DepED Order No. 8, s. 2007 establishing Revised Implementing Guidelines on the Operation and Management of School Canteens in Public Elementary and Secondary Schools

Tanggapan ng Kalihim Office ,f the Secretary REPUBLIKA NG PILIPINAS Republic of the Philippines KAGAWARANNGEDUKASYON DEPARTMENT OF EDUCATION DepEd Complex. Meralco Ave. Pasig City DepED ORDER No . 8 , s. 2007 Direct line: 633-72-08 E-mail. deot!d·ap11c· i/ic 11t!l .ph Website: http · www.deped!!m'. ph FEB 06 2007 REVISED IMPLEMENTING GUIDELINES ON THE OPERATION AND MANAGEMENT OF SCHOOL CANTEENS IN PUBLIC ELEMENTARY AND SECONDARY SCHOOLS To: Undersecretaries Assistant Secretaries Bureau Directors Regional Directors Directors of Services/Centers and Heads of Units Schools Division/City Superintendents Heads, Public Elementary and Secondary Schools 1.0 PURPOSE These guidelines are hereby issued in order to rationalize the operation and management of school canteens in the public school system and to ensure that: 1 .1 The school canteen shall help eliminate malnutrition among pupils/students . 1.2 The school canteen shall serve as a venue for the development of desirable eating habits of pupils/students. l .3 The school canteen shall serve as a laboratory for Home Economics, retail trade and in the incidental teaching of health and nutrition. It shall provide hands-on training for students on planning, purchasing, handling and storage, preparation, serving and sale of safe and nutritious meals. 1.4 The school canteen guidelines shall serve as a mechanism to support the Department's response to the mandate of Article 2 of Republic Act No. 6938 to create an atmosphere that is conducive to the growth and development of cooperatives. 1.5 Service should be the main consideration for operating a school canteen. Profit shall only be secondary since the clientele are pupils/students who are dependent only on their meager allowance from their parents. 1.6 Reporting and accounting of the proceeds from the operation of a school canteen shall be made by the parties concerned to emphasize transparency and accountability. 2.0 COVERAGE These guidelines shall apply to school canteens, as hereinafter defined, operating in public elementary and secondary schools of the Department of Education. 3.0 DEFINITION OF TERMS As herein used, the following tenns shall be understood to mean : 3.1 School Canteen - refers to one of the ancillary services in the school system that sells food items to the pupils/students and serves as a support mechanism in the effort to eliminate malnutrition concerns of the school. It can be used as a laboratory canteen on food planning, preparation, serving, storage and selling. A school canteen can either be school managed or teachers' cooperative-managed. 3.2 School-Managed Canteen - refers to a school canteen that is operated and managed by the school under the general supervision of the school head/principal. 3.3 Teachers' Cooperative Managed Canteen - refers to a school canteen that is operated and managed by a duly registered teachers' cooperative. 3 .4 Laboratory Canteen - refers to the canteen operated and managed by secondary students as part of their H.E. classes. It can make use of the facilities of the school-managed canteen or the teachers' cooperative managed canteen in the absence of a separate room that they can use. 3.5 Canteen Teacher - refers to an H.E. teacher who has been designated to operate, manage and supervise the school-managed canteen. He/She also supervises the students doing practicum activities in the canteen. 3.6 Administrative Expenses - refers to general expenses of business operation such as salaries, supplies, water and ele~tric bills, insurance, etc. 2 3. 7 Cost of Goods Sold - is equal to the inventory at the beginning of the year, adding the cost of goods manufactured or purchased during the year, minus the inventory at the end of the year. 3.8 Selling Expense - refers to expenses of promoting, selling and distributing products which may include such items as advertising, commissions, delivery expenses, travel expenses and entertainment. 3.9 Gross Margin - refers to the difference between gross sales and cost of goods sold including cost of freight and production directly related to the preparation of food items. 4.0 POLICY STATEMENTS 4.1 School canteens shall be of two types: (1) School-Managed Canteen; (2) Teachers' Cooperative-Managed Canteen. Both shall adhere to professional management and sound business practices as well as to safety and security measures. 4.2 Management of School Canteens in Elementary Schools 4.2.1 Elementary Schools in the rural areas with 500 pupils or less and those in urban areas with 1,000 pupils or less shall have only one canteen to be operated and managed by the school under the general supervision of the school head/principal. 4.2.2 Where the enrolment size in rural elementary schools is more than five hundred (500) pupils and in urban elementary schools, more than one thousand (1,000) pupils, the existing duly registered teachers' cooperative that complies with the Criteria for Qualification herein set forth, shall manage and operate the school canteen. When there is no duly registered teachers' cooperative that is interested or qualified to operate and manage the canteen, the school shall operate and manage the same. 4.3 Management of School Canteens In Secondary Schools 4.3.1 Regardless of enrolment size, there shall be a laboratory canteen, as herein defined, in all secondary schools. When the student population is less than one thousand five hundred (1,500), the laboratory canteen shall also be the school managed canteen. 