Cooperative Financial Reports and Financial Performance Indicators Study Guide

Overview of Cooperative Financial Reports

Definition of Cooperative Financial Report: A comprehensive report prepared to provide a snapshot of the cooperative's overall financial position, operating results, and cash flow at a specific time or over a period.
Management Responsibility: The report serves as a formal demonstration of the management board’s accountability in managing the cooperative’s finances, specifically for the benefit of its members.
Information Scope: Financial reports provide critical data regarding: * The financial position (assets, liabilities, and equity). * Financial performance (calculated business results). * Changes in the financial position of the entity.

Objectives of Cooperative Financial Reports

Factual Transactional Information: To provide objective information about transactions, specific events, and the current state of financial resources, liabilities, and net results during a reporting period.
Economic Assessment: To facilitate an understanding of the cooperative's economic results achieved throughout a specific period.
Management Evaluation: To provide data that can be used to assess the management's capability in utilizing cooperative resources effectively to meet organizational objectives.
Solvency and Liquidity: To disclose other important information that may directly impact the cooperative's liquidity and solvency status.

Basic Concepts and Characteristics of Preparation

Foundational Principles (Indonesian Institute of Accountants): * Continuity/Going Concern: Financial statements are prepared with the assumption that the cooperative will continue its operations indefinitely and will not be liquidated in the near future. * Accrual Basis: Transactions and events are recorded at the time they occur, regardless of when cash is received or paid.
Characteristics According to PSAK No. 27: * Accountability: Financial reports are the primary tool for management to fulfill their responsibility to members during the Annual General Meeting (RAT/Rapat Anggota Tahunan). * Standard Components: Generally includes a balance sheet, a statement of operating results, and a cash flow statement. * Authorization: Financial reports submitted to the AGM (RAT) must be signed by all cooperative members/management representatives. * SHU (Sisa Hasil Usaha): The final operating result, known as the Remainder of Business Results, is presented in the income statement. * Non-Consolidation: Cooperative financial reports are generally not presented as consolidated financial statements. * Reporting Structure: The balance sheet presents the financial position, and the calculation of operating results presents the business outcomes. * Capital Sources: Recorded capital consists of member savings (principal and mandatory), loans, deductions from operating profits, and other various sources.

Presentation of Cooperative Financial Reports

According to the standard presentation requirements, a cooperative must provide:

Balance Sheet (Neraca): Reports assets, liabilities, and equity at a specific point in time.
Calculation of Business Results (Perhitungan Hasil Usaha): Reports revenue and expenses.
Cash Flow Statement (Laporan Arus Kas): Tracks the movement of cash.
Member Economic Promotion Report (Laporan Promosi Ekonomi Anggota): Details benefits specifically for members.
Notes to the Financial Statement (Catatan Atas Laporan Keuangan): Detailed explanations and analysis.

Detailed Breakdown of the Balance Sheet

Assets (Aset): * Current Assets (Aset Lancar): Cash and bank (Kas dan Bank), short-term investments (Investasi Jangka Pendek), accounts receivable (Piutang Usaha), member loan receivables (Piutang Pinjaman Anggota), non-member loan receivables (Piutang Pinjaman Non Anggota), other receivables (Piutang Lain-Lain), allowance for doubtful accounts (Penyusutan Piutang Tak Tertagih), inventory (Persediaan), and income to be received (Pendapatan Akan Diterima). * Long-Term Investments (Investasi Jangka Panjang): Participation in other cooperatives (Penyertaan pada Koperasi) and participation in non-cooperative entities (Penyertaan pada Non Koperasi). * Fixed Assets (Aset Tetap): Land (Tanah/Hak atas Tanah), buildings (Bangunan), machinery (Mesin), office equipment (Inventaris), and accumulated depreciation (Akumulasi Penyusutan). * Other Assets (Aset Lain-Lain): Fixed assets under construction (Ak. Tetap dalam Konstruksi), deferred charges (Beban Ditangguhkan), and member-owned assets.
Liabilities (Kewajiban): * Short-Term Liabilities (Kewajiban Jangka Pendek): Trade payables (Hutang Usaha), bank loans (Hutang Bank), tax payables (Hutang Pajak), member savings payables (Hutang Simpanan Anggota), SHU distribution payables (Hutang Dana Bagian SHU), current portion of long-term debt (Hutang Jangka Panjang akan Jatuh Tempo), and accrued expenses (Biaya Harus Dibayar). * Long-Term Liabilities (Kewajiban Jangka Panjang): Long-term bank loans (Hutang Bank) and other long-term payables (Hutang Jangka Panjang Lainnya).
Equity (Ekuitas): * Member Components: Principal deposits (Simpanan Pokok) and mandatory deposits (Simpanan Wajib). * Capital Components: Participation capital (Modal Penyertaan), donation capital (Modal Sumbangan), and reserves (Cadangan). * Operating Result: Undistributed SHU (SHU Belum Dibagi).

