Sheet (DOC15)

The individual Ledger Card balances (for each sub Ledger) shall be extracted/machine-listed and the extracted totals compared with balances on the


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Control Accounts. Ideally the balance on the respective Control Accounts should agree to the total of the listing.

The Accountant or ledger keeper must ensure that all transaction vouchers have been posted to their respective Ledger Cards before balances are extracted.

When each ledger has been confirmed/balanced, the lists of balances shall be signed by the Accountant and approved by the Manager before they are filed or kept.

4) Balancing the number of personal accounts

Account-opening and Closing Registers (BK1) shall be maintained with respect to each sub ledger and their records shall be summarized on a monthly basis so as to provide accurate information on the number of Accounts per category as at the close of every month. The details are in the respective Chapters of this manual.

The total number of accounts in a particular sub ledger listing of monthly balances must balance with the respective Account-opening and Closing Register.

Where the number of accounts is less than the number in the Opening and Closing Accounts Register, check for the opened accounts entered twice and closed accounts entered twice by checking the entries in the register

5) Dormant Savings Accounts

A savings account shall be declared dormant if it does not transact in six consecutive months

A Dormant Account Register (shall have a similar lay-out as the Account Opening Register) shall be maintained

A listing of dormant savings accounts with their respective balances shall be extracted from the sub ledgers in the process of balancing ledgers and the ledger cards shall be relocated to the Dormant Accounts Ledger. The following entries shall be passed using the total of the listing:

A/C code Account Name Debit Credit Shs Shs

Saving (According to Sub-ledger) X Dormant Savings Accounts X

Narration: Being extraction of dormant accounts from …… (Sub-Ledger) for the month of ………

Movements from the Dormant Accounts for reactivation shall always be recorded in the Dormant Accounts register and shall be authorized by the Manager. The


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ledger cards shall be replaced into the respective Sub Ledger and the following entries shall be passed for every activated account:


Dormant Savings Accounts X Saving (According to Sub-ledger) X

Narration: Being Activation of ….. (Member’s name)’s dormant accounts

The records of the dormant account register shall be summarized on a monthly basis so as to provide accurate information on the number of dormant accounts as at the close of every month.

2.4 TRIAL BALANCE

1) A Trial Balance (TB) is a listing of all GL balances as at a certain date presented in four columns; the first column to the left represents the Account code, the second represents the Account Title, the third takes on the debit balances and the fourth takes on the Credit Balances.

2) A TB shall be produced and signed by the Accountant on a monthly basis after all the ledgers have been balanced and shall be and approved by the manager. A balanced TB shall prove that double-entry was observed while posting transactions.

3) The process of extracting the TB

i. The Ledgers and sub ledgers shall first be reconciled with their respective control accounts (See 2.3.3 iii)), and all the GL ledger cards updated.

ii. The individual Ledger Card balances (for each sub Ledger) shall be extracted/machine-listed and then fed into the format of the TB described in sub- Section i) of this Section. The contents shall be chronologically arranged according to the chart of Accounts.

iii. The columns shall be totalled and ideally total debits must be equal to total credits

2.5 COMPARATIVE INFORMATION

Comparative information shall be disclosed in respect of a previous period for all numerical information in the financial statements. Comparative information shall be included in narrative


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and descriptive information when it is relevant to the understanding of the current period’s information.

2.6 RELATED PARTIES

2.6.1 Definition of a Related Party

A Party is related to an entity if it has the capacity to exercise significant financial or operational control e.g. subsidiaries, joint ventures, jointly controlled entities, members of the key management personnel of the entity or its parent, close members (Partners, Children or Parents) of other related parties, Post employment benefit plans for the benefit of employees.

2.6.2 Definition of a Related Party Transaction

A related party transaction is a transfer of resources, services or obligations between related parties, regardless of whether a price is charged.

2.6.3 Related Party Disclosures

If there have been transactions between related parties and a SACCO, the SACCO shall disclose the nature of the related party relationship as well as information about the transactions and outstanding balances necessary for an understanding of the potential effect of the relationship on the financial statements. At a minimum, disclosures shall include:

a) The amount of the transactions

b) The amount of outstanding balances and;

Their terms and conditions, including whether they are secured, and the nature of the consideration to be provided in settlement; and

Details of any guarantees given or received

c) Provisions for doubtful debts related to the amount of outstanding balances, and;

d) The expense recognized during the period in respect of bad or doubtful debts due from related parties.

2.7 INCOME STATEMENT

SACCOs shall present income statements which group income and expenses by nature and disclose the amounts of the principal types of income and expenses.


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Disclosures

The disclosures in the Income Statement or the Notes to the Financial Statements should include, but are not limited to, the following items of income and expenses.

Interest and similar income Interest expense and similar charges Fee and commission expense Gains less losses arising from investment securities Other operating income Losses on loans and advances General administrative expenses; and Other operating expenses

2.8 BALANCE SHEET

SACCOs shall present balance sheets that group assets and liabilities by nature and list them in an order that reflects their relative liquidity and demandability. It will show the following:

Disclosures

The disclosures in the balance sheet or the notes to the financial statements should include, but are not limited to, the following assets and liabilities.

Assets

Cash and balances with the banks Government and other securities held for dealing purposes Placements with, and loans and advances to, other SACCOs/ Banks Loans and advances to customers and Investment securities.

Liabilities

Deposits from other SACCOs/ banks Other money market deposits Amounts owed to other depositors Other borrowed Funds. Members’ deposits


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Equity

Share Capital Retained earnings Share Transfer Fund (Duty to set up this Fund is imposed on the SACCOs by Section 43

of the Regulations) A Reserve Fund into which 10% of the annual net surplus must be put. (Duty to set up this

Fund is imposed on the SACCOs by Section 34 of the Regulations)

2.9 CASH FLOW STATEMENTS

1) Cash is the life-blood of SACCOs’ business. Therefore, information on its cash flows is vital for its proper financial management.

2) SACCOs will provide information on the historical changes in cash and cash equivalents. This shall be done by way of a cash flow statement, which classifies cash flows during the period into operating, investing and financing activities. These are defined as follows.

Operating activities are the principal revenue producing activities of SACCOS.

Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.

Financing activities are activities that result in changes in the size and composition of SACCOs' share capital and borrowings.

Cash equivalents are short-term and liquid investments that are readily convertible to cash.

2 2. .1 10 0 STATEMENT OF CHANGES IN EQUITY

1) A separate component of SACCOs’ financial statements, called a statement of changes in equity shall be presented showing:

i. The net profit or loss for the period

ii. Each item of income and expense, gain or loss which, as required by other standards, is recognized directly in equity, and the total of these items; and

iii. The cumulative effect of changes in accounting policy and the correction of Fundamental errors dealt with under the Benchmark treatments.


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2) The accounting policies section of the notes to the Financial Statements shall describe the following:

i. The measurement basis (or bases) used in preparing the Financial Statements; and

ii. Each specific accounting policy that is necessary for a proper understanding of the Financial Statements

2 2. .1 11 1 NOTES TO THE FINANCIAL STATEMENTS

1) The notes to the Financial Statements shall:

o Present information about the basis of preparation of the Financial Statements and the specific accounting policies selected and applied for significant transactions and events

o Disclose the information required by GAAPs that is not presented elsewhere in the Financial Statements, and

o Provide additional qualitative information which is not presented on the face of the financial statements but that is necessary for a fair presentation.

2) Notes to the Financial Statements shall be presented in a systematic manner. Each material item on the face of the balance sheet, Income Statement and cash flow statement shall be cross-referenced to any related information in the notes.

C CH HA AP PT TE ER R T TH HR RE EE E - - B BU UD DG GE ET TI IN NG G

3.1 POLICY STATEMENTS

Budgets are the basic tool used to define SACCO goal and objectives for the current year of a SACCO’s strategic plan, and against which results are compared to permit changes in strategy to improve performance. Each unit and/or activity can be incorporated in the budget to ensure results of operations of all components of a SACCO’s operation can be measured and evaluated. Each unit is responsible for performance goals included in the planning process to insure their commitment to the goals as well as their understanding of the goals.

3.1.1 SACCOs shall develop strategic plans (covering at least 3 years), reviewed annually, to ensure that annual budget strategies are still in line with it.

3.1.2 Management will be responsible for providing an environmental analysis and projections for key budget assumptions to all budget holders, as well as defining units and/or activities to be included in the budget process.

3.1.3 Each budget holder will be responsible for preparing their own projections for their unit for the coming year, considering external factors in their own operating environments as well as the key budgetary assumptions provided by Management.


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3.1.4 The final budget be prepared and reviewed by the Audit and Supervision Committee to ensure that it is realistic and consistent with a SACCO’s longer-term objectives, and will be approved by the Board of Directors.

3.1.5 Monthly budget variance reports shall be produced for monthly reviews by management, and the Board as required. Management will establish guidelines for the reporting of budget variances for individual line items as well as net profit.

3.2 THE BUDGET PROCESS

3.2.1 The Audit and Supervision Committee

The Audit and Supervision Committee shall hold a final meeting with management to ensure that the budgets are in line with the SACCO’s mission and achieve inter- department coherence. The committee shall discuss the draft budget with management before it is submitted to the Board of Directors. The minutes of the meeting shall be documented to ascertain the action points.

3.2.2 Budget Presentation To The Board

The Audit and Supervision Committee shall present the agreed budget to the Board of Directors/Annual General Assembly for approval. Should any amendment be required, these shall immediately be communicated to the Audit and Supervision Committee for corrective action.

3.2.3 Budget Reviews

Management shall continuously review their budgets against prevailing conditions to ensure that those budgets are realistic. Where amendments to the budget are required, a report shall be submitted to the Audit and Supervision Committee. The procedure of approval of the supplementary budget shall be similar to that for the original budget.

3.3 BUDGETARY PERFORMANCE AND CONTROL

3.3.1 The Accountant shall prepare a consolidated monthly budgetary performance report for management. This report shall show comparison between actual income and expenditure and cash flows against budget.

3.3.2 The variances in value and percentage shall be shown together with detailed notes explaining the causes of the variances. In addition, the corrective action to be taken shall be indicated.


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C CH HA AP PT TE ER R F FO OU UR R - - C CA AS SH H M MA AN NA AG GE EM ME EN NT T

4.1 POLICY STATEMENT

All Cash and cheque transactions of the SACCO must be handled by the Cashier. All Cash and cheques received during the day must be handed over to the Accountant for onward transmission to the Vault/Safe

4.2 CASHIERING

Cashiering is the process of carrying out all of the activities implied by the responsibilities of a Cashier as spelt out in 1.6.4. The details of such activities are as follows.

4.2.1 Till Management

1) Till management involves; the planning, organising and controlling of all the Till Sheet activities so as to ensure that services to clients and members are smooth and free of inaccuracies whether intentional or otherwise. It therefore follows that all the staffs that have a role to play in Cash management, have a role to play in Till management but the cashier is particularly responsible for this.


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2) The following guidelines shall serve to ensure sound Till management

a) Each Cashier shall be provided with a PAID and RECEIVED Stamp bearing a SACCO’s name and the Cashier’s identification number.

b) The Cashier will also be provided with the following stamps: Passbook stamp Duplicate stamp

c) Cashiers are strictly prohibited from altering or preparing clients’ deposit and withdrawal vouchers.

d) The Clients shall countersign all alterations of deposits and withdrawal vouchers.

e) All withdrawal vouchers shall be signed and countersigned by the clients and where applicable record his/her telephone number at the back.

f) Counterfeit notes shall be confiscated from the client and perforated, however this must be done with due care in order not to cause undesired reaction from the affected clients. Refer to the Manager if it gets complicated

g) Cash handed over to the accountant shall be counted in the presence of the concerned cashier and the accountant shall endorse/initial on the Cash count form to signify agreement with the record

h) SACCOs shall maintain a CASH OVERAGES ACCOUNT in their General Ledgers to which all Cash overages shall be credited. The (none cash) voucher to recognise the overage shall be prepared by the Cashier and approved by the Manager after the Accountant has verified the Till Sheet. The double entry is;

A/C Code Account Name Debit Credit Shs Shs

Cash X Cash Overages A/C X

Narration: Being Cash overage from ……………… (Teller’s name)

i) Reversals from the Overages account shall be on the basis of proven, documented and approved reasons. None cash vouchers, with such documentation(s) as the attachment(s) shall be prepared by the Accountant and approved by the Manager before reversals are effected. The double entry is;


Cash Overages A/C X Credit Client’s A/C X

Narration: Being Correction of Cash overage that resulted from the omission/ misstatement of ……… (Client’s name)’s savings deposit/ loan repayment/ fees


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payment etc, on ……… (Date) by ……… (Teller’s name).

j) SACCOs shall NOT maintain a CASH SHORTAGE ACCOUNT in their General Ledgers instead; all shortages shall be debited on the respective Tellers’ debtor Accounts. The (none cash) voucher to recognise the shortage shall be prepared by the Cashier and approved by the Manager after the Accountant has verified the Till Sheet. The double entry is;


Teller’s Debtor A/C X Cash A/C X

Narration: Being Cash Shortage from ……… (Teller’s name)

k) Cash shortages shall be recovered from the Cashier’s salary within reasonable time or at the earliest opportunity.

l) Persistent cash excess OR cash shortages in the Till shall be investigated and appropriate action taken.

4.2.2 Preparing the Till Sheet

1) Preparing the Till Sheet (DOC16) is accounting for all the Cash received and the payments made for the day. It therefore follows that all till transactions must be captured on the Till Sheet and that the Till Sheet must balance

2) The following guidelines shall serve to ensure proper preparation of the Till Sheets

a) Each Cashier shall prepare his or her own Till Sheet and sign it before handing over cash to the Accountant.

b) Each transaction (personal or none personal, like expenses and income) shall constitute a complete record to be entered onto the Till Sheet. The voucher number, account name, account number and the amount shall be captured in the respective columns.

c) The Till Sheet shall be prepared in an orderly manner i.e. all entries must flow in the order of their categories. The categories shall be set according to Ledgers so as to facilitate subsequent processing

d) Loan repayments shall be recorded onto the Till Sheet as a whole; the split into interest, principal surcharge etc, shall be done while posting the entries onto Ledger cards


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e) The following are examples of transactions that must be entered on the respective sides of the Till Sheet.

Debit side Credit side üCash from reserve üSavings withdrawals üCash from Bank üLoan Disbursements üAll cash receipt üAll other Payments üSavings Deposits üCash shortages üLoan repayments üCash Overages üPhysical Cash Balance

f) Cheque receipts shall be entered on the credit side of the Till Sheet after cash transactions have been balanced. There should be some space to separate them.

4.3 SAFE/RESERVE/VAULT CASH MANAGEMENT

Safe or Vault Cash is the Cash that is kept away from the main operating area for safe custody and for providing a buffer from which immediate cash requirements can be satisfied

The Safe can also be used for keeping other valuables like; client security documents, the SACCO’s important documents etc. A register must be maintained for every thing that is kept in the Safe and must be updated with every movement of such contents, whether permanent or temporary.

4.3.1 Reserve Cash Management

i) Till management involves; the planning, organising and controlling of all the activities that affect the SACCO’s Cash-at-Hand so as to ensure that services to clients and members are smooth and free of unnecessary Cash shortages, while at the same time avoiding the accumulation of too much Cash in the SACCO’s hands for security reasons.

ii) The following guidelines shall serve to ensure sound Reserve Cash management

a) An analysis book called the RESERVE BOOK (BK2) shall be maintained by the Accountant and shall record all the transactions between Vault Cash and the Cashiers and also provide a record of the SACCO’s Cash-at-Hand as at the close of business on any working day.

b) Transactions for a new month shall start on a fresh page


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c) A Cash account shall be maintained in the GL to correspond to the reserve book

d) The Audit and Supervision Committee shall carry out spot cash counts (and verify Safe contents), and write a report as evidence of the exercise

e) Adequate cash to cater for daily withdrawals and petty payments shall be maintained in the Vault. The benchmark may be 15 to 20% of total savings depending on the SACCOs deposit/withdrawal patterns

f) Special days when cash requirements are projected to be higher e.g. Disbursement days must be planned for a week ahead so that authority to withdraw Cash from Banks is secured in time.

4.4 TRANSFERING CASH

This section provides guidelines on transferring cash from the Vault to the Bank and also from the Bank to the SACCO.

4.4.1 Transferring Cash from Vault to Bank

i) All the possible security precautions must be taken while moving Cash from vault to Bank.

ii) The accountant shall raise a none-cash voucher, which shall be approved by the Manager. The accounting entries are as follows;


Bank X Cash X

Narration: Being transfer of Cash from Vault to the ……… (Bank name) A/C.

iii) A copy of the deposit slip duly stamped and endorsed by the Bank cashier shall be attached to the none-cash voucher.


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CHAPTER FIVE: BANK PROCEDURES


SACCOS shall operate Bank Savings or Current Accounts with Commercial banks for their excess cash.

5.2 OPENING OF BANK ACCOUNTS

SACCOS shall follow the procedures stipulated by the bank in which an account is to be opened. Copies of the application shall be maintained in a Bank Correspondences file at SACCO’s offices. A separate file shall be maintained for each bank account for correspondence with SACCOS banker. Monthly bank statements and other correspondences shall be kept in these files.

5.3 BANK SIGNATORIES


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5.3.1 SACCOS shall have at least two signatories to each of the bank accounts. The Committee in a Board resolution must approve selection of bank signatories on The SACCO bank accounts in writing. The Committee shall also authorize management to approve the opening of bank accounts for SACCO.

5.3.2 The Manager shall be the Principal Signatory while the Treasurer or the Chairperson shall be the second signatory. The chairperson shall only sign in the absence of the Treasurer.

5.3.3 The authority levels of each signatory shall be documented. In the event of a signatory leaving the SACCO, the bank shall be instructed in writing to remove him or her from the signatories’ list immediately.

