What are the co-operative governance check lists?

Last Updated on Saturday, 01 May 2010 22:24 Written by David Griffiths Thursday, 29 April 2010 02:29

Twelve checklists on the governance practices of the co-operative:

Accountability for Member Funds
Annual Reporting
Board and Management
Board Meetings
Code of Conduct
Communication with Members
Finances
Internal Controls
Leadership
Member Meetings
Minutes of Meetings
Statutory Accountability

Accountability for Member Funds

Has the board established appropriate arrangements to ensure that member funds are:

1. Properly safeguarded
2. Used economically,efficiently and effectively
3. Used in accordance with the legislative authorities that govern their use

Does the board publish on a timely basis an objective, balanced an understandable annual report?

Does the board include in its annual report a statement explaining itsd responsibilities for the co-operative's accounts and its adherence to co-operative values and principles?

Does the board include in its annual report a statement confirming that it has complied with relevant standards or codes of co-operative governance and does this include compliance with co-operative values and principles?

Board and Management

Is there a clearly defined and documented division of responsibilities between the board and management?

Does the board meet regularly?

Does the board retain full and effective control over the co-operative?

Does the board effectively and efficiently monitor and question management?

Board Meetings

What follows is a checklist for board meetings:

1. A regular schedule of meetings.

2. Regular attendance by all directors.

3. A definite agenda.

4. Adequate time schedule for each agenda item.

5. Meeting agendas and reports are received before meetings.

6.All directors read the agenda and reports before meetings.

7.All directors participate in discussion and ask questions.

8.Free expression of views at meetings.

9.Comprehensive reports with clear proposals and recommendations.

10. Board requires adequately researched and analysed recommendations.

11. Duration of meetings is long enough for adequate discussion.

Code of Conduct

Has the board developed a formal code of conduct defining the standards of co-operative values and principles and personal behaviour to which individual board members and all employees of the co-operative are required to subscribe?

Has the board established appropriate mechanisms to ensure that directors and employees are not influenced by prejudice, bias or conflicts of interest?

Communication with Members

Has the board established clear channels of communication?

Has the board established appropriate processes to ensure that these channels operate effectively in practice?

Has the board made an explicit commitment to openness in all the activities of the co-operative?

Does the board report to members the appointment of casual vacancies to the board?

Does the board make available the names of all board members together with their relevant experiences and other interests?

Finances

What follows is a checklist for the finances of co-operatives:

1. Defined financial objectives and updating process.

2. Written financial policies and updating process.

3. Monitoring of financial objectives.

4. Measurable standards for monitoring e.g. rate of return and equity level.

5. Annual budgets presented to board for approval.

6. Financial reports presented to each board meeting that are understandable and facilitate informed judgement.

7. Inclusion of key comparisons in financial reports.

8. Does the co-operative retain financial records for the statutory period?

9. How often are the books updated?

10. Does the co-operative have current lists of debtors and creditors?

11. Does the co-operative have cash payment and receipt books?

12. Does the co-operative have an asset registrar and depreciation schedule?

Internal controls

has the board taken steps to ensure that systems of internal control are established and continue toi operate in practice?

Does the board include in its annual report a statement on the effectiveness of the systems of internal control?

Has the board taken steps to ensure that effective sysvtems of risk management are established as part of the systems of internal control?

Has the board taken steps to ensure that an effective internal audit function is established as part of the systems of internal control?

Leadership

Has the board taken steps to ensure that its directors and managers exercise leadership by conduncting themselves in accordance with co-operative values and principles and high standards of personal behaviour?

Member Meetings

What follows is a checklist for member meetings:

1. Open to all members.

2.Planning to maximize attendance.

3. Adequate notification of time, date, place and purpose of meeting.

4. Encouraging members to suggest agenda items before meeting and explaining the process for doing so.

5. Circulation of readable and accessible agenda in advance of meetings.

6. Encouraging members to raise questions and comment at meetings.

7. Recording any dissent if required by member(s).

8. Clear communication to members of their participation rights and obligations at meetings.

Minutes of Meetings

What follows is a checklist for the minutes of meetings:

1. Type of meeting is identified.
2. Those present listed.

3. Apologies and absences recorded.

4. The date of the minutes of the previous meeting submitted for approval with any necessary amendments.

5. All motions considered by the meeting.

6. All motions moved, seconded and carried or defeated recorded.

7. Motions carried are clear and explicit.

8. If requested any dissent recorded.

9. If required, any conflict of interest recorded.

10. Names of reports considered at meeting.

11.Date, time and location of next meeting.

Statutory Accountability
Has the board established effective arrangements to ensure compliance with all applicable legislation and regulations including the Co-operatives Act and Corporations Law?

What are the roles of directors?

Last Updated on Saturday, 01 May 2010 22:31 Written by David Griffiths Thursday, 29 April 2010 02:13

Directors are accountable to members. They are elected by the members are report to members through the Annual Report and the Annnual General Meeting.

