MODULE 4

1. Unrestricted – available for immediate use and for any purpose.

2. Temporarily restricted – restricted by the donor in such a way that the availability of the
contribution for the NPO’s use is dependent
3. Organized, i.e., they have some structure and regularity to their operations, whether or not
they are formally constituted or legally registered. More than legal or formal recognition,
this qualification stresses organizational permanence and regularity, reflected in regular
meetings, a membership, and legitimate decision-making structures and procedures.
4. Private, i.e., they are not part of the apparatus of the state, even though they may receive
support from governmental sources.
5. Not profit-distributing, i.e., they are not primarily commercial in purpose and do not
distribute profits to a set of directors, stockholders, or managers. While NPOs may generate
a surplus from time to time, they must reinvest these resources back into the objectives of
their respective organizations.
6. Self-governing, i.e., they have their own mechanisms for internal governance, are able to
cease operations on their own authority, and are fundamentally in control of their own
affairs.
7. Voluntary, i.e., membership or participation in them is not legally required or otherwise
compulsory.
8. NPO – include many groups and institutions that are entirely or largely independent of
government and that have primarily humanitarian or cooperative rather than commercial
objectives.
9. Program services – are the activities that result in goods and services being distributed to
beneficiaries, customers, or members that fulfill the purposes or mission for which the
organization exists. Those services are the major purpose for and the major output of the
organization and often relate to several major programs.
10. Supporting activities – are all activities other than program services. Generally, these
include management and general, fund-raising, and membership-development activities.
11. A non-profit organization is a group or institution organized for purposes other than
generating profit.
12. Non-profit organization (NPO) is also called Non- Government Organizations (NGO) or Nor-
for-Profit Organizations (NFPO).
13. A non-governmental organization (NGO) is a non-for-profit, voluntary citizens’ group, which
is organized on a local, national or international level to address issues in support of the
public good. (UNDP definition) Nonprofit organizations exist to pursue missions that address
the needs of society.
14. This institutions depends on funds from contributions, membership dues, program
revenues, fundraising events, public and private grants. The contributions or investments
does not form income and do not have commercial owners.
15. In the Philippines, not-for-profit organizations (NPOs) are typically organized as "non-stock
corporations" registered under the Corporation Code.
16. Securities and Exchange Commission (SEC) of the Philippines is the government regulatory
body for this organizations which serves as the registration authority.
17. The basic concepts to nonprofit organizations for accounting and reporting are required by
the Financial Accounting Standards Board (FASB).
18. The UNDP2 describes NPOs as the “third sector”, the first and second being the government
and private sectors.
19. NPOs do not operate primarily for profit but for specific needs of a community, group,
organization or its membership.
20. Most of NPOs revenues come from funds contributed, donated, granted or given as other
forms of support. Revenues from income generating activities, if any, are eventually plowed
back to program operations.
21. NPOs have the responsibility to account for these funds designated for a specific purpose
for a specified period of time. The nature of the revenues received requires ensuring that
separate types of funds are properly tracked and reported.
22. For NPOs to fulfill their goals and objectives as well as to realize stakeholders’ expectations
efficiently and effectively, they must be governed by the principles of Fairness,
Accountability, and Transparency.
23. Fairness - rights of stakeholders should be observed and respected.
24. Accountability - Board and management should be answerable on their performance to
stakeholders
25. Transparency - timely, accurate and sufficient information must be disclosed.
26. A nonprofit's statement of financial position is similar to a balance sheet that reports the
organization's assets and liabilities, but since this is a nonprofit organization there is no
owner's equity or stockholders' equity but as Net Assets.
27. The primary purpose of NPO is to provide programs that meet certain needs of society thru
its various activities, thus it issues Statement of Activities.
28. The statement of activities reports revenue and expense that is presented in accordance
with the two classifications of net assets: With Donors Restrictions and Without Donor
Restrictions.
29. The statement of activities reports revenue and expense amounts in accordance with to the
two classifications of net assets illustrated in the Net asset. Below is an outline of the
statement
30. Components of Statement of Activities: Contributions, Membership dues, Program fees,
Fundraising events, Grants, Investment income, and Gain on sale of investments.
31. Reclassifications when net assets are released from restrictions (a negative amount in the
With Donor Restrictions column and a positive amount in the Without Donor Restrictions
column).
32. In order to accurately report the amount in each of these subgroups, it may be necessary to
allocate some management and general salaries to fundraising based on the time spent by
employees performing fundraising activities.
33. A nonprofit's transactions are recorded in accounts in the general ledger.
34. A listing of the titles of the general ledger accounts is also known as the chart of accounts.
35. The statement of functional expenses is reported in a matrix form to report expenses by
their function such as programs, management and general, fundraising and by the nature or
