A look into cooperatives

Efficient internal control system

As in any form of organized management, behind each cooperative there is a sound and well-divided structure. Each person interested in participating in an enterprise such as this must be aware of how it functions, the legal framework, and all other characteristics that ensure that actions are carried out in the most harmonious manner possible. The best way to do this is to pay visit to the Cooperative Organization in your state to find out how to proceed.

It is also important to know and understand the structure common to all cooperatives:

General Assembly – The supreme entity of any cooperative which, in accordance with current legislation and its Articles of Incorporation, makes any decision in the interest of the society. At these meetings collective responsibility is expressed by all, or most, members through debates and discussions. The General Assembly of cooperative members normally takes place on two occasions:

• Ordinary General Assembly (OGA) – which is held mandatorily once a year, no later than three months after the end of the fiscal year, to discuss accounts, reports, activity plans, destination of surplus funds, benefits, attendance sheets, election of the Administrative and Fiscal Council, and any other pending issues; and
• Extraordinary General Assembly (EGE) – held whenever necessary and may address any issue of interest to the cooperative. It is at these assemblies that amendments to the bylaws, mergers, incorporations, change of objectives or voluntary dissolutions are discussed and decided.

Administrative Council – The supreme administrative instance of a cooperative. All decisions regarding any issue of interest to the cooperative and its members are discussed in accordance with current legislation, its bylaws and the decisions of the General Assembly. The Administrative Council is comprised of eligible cooperative members, who have 4 year mandates, renewable as determined by the bylaws.

Fiscal Council – Comprised of three full members and three alternates, who oversee the activities of the administrative council, the activities and operation of the cooperative, examining books and documents, among other attributions. It is an independent entity. It is the representative of the General Assembly for a period of twelve months.

Research Committees, Cooperative Committees, or Consultation Councils – may be temporary or permanent, and aim to support cooperative management. These may be created through General Assembly decisions in order to conduct studies, and present solutions to specific situations. They may adopt, modify or ensure the compliance of decisions, including the coordination of educational programs for cooperative members, their families, and the community at large in the cooperative's area of activity.

Articles of Incorporation – the set of norms that determine the goals, acts and functions of a cooperative. These are drawn up among the members to meet the needs of the cooperative and its members. Certain guidelines must be followed. However, documents of other cooperatives should not be copied since cooperatives have different areas of activity, objectives and goals.

Social Capital – is the amount, in national currency, that each individual invests when becoming a member, which is used towards the development of the cooperative.

Yearly Financial Report – at the end of each fiscal year the General Financial Statement and the Demonstration of the Results are submitted to the General Assembly, containing the following information:

• Surplus funds – the result of revenue minus expenditures. These are returned to members after deductions have been made, in accordance with current legislation and the cooperative's bylaws;
• Indivisible fund – the amount in national currency that belongs to the cooperative's members but is not distributed. This reserve fund is used towards the development of the cooperative and to cover future losses; towards the Educational and Social Technical Assistance Fund (Fates); and other funds which may be created by decision of the General Assembly.