CARICOM CO-OPERATIVES

REGULATORS MEETING
“FINANCIAL REPORTING
STANDARDS
FINANCIAL REPORTING
STANDARDS
• REQUREMENTS FOR CO-
OPERATIVESS.
• IMPACT ON CREDIT UNIONS.
• COMPLYING WITH STANDARDS.
• BENEFITS AND
OPPORTUNITIES.
 FINANCIAL REPORTING
-IFRS AND IAS32-

• BACKGROUND TO STANDARDS.
• APPLICABLE TO ALL FINANCIAL
INSTITUTIONS WEF JAN 2005
• OBJECTIVE – FULL DISCLOSURE
AND TRANSPARENCY.
• CLASSIFICATION OF FINANCIAL
INSTRUMENTS BY ISSUER AS:-
• FINANCIAL ASSETS:
• FINANCIAL LIABILITIES:
• EQUITY:
 FINANCIAL REPORTING
-IFRS AND IAS32-

• A FINANCAL INSTRUMENT IS
ANY CONTRACT THAT GIVES
RISE TO A FINANCIAL ASSET
OF ONE ENTITY OR PERSON
AND A FINANCIAL LIABILITY OR
EQUITY INSTRUMENT OF
ANOTHER ENTITY OR PERSON.
FINANCIAL REPORTING

-IFRS AND IAS32-

FINANCIAL LIABILITY:-
• ANY LIABILITY THAT IS A
CONTRACTUAL OBLIGATION TO
DELIVER CASH OR ANOTHER
FINANCIAL ASSET TO
ANOTHER ENTITY OR PERSON.
FINANCIAL REPORTING

-IFRS AND IAS32-

• AN EQUITY INSTRUMENT :-
ANY CONTRACT THAT
EVIDENCES A RESIDUAL
INTEREST IN THE ASSETS OF
AN ENTITY AFTER DEDUCTING
ALL OF ITS LIABILITIES.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
CO-OPERATIVE MEMBERSHIP
CRITERIA.
• APPLICATION FORM.
• ENTRANCE/MEMBERSHIP FEE.
• PURCHASE AT LEAST ONE (1)
SHARE.
• MEMBERSHIP APPROVED BY
THE BOARD
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
RIGHTS OF SHARE(S):-
• ATTEND MEETINGS AND TO VOTE.
• RECEIVE DIVIDENDS FROM
SURPLUS.
• RECEIVE PART OF NET ASSETS ON
LIQUIDATION.
• RESPONSIBILITY FOR THE DEBTS
OF THE CO-OPERATIVE.
C0-OPERATIVE MEMBER
CAPITAL OR EQUITY
CREDIT UNION TREATMENT OF
SHARES :-
• DESPITE THE AMOUNT OF SHARES
ALL MEMBERS HAD ONE (1) VOTE.
• SHARES USED TO DESCRIBE ALL
SAVINGS IN ADDITION TO THE
SHARE(S) NEEDED TO QUALIFY FOR
MEMBERSHIP.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• SHARES WITHDRAWBLE AT
ANY TIME. (By-Laws )
• SHARES ALSO TRANSFERABE
(By-laws)
• SHARES LINKED TO MEMBER’S
ABILITY TO BORROW.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• SHARES USED TO BUILD POOL OF
LOAN FUNDS AND REGARDED AS
LONG TERM SAVINGS.
• SPECIAL DEPOSITS PROMOTED TO
MAINTAIN STABILITY OF SHARES.
• ALTHOUGH GIVEN STATUS OF
CAPITAL, NOT TREATED AS SUCH.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• CREDIT UNIONS’ FINANCIAL
STATEMENTS, CLASSIFIED ALL SHARES
AS EQUITY AND ONLY SPECIAL AND
OTHER DEPOSITS AS LIABILITIES.