5.4 CHEQUE BOOK MAINTENANCE AND CHEQUE PAYMENTS

5.4.1 Cheque Books and the Cheque Register

i) There shall be an Outgoing Cheque Register (BK10) in which all Cheque payments shall be recorded. The signatories to the accounts shall initial against the entry in the Cheque register upon authorizing the transaction

ii) The Accountant shall be responsible for the safety of both the Cheque Books and the Register and they shall be under key and lock at all times

5.4.2 Cheque payments

i) All Cheque payment shall be supported by Cheque payment vouchers duly approved by the relevant authorities depending on the nature of the transaction and the amounts involved.

ii) All Cheque payment vouchers shall be supported by, at least one of the following;

a) Duly approved Payment Requisition form b) Original Invoice and/or receipt c) Any other documents in support of the transaction

iii) Where a payment is settling an outstanding obligation, the creditor’s reconciled statement should be attached among the supporting documents.

iv) The Accountant will attach the supporting documents with a cheque payment voucher and forward it to the Manager for verification and approval. The verification shall include checking the following;

a) Arithmetic accuracy


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b) Creditor details and balances c) Budget Status with respect to the payment d) Adequacy and appropriateness of supporting documents e) Correctness of procurement procedures f) Account codes, and the double entry, their authorization as well as reviewing

reconciliation statements if any.

v) All payment vouchers together with the related supporting documents shall be date stamped ‘PAID’ immediately after payment.

vi) The payment accountant shall ensure that a receipt is obtained and that the payee signs on the payment voucher or delivery book in acknowledgement for payment.

vii) Where receipts may not be easily obtainable e.g. payments to individuals, a photocopy of the paid-out Cheque shall be made and the recipient of the Cheque shall sign on it

5.5 CASH AND CHEQUE DEPOSITS AND CHEQUE CLEARANCE

Cash and Cheques may be deposited on the SACCO’s Bank account by either the SACCO’s Management or by the SACCO’s clients especially as they pay back loans

Cash deposits by the SACCO’s Management has already been covered under (Transferring Cash from Vault to the Bank) section 4.4.1

5.5.1 Cash and Cheque Deposits on the Bank Account by Members

Cash and Cheque deposits on the Bank Account by Members shall be under special arrangement between the SACCO and the Bank (the SACCO does not have to open a separate Account for this). The purpose for this is to facilitate tracking of such transactions on the Bank statement and to ease the reconciliation process.

The special arrangement shall emulate the set up of a ‘School fees Account by a school’ as follows;

a) There shall be special deposit slips made in quadruplicate with features such as; the SACCO’s account name and number, a serial number and labelling of the copies i.e. Bank copy, 2 SACCO copies and, Client’s copy.

b) Clients wishing to directly deposit their repayments onto the Bank account shall be supplied with a few special deposit slips

c) A memorandum register of such clients may be maintained for reference purposes


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d) Clients who pay back in this arrangement shall, at the earliest opportunity provide a copy of the special deposit slip to the accountant who shall keep it on their loan file or Loan Ledger Card

e) Crediting the respective accounts shall be on the basis of copies that are directly obtained from the Bank or on the basis of transactions that are directly traceable to the Bank statement. Duly supported and approved none-cash vouchers must be raised for such transactions

5.5.2 Cheques from Members

i) There shall be an Incoming Cheque Register (BK5) to record the particulars of all Cheques received as follows;

a) Name of the Client or Member

b) Account number of the Client or member

c) Bank on whom the Cheque is drawn and the Account number

d) Cheque number

e) Receipt number issued to the depositor

f) Date of deposit into the Bank

g) Date of clearing or bouncing

ii) Incoming cheques shall be banked at the earliest opportunity but a cost benefit assessment must be done where Banks are significantly distant from the SACCO premises

iii) Crediting the respective accounts shall be on the basis of clear evidence from the Bank that the Cheque actually cleared and such evidence shall, where applicable be attached to the none cash voucher raised in that regard

iv) The following accounts shall be maintained to cater for incoming Cheque transactions

Incoming Cheques (Current Asset account)


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Un-cleared Cheques (liability Account)

v) The accounting treatment of Incoming Cheques shall be as follows;

a) On receiving the Cheque


Incoming Cheques X Bank X

Narration: Being recognition of Cash/Cheque number …… from …… (Member’s name) for ……… (Purpose of Cheque received)

b) On depositing the Cheque into the Bank


Bank X Incoming Cheques A/C X

Narration: Deposit of ……… (Member’s name)’s Cheque number ……..

c) On receiving evidence that the Cheque cleared


Un-cleared Cheques A/C X Member’s Savings A/C X

Narration: Clearance of Cheque number …… from …… (Member’s name) for ……… (Purpose of Cheque received)

d) On receiving evidence that the Cheque Bounced


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Incoming Cheques X Bank X

Narration: Being reversal of bounced-Cheque number …… from …… (Member’s name) for ……… (Purpose of Cheque received)

e) On issuing the Bounced Cheque back to the Member


Un-cleared Cheques X Incoming Cheques X

Narration: Return of bounced-Cheque number …… to …… (Member’s name)

vi) All costs associated with processing Incoming Cheques shall be charged to the beneficiaries/depositors of the Cheques by debiting their savings accounts and crediting the Bank account (after raising the relevant vouchers). This shall be done at the earliest opportunity as clients may withdraw all of the free balance from their accounts before the charges are recovered.

vii) An extract of pending Cheques shall be made at every month end and reconciled/compared to the respective Account balances

5.6 CASH WITHDRAWALS FROM THE BANK

i) Cash withdrawals from the Bank shall be done by an agent to the account whom shall be appointed by the Board.

ii) All feasible security precautions (armed guards, bullion van, reliable transport, means of quick communication, insurance etc) shall be taken with regard to cash in transit from the Bank to the SACCO premises and vice versa.

iii) A Cheque payment voucher shall be raised in the names of the agent and shall be given to the Cashier together with the withdrawn cash so that the transaction is incorporated in the Cashier’s transactions for the day

iv) The accounting entries are implied by the Till Sheet


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5.7 BANK RECONCILIATION

i) Monthly Bank statements shall be obtained from the Banks by the 3 rd of every month or at the earliest opportunity so that Bank reconciliations can be prepared in time

ii) Both the Bank statement and the Bank Ledger card (which represents the Cash book side of the Bank A/C) shall be photocopied and used in the reconciliation process as follows;

a) All Bank charges shall first be extracted from the Bank statement and posted on the Bank ledger card and Bank charges expense account as below (after raising the relevant vouchers)

Account code Account Name Debit Credit Shs Shs

Bank charges X Bank X

Narration: Being Bank charges on the ……… (Bank’s name) account for the month of ………

b) Entries that appear on both the Bank statement and the Bank Ledger card shall be ticked

c) A Bank reconciliation statement shall then be prepared according to the format in (FM13)

d) Reconciling items that remain outstanding for unreasonably long periods shall be reported to the Audit and Supervision committee so that appropriate action can be taken on them

5.8 PRESENTATION IN THE FINANCIAL STATEMENTS

i) SACCOs, in their Financial Statements, shall report Bank balances as per Bank Ledger cards and not Bank Balances as per Bank statement.

C CH HA AP PT TE ER R S SI IX X: : L LO OA AN NS S R RE EC CE EI IV VA AB BL LE E

6.1 POLICT STATEMENT

SACCOs shall take all the steps necessary to ensure sound loan management because loans form their biggest asset and the biggest source of revenue

6.2 TYPES OF LOANS


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SACCOs may have a variety of loan products depending on the needs of their clients and members. The loan products and the appropriate disbursement methods are summarized in the table below

Loan Type Disbursement Procedure Agricultural loans Hard cash/transfer to Savings Account Asset Financing loans The SACCO buys the Asset for the client and retains title

till the loan is paid off Commercial loans Hard cash/Transfer to savings Account Low Salary earners’ loan Scheme Hard Cash/Transfer to Savings Account School fees loans Hard Cash/Transfer to Savings Account Solar energy loans Hard Cash/Transfer to savings Account

6.3 LOAN DISBURSEMENTS

i) Loans shall only be disbursed to members whom have gone through all the steps of the appraisal process (these are covered in the lending manual).

ii) The responsibility of the Accountant shall be to ensure compliance with guidelines laid down in the lending manual. The following questions, for instance shall be answered ‘YES’ before a loan is disbursed.

1. Whether the recipient applied for the loan. 2. Whether the recipient is a member of the SACCO. 3. Whether the recipient was appraised by a SACCO Official. 4. Whether the loan was approved by the loan committee. 5. Whether all the required documentation for the loan is on file.

iii) All members whom have accessed loans from the SACCO shall have loan files which shall contain the following with respect to each loan disbursed to them.

a) Loan application b) Appraisal details c) Copy of receipt in respect of loan processing fees d) A sketch map to their residences and or work places

e) The members contacts (persons, telephone number(s), LC officials etc) f) The collateral securities pledged (if any) g) Copy of the disbursement voucher h) Paid-up Loan Ledger Card(s) i) Any other necessary documents

iv) Irrespective of the method of disbursement, the recipient must acknowledge receipt of the loan by signing on the relevant documents


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v) Where cash disbursements involve large sums of money, the Accountant or Manager may assist the cashier to disburse so as to give members some confidentiality; however, all the disbursement vouchers and the accountability for the Cash disbursed shall be handed over to the Cashier for incorporation into the Till Sheet.

6.4 LOAN REPAYMENTS

i) Loans repayments may be received in Cash or through none cash transactions that arise out of; direct deposits onto the SACCO’s Bank account, transfers from Savings accounts and other accounting adjustments. The repayments may be split into;

a) Principal b) Interest c) Surcharge or Penalties

6.5 RECORDING LOANS

6.5.1 On Disbursement

i) The Accountant or Loan Official shall start a new Loan Ledger card for each loan disbursed.

ii) The Cashier, in his or her Till Sheet, shall record loan disbursements on the credit side, because they are a cash outflow.

iii) The Accountant, in his or her Day sheet, shall record Total loan disbursements per Loan Ledger or category on the debit side, because they are an increase in the current Assets.

6.5.2 On Receiving Repayments

i) The Cashier, in his or her Till Sheet, shall record loan repayments as a whole (because the basis of splitting may not be readily available to him or her)

ii) Splitting the repayment shall be the responsibility of the Accountant and shall be done concurrently with the posting of repayments onto the Loan Ledger cards.

iii) The priority of recovering the different elements of a loan repayment shall be as follows;


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iv) The split of the transaction, according to the above priority, shall be written on the face of the voucher preferably in red ink

6.6 LOAN LOSS PROVISIONING AND WRITE OFFs

6.6.1 Meaning of Loan Loss Provisioning

i) Loan loss provisioning is an accounting adjustment on the profit or loss position of a SACCO and its objective is to provide or avail a reserve against which unrecoverable loans can subsequently be written-off instead of affecting the prevailing or subsequent profit or loss position.

ii) Advantages of Loan Loss provisioning

a) Provisioning is a standard accounting practice and requirement and therefore upholding it is upholding compliance with such standards

b) Bad debts expense (specific) is an allowable deduction according to Section 24 of the Income Tax Act and therefore the SACCO shall have less taxable profits and hence less tax liability if it provides for loan loss.

c) Loan Loss Provisioning brings the SACCO’s profit position closer to reality

6.6.2 Policy on Provisioning

All doubtful loans shall be provided for in accordance with the CGAP guidelines and best practice. The provisioning shall be in respect of only the principal in arrears because interest and other fees are recognized on modified cash basis.

SACCOs shall provide for loan loss on two fronts namely; General provisions and Specific Provisions.

The adequacy of loan loss provisions shall be reviewed on Quarterly basis as laid down in sub- section ii) of Section 6.6.3.

Element Priority Surcharge or penalties First Interest arrears Second Current Interest Third Principal arrears Fourth Current Principal Fifth Prepaid Principal Sixth Prepaid Interest Last


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i) General Provision

General provision means a loss reserve held against future and presently unidentified losses and is thus freely available to meet losses, which subsequently materialize. This implies that a flat 1% should be charged on all loans in arrears as and when management may decide.

ii) Specific provision

a) Meaning of specific Provisions

Specific provision means a loss reserve held against future and presently identified losses or potential losses and thus not available to meet previously unidentified losses, which subsequently materialize. A loan that has due to some reasons been specifically identified as doubtful under the respective loan categories should have an addition provision of at the corresponding rates. However, cash held as security may be deducted from the outstanding balance of the credit facility before determining the specific provisions

Specific provisions on the due but unpaid principal shall be made for all loans in view of the inherent credit risk of the industry by applying varying rates to the different loan bands similar to the repayment periods.

b) Basis of Specific Provisions

Specific provisions shall be based on the number of days that have passed since a particular loan installment (principal only) fell due but has remained unpaid for any reasons. The rates applicable according to the numbers of days in arrears may be based on the classifications below.

6.6.3 Computing Loan Loss Provisions

Classification (No. of Days in arrears) Rate

1-7 8-15

16-30 31-60 61-90 91-120

212-180 181 and above Sh

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i) The First Time of Provisioning

Provisioning shall be done as an End-of-Period adjustment (Quarterly or Annually)

The Loan ledger cards shall be reviewed one by one and a list of all loans in arrear as at the close of the period extracted.

The list shall then be categorized accordingly (based on the days in arrears and the applicable rates.

The principal in arrears column shall then be summed-up and the relevant rates applied to the category totals so as to derive the provision amounts per category

The provision amounts per category shall be summed-up and the following Accounting entries shall be passed


Bad Debts Expense X Provision for Bad Debts (specific) X

Narration: Being provision for Bad debts as at ………… (End of the period)

The lists used in the computations shall be attached to the none cash voucher as support documents and shall be filed such that they are easily accessible for reference in subsequent computations.

ii) Computing Loan Loss Provisions after the First time

The loan listings to be used shall be extracted as described above and the provision amounts per category computed as above

The new provision amounts per category shall be compared to the respective prior period amounts so as to establish an increase or decrease per category

The increases and decreases shall be summed-up and the following Accounting, depending on the net result, shall be passed Where the net result is an INCREASE in the provisions amount;


Bad Debts Expense X Provision for Bad Debts (specific) X

Narration: Being increase in provision for Bad debts as at ………… (End of the period)


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Where the net result is a DECREASE in provision amount;


Provision for Bad Debts (specific) X Bad Debts Expense X

Narration: Being decrease in provision for Bad debts as at ………… (End of the period)

The lists used in the computations shall be attached to the none cash voucher as support documents and shall be filed such that they are easily accessible for reference in subsequent computations

6.6.4 Write offs

i) A loan shall be written off if it is in arrears for extraordinarily long periods and under the following conditions;

a) The loan term must have expired b) The last principal instalment must have been in arrears for over 90 days c) It must be uncollectible in the opinion of management

ii) Authorization of Write-offs Authority to write off loans shall be obtained from the Annual General Assembly after management has given the Board of Directors a report to that effect.

iii) Accounting entries for writing off loans

a) Loans shall be written off against the Loan loss Reserves created (Specific and General Provisions) as follows;


Provision for Bad Debts (specific/general) X Loans (category) X

Narration: Being (Category) loans written off

b) Where the balances on the reserves is inadequate, write off shall be against; Specific loan loss provisions, General loan loss provisions and the Bad debts expense account in that order of priority.


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Provision for Bad Debts (specific) X Provision for Bad Debts (general) X Bad Debts Expense X Loans (according to category) X

Narration: Being (Category) loans written off

NB: It is assumed that by the time a loan becomes bad, it may have been categorized as a non- performing loan and provided for.

iv) Recovery of written-off loans

a) Loan Ledger cards for written off loans shall be kept in a separate file so that they can be referred to in case of subsequent recoveries/repayments.

b) Recovery of written off loans shall be recognised as other income as follows


Cash X Other income X

Narration: Being a recovery on……… (Member’s name)’s written off loan per journal reference ……. Dated ……….


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C CH HA AP PT TE ER R S SE EV VE EN N: : O OT TH HE ER R A AC CC CO OU UN NT TS S R RE EC CE EI IV VA AB BL LE E


Other Accounts receivable shall comprise of all receivables except for loans. It shall cover receivables like.

1) Interest receivable from loans 2) Interest receivable from investments 3) Prepayments 4) Salary Advance 5) Accountable Advance 6) Sundry Debtors

7.2 INTEREST RECEIVABLE ON LOANS

Generally Accepted Accounting Principles require that Interest should be recognized on accrual basis, however because of the difficulties associated with tracking of interest as it falls in a manual accounting system, a hybrid approach shall be adopted as follows

1) During the ordinary course of the Accounting period, interest should be recognized on cash basis

2) The accrual of interest shall be an ‘End of Period’ adjustment whereby the status of each loan with respect to interest shall be reviewed and a listing of due but unpaid interest shall be extracted

3) The following accounting entries shall be passed at the end of each Accounting period on the basis of the total sum of the lists.


Interest receivable X Accrued Interest Income X

Narration: Being accrued Interest on loans as at ……… (Period end date)

4) A detailed schedule of Accrued interest shall be maintained and be updated with subsequent repayments.

5) Repayments in respect of accrued interest shall be recorded as credit entries on the ‘Interest Receivable on Loans’ account. This shall be captured in the Day sheet.


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6) Accrued interest that remains unpaid for unreasonably longer periods shall be extracted in a report and forwarded to the Audit and Supervision committee with a recommendation to write it off against the Bad debts expense account.

7.3 INTEREST RECEIVABLE ON INVESTMENTS

Ordinarily the need to accrue interest on investments shall not arise as Financial institutions shall readily credit the SACCO’s account within time, however where the need arises, the following entries shall be passed.


Interest receivable X Accrued Interest Income X

Narration: Being accrued Interest on loans as at ……… (Period end date)

7.4 PREPAYMENTS

1) Where a SACCO paid for a services for a periods longer or for a periods that do not fall within the Accounting period (financial year), and such a payments were debited to expense accounts, adjustments shall be passed on such expense accounts such that only the portion of the expense that relates to the Financial year have an effect on the balances on the accounts.

2) The adjustments shall be passed as follows


Prepayments (accordingly) X Respective expense account X

Narration: Being adjustment for Prepaid ……… (Expense) as at ……… (Period end date)

3) Corresponding adjustments shall be passed at the onset of the subsequent accounting period in a reverse manner

7.5 STAFF LOANS AND ADVANCES

7.5.1 Staff Loans


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1) The decision on whether on not to avail loans to SACCO staff shall be taken by the Annual General Assembly and the policy guidelines on Staff loans shall be formulated by the Audit and Supervision Committee (a consultant may be involved for better work).

2) Where Staff loans are allowed, a separate loan sub Ledger shall be maintained and all the guidelines that relate to Accounting for SACCO loans shall apply.

7.5.2 Staff Salary Advances and Accountable Advances

1) Staff Salary Advances

a) The staff who is in need of a Salary advance shall complete an Advance Form (FM9) which shall be approved by the Manager or in case of the Manager by a member of the Audit and Supervision Committee.

b) The amounts accessible and how they are derived shall be determined by the Board of Directors from time to time

c) The monthly installments to recover such advances shall not exceed 50% of ones monthly Net Pay

d) All outstanding Salary advances as at the end of the Accounting period shall be acknowledged by the staff from whom they are due by signing against their respective balances on a schedule extracted by the Accountant to support the GL balance on the Salary Advance Account

2) Accountable Advances

a) Accountable Advances shall be given to staff in situations where expenses cannot be estimated with reasonable accuracy, for instance extraordinary field visits like Recovery Task Forces

b) Accountable Advances shall be requisitioned-for just like Salary Advances but shall be accounted for immediately after the activity

c) Un-accounted-for Accountable Advances shall be recovered from the concerned staff’s Saving account at the earliest opportunity and the manager shall authorize such recoveries

d) All outstanding Accountable Advances as at the end of the Accounting period shall be acknowledged by the staff from whom they are due by signing against their respective balances on a schedule extracted by the Accountant to support the GL balance on the Accountable Advance Account

3) Accounting Entries for Advances


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a) The GL shall have two Advance accounts; one for Salary Advances and the other for Accountable Advances. The entries on these accounts shall reflect the following with respect to every Advance issued.