4.3.2 In addition to the laboratory canteen in secondary schools where the student population is more than one thousand five hundred (1,500), the existing duly registered and interested 3 teachers' cooperative in the school that complies with the Criteria for Qualification set forth shall be allowed to operate and manage another school canteen. 4.3.3 For special schools with an enrolment size of more than five hundred (500) students, the existing duly registered and interested teachers' cooperative in the school that complies with the Criteria for Qualification set forth shall be allowed to operate and manage another school canteen in addition to the laboratory canteen. 4.4 Only nutrient-rich foods such as root crops, noodles, rice and corn products in native preparation, fruits and vegetables in season, and fortified food products labeled rich in protein, energy, vitamins and minerals shall be sold in the school canteen. Beverages shall include milk, shakes and juices prepared from fruits and vegetables in season. 4.5 The sale of carbonated drinks, sugar-based synthetic or artificially flavored juices, junk foods and any food product that may be detrimental to the child's health and that do not bear the Sangkap Pinoy seal and/or did not pass BF AD approval is prohibited. 4.6 Iodized salt shall be used, in controlled quantity, in the preparation of cooked foods to ensure that the iodine requirement of the clientele shall be met and to eliminate iodine deficiency disorders. The use of monosodium glutamate (vetsin) shall be regulated. 4.7 A reasonable mark-up price for all merchandise in the canteen shall be allowed, provided that the selling retail price does not exceed the prevailing prices in the locality. 4.8 Sub-leasing the whole or part of the school canteen premises or sub contracting the operation of the school canteen to concessionaires is prohibited. 4.9 Vendors shall not be allowed to bring in food items inside the school canteen/premises. Teachers and school personnel are likewise prohibited from selling food items within the school premises, except through the school canteen and unless authorized and covered by a ,written agreement with the school head/principal and/or the teachers' cooperative. 5.0 PROCEDURAL GUIDELINES 5.1 All school canteens are required to secure the following permits/clearances: 4 (a) Sanitation Clearance/Permit from the local Health Department (b) Health Permit of canteen personnel/staff from the city/municipal health office ( c) Authority from the school head/principal to Operate and Manage the School Canteen (for teachers' cooperatives only) Clearances/Permit shall be permanently displayed in a conspicuous place in the school canteen. They shall remain valid for the duration of the school year. 5.2 All canteen personnel/staff are required to wear clean and proper attire (white shirt/polo/blouse, colored pants/skirt, hairnet, apron, appropriate footwear) at all times. They shall also wear their identification cards with photo when inside the premises of the canteen. 5.3 Reportorial Requirements 5.3.1. All entities operating and managing a school canteen, including the laboratory canteen, shall regularly prepare the following reportorial requirements to be submitted to the DepEd and/or CDA, whichever is applicable: Category of Reports Types of Reports Date of Submission Category A-1 , To be submitted to the (1) Statement of Financial Quarterly submission with Department of Condition deadline dates of May 15 , Education, specifically (2) Statement of Operations August 15, November 15 to the school head in (3) Statement of Cash Flows and February 15 case of teachers' coop- (4) Notes to Interim Financial managed, and division Statement and Other office in case of Disclosures school-managed (5) Summary of Cost of Sales canteens Category A-2 , To be prepared and (1) Bank Reconciliation Monthly with deadline date maintained at all times (2) Schedule of Cost of Sales of every 10 th of the and posted on the (3) Schedule of Operating follqwing month school's bulletin board Expenses and/or 111 any (4) Schedule of Utilization of conspicuous place School Share Program within the school Received from the premises Cooperative (5) Schedule of Utilization of Gross Income Generated 5 Category of Reports Types of Reports Date of Submission from the Canteen Laboratory (6) Statement of Receipts and Disbursements (7) Statement of Reports on Cooperatives' School Program Support (8) Schedule of Capitalization on the Operation of School Canteen Category B ,- To be submitted on an ( 1) Audited Financial >- May 15 annual basis to or as Statements including notes required by the and disclosures Cooperative (2) Financial Performance >" May 15 Development Standards Authority (CDA) (3) Annual Report to CDA ',- 60 days after end of ( for teachers' fiscal year cooperatives only), (4) List of Directors and >- 30 days after the GA copy furnished the Officers meeting; and 15 days school head/principal following assumption of office (5) Report on Crimes and >- To be submitted as Losses crime/incident occurs, on the 5th business day after knowledge of crime or incident Note: Standards of Financial Reporting System shall be adopted by the cooperative as prescribed hy the CDA; and by the organization as prescribed by the profession on accountancy 5.3.2 The school-managed canteen shall prepare its financial statements using the pro-forma copies of the monthly statement of operations and financial statements which are hereto attached as Annexes "B" and "C", respectively. Teachers' cooperatives managing school canteens shall follow the Standard Chart of Accounts for Consumers' Cooperatives and Those with Canteen And/Or Catering Services prescribed by the Cooperative Development Authority, which is hereto attached as Annex "D". 