These are not the only ways that directors account to members. How accurate do you think your board's assessment of member expectations ? What sort of survey of members' expectations is likely to yield the most useful information in a reasonable timeframe Can members be surveyed at the AGM ? Should member surveys be reported in the annual report ? Do the annual reports, business plans and budgets realistically address the expectations of members

Planning Strategically

A thorough and well-structured strategic planning process helps a co-operative see the forest and trees and successfully navigate to an agreed destination or direction. Against the framework of the organisation's vision and mission, it sets out goals and objectives and indicates the required resources.

A strategic direction is a clear and shared vision on how the co-operative will fulfil its vision, mission and meet its member needs and where the Board and management aree jointly seeking to take the business operation of the co-operative.

With such a framework, an action plan for training and education of a co-operative's directors, members and staff could outline development targets and report against these to its members.


Ethics

Co-operative principles require ethical behaviour. Arguably, the community and co-op members expect more from a co-operative than from an investor-owned company focussed simply on achieving the best return to shareholders.

Good Faith

Co-operative directors and employees have an obligation to recognise that the interests of the co-operative and its members has priority over any personal interests.

Not only do directors and employees have an obligation to ensure compliance with legislation and regulation. They owe it to the co-operative to act in good faith in the performance of their duties. The fiduciary responsibilities of directors could be summarised as follows.

• Not to obtain or seek to obtain personal profit from any decision or transaction of the board.

• To exercise highest standards of honesty and integrity.

• To avoid conflicts of interest.

• To be aware of their duties and responsibilities.

Acting in good faith means that a director must act for the benefit of the co-operative and not harm the co-operative to further the director's own interest. Directors must not be in a position where their duties and interests conflict.

Manage Risk

Risk is anything that prevents a co-operative from achieving its objectives.

The board has to ensure that the co-operative complies with law and regulation, ensure the co-operative is managed to meet the needs of the members and maintaining financial stability.

To achieve this, it is necessary to manage risk.

Has the co-operative ever undertaken a risk audit? What was covered in the audit. Is there a lack of experience and expertise on the board that is creating risk for the co-operative ?The management of risk is fundamental to the ongoing success of a co-operative. The key areas are:

Liquidity risk
Market risk
Credit risk?
Data risk
Operations risk

Risk is an activity or function that has uncertain outcomes e.g.

Products not selling.
Members cease supplying the co-operative.
A lack of co-operative leadership.
Not meeting members needs and expectations.
Failure to implement and communicate industrial relations policies.

Internal controls are the policies and procedures established and implemented by a co-operative to minimise and monitor operational risk - identifying, assessing, measuring, mitigating, communicating and monitoring the risks.

The board is responsible for ensuring the risks are identified and managed. The internal controls adopted by a co-operative must be reinforced by the co-operative's culture and policies. The purpose of internal controls can be summarised as to:

Safeguarding assets.
Verifying efficiency and effectiveness.
Preventing fraud.
Preventing waste.
Assuring reliability of financial information.

There are two broad types of internal control - administrative and accounting.

Accounting controls - to provide assurance that transactions are authorized nd recorded in conformity with accounting principles e.g. daily posting, recording of transactions,sequential number and audit trail.

Administrative control - to provide assurance that lines of authority and responsibility are clear and operational and recording functions are separated e.g. accounting system, written policy and procedure and board approval monitoring and cash control. The key questions about managing risk are as follows:?

• Have significant risks been identified and a risk profile created?

• Is there a risk policy and is this clear including the roles and respective accountabilities

• Does the board and the Manager/CEO have clear strategies for dealing with these risks

• How are the processes and controls for identifying, monitoring and dealing with risk adjusted to reflect new or changing risks or operational deficiencies

• Are authority, responsibility and accountability clearly defined

• Are the decisions and actions of different parts of the co-operative appropriately co-ordinated

• Does the co-operative analyse the efficiency and effectiveness of its risk management and internal compliance

• Does the board receive regular, reliable and timely reports on progress on business objectives and risks

• Are there established procedures for managers, staff and members to report suspected breaches of legislation and regulation

• Are there procedures to monitor the effective application of policies, practices and activities related to internal control and risk management

• Are there appropriate reports to the board on the effectiveness of the ongoing moinitoring of risk

• Does the board review at least annually risk management

Represent the Co-operative

?Directors have dealings with a range of stakeholders in addition to members and the co-operative's workforce. The way they conduct themselves will reflect on the co-operative. Their effectiveness in lobbying governments or funding bodies or handling the media can have significant consequences for the co-operative.

Understand the Business Lifecycle

Businesses form, develop, mature, reinvent or die. Different stages of the business life cycle are associated with different risks and expectations. They may need different management styles to meet the needs of their customers.