üDate of advance; üName of payee; üAmount advanced; ü Brief description of purpose of payment; ü Reference number of the payment voucher

b) Where Salary Advances are issued for a period of more than three months, a Ledger card shall be maintained to track the repayments

c) On receiving accountability for Accountable Advances, the following entries shall be passed by use of a none cash voucher


Expense(s) (accordingly) X Cash (with the balance) X Accountable Advance X

Narration: Being ……… (Staff’s name)’s accountability for Funds issued on ……… (Date) in respect of ……… (Activity/Activities)

d) Salary advances shall be recovered from the payroll and therefore the accounting entries in this regard are considered in the Payroll section of this manual

7.6 SUNDRY RECEIVABLES

This account shall take care of all the debtors’ balances that cannot fit in any of the above mentioned classifications and shall have a schedule showing the par-individual breakdown of the balance there-on as at the Accounting period end. The schedule shall be supported by genuine documentation of the composite transactions and shall be approved by the Manager.


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C CH HA AP PT TE ER R E EI IG GH HT T: : I IN NV VE EN NT TO OR RY Y O OF F S ST TA AT TI IO ON NE ER RY Y

8.1 MANAGEMENT POLICIES

8.1.1 Recognition guidelines

a) During the ordinary course of the Accounting Period, all stationery purchases shall be expensed by debiting the Stationery expense account

b) Recognition of stationery stock/inventory shall be an End-of-Period adjustment preceeded by a Stock count which shall be documented on a Stock count form (FM14) and witnessed by a member of the Audit and Supervision Committee.

8.2 ACCOUNTING FOR STATIONERY

The Accounting shall be as follows;

a) On recognition of the Inventory


Stationery Stock X Stationery expense account X

Narration: Being recognition of Stationer Stock as at ……(Period end Date)

b) On the on set of the subsequent accounting period or on the basis of an (Externally) audited position;


Stationery expense account X Stationery Sock X

Narration: To expense Stationer Stock as at ……(Prior Period end Date)

NB Copies of the stock count sheets shall be attached to the none cash vouchers raised


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c) The minimum value of such Stationery to be recognized as inventory or to warrant an adjustment shall be determined by the Audit and Supervision committee from time to time (the benchmark is Ushs 500,000)

8.3 PROCUREMENT OF STATIONERY

8.3.1 The supply of printed stationery shall be from a reputable supplier recommended by the Audit and Supervision Committee

8.3.2 The SACCO shall invite at least three bids for the selection of such a supplier.

8.3.3 Local Purchase Orders (LPO) shall be placed to the supplier in a timely manner so as to avoid unnecessary shortages.

8.3.4 Un-printed stationery may be purchased from any shops but the purchase shall be supported by authentic invoices and/or receipts.

8.4 OBSOLETE STATIONERY

8.4.1 Items of stationery shall be declared obsolete if they are no longer usable in their current state or if no value at all, can be derived from them.

8.4.2 While carrying out stationery stock counts, the obsolete items shall be recorded on separate the stock count sheets (clearly labeled ‘OBSOLETE’) and no adjustments shall be passed in respect of such obsolete items. This implies that the value of such items shall remain part of the Stationery expense.

8.4.3 Obsolete items shall be burnt immediately after the stock count upon the authority of the member of the Audit and Supervision Committee that witnessed the stock count and the Stock count sheets shall be filed on the Stationery file.


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C CH HA AP PT TE ER R N NI IN NE E: : P PR RO OP PE ER RT TY Y, , P PL LA AN NT T A AN ND D E EQ QU UI IP PM ME EN NT T


9.1.1 Definition

Property, Plant and Equipment shall include tangible assets that are held for use in the production of goods or services, for rental to others or for administrative purposes and are expected to be used for more than one year. They may also include items held for maintenance or repair of such assets.

9.1.2 Procurement

a) The Manager shall identify the need for the asset and raise a Purchases Requisition Form (FM10) to the appropriate Committee for authorization and approval of the purchase of the asset.

b) SACCOs shall invite at least three bids for major purchases.

c) The Manager shall identify a list of suppliers of small items such as stationery for The Committee/Committee approval.

d) An order shall be placed to a supplier whose offer is the best on the market list (the market list gives different stationery items with different offers in the locality, and it is updated periodically). The accountability documents shall usually be; the requisition form, and the invoice/receipt.

e) All purchases shall be processed through a Local Purchase Orders (LPO).

i. These start by requesting at least three suppliers to express their offer for item(s) called a pro forma invoice

ii. The several pro-forma invoices are put together and evaluated to see who has the best offer

iii. The best offer is chosen on the basis of quality, price, delivery conditions, and terms of payment

iv. The award of tender is made known by issuing a supply order, which specifies the requirement and the terms of supply as per the winning offer


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f) On receipt of goods, the goods are checked for quality, quantity and price. If the goods have serial numbers, these must correspond with those on paper. The supporting documents shall be the invoices, LPO, supply order, delivery and Goods Received Notes.

g) The Delivery Note shall be ticked to ensure that the goods are received as listed and that the delivery is in agreement with the order.

9.1.3 Recording

1) Capitalization of assets takes place when the benefits of the expenditure are expected to extend over periods beyond one year and the cost is more than Shs 500,000 or as management may agree or as allowable for capitalization in the Income Tax Act- 1997

2) Donated assets should be capitalized at their market value at the time of donation.

3) The capitalization value of assets is the cost involved in bringing the asset to its present location and condition i.e. transportation, clearing charges, taxes and installation costs should be added to the purchase cost of such assets.

9.1.4 Depreciation

1) Depreciation shall be calculated on the straight-line basis to write down the cost of each asset at their residual values over their estimated useful life as follows:

Fixed Asset Class Applicable rates Freehold land and Buildings Nil Motor vehicles and cycles 12.5% to 25% Furniture and office equipment 5% to 12.5% Computer equipment-Hard ware 12.5% to 33.3% Computer software 20% to 33.3%

2) Depreciation shall be calculated per item of Plant, Property and Equipment, and the calculation shall be detailed out in the Fixed Asset Depreciation form (FM15) a copy which shall be appended onto the none cash voucher raised to that effect

3) Accounting entries shall be passed with respect to each Fixed Asset class as follows;


Depreciation expense X Accumulated depreciation (accordingly) X

Narration: Being depreciation expense on ……(Asset Class) for the yea ended


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……(Period end Date)

9.2 PHYSICAL CONTROLS

9.2.1 Physical Inspections

The fixed assets shall be physically inspected on an annual basis to coincide with SACCOS’ Year-End. An inspection report shall be prepared by the Accountant and submitted to the manager for action. The results of the inspection shall be documented and where necessary, adjustments shall be made to the fixed assets register (BK14) and general ledger.

9.2.2 Engraving of Fixed Assets

1) All moveable property such as furniture/fittings and computer equipment shall be engraved with unique reference numbers for easy identification. These identification numbers shall be indicated against the relevant item in the Fixed Asset Register. These numbers shall be used during the annual physical inspections.

2) All assets should permanently be marked with indelible identifications as belonging to SACCO.

9.2.3 Insurance of Property

All SACCO property shall be insured with a reputable insurance firm. The terms of the insurance policies shall be followed in order to avoid loss. All assets should be insured under a comprehensive policy at their market values. The amount insured should be reviewed periodically and at least once a year.

9.2.4 Safe Custody

A person using the assets shall take particular responsibility over each asset item in his/her possession and to ensure its proper use and custody. Management will issue rules regarding the location and times for parking assets.

9.2.5 Disposal of Assets


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1) Assets will be disposed of when they are rendered obsolete or due to unforeseen break down.

2) Assets may be disposed of by sale, donation to charitable organisations or abandoned.

3) Before disposal of the assets, the Manager shall obtain the authority to do so from The Committee/Committee (the Manager must present the condition to the authority and request for disposal)

4) The Manager shall then dispose off the asset.

5) Upon sale of the assets, the cost and accumulated depreciation are removed from the accounting records.

6) For any difference between net book value and net proceeds from sale, the accounting shall be as follows;

If the difference is a gain:


Cash/Bank (with the total proceeds) X Accumulated dep. (with the prevailing balance)

X

Fixed Asset class (with the cost) X Other income (with the gain) X

Narration: To derecognize ……(Item) after it was disposed/sold off to ……(Purchaser)

If the difference is a loss:


Cash/Bank (with the total proceeds) X Accumulated dep. (with the prevailing balance)

X

Loss on Sale of Fixed Asset X Fixed Asset class (with the cost) X

Narration: To derecognize ……(Item) after it was disposed/sold off to ……(Purchaser)


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NB Copies of the disposal documents shall be attached to the none cash vouchers raised

9.3 REVALUATION OF ASSETS

9.3.1 A SACCO may have its property, plant and equipment revalued regularly by a firm of competent quantity surveyors and valuation professionals, such that the carrying amount does not differ materially from that which would be determined using fair value at balance sheet date. The valuation figures in the valuation report shall be used to replace the cost figures in the Fixed Asset Register and general ledger. When a particular fixed asset is to be revalued, the entire class of fixed assets to which that item belongs shall be revalued. Revaluation should be done evenly over the chosen periods, preferably after every five years.

9.3.2 The following entries shall be made:


Fixed Asset (with the revaluation amount ) X Revaluation Reserve X

Narration: To recognize Revaluation of ……(Item) as at ……(Revaluation Date)

9.3.3 The balancing figure in the revaluation account is either a revaluation reserve or a revaluation loss, posted to the revaluation reserve account or profit and loss as the case may be.


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C CH HA AP PT TE ER R T TE EN N: : A AC CC CO OU UN NT TS S P PA AY YA AB BL LE E

This chapter covers the following elements.

Members’ Deposits Loans And Balances due to Banking Institutions Deferred Grant income Interest Payables and other Liabilities Tax Payable

10.1 MEMBERS’ DEPOSITS

10.1.1 Opening and Operating Savings Accounts.

The SACCOs saving accounts may be personal, joint, minor, group or institutional and shall be opened by members only. The following guidelines have to be followed in the opening and operation of the Savings accounts by members.

1) The applicant shall complete the Application Form for Opening a Savings Account (FM2) and affix his/her photograph.

2) The details of the applicant shall be recorded on the Savings Ledger Card (DOC12) to which shall be affixed his/her photograph. The applicant shall affix his/her specimen signature on the Personal Savings Ledger Card. Personal Savings Ledger Cards shall be kept in a lockable box and access shall be restricted to designated officials only.

3) In case the applicant would like to authorize other people to withdraw money from his/her Savings Account, the applicant shall complete the Third Party Mandate Form (FM11) as required.


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4) The Manager or designated official shall complete and issue a Pass book to the applicant. The Passbook shall contain the Member’s passport photograph and specimen signature duly stamped and certified by the Manager or designated official.

5) The applicant shall complete a Savings Deposits Slip (DOC9) for depositing at least the minimum deposit required for the SACCO’s Savings Account. Every member of the SACCO shall be required to have a savings account.

6) The Cashier shall receive the Passbook, Savings Deposits Slip and cash. He/she shall then count the cash and check the information filled in the Savings Deposits Slip to ensure that it is correct, keep the cash and pass on the pass book and deposit slip to the Manager or his/her representative for authorization.

7) The Manager/Accountant shall check the Deposit Slip and initial it, record the amount deposited into the Passbook and Savings Ledger Card (DOC12), work out the new outstanding balance, initial and return the passbook and Deposit Slip to the Cashier and keep the Savings Ledger Card.

8) The Cashier shall return the Passbook to the applicant or client and keep the Deposit Slip. The Cashier shall not keep members’ Passbook after they have completed their transactions.

9) In course of the day and in particular at the end of the day, the Cashier shall give each Deposit Slip a unique serial number for the day and post them to the day’s Till Sheet (DOC16)

10) The Cashier shall staple/ tie together all savings Deposits Slips for the day with a rubber band and pass them on to the Manager/Accountant together with the Till Sheet.

11) After preparing the Waste Sheet (DOC20) the Manager shall securely keep the Savings Deposit Slips in a lockable cup-board, which has controlled access.

12) At the end of the day, the manager/Accountant shall record all Pass Books issued in the Passbook Distribution Register (BK11). The Accountant or designated Official shall also complete the Account Opening Register (BK1).

10.1.2 Handling Full Passbooks or Savings Ledger Cards.

1) Whenever the depositor’s passbook is full, the balance thereon shall be transferred to a new Passbook which shall be given the same number as the old one. Other personal details shall also be transferred.


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2) Whenever the personal Savings Ledger Card (DOC12) is full, it shall be treated like a full Passbook.

10.1.3 Lost Passbook

In case a Depositor loses his/her Passbook:

1) He/She shall immediately report it to the SACCO Manager.

2) The Manager shall immediately mark the Personal Savings Ledger Card in red and bold “Lost Passbook notified’, and put the notification date and his or her initials

3) The depositor shall confirm the account balance as reflected on the Personal Ledger Card in writing and this shall be filed on the Savings accounts queries file.

4) A new Personal Saving Account shall be allocated and a new Personal Savings Ledger opened.

5) A new Passbook shall be issued bearing a new number and personal details. The balance from the old account that has been confirmed by the client shall be crosschecked to the old Personal Savings Ledger Card and if confirmed, be transferred to the new Passbook and Personal Savings Ledger Card.

6) The client shall pay the associated charges for lost Passbook replacement.

7) Issuance of a new Passbook implies automatic cancellation of the old one.

8) Should the member find the old passbook, he/she shall present it to the SACCO Manager who shall register and destroy it.

10.1.4 Closing A Savings Account

Whenever a depositor wishes to close his/her savings account, the manager or Records Assistant/ Accountant shall do the following.

1) Retrieve the Passbook from the client 2) Retrieve the Personal Savings Ledger Card 3) Mark both the Passbook and the Personal Savings Ledger Card “Closed” 4) Enter the account into the accounts opening and closing register. 5) Calculate the interest due on the client’s savings account and pass necessary entries

by debiting interest on savings expense account and crediting the client’s savings account.

6) Calculate total amount due less the account closing charges and pass necessary entries by debiting the client’s account and crediting the relevant income account.

7) Prepare a Withdrawal Slip/Voucher for the net balance due and have it signed by the client.

8) The Manager shall approve the Withdrawal Slip after which the cashier shall pay cash to the client.


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Reasons for closing a savings account may include:

1) The client making request to close his/her account. 2) If the client passed away (Deceased’s Estate). 3) If the SACCO has been wound up 4) If the client has been expelled from the SACCO

10.1.5 Fixed Deposits

Only SACCO members can make fixed deposits. The periods for fixed deposit maturities may be 3, 6, 9 or 12 months. In some situations, the maturity period may be longer than one year. SACCOs shall accept fixed deposits because the Funds are simple to manage since their life in the Institution is well known which makes it easy for planning. However, fixed deposits attract higher interest rates than ordinary saving deposits and therefore, a SACCO shall accept them only if it can lend them out at a higher interest rates than it will pay to the depositors.

The process shall be as follows.

1) A Fixed Deposit Slip (DOC2) shall be completed for each and every fixed deposit 2) The Cashier shall receive cash, count it, check the fixed deposit slips and ensure that

it has been correctly filled, keep the cash, endorse the Deposit Slip and pass it on to the Manager/Accountant.

3) The Manager/Accountant shall open the fixed deposit account for the member in the Fixed Deposit Register (BK4) and record it accordingly.

4) The Manager shall prepare a Fixed Deposit Certificate (DOC1), which shall be countersigned by the Chairperson of the Audit and Supervision Committee and issue it to the member.

5) The Manager shall keep a diary for the maturity dates of all fixed deposits. 6) On the maturity date, the manager shall instruct the Accountant to update the

member’s Fixed Deposit (FD) account by passing the necessary entries as follows.


Interest on FDs expense (with the gross interest according to the rate)

X

Member’s FD account (with 85% of the gross interest)

X

Withholding Tax Payable (with 15% of the gross interest)

X

Narration: Being interest on …… (Member’s name)’s FD for … ……… (FD Period) less 15% WHT.

7) On withdrawal, the client shall submit his/her Fixed Deposit Certificate to the Cashier who shall pass it to the Manager.


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8) The Manager shall cancel the fixed deposit certificate and pass it to the cashier for payment.

9) At the end of the day, the Cashier shall record the Fixed Deposit receipts and payments in the Till Sheet.

10.1.6 Paying Withdrawals From Savings Accounts

A. Where a member is withdrawing his/her own Savings and has a passbook

1) A member wishing to withdraw cash from his/her savings account shall complete a Cash Withdrawal Slip (DOC8) for ach and every withdrawal.

2) The Cashier shall check the cash Withdrawal Slip to ensure that it has been properly completed.

3) A cashier shall crosscheck the Withdrawal Slip to the Pass Book to ensure that the amount to be withdrawn is available on the member’s account and when satisfied, shall send it together with the pass book to the Accountant/Manager.

4) The Accountant/Manager shall compare the Pass Book to the Savings Ledger to ensure that the member has enough money on his/her account to cover the drawing required. Furthermore, the Accountant/Manager shall check to ensure that the signatures are similar and that the person requesting to draw the money from the account is the owner of the account.

5) When satisfied, the Accountant/Manager shall authorize the payment by endorsing on the withdraw slip and giving back the passbook to the cashier to effect the payment.

6) The Cashier shall check the amount authorized for payment, write the denominations to be paid at the back of the Withdrawal Slip and get the member to sign for it.

7) The cashier shall then count the money with the member looking on and pass it on to him/her together with the passbook.

8) The cashier shall stamp “PAID” on every Withdrawal Slip that has been paid, give it a consecutive number for the day and keep it.

9) The cashier shall never keep the member’s passbooks. 10) At the end of the day, each Withdrawal Slip shall be posted to the Till Sheet. 11) The cashier shall staple/tie together all Withdrawal Slips for the day with a rubber

band and hand them over to the Manager/Accountant. 12) After preparing the Day sheet, the Manager/Accountant shall keep securely the

Withdrawal Slips in a lockable cupboard, which has controlled access.

B. Withdrawal without a Passbook

Withdrawal without passbooks shall be restricted to very few and exceptional cases. Where such a withdrawal is to be made, it shall be justifiable and on a written recommendation by the SACCO treasurer or a committee/Board member. Such cases shall always be posted to the client’s passbook at the earliest opportunity. Only internal non-cash transactions authorized by the manager shall be made without the passbook but shall always be posted to the clients’ passbook at the earliest opportunity.


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C. Withdrawal by third parties

Withdrawals by third parties is exceptional and not a right. In any case the account holder ought to have completed third party mandate form (FM11) indicating the authorized third party. The third party must always present the passbook (withdrawals without the passbook are totally forbidden). In addition to checking the Withdrawal Slip to the passbook and personal ledger card, they shall also be checked to the third party withdrawal mandate form. If satisfied, the manager shall authorize the cashier to pay the cash for the withdrawal request.