type of expense such as salaries, rent etc..
36. The FASB now requires every nonprofit to present expenses by function and nature in one
place (statement or notes).
37. The statement of cash flows of a nonprofit organization is similar a for-profit business. This
reports the change in the cash and cash equivalent during the accounting period.
38. The statement of cash flows consists of three sections: net cash from operating activities;
net cash from investing activities; net cash from financing activities
39. The operating section reports the changes in cash other than those reported in the investing
and financing sections.
40. The investing section of the statement of cash flows reports the amounts spent to purchase
long-term assets such as equipment, vehicles and long-term investments. The investing
section also reports the amount received from the sale of long-term assets.
41. The financing section of the statement of cash flows reports the amounts received from
borrowings and also any repayments.
42. While the statement of cash flows, or cash flow statement, may be a bit difficult to prepare,
it is an important financial statement to be read.
43. Donors/Grantors/Funding Agencies: Degree of attainment of development objectives as
indicated in financial statements and reports; Degree of compliance with agreed amount
and manner of using funds; Degree of compliance with prescribed financial accounting and
reporting system and procedures
44. Creditors (Banks/Financing Institutions): Information on ability to pay as indicated by ratios
of solvency, liquidity, and stability as well as status of their security.
45. Government Agencies: Compliance with laws, government rules and regulations, payment
of taxes (if any) and reportorial requirements
46. General Public: Effect of the activities of NPOs to the community and society in general
47. Members: Information on how fees, donations, grants, and proceeds from fundraising
activities were used; Other information needs such as managerial remuneration, use of
assets, management efficiency, etc.
48. Management Team: Board of directors/trustees for policy-making, strategic decision-
making, and fulfilling its trusteeship/stewardship role.
49. When a cash basis of accounting is used, income is recognized once it is received while
expense is recognized once it is paid.
50. Using an accrual basis means that income is recognized when it is earned, even when it has
not yet been received, and expenses are recognized when they are incurred even when
they have not yet actually been paid.
51. In some countries, cash basis of accounting is allowed or required by local laws for NPOs. In
such cases, NPOs may use the cash basis.
52. Relevance. Information has the quality of relevance when it influences the decisions of
users by helping them evaluate past, present or future events or confirming, or correcting
their past evaluations.
53. Materiality. Information is material if its omission or misstatement could influence the
decision of users taken on the basis of the financial statements.
54. Timeliness. Accounting information must be available on time when needed if it is to
influence decisions. Lack of timeliness reduces relevance.
55. Reliability. Information is reliable when it is free from material error and bias and can be
depended upon by users to embody faithfully the representation contained therein.
56. Faithful Representation. To be reliable, information must represent faithfully the
transactions and other events that it either purports to represent or could reasonably be
expected to represent.
57. Substance over form. Transactions and other events are accounted for and presented in
accordance with their substance and not merely their legal form.
58. Neutrality. Information must be free from bias. Financial statements are not neutral if, by
selection or presentation of information, they influence the making of a decision or
judgment in order to achieve a predetermined result or outcome.
59. Prudence. Some degree of caution in the exercise of the judgments needed in making the
estimates required under conditions of uncertainty, such that assets or revenues are not
overstated and liabilities or expenses are not understated.
60. Completeness. Information must be complete within the bounds of materiality. Omission
may cause information to be false or misleading and thus unreliable and deficient in terms
of its relevance.
61. Comparability. Users must be able to compare the financial statements through time in
order to identify trends in its financial position
62. . Understandability. An essential quality of the information provided in financial statements
is that it is readily understandable by users.
63. A contractual adjustment is the difference between what the hospital considers a fair price
for a service rendered versus an agreed upon amount for the service with the insurance
company.
64. Charity care pertains to free services rendered to patients. Charity care is not recognized
but rather disclosed only in the notes.
65. Capitations Agreements are agreements with third parties based on the number of
employees instead of services rendered.
66. Unlike for other NPOs, health care organizations do not present restricted contributions on
the statement of operations as part of revenues.
67. According to the AICPA Guide, the statement of operations shall provide a performance
indicator, such as operating income, revenue over expenses, etc. The policy used in
determining the performance indicator shall be disclosed in the notes.
68. Unrealized gains and losses on investments in securities are not a part of the performance
indicator, but shall be reported on the statement of operations after the performance
indicator.
69. Voluntary Health and Welfare Organizations (VHWO) are non-profit entities that derive
their revenues primarily from donations from the general public to be used for purposes
connected with health, welfare, or community services.
70. Other general accounting requirements for NPOs apply to other non-profit organizations.
Thus, there are actually no accounting requirements peculiar to these organizations.