Cash Flow Statement Methods and Types

Cash Flow Categories: * Operational Activity: Flows related to the core business entity operations (e.g., receipts from customers, payments to suppliers/employees, interest, and taxes). * Investment Activity: Flows related to future income generation, such as purchasing/selling land, buildings, equipment, or acquiring other companies. * Funding Activity: Flows resulting in changes in equity and loan composition (e.g., issuing shares, long-term loans, or paying dividends).
Methodologies: * Direct Method (Metode Langsung): Lists specific classes of operating cash receipts and disbursements. * Indirect Method (Metode Tidak Langsung): Adjusts net profit for effects of non-cash transactions and changes in working capital accounts.

Member Economic Promotion Report

Purpose: To provide transparent information regarding the specific economic benefits acquired by members over the fiscal year.
Key Elements: * Economic benefits from joint purchases of goods or procurement of services. * Economic benefits from joint marketing efforts and management. * Economic benefits from savings activities and loans secured through the cooperative. * Economic benefits derived from the distribution of the remaining business profits (SHU).
Example Calculation (Mentari Cooperative): * Market Comparison: It was agreed to use Lala Supermarket for price comparison. * Purchase Benefit: Cooperative sold products to members worth $Rp\,96,000,000$ . The same goods at Lala Supermarket would cost $Rp\,94,500,000$ . The economic benefit is calculated as: $(Rp\,94,500,000 - Rp\,96,000,000) = -Rp\,1,500,000$ . * SHU Benefit: The cooperative net profit was $Rp\,18,350,000$ . If $40\%$ is allocated to the Member Fund, the benefit is: $Rp\,18,350,000 \times 40\% = Rp\,7,340,000$ .

Notes to the Financial Statements

Function: Provides detailed lists, analysis, and adequate disclosure for items in the Balance Sheet, Business Results, and Cash Flow reports.
Required Disclosures: 1. General overview of the cooperative organization. 2. Basis for statement preparation and specific accounting policies applied to significant transactions. 3. Information required by PSAK standard not found on the face of the financial statements. 4. Additional information necessary to ensure the presentation is fair.

Target Users of Financial Reports

Investors: To evaluate the feasibility of investing or providing capital.
Suppliers and Trade Creditors: To assess the cooperative's ability to pay for supplies or goods on credit.
Government: For regulatory compliance, taxation, and economic monitoring.
Community: And various other interested third parties interested in the cooperative's social or local economic impact.

Preparation Example: Koperasi Mutiara

Worksheet (Neraca Lajur) Data (in thousands of Rupiah): * Assets: Cash ( $196,300$ ), Member Receivables ( $55,000$ ), Inventory ( $29,200$ ), Prepaid Office Rent ( $36,000$ ), Office Supplies ( $2,400$ ), Office Equipment ( $40,000$ ). * Liabilities & Equity: Trade Payables ( $40,450$ ), Principal Savings ( $250,000$ ), Mandatory Savings ( $50,000$ ). * Operations: Gross Participation ( $96,000$ ), Sales ( $72,000$ ), COGS/Beban Pokok ( $81,600$ ), HPP ( $61,200$ ). * Expenses: Utilities ( $1,300$ ), Employee Salary ( $2,400$ ), Management Salary ( $2,000$ ), Depreciation ( $100$ ). * SHU: Calculated at $18,350$ . * Totals: The Balance Sheet totals for both Aktiva (Assets) and Pasiva (Liabilities + Equity) are $358,800,000\,Rupiah$ as of December 31, 2018.

Cooperative Financial Performance Indicators

Regulatory Context: Based on the Indonesian Minister of State for MSME regulation No. 06/PER/M.UMKM/V/2006 regarding "Award" cooperatives.
Key Ratios and Ideal Standards: * Rentabilitas Modal Sendiri (Return on Equity): Comparison of SHU with equity. Ideal Standard: $21\%$ . * Return on Assets (ROA): Comparison of SHU with total assets. Ideal Standard: $10\%$ . * Asset Turnover: Comparison of business volume with cooperative assets. Ideal Standard: $3.5\,\text{times}$ or $15\%$ . * Current Ratio: Current assets divided by short-term liabilities. Ideal Range: $200\% \text{ to } 250\%$ . * Debt Asset Ratio: Total debt compared to total assets. Ideal Standard: $40\%$ . * Debt Equity Ratio: Comparison of own capital (equity) with total debt. Ideal Standard: $70\%$ . * Member Business Transaction Ratio: Transactions with members divided by total cooperative transactions. Ideal Standard: $90\%$ . * Accounts Receivable Turnover: Ratio of sales to average accounts receivable. Ideal Standard: $12\%$ . * Net Profit Margin: Comparison of SHU with gross income. Ideal Standard: $15\%$ . * Loan Deposit Ratio (LDR): Funds distributed (loans) compared to savings received. Ideal Standard: $78\%$ . * Loan to Asset Ratio (LAR): Measures credit distributed against total assets. Relationship: The higher the LAR, the lower the cooperative's liquidity.