10.1.7 Using SACCOs’ Cheques

Depending on the level of development of a systems and operations, a SACCO may introduce cheques to be used by its members in effecting transactions, amongst themselves. The following guidelines shall serve to ensure proper utilization of SACCO Cheques.

i) SACCOs’ cheques shall be used for transactions between SACCO members only. ii) The member seeking to withdraw money from his/her savings account shall not fill the

Withdrawal Slip. A well prepared cheque shall be presented to the Cashier along with the member’s Passbook. The transaction shall be treated as a normal withdrawal. In this case however the cheque will act as a Withdrawal Slip

iii) A member who has been given a cheque by another member shall fill the cheque Deposit Slip and present it together with a cheque and he/her Passbook to the cashier

iv) The cashier shall check to confirm that the Deposit Slip has been correctly filled after which he/she shall pass them on to the Manager/Accountant.

v) The Manager shall check the documents and retrieve the Ledger cards of the member depositing the cheque and that of the member depositing who drew the cheque.

vi) If the signature of the member who drew the cheque is correct and he/she has money on his/her account, then the Manager/Accountant shall credit the depositor’s Personal Savings Ledger Card and the passbook. The Manager/Accountant shall debit the cheque drawer’s Personal Savings Ledger Card. The cheque drawer’s passbook shall be debited at the earliest opportunity.

vii) The Manager/Accountant shall return the passbook to the cashier who shall return it to the member.

10.1.8 Non – Cash Transactions

These are SACCO transactions, which take place but do not involve cash moving in and out of the SACCO. Examples include interest paid on savings accounts by way of crediting the members’ accounts, dividends which are capitalized or credited to the members share capital accounts, collections made on behalf of members, ledger fees charged to the members’ accounts etc. The process of none cash transactions on members’ savings shall be as follows.

i) For each non-cash transaction, the staff initiating the transaction shall raise either non cash Transaction Debit Voucher (DOC4) or non cash transaction credit voucher (DOC3)


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supported by relevant authority documents and have it approved by the Manager. After approval, the records assistant/accountant shall incorporate the transactions into the Day Sheet and later post the transactions to the accounts they affect.

ii) The Depositor’s Passbook shall be adjusted for any entries at the earliest opportunity.

10.2 OTHER BORROWED FUNDS

10.2.1 These may include both short and long term borrowed Funds from donors, other financial institutions and directors or members.

10.2.2 Copy of the loan agreement, correspondences, monthly statements and reconciliation, evidence of payments made, repayment schedules etc, shall be kept by the Manager or any other designated official.

10.2.3 Unused Operating Grants

This account is used to record those Grants received purposely to cover future expenses. Debits on this account shall be made as the expense is realized, which is when the Grant income has to be recognized. The

i. On receiving the Grant;


Respective Bank Account X Deferred Grant income with total Grant X

Narration: To defer Grant income received until prescribed Grant conditions are met

ii. Monthly amortization of the operating Grant

A/C Code Account Name Debit Credit

Deferred Grant Income X Grant income X

Narration-To recognize income that had been deferred with respect to the Grant terms

10.3 CAPITAL GRANTS

This account is used to record Grants for the purchase of equipment or those Grants for the Capitalization of credit subject to restrictions with regard to the use of the Funds. They are


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Equity Grants because they contribute to the creation of capital and because they will eventually become part of the organization’s equity.

i. On receiving

A/C Code Account Name Amount (Shs) Debit Credit

Asset Account X Deferred Capital Grant X

Narration: To Defer capital asset Grants until when earned

ii. On recognition

A/C ode Account Name Amount (Shs) Debit Credit

Deferred Grant Income X Depreciation/Equity-Reserves X

Narration: To recognize the asset portion realized as equity (to compensate depreciation expense) for the period with regard to asset……

a) Sufficient provision shall be made for depreciation, bad loans and accrued expenses.

b) Provision for doubtful and bad loans shall be made in accordance with the ageing structure for loans using recommended rates as stipulated in SACCOS Lending Policies and Guidelines.

10.4 INTEREST PAYABLE AND OTHER LIABILITIES

These will cover the following accounts

Interest on Member Savings Accounts Other Interest Payable

To record the accrued interest payable in a time period the following accounting entries shall be made.



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Respective interest expense account X Interest payable X

Narration-To recognize income with respect to the Grant terms

10.5 PAYROLL LIABILITIES

10.5.1 Payroll liabilities include net salaries payable, PAYE payable, NSSF payable, Gratuity payable etc.

10.5.2 PAYE is a form of withholding tax from an employee’s gross pay recorded as follows:

i) On recognizing the liability


Salary expense X PAYE payable X

Narration: To recognize PAYE payable for ……. (month & year)

ii) On payment


PAYE payable X Bank Account X

Narration: Payment of ……. (month & year) PAYE

10.5.3 NSSF is contributed to by both the employee (5%) and employer (10%) of the employee’s gross remuneration as shown below:


NSSF SACCO’s contribution-10% X Salary expense - (Employee contribution)-5% X


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NSSF/Statutory pensions payable X Narration: To recognize NSSF payable for ……. (month & year)

On payments to NSSF


NSSF /Statutory pensions payable X Bank/Cash X

Narration: Payment of ……. (month & year) PAYE

10.6 ACCRUALS

10.6.1 Accrued expenses arise when goods or services have been received or services utilized prior to the end of the accounting period, but where payment has not been made. Accruals should not be made simply to show expenditure in the period in which it was budgeted, unless the goods or services were actually received in that period.

10.6.2 For monthly accounts, accruals should only be made where they are material.

10.6.3 To accrue expenses, the following entries shall be passed by use of none cash vouchers duly supported with the bases for accrual as attachments.


Expense account (accordingly) X Payables (accordingly) X

Narration: To accrue …….. (No of months)’s …….. (Expense name) as at …… (Period end Date)

10.7 OTHER ACCOUNTS PAYABLE

10.7.1 Creditors should only be recognized where the invoice for the goods or services has been received prior to the end of the accounting period, but where payment has not been made. Recognition of creditors shall be an End of Period process/activity.

10.7.2 Unpaid but accrued invoices shall be marked ‘ACCRUED with the date of accrual’ and initialed by the Accountant


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10.7.3 Other known creditors e.g. Telephone, Electricity, Water etc. shall be accrued after the Manager’s approval.

10.8 CORPORATION TAX

10.8.1 The Income Tax Act 1997 demands that all the gross income of a person for the year less total deductions allowed under the same Act is income subject to corporation tax at the prescribed rate, currently at 30 %.

10.8.2 After taking into consideration all the necessary income tax provisions, a provisional final installment amount will be provided for in the accounts. To arrive at the final installment tax payable, the overall 30% tax liability computed for the year should be adjusted with all the provisional installments that were made during the year.

10.8.3 Final Tax Returns

A final return of income for each year of income is required not later than 6 months after the end of that year in the form prescribed by the commissioner and signed by the tax payer declaring completeness and accuracy of the return together with a statement of income and expenditure and a statement of assets and liabilities.

10.8.4 Provisional Returns

Provisional tax returns should be submitted as follows:

Before 30 June 1 st provisional return Before 31 December 2 nd provisional return Before 30 April 3 rd and Final tax return

Computation

Each installment of provisional tax shall be computed as follows:

50% X (A-B), where;

A – Estimated tax payable by the SACCO for a year of income B – Amount of tax withheld under the Income Tax Act prior to the due date for payment of installment for which the SACCO has tax certificates.


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C CH HA AP PT TE ER R E EL LE EV VE EN N: : C CA AP PI IT TA AL L A AN ND D R RE ES SE ER RV VE ES S

11.1 MEMBERS’ CONTRIBUTIONS

Subject to the provisions and the rights attaching to any class of shares, the holders are entitled pari passu amongst themselves to the profits of the SACCO available and recommended for distribution. On a winding up of the SACCO, the balance of the assets available for distribution shall, subject to any sanction as required by the statute be divided among the members in proportion to the amount of capital paid up on each Ordinary Share. This is in addition to voting rights. Other rights are enshrined in the bye laws.

The SACCO should disclose in the notes for each class of share the following details;

ü The number of shares authorized ü The par value per share ü Rights relating to each class of shares

11.2 HANDLING MEMBERSHIP APPLICATIONS AND PAYMENTS FOR SHARE CAPITAL

11.2.1 Admitting members to a SACCO

The process of admitting members to a SACCO shall be as follows


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i) Anyone wishing to become a member of a SACCO shall fill a Membership Application Form (FM1). An individual, group or institution can apply to become a member of a SACCO.

ii) The Cashier shall check to ensure that the applicant has correctly filled the application form and that the applicant meets the minimum requirement e.g. share capital, membership fee and that the applicant is a resident of the target area.

iii) The Manager shall check and ensure that the information given is correct and if satisfied, approve it.

iv) Authentic identification documents shall be presented together with the Application form and where possible copies shall be attached to the form

v) The Cashier shall receive the payments (share capital and membership fees), issue cash receipt, write the number of the cash receipts on the application form, stamp it “PAID” and return it to the Manager.

vi) The Manager shall issue and complete relevant sections of the Passbook, which shall be returned to the Applicant through the Cashier.

vii) At the end of the day, the Cashier shall summarize share capital and membership fees payments into the Till Sheet (DOC16) for the day.

viii)At the end of the day, the Passbook Distribution Register (BK11) shall be updated.

ix) The Membership Application Form shall be sent to the SACCO Chairperson and Secretary for authorization and issue of Share Certificate (DOC5) after which it shall be filed.

x) In case a member is illiterate, the Manager of the SACCO shall ensure that he/she is facilitated to complete the necessary documentation. In addition to the photograph, a specimen of his/her thumbprint shall be affixed to the relevant documents. The cashier or any other person of his/her choice shall complete the documentation which shall be read to him/her after which he/she shall affix his/her thumbprint. The manager shall again read the documents to such a member before authorizing the transaction.

11.2.2 Recording Share Capital and Membership Fees

The process of Recording Shares and Membership fees shall be as follows.

i) Receipts shall be written such that membership fees are separate from Share Capital contributions because they are accounted for separately

ii) The cashier, in his/her Till Sheet, shall separate Membership fees from Share Capital contributions


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iii) The Accountant in his/her Day Sheet, shall record total membership fees received as Membership fees income and Credit the Share Capital account with the total shares purchased

iv) At the end of the day, the Members’ Register (BK9) and Share Capital Register (BK12) shall be updated. The custody of the register of members is a duty of the Secretary according to Section 28 of the Cooperative Regulations 1992. Therefore, for day-to-day operations, management shall maintain a preliminary register that will capture members’ data as they are recruited. The data will then be used to periodically update the statutory members register that the Secretary keeps.

v) Whenever any member wants to buy more shares in the SACCO (increase his/her Share Capital), he/she shall complete the Application Form for Purchase of additional shares (FM3) that shall be checked by the Manager and approved by the Chairperson and Secretary. This is to ensure that the maximum shareholding regulations of the society are complied with.

11.3 EQUITY GRANTS APPLIED

11.3.1 Accounts under this category

A/C Code A/C name Portfolio equity Grants Fixed assets equity Grants

11.3.2 These accounts show the balances of Grants in fixed assets and portfolio free of special restrictions by the donors and, therefore, taken in as part of the SACCO’s equity.

11.3.3 The following entries shall be made in respect of Equity Grants depending on whether:

ØA Grant has been receive free of restrictions ØThe Grant received is restricted ØThe restrictions on the Grant have been freed/fulfilled ØThe Equity Grant /donation is in kind

On receiving a Grant free of restriction:


Cash/ Bank (accordingly) X Portfolio/FA Equity Grant (accordingly)

X

Narration: To recognize donated Equity from …….. (Donor’s name)

On receiving a Grant that has restriction:


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Cash/ Bank (accordingly) X Differed Grants (accordingly) X

Narration: To recognize restricted Grant(s) from …… (Donor’s name)

When the restrictions on the Grant have been fulfilled:


Deferred Grants (accordingly)

X

Portfolio/FA Equity Grant (accordingly)

X

Narration: To recognize donated Equity from …….. (Donor’s name)

11.4 RESERVES

11.4.1 Definition of Reserves

Disclosure;

ü The reserves representing the appropriations of the retained earnings ü Reserves required by statute ü Revaluation reserves ü Foreign currency translation reserves

11.4.2 Retained Surplus/Deficit b/f

This is used for the purpose of showing profits or losses from previous fiscal years. Since this is a capital account, it generally has a Credit balance. This account is used for the purpose of showing (accumulated) surplus (deficit) from the previous fiscal years.

The account is debited with losses and credited with surpluses from earlier periods. The account may also be affected by duly approved and justified adjustments relating to similar prior periods.


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11.4.3 Current Year Surplus of Deficit

This account is used for the purpose of showing profits or losses earned during the current fiscal year. Only one account can exist for the current year. It shows the accrued balance of financial income.

At the end of a fiscal year all the income accounts should be debited to nil and the expense accounts credited to nil; the current year surplus or deficit shall be posted to the ‘Current year Surplus/Deficit Account.

11.4.4 Statutory Reserves

Statutory reserves include the following

1) Reserve Fund

According to Section 34 of the Cooperative Regulations 1992, 10% of the annual operational net surplus shall be put into the Reserve Fund and withdrawals from this Fund must be permitted by the Registrar.

2) Share Transfer Fund

According to Section 9 of the Cooperative Regulations 1992, payment to ex- members in respect of shares must be from a Share Transfer Fund and duty to maintain this Fund is imposed on SACCOs by Section 43 of the Cooperative Regulations 1992.

C CH HA AP PT TE ER R T TW WE EL LV VE E: : I IN NC CO OM ME E


12.1.1 Definition

Income shall encompass both revenue and gains. Revenue is income that arises in the ordinary course of business e.g. fees, interest, dividends, royalties, penalties, commission. Gains may or may not arise in the ordinary activities of an enterprise e.g. disposal of non-current assets.

1 12 2. .1 1. .2 2 Revenue shall not be recognized unless it meets certain standards of transfer of ownership, certainty, collectability and measurability.

12.1.3 Capital and reserve Grants shall be disclosed in equity on a cumulative basis, against the related accumulated costs over time. Grants relating to operating expenditure shall be shown as non-operating income in the income statement.

12.2 TYPES OF REVENUE


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The major sources of revenue shall be categorized as follows:

Loans Income A/C Code A/C Name

Interest received on loans Loan Commitment fees Surcharge on loans Collection fees

Savings and Membership fees Income

A/C Code A/C Name Membership fees Sale of stationery Saving Ledger fees Account closure fees

Other Income A/C Code A/C Name

Grant income Interest from Bank A/C Profit on Sale of Fixed Assets Foreign Exchange gain Miscellaneous income

12.3 INTEREST INCOME

12.3.1 Interest on Loans Interest on loans shall be recognized on modified accrual basis as described in Section 7.2 of this manual.

12.3.2 Interest on Investments Interest on Investments ordinarily arises out of Fixed Deposit Placements with other Financial Institutions and the SACCO shall pay 15% WithHolding Tax thereon, in accordance with Section 117 of the Income Tax Act. The 15% WithHolding constitutes a Tax credit which is deductible from Gross Tax liability at the end of the Financial Year and must therefore be accounted-for properly. Every time Interest is received on Investments, the following entries shall be passed.


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12.4 OPERATING GRANT INCOME

12.3.3 This represents income that is not from an internal source or that is outside the SACCO’s normal business activities. The account is used to record and accumulate the income from Grants. Entries are made transferring Funds from deferred Grant income to operating Grant income as and when expenses for which they were donated are incurred.

12.3.4 Accounting Policies

a) All Grants shall be recognized as income over the period necessary to match them with the related costs, which they are intended to compensate on a systematic basis. They should not be credited directly to shareholders’ interests.

b) Grants shall be recorded at fair value only where there is reasonable assurance that the SACCO will comply with the conditions attached to the Grant and that the Grant will be received

c) Revenue shall not be recognized unless the SACCO meets certain standards of transfer of ownership, certainty, collectability and measurability

d) Capital and Revenue Grants shall be disclosed in equity on a cumulative basis, against the related accumulated costs over time

e) Grants relating to operating expenditure shall be shown as non-operating income in the Income Statement

f) Grant income shall be recorded as the correspondence expense (In case of fixed asset Grants) is being made.

12.3.5 RECORDING

The Manager shall maintain a schedule for the expected and budgeted Grants/loans to be received from donors and government and when received.

12.3.6 ASSET GRANTS


Bank (85% of the Gross Interest) X WithHolding Tax Claimable (15%) X Interest on Investmants (100%) X

Narration: To recognize Interest on FD Placement for …….(Investment Period) with …….(Bank)


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Grants or donations in form of assets shall be recorded as deferred income that will be recognized as no-operating income on a systematic and rational basis over the life of the depreciable asset by way of a reduced depreciation charge. The accounting entries shall be passed as follows.

To recognize the Asset Grant in the SACCO books:


Respective asset account X Deferred asset Grant X

Narration: To recognize donated ……. (Asset name) from …….. (Donor’s name)

To recognize income on a systematic basis/depreciation charge


Deferred asset Grant X Grant Income (with the Depn. Charge) X

Narration: To recognize income on depreciation of donated ……. (Asset name) from …….. (Donor’s name)

12.5 OTHER INCOME

Other income shall be from non-recurring sources like profit or loss from the sale of fixed Assets or investments, profit or loss on exchange of a foreign currency, recovery of bad debts etc.

12.6 DISCLOSURE IN THE FINANCIAL STATEMENTS

12.2.1 Grant income shall be disclosed as non-operating income separately after net operational income in the income statement.

12.2.2 In the balance sheet, Grants, donations and in kind contributions shall be disclosed as accumulated donations under equity. A note reconciling the previous year’s opening balance to the current years’ closing balance per donor should be included in the notes to the financial statements.

The following should also be disclosed;


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a) The accounting policy adopted for Grants, donations and in kind contributions, including the methods of presentation adopted in the financial statements.

b) The nature and extent of Grants, donations and in kind contributions recognized in the financial statements.

c) Unfulfilled conditions and other contingencies attaching to Grants, donations and in kind contribution.

C CH HA AP PT TE ER R T TH HI IR RT TE EE EN N: : E EX XP PE EN ND DI IT TU UR RE E


1) All SACCO expenses shall be recognized immediately they are incurred (expenses shall be treated on accrual basis).

2) All SACCO expenses must be in the approved budget and shall be incurred only when there is still a balance on the budget item or upon the approval of the Board of Directors if it is over and above Budget.


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3) The Committee shall set expenditure limits for the Manager beyond which he/she shall seek the authorization of the Treasurer. The Manager shall not incur repetitive expenditure as a way of defeating the expenditure limit. Where it is discovered, the Committee shall discipline the Manager.