MODULE 5:

1. The primary objective of every cooperative is to help improve the quality of life of its members.
2. A cooperative duly registered shall have limited liability.
3. A cooperative shall exist for a period not exceeding fifty (50) years from the date of registration
unless sooner dissolve or unless said period is extended.
4. All cooperatives applying for registration shall file with the Authority the Articles of Cooperation
which shall be signed by each of the organizers.
5. The articles of cooperation may also contain any other provisions not inconsistent with any related
laws.
6. Four copies of each Articles of cooperation,bylaws and the general statement shall be submittes to
the Authority.
7. Each cooperative to be registered under RA 9520 shall adopt bylaws not inconsistent with the
provisions of this Code. The bylaws shall be filed at the same time with the Articles of Cooperation
8. Under Art. 10 of R.A 9520 Organizing a Primary Cooperative, Fifteen or more natural persons who
are Filipino citizens, of legal age having a common bond of interest and are actually residing or
working in the intended area of operation,may organize a primary cooperative under this Code:
Provided, that a prospective member of a primary cooperative must have completed a Pre-
Membership Education Seminar (PMES)
9. Any newly organized primary cooperative may be registered as multi-purpose cooperative only after
compliance with the minimum requirements for multipurpose cooperative to be set by the
Authority.
10. A single-purpose cooperative may transform into a mutipurpose or may create subsidiaries only
after at least two (2) years of operations.
11. The General Assembly shall be composed of such members who are entitled to vote under the
articles of cooperation and bylaws of the cooperatives.
12. The General Assembly shall be the highest policy-making body of the cooperative and shall exercise
such powers as are stated in RA 9520, in the Articles of cooperation and bylaws of the cooperatives.
13. A regular meeting shall be held anually by the general assembly on a date fixed in the bylaws, or if
not ao fixed, on any dated within ninety (90) days after the close of each fiscal year.
14. Whenever necessary, a special meeting of the general assembly may be called at any time by a
majority vote of the board of directors or as provided in the bylaws.
15. A quorum shall consists at least 25% of all the members entitled to vote.
16. Each member of a primary cooperative shall have only one (1) vote. In the case of members of
secondary or tertiary cooperatives, they shall have one basic vote and as many incentive votes as
provided for in the bylaws but not exceed 5 votes.
17. Cooperatives registered under this Code may derive their capital from any or all of the following
sources: "(1) Member’s share capital; "(2) Loans and barrowings including deposits; "(3) Revolving
capital which consists of the deferred payment of patronage refunds, or interest on share capital;
and "(4) Subsidies, donations, legacies, grants, aids and such other assistance from any local or
foreign institution whether public or private:
18. The capitalization of cooperatives and the accounting procedures shall be governed by the
provisions of this Code and the regulations which shall be issued.
19. No member of primary cooperative other than cooperative itself shall own or hold more than ten
per centum (10%) of the share capital of the cooperative.
20. "Where a member of cooperative dies, his heir shall be entitled to the shares of the decedent:
Provided, That the total share holding of the heir does not exceed ten per centum (10%) of the share
capital of the cooperative.
21. The accountant or the bookkeeper of the cooperative shall be responsible for the maintenance of
the cooperative in accordance with generally accepted accounting practices. He shall also be
responsible for the production of the same at the time of audit or inspection.
22. The audit committee shall be responsible for the continuous and periodic review of the books and
records of account to ensure that these are in accordance with generally accepted accounting
practices. He shall also be responsible for the production of the same at the time of audit or
inspection.
23. Each cooperative shall maintain records of accounts such that the true and correct condition and the
results of the operation of the cooperative may be ascertained therefrom at any time.
24. The financial statements, audited according to generally accepted auditing standards, principles and
practices, shall be published annually and shall be kept posted in a conspicuous place in the principal
office of the cooperative.
25. Subject to the pertinent provisions of the National Internal Revenue Code and other laws, a
cooperative may dispose by way of burning or other method of complete destruction any
document, record or book pertaining to its financial and nonfinancial operations which are already
more than five (5) years old except those relating to transactions which are the subject of civil,
criminal and administrative proceedings.
26. Cooperatives under this Code shall be subject to an annual audit by an auditor who satisfies all the
following qualifications:
 He is independent of the cooperative being audited and of any subsidiary of the cooperative;
and
 He is a member of any recognized professional accounting or cooperative auditors’ association
with similar qualifications