5.3.3 The school head/principal shall also post on the school's bulletin board a statement of receipts and disbursements, indicating the share it received from the teachers' cooperative managed canteen. 6 5.4 Accounting of Funds 5.4.1 A book of accounts and statement of sales and disbursements shall be maintained for recording daily transactions related to the operations of the canteen. Receipts and other similar documents shall be kept to support sales, purchases and disbursements made. The books of accounts should be kept up-to-date and made available for examination and inspection at any appropriate time by the school level auditing committee or the COA representative based in the division office. 5.4.2 For purposes of transparency and accountability, the school head/principal shall organize a school level auditing committee to be headed by a Mathematics department head/teacher, and Home Economics department head/teacher and the president of the faculty club as members. The committee shall look into the books of accounts at least once a month. The audited statement shall be posted on the school's bulletin board. 5.4.3 Canteen funds shall be audited by the school level auditing committee on a quarterly basis and by the Division COA Resident Auditor or his/her authorized representative twice a year. Audit findings shall be submitted to the Schools Division Superintendent through the school head/principal. Audited financial statements shall be posted on bulletin boards for the information of everybody. 5.5 Incentives received in cash or in kind from private suppliers of food items and beverages shall form part of the gross income of the school canteen and shall be part of the financial statement. 5.6 Adherence to Food Safety 5.6.1 Food safety standards shall be strictly enforced and adhered to at all times by complying with the following: (a) Availability of potable drinking water and hand washing facilities; (b) Well-maintained, clean, well-ventilated and pest-free environment; (c) Availability of food covers and containers for safekeeping; (d) Hygienic practices on food preparation, cooking display, serving and storage. 5. 7 All canteen personnel, including practicum students, shall undergo training on proper and safe handling of food before they are allowed to work in the canteen. 7 5.8 No portion of the net income derived from canteen operations shall be set aside and in any manner, in favor of the Regional, Division or District Offices. 6.0 SPECIFIC GUIDELINES FOR SCHOOL-MANAGED CANTEENS 6.1 The school head/principal shall issue a written designation to a Home Economics teacher who shall be the Canteen Teacher. He/She is tasked to supervise canteen operations for a period not exceeding three (3) hours per day which is equivalent to four (4) EPP teaching periods. The rest of the required number of hours in a day's load shall be spent in actual teaching. In no case shall he/she be totally stripped/deprived of academic teaching load. The Canteen Teacher shall be assisted by all Home Economics Teachers on rotation basis, the schedule of which shall be prepared by the school head/principal or his/her authorized representative. 6.2 In addition to the Canteen Teacher and other HE teachers, the school head/principal shall contract the services of additional qualified full-time canteen personnel, subject to availability of funds. 6.3 Indigent pupils/students who wish to work in the canteen shall be duly and reasonably compensated. Their employment shall only be done upon written consent of their parents. They shall only be allowed to work in the canteen outside their regular class schedule. 6.4 The Canteen Teacher shall be responsible in the preparation and submission of reports, and the books of accounts and statement of sales and disbursements required and enumerated in Procedural Guidelines 5.3.1 and 5.4.1, respectively. 6.5 The net income derived from the operation of the canteen shall be utilized for, but not limited to the following: Supplementary feeding program for undernourished 35% pupils/students School clinic fund 5% Faculty and student development fund 15% H.E. instructional fund 10% School operations fund 25% Revolving capital 10% TOTAL 100% 6.6 Earnings and cash received from canteen operations shall be deposited daily in the nearest government depository bank. In the absence of such government depository bank, deposits shall be made at any nearest 8 reputable commercial bank. In no case shall the deposits be made in the personal account of any school official. A school-managed canteen shall have a bank account "in trust for" the name of the school, whereby the school head/principal and the Canteen Teacher shall be the joint signatories. 6. 7 Based on the expected income of the school canteen, the school head/principal shall prepare an Annual Budget to be submitted to and approved by the Schools Division Superintendent or his/her representative at the start of every school year. 6.8 Disbursement of canteen funds shall be in accordance with the approved budget and existing accounting and auditing rules and regulations. 6.9 Teachers and canteen personnel shall be required to secure clearance from money and property accountabilities in relation to their involvement in the operation and management of the school canteen before they are allowed to retire and/or resign from government service, or transfer to other posts for purposes of re-assignment or promotion to a higher position. 