4) Expenditure above Shs 500,000 meant to benefit more than one accounting period or month shall be spread over the period it is to benefit. However, expenditures below Shs 500,000 shall be expenses during the period it is incurred. Similarly, expenses whose period of benefit cannot be ascertained with reasonable degree of accuracy like in case of motor vehicle repairs shall be written off during the period they are incurred.

5) The Manager shall be fully responsible for all SACCO expenses and no expenditure shall be incurred without his or her authorization.

6) All expenses shall be properly budgeted for and any expenditure not in the budget shall be approved by the Committee based on a supplementary budget, which will be reported at the Annual General Meeting.

7) Every expense shall be supported by an expenditure voucher, to which a supporting document shall be attached. The expenditure shall be approved by SACCO’s Manager and by any relevant SACCO authorities for any expenditure beyond the Manager’s limit.

8) A Payment Voucher (DOC6 ) shall show the following

The name of the payee The serial numbers of the voucher The account to be charged The purpose of payment and the documents justifying the payment The amount being paid (in words and figures) The name and title of SACCOS Official raising it. The authorization by the Manager or Treasurer (where applicable) Signature of the payee acknowledging receipts of payment

9) After payment, the Payee shall acknowledge receipt of payment and provide SACCO with his/her own receipt.

10) All SACCO capital expenditure shall be initiated by the Manager, authorized and approved by The Board of Directors/Committee.

11) The Committee minute authorizing the expenditure shall be quoted on the expenditure documents.

12) The Chairperson and SACCO Secretary/Treasury shall sign the minutes.

13) The capital expenditure documents shall include:

i. The Voucher ii. The original copies of the suppliers invoices


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iii. Analysis of the evaluation report and award of the tender where more than one quotation was received.

14) All paid Vouchers shall be kept in the order of date paid, batched and kept by SACCO Manager

15) The Finance Committee of the Board shall, from time to time, set procurement guidelines to streamline the processing and management of large expenses.

13.2 TYPES OF EXPENSES AT SACCOs

Expenses of SACCOs shall be categorised into the following categories;

1) Financial expenses e.g.

Interest on voluntary savings Interest on Borrowed Funds

2) Direct Loan Costs

Bad debts Expense Loan appraisal costs Loan monitoring and recovery costs Legal Fees on Loans

3) Personnel/Staff costs e.g.

Gross salaries Staff welfare and incentives NSSF – 10% Gratuity Staff trainings, workshops and capacity building Other Personnel Expenses

4) Office and Administration

Stationery expenses Rent of office premises Office expenses Telephone Internet and e-mail Professional fees


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Transport and travels Advertisement, announcements and publicity Power/fuel costs Accommodation allowances Duty allowances Community mobilisation Audit costs & legal fees Depreciation Loss on Sale of Fixed Assets Equipment Repairs & Replacement Security expenses Computer expenses Miscellaneous expenses

5) Governance

General meeting expenses Registration/affiliation fees B.O.D and committee expenses

6) Statutory expenses

Contribution to the Cooperative development Fund Members’ training Remittances to Secondary Society (Education Fund)

13.3 ACCOUNTING PROCEDURES

13.3.1 Expenditure Processing

1) Initiation of payments

Users on identifying a requirement shall raise a requisition that shall be recommended by the user for approval by the Manager, before it can be processed for payment.

2) Authorization of payments

In line with budgetary limits and any other managerial considerations, payments or any advance claims shall be verified and approved by the manager.

3) Refunds


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In the case of refunds, a Refund Claim Form (FM15) shall be filled out and accompanied by proper supporting documents. In the case of allowances not paid through the payroll, an authorization form must be attached to the claim.

4) Payment of claims by cashier

Claims and advances authorized for payment shall be forwarded to the cashier to effect payment. The payee shall be required to acknowledge receipt of payment by signing on the payment voucher and the cashier shall be required to stamp, sign and date the claim form and all supporting documents with the “PAID” stamp

13.3.2 Computation of Interest on Members’ Savings

a) SACCOs mobilize and provide safe custody for members’ savings. They shall ensure profitability, sustainability, and secure members’ confidence to save with them.

b) SACCOs shall in turn pay interest on the members’ deposits from the income earned from their operations particularly loans.

c) SACCOs’ Board/Committee shall determine the rate of interest to be paid on the members’ savings and shall be reviewed from time to time. In determining the rate of interest to pay, The Committee shall take into account, among other things the following:

i. The interest rate paid on Saving Deposits by Commercial banks particularly the rates applied by the Bank on its Account.

ii. The interest rate applied by other players in the Microfinance industry. iii. The lending interest rates other SACCOs charge on loans iv. The inflation rate v. The Cost of Capital or Required Rate of Return

d) SACCOs must note that interest payable on savings deposits is a cost and they shall have the capacity to pay.

e) Interest on Savings Account shall be calculated twice a year as follows:

Minimum balance held during months 1 & 2 TIMES the applicable interest rate DIVIDE by 6 PLUS Minimum balance held during months 3 & 4 TIMES the applicable interest rate DIVIDE by 6 PLUS


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Minimum balance held during months 5 & 6 TIMES the applicable interest rate DIVIDE by 6

Below is an example of how a SACCO can calculate interest on a Savings Deposit Account

At the end of 6 months and end of the year, DEBIT interests paid on Savings Account and CREDIT respective members’ Accounts as follows;


Interest on Members’ deposits expense X Member’s savings Account (85%) X Withholding Tax Payable (15%) X

Narration: Interest paid on member’s accounts for ….. Months ended …. (Date)

13.3.3 Expenditure Documentation

The following documents shall constitute expenditure supporting documents.

• Appointment letters, Training application form, Leave application forms • Overtime Claim Forms, Payroll, Pay advice slips

Month Minimum balance held

Applicable annual interest

A x B Interest payable per month C/6

A B C D Shs Shs Shs

1 60,000 3% 1,800 300 2 120,000 3 200,000 3% 6,000 1,000 4 250,000 5 100,000 6 50,000 3% 1,500 250

Total Interest Payable for Six Months 1,550


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• Bank summary and bank schedules, Expenditure Claim Forms • Petty cash Payment Voucher, Cheque Payment Voucher • Accountability statement, Purchase order, Requisition forms • Order Forms • Journal Voucher Form • Invoices, GRN, Delivery notes • Etc

13.4 PAYROLL COSTS

13.4.1 Introduction

• Payroll costs include the cost of hiring staff on a permanent or on a casual basis. It does not, however, include costs of hiring consultants.

• The overall policy on staff is set out in a separate manual. This document only serves to cover the accounting aspect.

13.4.2 Personnel Files

Each employee shall have a personal file kept by the Official responsible for staff matters. These files shall contain among others, the employee bio-data, photographs, application, interview details, CV, job description, salary scale and monthly gross pay, appraisal reports and any other documentation. These files shall be updated on a regular basis

• A Pay Roll (FM8) shall be prepared monthly and shall reflect the payments due to all employees. A payroll summary will be filled for all permanent staff salaries paid by the respective departments.

• All casual staff wages will be paid by cash.

13.4.3 Salary Deductions

1) National Social Security Fund

• A SACCO shall have all its employees registered with the National Social Security Fund (NSSF) as stipulated in the NSSF Act 1987.

• SACCOs shall comply with the National Social Security Fund (NSSF) Act and deduct NSSF, from each employee’s gross pay, in accordance with the Act. In addition, SACCOS shall contribute towards each employee’s NSSF as stipulated in the Act. Contributions shall be as follows:


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• Employee - 5% of the employee’s gross pay • Employer (The SACCO) -10% of the employee’s gross pay

ii) Pay As You Earn (PAYE)

SACCOs shall comply with the Income Tax Act and deduct PAYE, from each employee’s gross pay, in accordance with the tax tables in place at any point in time.

Computation of PAYE

Gross Pay range (GP) Rate Less or equal to Shs 130,000 NIL More than Shs 130,000 but less than Shs 235,000

10%

More than Shs 235,000 but less than Shs 410,000

(GP-130,000)*20%)+10,500

More than Shs 410,000 (GP-410,000)*30%)+45,500

iii) Other Deductions

Any other lawful deductions as Management may decide from time to time shall be effected on the Payroll

13.4.4 Remittance Of Deductions

a) National Social Security Fund

NSSF deductions shall initially be credited to a liability account under Statutory Deductions Payable pending remittance to the NSSF. SACCOs shall also comply with the time frame stipulated in the NSSF Act so as to avoid penalties levied by the NSSF. Deductions [in total 15% of each employee’s gross pay] shall be remitted to the NSSF by the 15 th of the month following the month of deduction (e.g. deductions for the month of May shall be remitted by 15 June etc).

SACCOS shall submit the NSSF return and obtain a receipt for the payment made as evidence that the liability has been settled.

b) Pay As You Earn

PAYE deductions shall initially be credited to a liability account under NSSF payable pending remittance to the URA. SACCOs shall also comply with the time frame stipulated in the Income Tax Act so as to avoid penalties levied by the URA.

Deductions shall be remitted to the URA by the 15 th of the month following the month of deduction (e.g. deductions for the month of May shall be remitted by 15 June etc).


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In the event of failure to raise the Funds to remit statutory deductions or to pay Salaries for a given month, the Manager shall contact the relevant authorities before the expiry of the remittance deadline for advice.

13.4.5 Payroll Processing

Payrolls shall be prepared using the format laid out in (Appendix) and shall be processed into a special Day Sheet or Journal Voucher (JV) to ensure that all the necessary accounting has been done. The Day Sheet is elaborated below.

“SACCO NAME” DAY SHEET

Date …………………………………………………………………………………… A/C Code Account Name Debit Credit

Shs Shs Gross Pay X Allowances (accordingly) X NSSF 10% (employers contribution) X Statutory deductions Payable(PAYE &NSSF 15%) X Salary Advance X Other accounts (accordingly) X Staff Savings A/Cs (accordingly) with the NET Pay X

Totals XX XX

13.4.6 PAYMENT OF SALARIES

a) Authorization of Salary Payments

The Manager shall authorize payment of Salaries by approving the Payroll together with the Payment Vouchers and none cash vouchers that shall be prepared in respect of the accounting entries derived there-from.

b) Mode of Payment

It is preferable that all SACCO staff operate Savings accounts with the SACCO such that their monthly salaries may be deposited/credited to those accounts.

c) Date of Payment

Salary payments shall be effected within the fourth week of the month for which Salaries are being paid so as to uphold the matching concept.

C CH HA AP PT TE ER R F FO OU UR RT TE EE EN N: : A AU UD DI IT T A AN ND D S SU UP PE ER RV VI IS SI IO ON N


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14.1 MANAGEMENT POLICY

In accordance with the Cooperative Societies Statute 1991, the members shall nominate for appointment annually or after 3 years a Certified Public Accountant, or a firm of qualified auditors whose duty shall be to perform an audit of the financial statements of a SACCO and to give an opinion in accordance with International Standards on Auditing as adopted in Uganda.

14.2 INTERNAL AUDIT AND SUPERVISION

Internal Audit and Supervision shall be carried out by the audit and supervision committee appointed by the Annual General Assembly

14.3 APPOINTMENT OF EXTERNAL AUDITORS

The members shall give management the mandate to identify suitable external auditors and to fix the remuneration and terms of reference. The identified auditors shall be presented to the Annual General meeting, and by a resolution shall be nominated for appointment.

Engagement Letter

The appointed auditor shall be given an engagement letter tailored to the nature of the engagement, indicating the scope of work, the agreed fees, deliverables, time schedule, his responsibility and management’s responsibility and the need to provide a management letter.

14.4 SUITABILITY FOR NOMINATION

The following qualifications shall be used as benchmarks for assessing the auditor’s suitability for nomination:

• Every partner (of the Audit firm) must be a registered member of the Institute of Certified Public Accountants of Uganda.

• The partner(s) with their staff must not have any financial, personal or other relations with SACCO that may impair their independence.

• A valid professional indemnity insurance cover for negligence in the performance of its duties.

14.5 THE AUDIT PROCESS


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14.5.1 Planning for the Statutory Audit

The Accountant shall ensure that draft financial statements for audit are ready within one month after the end of the financial year. The audit shall start latest in the second month following end of the fiscal year.

14.5.2 Execution of the Audit

The Accountant shall ensure that all the relevant schedules for the audit are ready so that the exercise is expedited. The external audit fieldwork shall be completed in the third month after the end of the fiscal year.

14.5.3 Report to Management

The Manager shall receive a draft report from the external auditors. An internal meeting with the Audit and Supervision Committee shall be held to discuss the findings by the external auditors and the comments from management. The Management shall then submit a final response to the external auditors for consideration. The final report shall be submitted to the Board at their next meeting.

14.5.4 Draft Audited Financial Statements

The Management shall receive the draft audited financial statements. The Manager shall then forward them to the Audit and Supervision Committee for review and comment. The draft Statements shall be distributed to the members of the Board of Directors for review and comment. If management and the members of the Board are satisfied with the draft Statements, the external auditors shall be requested to submit copies for signature of two members of the Board of Directors.

14.5.5 Board Meeting

The Board of Directors shall meet to approve the financial statements. The Balance Sheet shall be signed by two of the directors. The Secretary shall sign the Directors Report. Both documents shall be appropriately dated.

14.5.6 Letter of Representation

The Manager shall sign a letter of representation and submit it to the external auditors. This letter confirms the nature of representations made to the firm during their audit.


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14.5.7 Director’s Responsibility Report

Whereas the audit report contains a statement to the effect that directors are responsible for the financial statements, a separate statement called a director’s responsibility report is meant to remind the directors of their responsibility for the preparation of financial statements which present a true and fair view of the results of operation of the entity for an accounting period and of its financial position as at the end of the accounting period and which comply in all material respects with Generally Accepted Accounting Principles and the Cooperative Regulations 1992.

The directors (preferably those who sign the financial statements) should sign this statement on behalf of the board.

14.6 DISTRIBUTION OF AUDITED ACCOUNTS

14.6.1 Registrar of Cooperatives and U.R.A

The SACCO’s Secretary shall within 42 days after the Annual General Meeting for the year send copies of the final signed financial statements to the Registrar of Cooperatives and the revenue authorities.

14.6.2 SACCO Management and the Board

The SACCO Management shall retain a copy of the Audited Accounts for reference purposes and the Secretary shall keep a copy for record purposes

14.7 REMOVAL OF EXTERNAL AUDITORS

14.7.1 At any Annual General Meeting, a retiring auditor shall be deemed re-appointed unless the auditor is disqualified for re-appointment, or a resolution has been passed appointing another auditor, or the auditor has given written notice to a SACCO of his unwillingness to be re-appointed. No auditor shall be removed or changed except with approval of the Annual General Assembly.

14.7.2 An audit firm should not serve as an Auditor, continuously for more than four years.


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APPENDIX 1: COMMITTEE’S STATEMENT OF RESPONSIBILITY

STATEMENTS OF THE COMMITTEE’S RESPONSIBILITIES

It is the duty of the Committee to prepare financial statements for each year that show a true and fair view of the state of affairs of the SACCO as at the end of the financial year. The Committee is also required to ensure that the SACCO keeps proper books of account and records, which disclose with reasonable accuracy, at any time, the financial position of the SACCO. They are also responsible for safeguarding the assets of the SACCO.

The Committee accept responsibility for the annual financial statements, which have been prepared using appropriate accounting polices supported by reasonable and prudent judgments and estimates, in conformity with Generally Accepted Accounting Principles and in a manner required by the Cooperative Societies Statute 1991 and the Cooperative Regulations 1992. The Committee is of the opinion that the financial statements give a true and fair view of the state of affairs of the SACCO and of its operating results. The Committee further accept responsibility for the maintenance of accounting records, which may be relied upon in the preparation of financial statements, as well as adequate systems of internal control.

Nothing has come to the attention of the Committee to indicate that the SACCO will not remain a going concern for at least the next twelve months from the date of this statement.

Yours faithfully,

_______________________ Date ________ ___________________ Date___________ Chairperson Secretary


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APPENDIX 2: MODEL CHART OF ACCOUNTS

The General Ledger

A/C Code A/C Title Active/ Not Active

01-10000 ASSETS 01-1-1000 Cash and Bank Balances N/A

10-1-1001 Cash at Hand A 10-1-1002 Cash at Bank 1 A 10-1-1003 Cash at Bank 2 A 10-1-1004 Cash at Bank 3 A 10-1-1005 Cash at Bank 4 A

10-1-2000 Loans Outstanding N/A

10-1-2001 Loans to Females A 10-1-2002 Loans to Males A 10-1-2003 Loans to Groups A 10-1-2004 Loans to Institutions A 10-1-2005 Loans to Others A

10-1-3000 Advances N/A

10-1-3001 Employee advances A

10-1-4000 Investments N/A

10-1-4001 Short Term Investment A 10-1-4002 Long Term Investment A

10-1-5000 Prepayments N/A

10-1-5001 Prepaid Rent A 10-1-5002 Prepaid Utilities A 10-1-5003 Other Prepayments A


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10-1-6000 Receivables N/A

10-1-6001 Interest receivable on Loans A 10-1-6002 Interest receivable on Fixed Deposits A

10-1-6003 Overdrawn Savings Accounts A

10-1-7000 Amounts Receivable from Related Party N/A

10-1-7001 Advances to Board Members A 10-1-7002 Other receivables from Board Members A

10-1-8000 Stock N/A

10-1-8001 Stock of T-Shirts A 10-1-8002 Stock of Stationery A 10-1-8003 Stock of Other Assets A

10-1-9100 Tangible Assets N/A

10-1-9101 Motor Vehicles/Cycles A 10-1-9102 Equipment A 10-1-9103 Furniture & Fittings A 10-1-9104 Computers & Accessories A 10-1-9105 Land and Buildings A

10-1-9200 Intangible Assets N/A

10-1-9201 Software A

10-1-9202 Goodwill A

10-2-0000 LIABILITIES

10-2-1000 Savings and Time deposits N/A

10-2-1001 Members’ savings - Females A 10-2-1002 Members’ savings - Males A 10-2-1003 Members' Savings - Groups A 10-2-1004 Members' Savings - Institutions A 10-2-1005 Members' Savings - Others A

10-2-2000 Interest and Dividends Payable N/A

10-2-2001 Interest payable on Savings by Females A 10-2-2003 Dividends payable to Members A


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10-2-3000 Other Accounts Payable and Accruals N/A

10-2-3001 Interest payable on Borrowed Funds A 10-2-3002 Withholding Tax payable A 10-2-3003 Income Tax Liability A 10-2-3004 Professional fees Payable A 10-2-3005 Suppliers Payable A 10-2-3006 NSSF payable A 10-2-3007 PAYE payable A 10-2-3008 Affiliation fees Payable A 10-2-3009 Net Salaries/Wages Payable A

10-2-4000 Other Liabilities N/A

10-2-4001 General Loan loss provisions A 10-2-4002 Specific Loan loss provisions A 10-2-4003 Accumulated Depreciation A