Co-operatives, and other businesses, that live long enough, typically start with an entrepreneurial seat-of-the-pants management style, then move onto a stable administrative infrastructure and well-planned and managed development.

Do members and the board know where the co-operative is in the business cycle?? Are there indicators that the co-operative is moving from one phase to another and, if so, what are these indicators? How is the board adjusting to the business cycle in terms of the co-operative's vision, mission, membership, size, activities, locations and mix of resources?

Understand the Co-operative Lifecycle

Co-operatives have distinct lifecycles that need to be understood in the context of the business lifecycle.

The most distinct lifecycle changes are the differences created by the founding members and directors and their subsequent departure and the emerge of members and directors who were not involved in the foundation of the co-operative.

What are the co-operative characteristics?

Last Updated on Saturday, 01 May 2010 22:48 Written by David Griffiths Thursday, 29 April 2010 02:09

The co-operative values and principles create specific challenges for co-operative governance. Co-operatives throughout Australia share these characteristics:

• Formed by a group of people who have a common need and form a co-operative to help each other.

• The members own the co-operative. The co-operative exists to serve and be used by its members.

• Each member has only one vote irrespective of their use of the co-operative.

• The member owners elect the board and charge it with the responsibility of operating the co-operative on their behalf. The board is accountable to the members.

• The board is elected by the members at a general meeting of the co-operative.
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• Members may choose to raise capital from external sources but without compromising democratic control.
• The capital of the co-operative is contributed in whole or part and is the common property of the members.

These characteristics underpin and inform the principles and practice of co-operative governance. Democratic control is integral to co-operative governance. Crucial to co-operative democracy is that any member can stand for and be elected to the board. There is a risk, however, that the need for qualifications and experience could be sacrificed and the co-operative becomes management-driven. The answer to this dilemma is to co-exist democracy and the necessary qualifications and experiences.

A co-operative should promote and practice co-operative values and principles. In practice, therefore, a co-operative should actively:

• provide and promote co-operative education to members, managers and employees.

• co-operate with other co-operatives at local, state and national levels.

• promote equity and non-discrimination in relation to age, race, nationality, sex, religion and politics.

• promote and facilitate member retention and growth.

• promote and facilitate member ownership and control.

Directors of a co-operative are not neutral. They have a business relationship with and personal goals for the co-operative and it is necessary to:

• Clearly define the role of the board and directors.

• Strive to attract directors with appropriate qualifications and expertise.

• Define required and desired director competencies.

• Provide ongoing training and development for directors and members.

Except for very small co-operatives, the members are not expected or desire to participate in all decisions of the co-operative. In electing a board, the members confer on the board the authority to make decisions. The board is, however, accountable to the members about:

• what decisions have been made

• why the decisions have been made

• what co-operative resources have been used

• what results have been achieved and why

All members should have equal and timely access to information concerning the co-operative including:

• The financial situation

• Performance

• Ownership

• Governance

Information provided by the co-operative to members and other relevant parties should be:

• Factual

• Timely

• Clear and objective

The annual report to members should include:

• A coherent explanation of the co-operative's performance and prospects.

• An explanation of successes and setbacks.

• The report should also be clearly written so that it is easily understood by members.

• Include all material information

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• ?Transparency about director fees and reimbursements.

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What is Co-operative Governance?

Last Updated on Sunday, 02 May 2010 06:03 Written by David Griffiths Thursday, 29 April 2010 01:59

Public policy debate has in recent years increasingly focussed on the governance of business enterprises. Large co-operatives incorporated under Corporations Law are equally impacted by this debate.

Unfortunately, the values underpinning this debate assume that enterprises are investor owned and controlled. ?It is critical. therefore, to consider the specifics of governance for co-operatives.

Co-operative governance is the set of relationships between the co-operative’s members, the board as representatives of members that advise management for the members and the management that has the care and control of the co-operatives for the members and how a business can be best governed in the interests of its owners.

Co-operative governance provides the structure through which the objectives of the co-operative are set and the means of attaining those objectives and the monitoring of performance.

Co-operative governance is different from the governance of investor-owned and public enterprises. Good co-operative governance should provide proper incentives for the board and management to pursue objectives that are in the interests of the co-operative and members and should facilitate effective monitoring, thereby encouraging the co-operative to use resources more effectively. Co-operatives differ from investor-owned companies in their:

character
purpose
goal-setting
methods of financing
profit distribution?

Governance in an investor-owned company is aligned with profit maximization. Co-operative governance, however, is broader and more complex than profit generation and is based on co-operative values and principles. A commitment to co-operative governance improvement is particularly important for co-operatives because they are not exposed to the "disciplines" of the stock exchange.

Understanding and embracing co-operative governance is essential for the strategic re-positioning of co-operatives to survive globalization and the challenge of investor-owned companies and, in particular, multinationals. Fundamental to this, however, is acknowledgement of the strategic and operational relevance of co-operative values and principles.