27. The auditor shall submit to the audit committee a report of the audit which shall contain a statement
of the assets and liabilities of the cooperative, including earnings and expenses, amount of net surplus
as well as losses and bad debts, if any.

28. The audit committee shall forthwith furnish the board of directors a copy of the audit report.
Thereafter, the board of directors shall present the complete audit report to the general assembly in its
next meeting.

29. Credit Cooperative is one that promotes and undertakes savings and lending
services among its members. It generates a common pool of funds in order to provide
financial assistance to its members for productive and provident purposes;

30. Consumers Cooperative is one of the primary purpose of which is to procure and
distribute commodities to members and non-members;

31. Producers Cooperative is one that undertakes joint production whether agricultural
or industrial. It is formed and operated by its members to undertake the production and
processing of raw materials or goods produced by its members into finished or
processed products for sale by the cooperative to its members and non-members. Any
end product or its derivative arising from the raw materials produced by its members,
sold in the name and for the account of the cooperative, shall be deemed a product of
the cooperative and its members;

32. Marketing Cooperative is one which engages in the supply of production inputs to
members and markets their products;

33. Service Cooperative is one which engages in medical and dental care,
hospitalization, transportation, insurance, housing, labor, electric light and power,
communication, professional and other services;

34. Multipurpose Cooperative is one which combines two (2) or more of the business
activities of these different types of cooperatives;

35. Cooperative Bank is one organized for the primary purpose of providing a wide
range of financial services to cooperatives and their members;

36. Dairy Cooperative is one whose members are engaged in the production of fresh
milk which may be processed and/or marketed as dairy products;

37. Financial Service Cooperative is one organized for the primary purpose of engaging
in savings and credit services and other financial services;

38. Fishermen Cooperative is one organized by marginalized fishermen in localities

whose products are marketed either as fresh or processed products;
Health Services Cooperative is one organized for the primary purpose of providing
medical, dental and other health services;