10-2-5000 Non-Current Liabilities N/A

10-2-5001 Deferred Grant Income A 10-2-5002 Members’ Deposits – Long-term Fixed Deposits 10-2-5003 Long term Debt Market rate 10-2-5004 Long term Debt Subsidized rate

10-3-0000 EQUITY AND RESERVES

10-3-1000 Member shares N/A

10-3-1001 Shares Class 1 A 10-3-1002 Shares Class 2 A 10-3-1003 Shares Class 3 A

10-3-2000 Statutory Reserves N/A

10-3-2001 Reserve Fund A 10-3-2002 Share Transfer Fund A

10-3-3000 Retained earnings N/A

10-3-3001 Retained Profit A 10-3-3002 Current Year Profits A


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10-3-4000 Capital Grant (Donated Equity ) N/A

10-3-4001 Donor 1 A 10-3-4002 Donor 2 A 10-3-4003 Donor 3 A 10-3-4004 Other Donors A

10-4-0000 INCOME

10-4-1000 Loans Income N/A

10-4-1001 Interest income on Loans A 10-4-1002 Commission on loans A 10-4-1003 Penalty and Surcharge A 10-4-1003 Other Loans Income A Donor 3 Donor 4 Savings and Membership fees Income N/A

10-4-2001 Membership fees A 10-4-2002 Entrance fees A 10-4-2003 Sale of stationery A 10-4-2004 Saving Ledger fees A 10-4-2005 Account closure fees A

10-4-3000 Grant Income N/A

10-4-3001 Grant Income for Loan Capital A 10-4-3002 Grant Income for Operations A

10-4-4000 Investments Income N/A

10-4-4001 Interest on Fixed Deposits A 10-4-4002 Other Investment Income A

10-4-5000 Other income N/A

10-4-5001 Recovery of loans previously written off A 10-4-5002 Interest from Bank A/C A 10-4-5003 Profit on Sale of Fixed Assets A 10-4-5004 Foreign Exchange gain A 10-4-5005 Miscellaneous income A


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10-5-0000 EXPENDITURE N/A

10-5-1000 Financing Costs N/A

10-5-1001 Interest expense on Members' Savings A 10-5-1002 Interest expense on Borrowed Funds A 10-5-1003 Interest expense on Time Deposits A 10-5-1004 Other Financing Costs A

10-5-2000 Direct Loan Costs N/A

10-5-2001 Bad debts Expense A 10-5-2002 Loan appraisal costs A 10-5-2003 Loan monitoring and recovery costs A 10-5-2004 Legal Fees on Loans A 10-5-2005 Other Direct Loan Costs A

10-5-3000 Staff Costs N/A

10-5-3001 Gross salaries A 10-5-3002 Staff welfare and incentives A 10-5-3003 NSSF – 10% A 10-5-3004 Gratuity A 10-5-3005 Staff trainings, workshops and capacity building A 10-5-3006 Other Personnel Expenses A

10-5-4000 Administration expenses N/A 10-5-4001 Stationery expenses A 10-5-4002 Rent of office premises A 10-5-4003 Office expenses A 10-5-4004 Telephone A 10-5-4005 Internet and e-mail A 10-5-4006 Professional fees A 10-5-4007 Transport and travels A 10-5-4008 Advertisement, announcements and publicity A 10-5-4009 Power/fuel costs A 10-5-4100 Accommodation allowances A 10-5-4101 Duty allowances A 10-5-4102 Community mobilisation A 10-5-4103 Audit costs & legal fees A 10-5-4104 Depreciation A


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10-5-4105 Loss on Sale of Fixed Assets A

10-5-4106 Equipment Repairs & Replacement A 10-5-4107 Security expenses A 10-5-4108 Computer expenses A 10-5-4109 Donations and gifts A 10-5-4020 Bank charges A 10-5-4021 Affiliation fees expense A 10-5-4022 Miscellaneous administrative expenses A

10-5-5000 Governance expenses N/A

10-5-5001 General meeting expenses A 10-5-5002 Registration fees A 10-5-5003 Committee expenses A 10-5-5004 Other Governance expenses A

10-5-6000 Statutory Expenses N/A

10-5-6001 Cooperative development Fund Contribution A 10-5-6002 Members’ training A

10-5-6003 Remittances to Secondary Society (Education Fund) A

10-5-6004 Other statutory Expenses A

Key to symbols used;

A refers to ‘Active’ N/A refers to ‘Non – Active’


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The Savings Ledger

A/C Number format Classification of Accounts Comments

2X1XXXX Savings by Females • Corresponds to GL Control Account 1021001 • Shall contain all female savers Savings accounts

2X2XXXX Savings by Males • Corresponds to GL Control Account 1021002 • Shall contain all female savers Savings accounts

2X3XXXX Savings by Groups • Corresponds to GL Control Account 1021003 • Shall contain all female savers Savings accounts

2X4XXXX Savings by Institutions • Corresponds to GL Control Account 1021004 • Shall contain all female savers Savings accounts

2X5XXXX Savings by Others • Corresponds to GL Control Account 1021005 • Shall contain all female savers Savings accounts

The Loans Ledger

A/C Number format Classification of Accounts Comments

3X1XXXX Loans to Females • Corresponds to GL Control Account 1012001 • Applies to all Female borrowers Loan Accounts

irrespective of the Loan Product

3X2XXXX Loans to Males

• Corresponds to GL Control Account 1012002 • Applies to allMale borrowers Loan Accounts


3X3XXXX Loans to Groups

• Corresponds to GL Control Account 1012003 • Applies to all Group borrowers Loan Accounts


3X4XXXX

Loans to Institutions • Corresponds to GL Control Account 1012004 • Applies to all Institutional borrowers Loan

Accounts irrespective of the Loan Product

3X5XXXX Loans to Others • Corresponds to GL Control Account 1012005 • Applies to all Other borrowers Loan Accounts



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APPENDIX 3: SAMPLE ACCOUNTING BOOKS, FORMS AND DOCUMENTS

BK1: ACCOUNT OPENING REGISTER

“SACCO NAME” COOPERATIVE SAVINGS & CREDIT SOCIETY LTD

Account Opening Register

Date Title of Account Account No. Cumulative No. of Accounts

Remarks

This Register should be a Counter Book with prenumbered pages

BK2: RESERVE CASH REGISTER.

“SACCO NAME” COOPERATIVE & CREDIT SOCIETY LTD

RESERVE CASH REGISTER

Date Shilling Notes Shilling Coins 50,000 20,000 10,000 5,000 1,000 500 200 100 50 20 10 5 2 1 Total Initials

This Register should be a Counter Book with Prenumbered pages.


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BK3: CASH COUNT BOOK

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD

Cash Count Book Date ……………………

Cashier 1 Shs

Cashier II Shs

Total Shs

Notes 50,000 20,000 10,000 5,000 1,000

Coins 500 200 100502010

Spoilt Cheques etc Excess/ shortages Reserve

Balance B/F Cash in

Cash out Balance

Total

Cashier’s Signature: …………………………………….

Checked by: ……………………………………………..


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BK4: FIXED DEPOSITS REGISTER

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD.

Fixed Deposits Register

Date Title of A/C A/C No Amount Deposited

Period Expiry Date

Interest Rate

Total at Maturity

The register should be a counter book with prenumbered pages

BK5: INCOMING CHEQUE REGISTER


Incoming Cheque Register

Date Cheque No Amount AC/ No. Deposited on

Title of A/c

Remarks


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BK6: STATIONERY INVENTORY REGISTER


Stationery Inventory Register

Date Particulars Number Cost per Unit Total Value Remarks

BK7: LEDGER CARD REGISTER


Ledger Card Register

Date Name of customer Account No

Ledger No

Initial of Manager


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BK8: DOCUMENT MOVEMENT REGISTER


Document Movement Register

Date Date of voucher Bundle

Ledger Reason for

Removal

Authorization Official

Name & Signature of Official

Date Returned

Signature of

returning Official

Signature of

receiving Official

BK9: MEMBERSHIP/SHARES REGISTER


Membership/Shares Register

Name: ………………………………………… Membership No: …………………………………

Address: ……………………………………………………. Date of

Transaction Nature of Transaction

No of Shares

Value of shares purchased (Shs)

Value of shares sold (Shs)

Other capital transactions

Balanc e (Shs)



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BK10: OUT GOING CHEQUE REGISTER


Out going Cheque Register

Date Cheque No

Drawee A/c Number

Amount Remarks


BK11: PASSBOOK DISTRIBUTION REGISTER


Passbook Distribution Register

Date Name Owner’s Account No

Passbook No

Owner’s Signature

Initial of Manager


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BK12: SHARE CAPITAL REGISTER


SHARE CAPITAL REGISTER

Date Opening Balance (Ugshs)

Transactions for the day Closing Balance (Ugshs)

No. of Shares

Value of shares purchased (Ugshs)

Value of shares sold (Ugshs)

Other share capital

transactions

This Register should be a Counter Book with Prenumbered pages

BK13: UNPAID CHEQUE REGISTER


UNPAID CHEQUE REGISTER

Date of receipt

Depositor’s Name

Cheque No.

Cheque Date

Drawee A/c No. Amount Bank on whom Chq is drawn

Remarks


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This Register should be a Counter Book with Prenumbered pages.

BK14: FIXED ASSETS REGISTER


Fixed Assets Register

Asset description

Manufacturer’s Serial No.

Date of Purchase Value (shs)

Unique Identification No.

Location (eg office) User Remarks


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FM1: APPLICATION FOR MEMBERSHIP

Name: …………………………………………………………………………………………………………….………

Date: ………………………………………………………………………………………………………………

I hereby apply for Membership in the Society.

Applicants full names Residential Address Location of Business

Sex: : Date of Birth:

Occupations: ………………………………………………………………………………………………………

Name and address of employer: (if any) ………………………………………………………………………….

If Application is acceptable, I agree to pay an entrance fees of Shs ……………………………………….and Share Capital of Shs ………………………………. For ……………………………….shares.

I agree to abide by the byelaws and any other rules and regulations of the society.

In case of death, I nominate……………………………………………………… to take over my shares in the society.

Signature of Applicant: ………………………………………………………………………………………….

FOR OFFICIAL USE ONLY

This application has been approved/rejected by the committee during the society Committee/Board meetings of ………………………………, minute no……………………………..

Membership number allocated …………………………………………

Signed …………………………………. Signed ………………………………………… MANAGER CHAIRPERSON

Date: …………………………………… Date: ………………………………………….

*Please give reasons for rejection

**Group applicants should attach supporting documents


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FM 2: APPLICATION FORM FOR OPENING A PERSONAL SAVINGS ACCOUNT

Name of SACCO: ……………………………………………………………………………………

Date: ………………………………………………………………………………………………………………

Dear Sir,

We/I hereby request you to open a Savings Account in my names (entitled …………………………………….

…………………………………………………………………………………………………………………….

You are requested to honour any drawings instructions bearing my signature as per the specimen given below, and on your specimen of signature cards and also the signatures of any person who may be given my mandate to sign on my behalf. In case of death the following person can take over my Savings Account and their particulars:

Name: …………………………………………Village/Address:……………………………………………….

I hereunder also supply the following personal particulars to which I testify their correctness.

Present address: Village : ………………………………………….

Parish: ……………………………………………

P O Box …………………………………………

Tel: ………………………………………………

Sub county………………………

Age: ……………………………..


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Occupations: ………………………………………………………………………………………………………

Name and address of employer: (if any) ………………………………………………………………………….

I hereby agree to conform to the rules governing SAVINGS Account at your society

Signature of Applicant: 1……………………………………………………………………………………..

2……………………………………………………………………………………..

Our/my first savings deposit is Shs ……………………………………paid by …………………………….. Other Bankers…………………………………………Branch ………………………………………………

Introduced by: 1. …………………………………..A/C………………………Signature…………………...

2……………………………………A/C……………………….Signature ………………….

Checked By………………………………………………

Approved by:…………………………………………….Account No: ……………………………………..

FM3: APPLICATION FORM FOR PURCHASING ADDITIONAL SHARES

Name of SACCO I am applying to purchase shares in the society as per the following particulars;

Name of applicant: …………………………………………………………………………………………. ID/No/GPT No: ……………………………………………………………………………………………... Membership No: in the society ……………………………………………………………………………... Residential address (Village, Parish, Subcounty …………………………………………………………... Number of Shares Applied for; ……………………………………………………………………………... Total Value of shares Shs …………………………………………………………………………………..

The undersigned agree to abide by the society’s bylaws, which govern the subscription of the society’s shares.

Signed: …………………………………………….. Date: ………………………………………………

(GPT stands for Graduate Pool Tax Ticket No)

N B Your Cheque/Cash will be acknowledged immediately by the Manager of the Society and Share Certificate will be issued in due course.

See Notes: Please Read through the following Notes:


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The limit of the number of shares and individual can buy is subject to the Society’s byelaws and the Cooperative Act based on the following criteria.

1. The value of one share is Shs …………………………………………

2. Entrance fee is Shs …………………………………………………….

3. The Minimum number of shares to be purchased by an individual are ………………shares

OFFICIAL USE ONLY Date Received …………………………………………………………………………………………….

Amount Received: …………………………………………………………………………………………

Cash receipt No: ………………………………………….Dated:……………………………………….

Share Certificate No: ………………………………………………………………………………………

Cashier’s Siganature…………………………………….

Manager’s Siganature…….…………………………….

FM4: RESERVE CASH LODGMENT FORM


Reserve Cash Lodgment Form Name: ………………………………… Date: ………………………..20………..

Notes Coins 50,000 500 20,000 200 10,000 100 5,000 50 1,000

Subtotal (notes) Subtotal (notes)

Grand total

Amount in words:______________________________________________________________________

Cashier’s Name : __________________________ Signature: _____________________________


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Authorized by : __________________________ Manager

Signature: _____________________________

FM5: RESERVE CASH REQUISITION FORM


Cash Reserve Requisition Form Name: ………………………………… Date: ………………………..20………..

Notes Coins 50,000 500 20,000 200 10,000 100 5,000 50 1,000

Subtotal (notes) Subtotal (notes)

Grand total

Amount in words:____________________________________________________________________


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Cashier’s Name : __________________________ Signature: __________________________

Authorized by : __________________________ Manager

Signature: __________________________

FM6: LOAN APPLICATION FORM


Name: ……………………………………………………………………………………………………………...

Name of Application Residential Address Location of Business

Membership No: Savings Account No:


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Amount of Loan Applied for Shs ………………………………………(Amount in words)………………………………

……………………………………………………………………………………………………………………………….

Purpose for which the Loan is required: …………………………………………………………………………………….

Date when the loan is required: ……………………………………………………………………………………………..

From where will you get the money to repay the loan? ……………………………………………………………………

Securities offered: 1……………………………………………Approximate Value (shs) ………………………………..

2……………………………………………Approximate Value (shs)…………………………………

3……………………………………………Approximate Value (Shs)………………………………..

Value of shares in the society:……………………………………………………………………………………………..

Balance on my Savings Account deposit in the Society (Shs) ……………………………………………………………

Guarantors: I/we, the undersigned agree to repay from our own sources, the total amount of the loan owed by the applicant to the society if the applicant fails to repay the loan Granted by the society by the time it is due

Name: …………………………………….Membership No…………Savings A/c……………signature………………….

Name: …………………………………….Membership No…………Savings A/c……………signature………………….

I undertake to fully repay the loan applied for with interest thereon the due dates agreed upon with the society. I also authorize the society to deduct from my savings Account, Share Capital or sell my assets pledged as a securities for the loan without any hindrance from me or anyone else to recover any amount of the loan that I will have failed to pay

Name : ………………………………...Signature of applicant………………………Thumb print………………………

I agree with and hereby give permission to my spouse to borrow from the society Shs ………….. for the purposes of ………………………….and pledge the securities mentioned above.

Name : …………………………….….Signature of applicant………………………Thumb print………………………

Verified by LC1 (Name & Signature and Stamp)………………………………………………………………………….

FM7: PAYMENT REQUISITION FORM

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD Box number and physical address Registration No

PAYMENT REQUISITION FORM

This request is being made by: ……………………………………………………………………………………...

On this date of……………………………………………………………………………………………………….


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The amount requested is …………………………………………………………………………………………….

………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………..

……………………………………………………………………………………………………………………….

And the amount requested will be used in the following manner …………………………………………………...

………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………..

(Use separate sheet if this not enough)

Signature: ……………………………………………………………………………………………………………

ACCOUNTANT

Payment can be made/Not made/Payment referred to next date

Note Item: …………………………………………………………………………………………………………...

Unexpended balance…………………………………………………………………………………………………

Signature: ……………………………………………………………………………………………………………

MANAGER

Payment Approved/Disapproved:

FM8: PAYROLL FORM

“SACCO NAME” COOPERATIVE SAVINGS & CREDIT SOCIETY LTD PAYROLL FORM

a b c = a+b d e f g = c (d+e+f)

Name of Employee

Basic Pay

Allowances Gross Pay PAYE deduction

NSSF deduction

Other deductions

Net Pay


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Totals

FM9: SALARY ADVANCE REQUEST FORM “SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT

SOCIETY LTD.

Salary Advance Request Form Name: ……………………………………………..

Designation: ……………………………………….

Salary advance requested for Shillings ………………………………………. Amount in words.

…………..……………………………………………………………………………………………………..)

Purpose fro which the advance is sought ……………………………………………………………………… …………………………………………………………………………………………………………………. To be recovered from my salary in …………………………………………………….months (please note that all salary advances

shall be recovered in a period of not more than 4 (Four) months.

Signature: ……………………………………. ……… Date: ……………………………………….

Recommended by:…………………………………… (Manager)

Date:………………………………………..

Authorised by: ………………………………………. Date:………………………………………..

Received by: ………………………………………… Date:………………………………………..

FM10: PURCHASES REQUISITON FORM

“SACCO NAME” COOPERATIVE & CREDIT SOCIETY

PURCHASES REQUISITON FORM

Date………………………………………

No. Items requested Quantity

Prepared by: ……………………… Checked by: …………………… Approved by: ………...

Date : ……………………… Date : ………………….. Date : …………


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_____ ____________________________________ ___________________

_____ ____________________________________ ___________________

_____ ____________________________________ ___________________

_____ ____________________________________ ___________________

_____ ____________________________________ ___________________

_____ ____________________________________ ___________________

Requested by _____________________________________ Sign ________________

Designation _______________________________________

Authorized by _____________________________________ Sign ________________

Designation _______________________________________

Received by _______________________________________ Sign _______________

Date ______________________________________

FM11: THIRD PARTY MANDATE FORM


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A/C No……………………………………

THIRD PARTY MANDATE FORM

TO,


I/We request you that, until you receive written direction from me/ us to the contrary, treat and consider my /our Mr./ Mrs/ Miss …………………………………………….. as fully empowered to draw and sign Cheques/Vouchers on my/our account, whether the same be in credit or overdrawn, and to endorse or accept Cheques, Bills and Promissory Notes and other documents in my/our name, for all of which this shall be a full and sufficient authority to you, and shall be binding upon me/us and all other persons claiming from or under me/us.

