BSUCMPC-RISK-MANAGEMENT

BIR and NATCCO Assessment Overview

  • Overview of the assessment conducted regarding financial health and compliance.

Financial Performance

Where Are We Now?

  • Current Assets: Total assets reported at 4.4B.

  • Sources of Funds:

    • Statutory Funds

    • Share Capital

    • Deposit Liabilities (Savings & Time Deposits)

    • Undivided Net Surplus

    • MAHA

    • Other Liabilities

  • Uses of Funds:

    • Loans Receivable

    • Accounts Receivable

    • Cash in Banks

    • Liquid Investment

    • Investment Properties

    • Cash

    • Other Assets

Compliance Review

BIR 2022 Audit

  • Identified tax deficiency reduced from 7 million to 4.6 million.

  • Primary Contributors:

    • Non-Member Tenants: Contributed 4.3M (notable mentions: Bonifacio, Annie’s Place, Naguilian). Membership could have reduced tax liability.

Employee Benefits

  • Breakdown of employee incentives:

    • Cash Incentives

    • Hazard Pay

    • Transportation Allowance

    • Load Allowance

    • Housing Allowance

    • Cost of Living Adjustment (COLA)

    • Loan Interest Differential

    • Other Benefits

Withholding Tax Obligations

  • Goods: 1% withholding tax

  • Services: 2% withholding tax

  • Professional Fees/Honorariums: Compliance details provided.

Audit Findings

Financial Ratios Summary (2019 - 2024)

  • Total Assets Growth:

    • 2019: 2.4B

    • 2020: 2.7B (~11% growth)

    • 2021: 3.1B (~14% growth)

    • 2022: 3.8B (~24% growth)

    • 2023: 4.4B (~24% growth)

  • Net Surplus observations over the years:

    • 2019: 51M

    • 2020: 86M

    • 2021: 136M

    • 2022: 178M

    • 2023: 168M

Loan Performance Indicators

  • Outstanding Balances of major loan types:

    • Salary Loan: 925M; PAR1: 34%

    • Assets Acquisition: 411M; PAR1: 15%

    • Housing Loan: 378M; PAR1: 14%

    • Business Loan: 303M; PAR1: 11%

  • Contributors to PAR Issues:

    • Mismanagement of salary billing, incorrect loan computations.

    • Communication reminders to members about payments are essential.

NATCCO Assessment Summary

Risk Classification

  • Nature of Risks: Ranges from High to Low across several domains (Finance, Credit, Operations, Governance).

Risk Events Encountered

  • Negative Institutional Capital: Address through intensive collections and monitoring.

  • Loan Documentation Deficiencies: Ensure compliance and sound practices.

  • High Investment Structure: Need to evaluate and possibly adjust strategies regarding investments.

Recommendations for Risk Management

  1. Intensive Collection Plans: Follow established plans with regular account monitoring.

  2. Sound Credit Practices: Implement regular review processes for loan documentation and approvals.

  3. Increased Loan Releases: Initiatives to boost market loan uptake through various means (brochures, websites).

  4. Training & Compliance: Consistent training and adherence to cooperative policies.

Challenges Ahead

Key Areas for Improvement

  • To enhance cooperative status and member trust:

    • Foster stronger connections and membership engagement.

    • Design comprehensive marketing strategies for cooperative promotions.

Assignment Recommendations

  1. Submit leave forms to manage personal plans.

  2. Reflection on reasons for remaining in the cooperative.

  3. Individual and departmental recommendations for improvement.