39. Housing Cooperative is one organized to assist or provide access to housing for the
benefit of its regular members who actively participate in the savings program for
housing. It is co-owned and controlled by its members;

40. Insurance Cooperative is one engaged in the business of insuring life and poverty of
cooperatives and their members;

41. Transport Cooperative is one which includes land and sea transportation, limited to
small vessels, as defined or classified under the Philippine maritime laws, organized
under the provisions of this Code;

42. Water Service Cooperative is one organized to own, operate and manage waters
systems for the provision and distribution of potable water for its members and their
households;

43. Workers Cooperative is one organized by workers, including the self-employed, who
are at same time the members and owners of the enterprise. Its principal purpose is to
provide employment and business opportunities to its members and manage it in
accordance with cooperative principles; and

44. Advocacy Cooperative is a primary cooperative which promotes and advocates

cooperativism among its members and the public through socially-oriented
projects, education and training, research and communication, and other similar
activities to reach out to its intended beneficiaries;

45. Electric Cooperative is one organized for the primary purposed of undertaking
power generations, utilizing renewable energy sources, including hybrid systems,
acquisition and operation of subtransmission or distribution to its household members;

46. The reserve fund shall be used for the stability of the cooperative and to meet net
losses in its operations.

47. The general assembly may decrease the amount allocated to the reserve fund when
the reserve fund already exceeds the share capital.

48. Any sum recovered on items previously charged to the reserve fund shall be credited
to such fund.

49. The reserve fund shall not be utilized for investment, other than those allowed in
this Code. Such sum of the reserve fund in excess of the share capital may be used at
anytime for any project that would expand the operations of the cooperative upon the
resolution of the general assembly.

50. Upon the dissolution of the cooperative, the reserve fund shall not be distributed
among the members. The general assembly may resolves: To establish a usufructuary
trust fund for the benefit of anyfederation or union to which the cooperative is
affiliated; and To donate, contribute, or otherwise dispose of the amount for the benefit
of the community where the cooperative operates. If the members cannot decide upon
the disposal of the reserve fund, the same shall go to the federation or union to which
the cooperative is affiliated.

51.Notwithstanding the provisions of existing laws, the net surplus of cooperatives shall
be determined in accordance with its bylaws.

52.Every cooperative shall determine its net surplus at the close of every fiscal year and
at such other times as may be prescribed by the bylaws.

53. Any provision of law to the contrary notwithstanding, the net surplus shall not be
construed as profit but as an excess of payments made by the members for the loans
borrowed, or the goods and services availed by them from the cooperative or the
difference of the rightful amount due to the members for their products sold or services
rendered to the cooperative including other inflows of assets resulting from its other
operating activities and which shall be deemed to have been returned to them if the
same is distributed as prescribed herein.

54. Every cooperative shall, at its principal office, keep and carefully preserve the
records required by this Code to be prepared and maintained. It shall take all necessary
precaution to prevent its loss, destruction or falsificati

55. Any officer of the cooperative who shall refuse to allow any member of the
cooperative to examine and copy excerpts from its records shall be liable to such
member for damages and shall be guilty of an offense which shall be punishable under
Article 106 of this Code.

56. All applications for registration shall be finally disposed of by the Authority within.
period of sixty (60) days from the filing thereof, otherwise the application is deemed
approved, unless the cause of delay is attributable to the applicant.

57. Under Article 16 of R.A 9520, a cooperative formed and organized under this code
acquires juridical personality from the date the Authority issues a certificate of
registration under its official seal.

58. In a case of a denial of application for registration, an appeal shall lie with the Office
of the President within ninety (90) days from receipt of such notice of denial.

59. A certificate of registration issued by the Authority under its official seal shall be
conclusive evidence that the cooperative therein mentioned duly registered unless it is
proved that the registration thereof has been cancelled.

60. Statement of Changes in Equity shows a reconciliation between the carrying

amounts of f the beginning and end of the period.