• MEMBERS’ TOTAL SHARES SAVINGS

THEREFORE SUBJECT TO RISK.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
NEW STANDARDS FOR REPORTING
• 2003 – IAS 32 STANDARD NOW
DETERMINED THAT SHARES THAT
ARE WITHDRAWABLE SHOULD BE
CLASSIFIED AS LIABILITIES.
• THE FORM OF FINANCIAL
STATEMENT PRESENTATION USED
BY CO-OPERATIVES MUST CHANGE
TO COMPLY WITH STANDARD.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
2004 – IFRIC CLARIFICATION –
THE CO-OPERATIVE DIFFERENCE.
• SHARES ALTHOUGH
WITHDRAWABLE WERE NOT
NECESSARILY ALL LIABILITIES.
• SHOULD BE EVALUATED
ACCORDING TO THE CONTRACT.
• CO-OPERATIVE SHARES HAVE BOTH
EQUITY AND LIABILITY
CHARACTERISTICS.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• EQUITY CHARACTERISTIC –
THE MEMBER IS ENTITLED TO
A SHARE OF THE RESIDUAL
ASSETS. (LAW)
• LIABILITY CHARACTERISTIC -
THE SHARES ARE ALSO
WITHDRAWABLE.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
WHERE THE MEMBER HAS NO
STATED RIGHT TO WITHDRAW
SHARES THEY ARE EQUITY IF:
• THE CO-OPERATIVE HAS AN
UNCONDITIONAL RIGHT TO
REFUSE REDEMPTION OR
WITHDRAWAL; OR
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• LOCAL LAW, REGULATION, OR
THE CO-OPERATIVE’S BY-LAWS
UNCONDITIONALLY PROHIBIT
REDEMPTION OR WITHDRAWAL.
• THE LAW, REGULATION OR BY-
LAW ITSELF CANNOT BE
CONDITIONAL.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• INTEREST, DIVIDENDS & OTHER
PAYMENTS RELATING TO A
FINANCIAL LIABILITY ARE TO BE
RECOGNIZED AS CURRENT YEAR
INCOME OR EXPENSE IN PROFIT &
LOSS.
• DISTRIBUTIONS ON EQUITY SHALL
BE MADE FROM THE SURPLUS
(EQUITY).
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
APPLICATION OF THE STANDARD
TO THE SECTOR:
• ONLY THE SHARES OF A
CREDIT UNION HAVE THE TWO
DISTINCT CHARACTERISTICS
OF EQUITY AND LIABILITY AS
OUTLINED IN THE STANDARDS.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• CREDIT UNION SHARES
THEREFORE HAVE TO BE
CLASSIFIED AS EQUITY OR
LIABILITIES AND SO
PRESENTED IN ACCORDANCE
WITH THE REPORTING
STANDARD.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
OTHER TYPES OF CO-OPERATIVES.
• WHERE PAID IN OWNERSHIP
SHARES IS THE ONLY MEANS OF
MEMBER CAPITAL;
• MEMBERS HAVE NO STATED RIGHT
TO WITHDRAWAL OR REDEMPTION.
• MEMBERS HOWEVER MAY HAVE
THE SAME EQUITY INTEREST.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
• IF THE CO-OPERATIVE HAS THE
UNCONDITIONAL RIGHT TO
PROHIBIT REDEMPTION;
• IF THE LAW, OR OTHER
STATUTE UNCONDITIONALLY
PROHIBITS REDEMPTION;
• THESE SHARES ARE EQUITY.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
COMPLIANCE - CREDIT UNIONS
• THERE IS ONLY ONE (1) OPTION
WHICH IS TO DETERMINE THE
COMPONENT OF SHARES WHICH
QUALIFY AS EQUITY AND ARE TO
BE SO REPORTED.
• REPORT THE REMAINDER OF
WITHDRAWABLE SHARES AS
LIABILITIES.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
METHODS OF COMPLIANCE.
• EITHER PAR VALUE OF A SHARE
AND MANDATORY MINIMUM
NUMBER OF EQUITY SHARES TO BE
HELD BY EACH MEMBER.
• OR DETERMINE A TOTAL VALUE
BELOW WHICH MEMBERS’ SHARES
AS CAPITAL WILL NOT FALL AND
WHICH THEREFORE CONSTITUTE
EQUITY.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
• PROHIBIT WITHDRAWALS
BELOW THE MINIMUM SET.
• DETERMINE HOW THE
MINIMUM EQUITY CAPITAL IS
ALLOCATED CONSIDERING
EQUITY INTEREST OF EACH
INDIVIDUAL MEMBER.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• AT A DATE TO BE AGREED ISSUE
EACH MEMBER WITH A SHARE
CERTIFICATE FOR HIS OR HER
EQUITY CAPITAL.
• ALLOW ANY NECESSARY GRACE
PERIOD FOR A MEMBER TO REACH
THE LEVEL OF THE REQUIRED
MINIMUM EQUITY SHARES.
• DEVELOP STRATEGIES FOR
MEMBERS TO INVEST IN CAPITAL
SHARES ABOVE THE MINIMUM.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
OTHER COMPLIANCE RELATED
ISSUES.
• MEMBER EDUCATION.
• ACCURACY OF INFORMATION.
• OTHER EXPERIENCES -
REGIONAL AND LOCAL.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
MEMBER BENEFITS.
• EQUITY INTEREST AND LIABILITY
CLEARLY ESTABLISHED.
• PROTECTION - SHARES AT RISK
SEPARATED FROM OTHER SHARES.
• ANNUAL DIVIDENDS ON SHARES AS
EQUITY AND REGULAR INTEREST
ON OTHER SHARES SAVINGS.
CO-OPERATIVES MEMBER
CAPITAL OR EQUITY
NOTE HOWEVER
• ALL FUNDS WILL REMAIN THE
PROPERTY OF THE MEMBER BUT
ACCESS TO THE EQUITY SHARES
WILL NOT BE THROUGH INSTANT
WITHDRAWAL.
• THE SEPARATION IS IN THE BEST
INTEREST OF THE MEMBER.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
• LONG TERM INVESTMENT
OPPORTUNITY IN CREDIT
UNION SHARES.
• EDUCATION IN THE USE AND
PURPOSE OF SHARES IN
CREDIT UNIONS AND OTHER
INSTITUTIONS.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
CREDIT UNION BENEFITS
• FINANCIAL STRUCTURE CLEARLY
ESTABLISHED IN SEPARATION OF
ASSETS, CAPITAL AND LIABILITIES.
• FOCUS ON CAPITAL MOBILIZATION
FOR MAXIMUM MEMBER BENEFITS.
• GREATER INSTITUTIONAL
DEVELOPMENT & CO-OPERATION.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
FINANCIAL STATEMENTS
PRESENTATION:-
• HIGHER LEVEL OF LIABILITIES.
• HIGHER LEVEL OF DIRECT
EXPENSES (FINANCIAL COST).
• LOWER LEVELS OF SURPLUS.
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY
MEMBER EDUCATION
• WHAT DO WE TELL OUR
MEMBERS?
 CO-OPERATIVE MEMBER
CAPITAL OR EQUITY

CONCLUSION:
• TAKING DEVELOPMENT TO
THE NEXT LEVEL.