………………………………………….. Signature of Owner of Account

……………………………………………… Signature of Witness

A/c No………………………………………

……………………………………………… Signature of Third Party

Photograph of the third party

For internal use

Checked by Cashier……………………………………………………….

Approved by Manager…………………………………………………….


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FM12: FIXED ASSETS DEPRECIATION FORM

FM13: BANK RECONCILIATION FORM


BANK RECONCILIATION STATEMENT

Bank Name: ………………………….. Date: ……………

Date Particulars/Narration Shs 000 Shs 000 Closing balance as per cash book XXX

Add: All direct credits xxx All unpresented cheques xxx

TOTAL ADDITIONS XXX XXX

Less: All direct debits (xxx) All un – credited cheques (xxx)

TOTAL DEDUCTIONS (XXX) Balance as per Bank Statement XXX


FIXED ASSETS DEPRECIATION FORM

Fixed Asset Class: ………………………….. Depreciation Rate: ……………

S/N Name of the Asset

Date of Purchase

Cost of purchase

Depreciation charge

Accumulated depreciation

Written down Value

Remarks


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FM14: STOCK COUNT FORM

“SACCO NAME” COOPERATIVE & CREDIT SOCIETY

STOCK COUNT FORM

Date………………………………………

No. Item Name Quantity

Counted by _____________________________________ Sign ________________

Witnessed by _____________________________________ Sign ________________


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FM15: REFUND CLAIM FORM

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD Box number and physical address Registration No

ReFund Claim Form

This request is being made by: ……………………………………………………………………………………...

On this date of……………………………………………………………………………………………………….

The amount requested is …………………………………………………………………………………………….

………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………..

……………………………………………………………………………………………………………………….

And the amount requested was used in the following manner …………………………………………………...

………………………………………………………………………………………………………………………..

………………………………………………………………………………………………………………………..

(Use separate sheet if this not enough)

Signature: ……………………………………………………………………………………………………………

ACCOUNTANT

Payment can be made/Not made/Payment referred to next date

Note Item: …………………………………………………………………………………………………………...

Unexpended balance…………………………………………………………………………………………………

Signature: ……………………………………………………………………………………………………………

MANAGER

Payment Approved/Disapproved:


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DOC1: FIXED DEPOSIT CERTIFICATE


FIXED DEPOSIT CERTIFICATE

I certify that on ……/…./20……………………………………………………………..placed total amounting to Shs ……………….. (……………………………………………………………………..) only with …………………………………………………. The Fixed Deposit will mature after ………………….. date of placement and in any case not later than …../…./20…… the Fixed Deposit interest at the rate of …..% per …. (………… per………...) payable on security.

………………………………Date …………………… Signed ………………………………. Managers Treasurer

Official SACCO stamp


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DOC2: FIXED DEPOSIT SLIP


Fixed Deposit Slip

Date: ………………………..20……..

Credit: ……………………………….. To: …………………………………………………………………………………………………………………

Please receive the following cash being deposited in respect of my fixed deposit for ………………..months.

Notes Shs. 50,000 Shs. 20,000 Shs. 10,000 Shs. 5,000 Shs. 1,000 Coins Shs. 500 Shs. 200 Shs. 100 Shs. 50 Total Cash Total Cheque Listed overleaf

Amount of Shillings in words: ________________________________________________________________

Paid by: __________________________________ Sign:________________________

Savings Account No: _______________________

Authorized by: ____________________________ Manager

Cashier’s Stamp


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DOC3: INTERNAL CREDIT VOUCHER


INTERNAL CREDIT VOUCHER Serial No: ___________________________ Date: _______________________________

Credit: ______________________________ A/C No: _______________________________

Being: ____________________________________________________________________________________

__________________________________________________________________________________________

Ug Shs

Amount in words: ___________________________________________________________________________

__________________________________________________________________________________________

Contra Account: ________________________________ Prepared by: ___________________________________ Approved by: _________________________


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Doc 4: INTERNAL DEBIT VOUCHER


INTERNAL DEBIT VOUCHER Serial No: ___________________________ Date: _______________________________

Debit: ______________________________ A/C No: _______________________________

Being: ____________________________________________________________________________________

__________________________________________________________________________________________

Ug Shs

Amount in words: ___________________________________________________________________________

__________________________________________________________________________________________

Contra Account: ________________________________ Prepared by: ___________________________________ Approved by: _________________________


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DOC5: ORDINARY SHARE CERTIFICATE

“SACCO NAME” COOPERATIVE “SACCO NAME” COOPERATIVE & CREDIT SOCIETY & CREDIT SOCIETY (Include registration number and address) Certificate No. ………………………. No of Shares…………………………. Certificate No………… Member Reg No. …………… Date of issue………………….. Date of issue……………….20……… Names……………………………….. ………………………………………. ORDINARY SHARE CERTIFICATE Address……………………………… ………………………………………. This is to certify that …………………………………………………………………. ………………………………………. of………………………………………………….is the registered holder of ……………

fully paid shares of Shs………………………………………………each, in the share DISTINCTIVE NOS. capital of ………………………………… Cooperative Savings & Credit Society in

accordance with the bye – laws of the society.

No. of Transfers…………………… No. of old Certificates…………….. Received by………………………..

NOTE: No Transfer of the above shares cannot be registered unless if accompanied by this certificate

Date Rpt No Shares AMOUNT

Total to Date

Shs

DISTINCTIVE RECEIPT NOs.

Date Receipt No No. Shares

AMOUNT

Total to Date

(……………20…..) Shs …………….

Given under the common Seal/Stamp of ………………………………………… ………………………………………... ………………………………………… this………………day of …………..20…

…………………………………………… Chairman

…………………………………………… Secretary


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DOC6: PAYMENT VOUCHER

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD Box number, physical address Registration No

Payment Voucher Name/Address of payee _____________________________________

_________________________________________________________

Vr. No: _______________________

Date: _________________________

Doc/Receipt No: ____________________File No: _______________ Cheque No: ___________________

Bank A/C No: _________________

Item Description of Payment Budget Line Amount

Total

Amount in words: __________________________________________________________________________

__________________________________________________________________________________________

Prepared by: ____________________________________ Approved by: ________________________

Date: ___________________________________________ Date: _______________________________

Received by: ____________________________________ Paid by: _____________________________

Date: _______________________________________ Date: ________________________________


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DOC7: RECEIPT

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD “Physical address and Telephone number”

RECEIVED with thanks from ________________________________________

RECEIPT

___________________________________________________________ Date

___________________________________________________________ No.

The sum of Shillings _________________________________________________________________________

__________________________________________________________________________________________

Being payment of ___________________________________________________________________________

__________________________________________________________________________________________

Cash/cheque No. ____________________________ Balance _____________________________________

Shs . _________________________________________

With thanks For : “Sacco name” Coop Savings and Credit Society Ltd


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DOC8: WITHDRAWAL SLIP

WITHDRAWAL SLIP Date: .../…/….

“SACCO NAME” CO-OPERATIVE SAVINGS & CREDIT SOCIETY LTD. Box number, Tel number & Registration No

Account Number Account Name:

Amount in words: _________________________________________________ Amount USHS

Customer Signature Signature Ver I acknowledge Receipt of the above Cash:

__________________________________

Supervisor: __________________________ Manager: _________________________


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DOC9: SAVINGS DEPOSITS SLIP


Box number, Tel number & Registration No

Savings Deposit Slip

Credit: …………………………………………………………………

Date: ……………………………

A/C No:

Notes Shs. 50,000 Shs. 20,000 Shs. 10,000 Shs. 5,000 Shs. 1,000 Coins Shs. 500 Shs. 200 Shs. 100 Shs. 50 Total Cash Total Cheque Listed on reserve


_________________________________________________________________________________________

Paid by: __________________________________ Sign:________________________

Cashier’s Stamp & Signature


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DOC10: LOAN REPAYMENT SLIP


Box number, Tel number & Registration No

Loan Repayment Slip

Credit: …………………………………………………………………

Date: ……………………………

A/C No:

Notes Shs. 50,000 Shs. 20,000 Shs. 10,000 Shs. 5,000 Shs. 1,000 Coins Shs. 500 Shs. 200 Shs. 100 Shs. 50 Total Cash Total Cheque Listed on reserve


_________________________________________________________________________________________

Paid by: __________________________________ Sign:________________________

Cashier’s Stamp & Signature


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DOC11: LOAN LEDGER CARD


Loan Ledger Card Serial No. …………

Name: ………………………………………… Address: ………………………………………….

Membership No: ……………………………. Savings No: ………………………………………

Principal Loan Amount (Shs) …………. Interest Amount (Shs) ………………Total …………. Loan Period …………………………………. Interest Rate……………………………………….. Date Opening Balance Repayments Closing Balance

Principal Interest Principal Interest Principal Interest


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DOC12: SAVINGS LEDGER CARD


SAVINGS LEDGER CARD

Name …………………………………………………. Serial No. …………….

Pass Book No. ………………………………………..

Account Holder’s Signature…………………………..

Verified by …………………………………………… (Manager’s Signature)

Date Description of the transaction

Debits Credits Balance Authorizing Person’s Signature

Account Holder’s Photograph


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DOC13: GENERAL LEDGER CARD


GENERAL LEDGER CARD

Account Name ………………………………………. Serial No. ……………

Account Number. ……………………………………

Verified by …………………………………………… (Manager’s Signature)

Date Description of the transaction

Debits Credits Balance Authorizing Person’s Signature


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DOC14: SPECIMEN SIGNATURE CARD


Specimen Signature Card

Current/ Savings/ Fixed Deposit Account

Title/ Name of the account______________________________________________________ (Surname first followed by other names)

________________________________________________________________(fill in full names of partners if any)

Name Signature Position Age

_________________ _________________ ________________ _____________

_________________ _________________ ________________ _____________

_________________ _________________ ________________ _____________

_________________ _________________ ________________ _____________

Date _________________________

Authenticated by ___________________________ ___________________________ Cashier Manager

Date ______________________________ ___________________________

Account No. …………………………………..


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DOC15: DAY SHEET


DAY SHEET Date: …………..

Account Code Account Number Debit (Dr.) Credit (CR) Shs Shs

Totals

Prepared by: ………………………………. Approved by: ………............................................

Date : ………………………………. Date : ……………………………………


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DOC16: TILL SHEET


TILL SHEET Cashier No: _________________________ Date: _______________________________

S/No. Name A/c Dr. S/No. Name A/c Dr.

Prepared by: ____________________________Checked by:_______________________


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DOC17: Weekly Certificate of Balance – Saving Account


Weekly Certificate of Balance – Saving Account as at ……………………………..

Ledger No

No of A/cs

Balance B/F

Total Debits

Total Credit Balance per control

Balance per extract


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DOC18: WASTE SUMMARY SHEET


Waste Summary Sheet Debit G/L Account Credit

Cash

Savings

Share Capital

Profit/Loss

Creditors

Debtors

Loans

Bank A/C

Capital Grants

Stock Stationery

Payroll Liabilities

Fixed Assets (G)

Fixed Assets (L)

Accumulated Dep.

Interest Receivable


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Prepared by: ____________________________ Checked by: ____________________

DOC19: CONTROL SHEET


Control Sheet Account: ………………………………………………..

Particulars Check figure Debit Credit Balance Unit Ref


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DOC20: WASTE SHEET


Waste Sheet

Account: ……………………………………………….. C R E D I T DEBIT

Proof Ref Cash Savings A/c

Current A/c

Loan A/c

Shares A/c

Banks A/c

Misce Revenue Ref Cash Saving A/c

Current A/c

Loan A/c

Shares A/c

Banks A/c

Misce Rev exp


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APPENDIX 4: WORKED-OUT EXAMPLES

1. Example on payroll Processing

Considering a situational circumstance whereby a SACCO has 10 employees with one manager and the following Basic Pay rates.

Employee Basic pay Manager 600,000 Supervisor 400,000 Accounts Official 350,000 Head of Credit 320,000 Credit Official 305,000 Loans Official 280,000 Cashier 250,000 Administrative Official. 200,000 Office messenger 120,000 Security guard 50,000

• Each of the above employees, except the manager, is entitled to lunch allowance of 50,000/=. • Apart from the security guard, the rest of other the employees are also entitled to transport allowance

of 50,000/=. • The Supervisor happens to have taken a salary advance of 100,000/= during the month.

• The Manager is entitled to housing allowance of 100,000/=, lunch allowance of 60,000/= and transport allowance of 50,000/=.

• The Manager got a loan from the SACCO. In repayment of this loan, the SACCO deducts 150,000/= from his salary on a monthly basis.

• All allowances are paid or claimed on a monthly basis.

• Payroll for the above situation can be prepared as shown below;

Pay As You Earn (PAYE) Computation

The following workings show how Pay As You Earn (PAYE) is computed for people in four different income brackets as displayed by the formulas below. A sample of four employees has been picked from the example above and their PAYE amounts have been computed to match what is shown in the example.


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The standard table of formulas used for PAYE in UGANDA is as shown below;

Income bracket Tax Rate charged Income below 130,000/= 0% Above 130,000/= and below 235,000/= 10% X (a– 130,000/=) Above 235,000/= and below 410,000/= 20% X (b – 235,000/=) + 10,500/= Income above 410,000/= 30% X (c – 410,000/=) + 45,500/=

Where; a = any income above 130,000/= but below 235,000/= b = any income above 235,000/= but below 410,000/= c = any income above 410,000/=

Applying the explanation in the above table, the PAYE computations can be made for the Security Guard, Office messenger, Cashier and the Supervisor as shown below;

o PAYE for the Security Guard with a Gross Pay of 100,000/=. This income is below 130,000/=. The formula is applied as below;

100,000 X 0% = 0

o PAYE for the Office Manager with a Gross Pay of 220,000/=. This income is above 130,000 /= but below 235,000/=. The formula is applied as below;

(220,000130,000) X 10% = 9000

o PAYE for the Cashier with gross pay of 350,000/=. This income is above 235,000/= but below 410,000/=. The formula is applied as below;

(350,000 – 235,000) X 20% + 10,500 = 33,500

o PAYE for the Supervisor with gross pay of 500,000/=. This income is above 410,000/=. The formula is applied as below;

(500,000 – 410,000) X 30% + 45,500 = 72,500

The above four sampled people whose PAYE computation has been illustrated have also been recorded in the PAYROLL computation table. In this table, the values of PAYE reported tally with what has been calculated in the illustration.


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NSSF computation

Referring to the payroll computation above, a sample of four employees has been taken to illustrate how the NSSF value is computed.

o NSSF for the Security Guard with a Gross Pay of 100,000/=

(100,000 X 5%) + (100,000 X 10%) = 15,000

o NSSF for the Office Manager with a Gross Pay of 220,000/=

(220,000 X 10%) + (220,000 X 10%) = 33,000

o NSSF for the Cashier with gross pay of 350,000/=

(350,000 X 5%) + (350,000 X 10%) = 52,500

o NSSF for the Supervisor with gross pay of 500,000/=

(500,000 X 5%) + (500,000 X 10%) = 75,000

In the above illustrations, the 10% relates to the SACCO contribution towards the savings of the staff members and 5% relates to the contribution of the staff towards their own savings in National Social Security Fund. The above illustration helps to explain why the NSSF value reported in the Day Sheet is higher than that reported in the Payroll sheet above. The Payroll sheet includes only 5% of the contribution and the Day Sheet includes both the 5% and 10% making total contribution equaling to 15%.


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The detailed Payroll

Allowances Other deductions

Employee Basic pay

Housing allowance

Lunch Allowance

Transport Allowance

Gross Pay PAYE NSSF

Loan payment

Salary advance Net Pay

Manager 600,000 100,000 60,000 50,000 810,000 165,500 40,500 150,000 454,000

Supervisor 400,000 50,000 50,000 500,000 72,500 25,000 100,000 302,500 Accounts Official 350,000 50,000 50,000 450,000 57,500 22,500 370,000

Head of Credit 320,000 50,000 50,000 420,000 48,500 21,000 350,500

Credit Official 305,000 50,000 50,000 405,000 44,500 20,250 340,250

Loans Official 280,000 50,000 50,000 380,000 39,500 19,000 321,500

Cashier 250,000 50,000 50,000 350,000 33,500 17,500 299,000 Administrative Official. 200,000 50,000 50,000 300,000 23,500 15,000 261,500 Office messenger 120,000 50,000 50,000 220,000 9,000 11,000 200,000

Security guard 50,000 50,000 100,000 5,000 95,000 TOTALS 2,875,000 100,000 510,000 450,000 3,935,000 494,000 196,750 150,000 100,000 2,994,250


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The Journal Voucher that summarizes the Payroll transactions

“SACCO NAME” CREDIT & COOPERATIVE SOCIETY LTD

Journal voucher

Note:

* The Gross Pay to be reported here includes all fixed/absolute allowances. These allowances are obvious in the daytoday operations of the SACCOs.

**Allowances entry in the JV above, will be filled up with the allowances that are given once in a while. The allowances are not absolute.

*** The NSSF deduction reported here includes the 10% that is contributed by the SACCOs. That is why it is more than that reported in the Payroll schedule above.

Account Code Account Name Dr. Cr. Gross Pay* 3,935,000 Allowances (accordingly)** NSSF Contribution (10%) 393,500 Statutory deductions

PAYE 494,000 NSSF*** 590,250

Advances 100,000 Loan Payments 150,000 Employee Savings' A/c:

Manager 454,000 Supervisor 302,500 Accounts Official 370,000 Head of Credit 350,500 Credit Official 340,250 Loans Official 321,500 Cashier 299,000 Administrative Official. 261,500 Office messenger 200,000 Security guard 95,000

TOTALS 4,328,500 4,328,500


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2. Example on Income Tax Computation

These Tax Computations are merely illustrative and have been based on the Financial Statements laid out in Appendix 5

i) Initial allowance computation

Details Note Amount Shs '000

Total Fixed Asset Additions 9 4,695

Less: Amounts that don't qualify for initial allowance (S.28ITA) Office Equipment (S.28 (3) – ITA) Computers & Accessories (S.28 (3) – ITA) (4,229) Furniture & Fittings (S.28 (3) – ITA) (199) Total deduction (4,428) Qualifying Expenditure for initial allowance (S.28 (1) – ITA) 267

Initial allowance on the qualifying expenditure 50% for SACCOs within Kampala, Entebbe, Njeru, Namanve (S.28 (1) (b) – ITA) 134 75% for SACCOs outside Kampala, Entebbe, Njeru, Namanve (S.28 (1) (a) – ITA) 200

ii) Wear and Tear Computation for a sample example on SACCOs within listed areas (S.27 – ITA)

iii) Wear and tear Computation for a sample example on SACCOs outside listed areas

Particulars Class I Class II Class III Class IV TOTALS Wear & Tear Rates (40%) (35%) (30%) (20%)

Shs '000 Shs '000 Shs '000 Shs '000 Shs '000 Written Down Value (WDV) b/f Additions 4,229 466 4,695 Disposals Balance before charging Initial allowance 4,229 466 4,695 Initial allowance charge (50%) (Note i) (134) (134) Qualifying Expenditure for Wear & Tear 4,229 332 4,561 Wear & Tear Charged at respective rates per class (1,692) (66) (1,758)

WDV c/f at the end of the period 2,537 266 2,803


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iv) Calculation Of Corporation Tax Liability ( for SACCOs outside the Listed Areas)

Particulars Class I Class II Class III Class IV TOTALS Wear & Tear Rates (40%) (35%) (30%) (20%)

Shs '000 Shs '000 Shs '000 Shs '000 Shs '000 Written Down Value (WDV) b/f Additions 4,229 466 4,695 Disposals Balance before charging Initial allowance 4,229 466 4,695 Initial allowance charge (50%) (200) (200) Qualifying Expenditure for Wear & Tear 4,229 266 4,495 Wear & Tear Charged at respective rates per class (1,692) (53) (1,745)

WDV c/f at the end of the period 2,537 213 2,750


Profit before Tax 30,390

Add back Disallowable expenses (S.22(2) ITA) Depreciation 9 12,036 Donations & Gifts (S.22(1) ITA) 24 130 Total Disallowables 12,166

42,556 Less: Allowable deductions Initial allowance (S. 28(1) ITA) (200) Wear & Tear deduction (S.27 (1) ITA) (1,745) Total allowable deductions (1,945)

Taxable profits 41,624 Tax Charge (30%X 41624) 12,487


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v) Calculation Of Corporation Tax Liability (for SACCOs Within The Listed Areas)


Profit before Tax 30,390

Add back Disallowable expenses (S.22(2) ITA) Depreciation 9 12,036 Donations & Gifts (S.22(1) ITA) 24 130 Total Disallowables 12,166

42,556 Less: Allowable deductions Initial allowance (S. 28(1) ITA) (134) Wear & Tear deduction (S.27 (1) ITA) (1,745) Total allowable deductions (1,878)

Taxable profits 40,678 Tax Charge (30%X 40,678) 12,203


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APPENDIX 5 MODEL FINANCIAL STATEMENTS

Introductory Remarks

• This set of Management accounts shall be prepared by the Accountant and approved by the Manager on regular basis and shall be properly filed for future reference.

• As a sign of readiness for an external Audit, this set of Accounts shall be presented to the Auditor for him/her to express an independent opinion thereon.

‘SACCO Name’ Balance Sheet as at Year end Date

_____________________ _____________________

Notes Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 ASSETS

Cash and bank balances 3 377,176 90,847 Loans Outstanding 4 93,129 49,873 Employee Advances 5 7,521 3,442 Short-term investments 6 1,130,304 1,076,165 Prepayments 7 36,323 20,398 Receivables 8 53,608 45,575 Amounts receivable from related party 9 12,990 20,592 Property and Equipment 10 28,188 35,528 Intangible Assets 11 9,300 - Other assets 12 1,481 - Total Assets 1,750,020 1,342,420

LIABILITIES

Savings and Short-term Time deposits 13 1,575,855 1,193,738 Interest and Dividends payable 14 12,543 8,409 Accounts payable and accruals 15 41,323 39,852 Other liabilities 16 48,457 50,826 Total Liabilities 1,678,178 1,292,825

EQUITY AND RESERVES

Member shares 17 33,760 29,700 Statutory legal reserves 18 8,801 5,807 Retained earnings 29,281 14,088 Total Equity and Reserves 71,842 49,595

TOTAL RESERVES AND LIABILITIES 1,750,020 1,342,420


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Manager Accountant

Notes accompanying these Financial Statements form an integral part of these financial statements

‘SACCO Name’ I In nc co om me e S St ta at te em me en nt t f fo or r t th he e P Pe er ri io od d E En nd de ed d … …/ /… …/ /2 20 0X XX X


Prior Year 20XX

Shs’000 Shs’000 INCOME

Loans Income 19 149,852 112,550 Savings and Membership-fees Income 20 47,356 28,204 Investments Income 21 71,691 63,805 Other income 22 90,000 86,500 Total income 358,899 291,059

EXPENDITURE

Interest expense and Other Financial Costs 23 78,001 50,197 Direct Loan Costs 24 141,691 145,305 Staff Costs 25 50,264 42,304 Administration expenses 26 56,959 46,793 Governance Expenses 27 18,642 11,251 Statutory Expenses 28 141 - Total Expenditure 345,698 295,850

Operating Profit/Loss for the period 13,201 (4,791) Grant Income 29 17,189 8,344 Net Profit Before Tax 30,390 3,553 Taxation (See Tax Computation) 15 (12,203) - Profit After Tax 18,187 3,553

‘SACCO Name’ S St ta at te em me en nt t o of f C Ch ha an ng ge es s i in n E Eq qu ui it ty y f fo or r t th he e P Pe er ri io od d E En nd de ed d … …/ /… …/ /2 20 0X XX X

Member Reserves Accumulated Total Shares Profits Equity

Shs’000 Shs’000 Shs’000 Shs’000

As at 29,700 5,807 14,088 49,595 Net profit for the period - - 18,187 18,187 Additional share capital 4,060 - - 4,060


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Statutory Reserves - 2,994 (2,994) - 33,760 8,801 29,281 71,842

‘SACCO Name’ Cash Flow Statement for the Period Ended …/…/20XX


Prior Year 20XX

Shs ‘000 Shs ’000 Operating Activities

Operating surplus for the period 30,390 3,553 Adjustments for: Depreciation 26 12,036 6,165 Impairment of stock & other assets - 1,796 Donor income 29 (17,189) (8,344) Loan loss provisions 24 3,144 2,556 Operating surplus before working capital changes 28,381 5,726

Increase in loans to Members 4 (50,479) (3,299) Increase in prepayments 7 (15,925) (10,601) Increase in other accounts receivable 8 (8,033) (25,047) Increase in accounts receivable from related party 9 7,602 (20,592) Increase in member savings and other deposits 13 382,117 414,976 Decrease in interest payable 14 4,134 (1,291) Increase in other payables 15 1,471 30,490 Increase in other liabilities 16 2,617 (4,083)

Cash generated from operations 323,504 380,553

Net cash outflow from operating activities 351,885 386,279

Investing Activities

Increase in Short term investments 6 (54,139) (543,843) Purchase of property and equipment 10 (4,696) (22,968) Purchase of Intangible assets and other assets. 11 (10,781) -

Net cash outflow from investing activities (69,616) (566,811)

Financing Activities

Issue of Shares 17 4,060 34,464 Share redemption - (15)

Net cash inflow from financing activities 4,060 34,449

Net increase in cash and cash equivalents 286,329 (146,083)


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Cash and Cash Equivalents at Start of the Period 3 90,847 236,930 Cash and Cash Equivalents at End of the Period 3 377,176 90,847

‘SACCO Name’ Notes to the Financial Statements the Period Ended …/…/20XX

1 1. . O Or rg ga an ni is sa at ti io on n a an nd d B Ba as si is s o of f P Pr re es se en nt ta at ti io on n

The accounting and reporting policies adopted by “SACCO NAME” SACCO are in accordance with Generally Accepted Accounting Principles.

a a) ) B Ba ac ck kg gr ro ou un nd d

b b) ) N Na at tu ur re e o of f b bu us si in ne es ss s

c c) ) P Pr re es se en nt ta at ti io on n a an nd d b ba as si is s o of f F Fi in na an nc ci ia al l S St ta at te em me en nt ts s

2 2. . S Si ig gn ni if fi ic ca an nt t A Ac cc co ou un nt ti in ng g P Po ol li ic ci ie es s

The principal accounting policies adopted in the preparation of these Financial Statements are set out below:

a a) ) L Lo oa an ns s, , B Ba ad d a an nd d D Do ou ub bt tf fu ul l D De eb bt ts s

b b) ) R Re ev ve en nu ue e R Re ec co og gn ni it ti io on n

c c) ) I In nv ve es st tm me en nt ts s

d d) ) R Re el la at te ed d P Pa ar rt ty y T Tr ra an ns sa ac ct ti io on ns s

e e) ) P Pr ro op pe er rt ty y a an nd d E Eq qu ui ip pm me en nt t

The annual depreciation rates in use are:

Asset Class Rate

Acc

ordi

ngly

Acc

ordi

ngly

Depreciation on grant funded assets is charged to the deferred income account.

f f) ) I In nt ta an ng gi ib bl le e A As ss se et ts s

g g) ) D Do on na at ti io on ns s, , G Gr ra an nt ts s a an nd d I In n- -K Ki in nd d C Co on nt tr ri ib bu ut ti io on ns s

h h) ) C Co om mp pa ar ra at ti iv ve es s


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3 3. . C Ca as sh h a an nd d B Ba an nk k b ba al la an nc ce es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Cash at hand 138,378 86,653 Cash at Bank 1 213,413 2,992 Cash at Bank 2 25,385 1,202 Total 377,176 90,847

4 4. . L Lo oa an ns s Outstanding

a a) ) L Lo oa an n D De et ta ai il ls s Current Year

20XX Prior Year

20XX Shs’000 Shs’000

Gross Loans to Females 39,084 51,060 Gross Loans to Males 4,047 493 Gross Loans to Groups 19,542 Gross Loans to Institutions 35,280 Gross Loans to Others

Total Gross Loans 97,953 51,553 Provision for Bad Loans (4,824) (1,680) Net Loans 93,129 49,873

b b) ) R Re ec co on nc ci il li ia at ti io on n o of f G Gr ro os ss s L Lo oa an ns s B Ba al la an nc ce es s

Current Year 20XX

Prior Year 20XX

Balance b/f 53,315 25,300 Loans disbursed out 210,000 180,000 Recoveries during the period (165,362) (151,985) Balance (Gross Portfolio) 97,953 53,315

5. E Em mp pl lo oy ye ee e A Ad dv va an nc ce es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 Employee 1 5,000 Employee 2 2,000 Employee 3 300


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Employee 4 221 3,442 Total 7,521 3,442

6 6. . S Sh ho or rt t- -t te er rm m I In nv ve es st tm me en nt ts s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 Short Term Investment 1 250,200 150,000 Short Term Investment 2 50,000 70,200 Short Term Investment 3 350,000 Short Term Investment 4 480,104 855,965 Total 1,130,304 1,076,165

7 7. . P Pr re ep pa ay ym me en nt ts s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Prepaid Rent 4,983 1,640 Prepaid Utilities 29,040 16,758 Other Prepayments 2,300 2,000 Total Prepayments 36,323 20,398

8 8. . R Re ec ce ei iv va ab bl le es s

Current Year 20XX

Prior Year 20XX

Interest receivable on Loans 36,871 75 Interest receivable on Fixed Deposits 13,066 351 Overdrawn Savings Accounts 3,671 45,149 Total 53,608 45,575

9 9. . A Am mo ou un nt ts s R Re ec ce ei iv va ab bl le e f fr ro om m R Re el la at te ed d P Pa ar rt ty y

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 Advances to Board Members 5,000 4,000 Other receivables from Board Members 7,990 16,592 Total Amounts Receivable from Related Parties 12,990 20,592


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1 10 0. . P Pr ro op pe er rt ty y, , P Pl la an nt t a an nd d E Eq qu ui ip pm me en nt t

Motor Cycles& Vehicle

Eq’ment F’ture & Fittings

Computers &

Accessories

Land & buildings TOTAL

Shs’000 Shs’000 Shs’000 Shs’000 Shs’000 Cost As at start of Period 5,050 2,920 15,229 16,754 8,274 48,227 Additions 139 - 199 4,229 128 4,695 As at End of Period 5,189 2,920 15,428 20,983 8,402 52,922

As at start of Period - 730 4,873 4,311 2,784 12,698 Charge for the year 1,728 584 3,833 5,051 840 12,036 As at End of Period 1,728 1,314 8,706 9,362 3,624 24,734

As at start of Period 5,050 2,190 10,357 12,443 5,489 35,528 As at End of Period 3,461 1,606 6,722 11,621 4,778 28,188

1 11 1. . I In nt ta an ng gi ib bl le e A As ss se et ts s

Intangible assets represent Shs 9.3 million that relates to purchase of an accounting software-Finance Solution, expected to be used in SACCO operations. The accounting software is not yet put to use as intended by SACCO management.

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Software 7,300 Goodwill 2,000 Total 9,300

* * T Th he e Intangible asset has not been amortized during Current Year because it is not yet put to use

1 12 2. . I In nv ve en nt to or ry y

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Stock of TShirts 391 Stock of Stationery 1,090 Total other assets 1,481


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1 13 3. . S Sa av vi in ng gs s a an nd d O Ot th he er r D De ep po os si it ts s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Member savings – Ordinary 804,815 634,172 Member savings – Restricted 735,716 520,053 Members' Shortterm Fixed Deposits 35,324 39,513

Total Savings and Time Deposits 1,575,855 1,193,738

1 14 4. . I In nt te er re es st t a an nd d D Di iv vi id de en nd ds s P Pa ay ya ab bl le e

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Interest payable on Savings by Females 10,530 8,409 Interest payable on Savings by Males 1,013 Dividends payable to Members 1,000

Total Interest & dividends Payable 12,543 8,409

1 15 5. . O Ot th he er r A Ac cc co ou un nt ts s P Pa ay ya ab bl le e a an nd d A Ac cc cr ru ua al ls s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Interest payable on Borrowed funds 13,859 30,307 Withholding Tax payable 5,818 4,092 Income Tax Liability 12,203 Professional fees Payable 1,290 1,784 Suppliers Payable 5,932 NSSF payable 817 1,973 PAYE payable 700 1,696 Affiliation fees Payable 664 Salaries/Wages 40

Total other accounts payable & accruals 41,323 39,852


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1 16 6. . O Ot th he er r L Li ia ab bi il li it ti ie es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Taxation 12,203 Loan Protection Fund 8,524 5,327 Unearned Revenue 2,607 3,131 Deferred Grant Income 24,116 40,485 Accumulated Depreciation 1,007 1,883

Total other liabilities 48,457 50,826

1 17 7. . M Me em mb be er rs s S Sh ha ar re es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Shares Class1 29,700 26,500 Shares Class2 2,060 1,000 Shares Class3 2,000 2,200

Total Member shares 33,760 29,700

1 18 8. . S St ta at tu ut to or ry y R Re es se er rv ve es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Reserve Fund 6,801 3,792 Share Transfer Fund 2,000 2,015

Total statutory reserve 8,801 5,807

1 19 9. . I In nt te er re es st t o on n L Lo oa an ns s I In nc co om me e

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Interest income on Loans to Female 82,298 87,429


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Commission on loans 25,343 16,389 Penalty and Surcharge 35,039 883 Other Loans Income 7,172 7,849

Total Interest Income 149,852 112,550

2 20 0. . Savings and Membership fees Income

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Membership fees 27,594 18,769 Entrance fees 10,910 3,603 Sale of stationery 4,863 2,896 Saving Ledger fees 2,660 2,000 Account closure fees 1,329 936

Total 47,356 28,204

2 21 1. . I In nv ve es st tm me en nt t I In nc co om me e

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 Interest on Investments 1 36,322 63,805 Interest on Investments 2 30,022 Interest on Investments 3 5,347

Total 71,691 63,805

2 22 2. . O Ot th he er r I In nc co om me es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000 Interest from Link Bank A/C 50,000 40,000 Profit on Sale of Fixed Assets 5,000 Foreign Exchange gain 30,000 42,000 Recovery of loans previously written off 4,000 Miscellaneous income 1,000 4,500

Total Miscellaneous Income 90,000 86,500

2 23 3. . F Fi in na an nc ci ia al l C Co os st ts s Current Year

20XX Prior Year



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Interest expense on Members' Savings 59,206 38,275 Interest expense on Borrowed Funds 14,638 9,366 Other Financing Costs 4,157 2,556

Total I In nt te er re es st t E Ex xp pe en ns se e 78,001 50,197

2 24 4. . D Di ir re ec ct t L Lo oa an n C Co os st ts s

Current Year 20XX

Prior Year 20XX

Bad debts Expense 3,144 2,556 Loan appraisal costs 31,549 45,000 Loan monitoring and recovery costs 60,000 60,000 Legal Fees on Loans 32,000 25,000 Other Direct Loan Costs 14,998 12,749

Total Direct Loan Costs 141,691 145,305

2 25 5. . S St ta af ff f C Co os st ts s Current Year

20XX Prior Year


Gross salaries 30,965 26,425 Staff welfare and incentives 5,884 6,727 NSSF – 10% 3,092 2,613 Gratuity 2,000 Staff trainings, workshops and capacity building 8,216 6,184 Other Personnel Expenses 107 355

Total Staff Costs 50,264 42,304

2 26 6. . A Ad dm mi in ni is st tr ra at ti io on n E Ex xp pe en ns se es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Stationery expenses 8,481 5,564 Rent of office premises 3,000 2,850 Office expenses 3,568 1,956 Telephone 3,339 Internet and email 1,235 2,559 Professional fees 2,350 Transport and travels 7,378 6,141 Advertisement, announcements and publicity 935 3,294 Power/fuel costs 205 Accommodation allowances 2,038 106


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Duty allowances 4,212 3,790 Community mobilization 101 Audit costs & legal fees 1,220 2,996 Depreciation 12,036 6,165 Loss on Sale of Fixed Assets 5,212

2 26 6. . A Ad dm mi in ni is st tr ra at ti io on n E Ex xp pe en ns se es s ( (C Co on nt ti in nu ue ed d) )

Equipment Repairs & Replacement 1,543 1,018 Security expenses 3,353 1,252 Computer expenses 1,540 Donations and gifts 130 Bank charges 1,498 1,700 Affiliation fees expense 225 125 Miscellaneous administrative expenses 112 525

Total Administration Costs 56,959 46,793

2 27 7. . G Go ov ve er rn na an nc ce e e ex xp pe en ns se es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

General meeting expenses 1,658 1,600 Registration fees 1,007 B.O.D and committee expenses 270 860 Other Governance expenses 15,707 8,791

Total Governance Expenses 18,642 11,251

2 28 8. . S St ta at tu ut to or ry y E Ex xp pe en ns se es s

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Cooperative development fund Contribution 20 Members’ training 15 Remittances to Secondary Society Education fund 13 Other statutory Expenses 93

Total Statutory Expenses 141


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2 29 9. . G Gr ra an nt t I In nc co om me e

Current Year 20XX

Prior Year 20XX

Shs’000 Shs’000

Grant Income for Loan Capital 14,298 Grant Income for Operations 2,891 8,344 Total Grant income

17,189 8,344

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