7.0 SPECIFIC GUIDELINES FOR TEACHERS' COOPERATIVE MANAGED CANTEENS 7.1 A teachers' cooperative shall be authorized to operate and manage a school canteen if it satisfies the following requirements: (a) It is duly registered with the Cooperative Development Authority (CDA) with membership composing of incumbent teaching and non-teaching staff of the school at the time of its registration with the aforesaid agency. (b) One of its primary purposes as reflected in its Articles of Cooperation and Constitution and By-Laws is the operation and management of a school canteen. ( c) It has been in existence for at least two (2) years at the time that it signified interest to manage the school canteen. ( d) It has the necessary equipment/utensils, facilities, furniture and other supplies such as forms and stationery that will be used m canteen operations. ( e) It will ensure the complete and continuous training for canteen personnel/staff on handling of food and food safety. 9 (f) It is able to secure and present a certification from the CDA, or the federation where it is affiliated to, of its ability to hire qualified full-time manager and staff who are not holding civil service positions. (g) Its membership is composed of more than fifty percent (50%) of the teachers and non-teaching personnel of the school: Provided, that members who have retired, resigned or have been dismissed or otherwise removed from the service, shall not be included in the determination of compliance with the required membership. Withdrawal of membership from the cooperative shall be made in accordance with the Cooperative Code of the Philippines, rules and regulations, guidelines and issuances of the cooperative. The withdrawal of membership by members of the cooperative shall be made individually and in writing. Mass withdrawal of membership shall be presumed to have been made under duress or undue pressure. The number of members who have withdrawn membership from the cooperative in violation of or not in accordance with existing laws, regulations and issuances of the CDA and those whose withdrawal of membership was made under duress or undue pressure shall not be considered in the determination of compliance 7 .2 Documents required to be submitted At least thirty (30) days prior to the start of canteen operations, the cooperative shall submit the following documents to the division office, through the school head/principal, for evaluation: (a) Copy of its registration with the CDA; (b) Copy of its Amended Articles of Cooperation and Constitution and By-Laws stating among others, its purpose in engaging in canteen and/or catering services; (c) Certificate of good standing issued by the CDA; (d) Resolution by the General Membership/Assembly signifying willingness, intention and readiness to operate and manage the school canteen, including the canteen development plan; (e) Copy of the approved memorandum of agreement between the cooperative and the school head/principal; (f) List of full-time management officers and their respective designations and salaries; (g) Bio-data sheets, statement of assets and liabilities, income tax returns, and statement of income and expenses of directors/officers; (h) Chart of organization (includes names of officers, functions and responsibilities, and the designations of positions); 10 (i) Copy of the bonds of accountable officers/employees; and (i) Certification by the chairman of the board authorizing the canteen manager to coordinate with the H.E. canteen teacher on the schedule of practicum activities in the teachers' cooperative managed canteen. 7.3 Within thirty (30) days upon receipt of the required documents, the schools head/principal shall issue to the applicant teachers' cooperative the "Authority to Operate and Manage the School Canteen" if the documents submitted are complete. The teachers' cooperative shall display at its business office a sign with the following words: AUTHORIZED BY DepED TO MANAGE AND OPERA TE THE SCHOOL CANTEEN. If the documents are found inadequate, the same shall be returned within seventy two (72) hours. 7.4 Memorandum of Agreement 7.4.1 As a rule, a memorandum of agreement shall be entered into by and between the school head/principal and the chairperson of the teachers' cooperative as a required document to be submitted to the Schools Division Superintendent. The MOA shall have a term of three (3) years and may be renewed every three (3) years thereafter. 7.4.2 Upon the termination of the MOA and when the teachers' cooperative ceases to operate the school canteen, the cooperative shall retain ownership of all properties it acquired for the operation thereof, except those properties or improvements which cannot be removed from the premises of the canteen without causing substantial damage thereto. Any arrangements pertaining to other facilities/equipment in the school canteen shall be subject to the individual MOA between the cooperative and the school head/principal. 7.5 Approval of Memorandum of Agreement (MOA) 7.5.1 The school head/principal and chairperson of the teachers' cooperative shall have thirty (30) days upon receipt thereof within which to sign and approve the Memorandum of Agreement. 7.5.2 In view of this, upon receipt of the proposed MOA by the school head/principal, he/she shall within ten (10) days make a written reply to the chairperson of the teachers' cooperative indicating therein his/her comment, objection, counter-proposal on the terms and conditions stipulated in the MOA. Thereafter, within the aforesaid period of thirty (30) days, the school head/principal 1 1 and the chairperson of the teachers' cooperative shall meet and mutually agree on the terms and conditions of the MOA. 7.5.3 Failure on the part of the school head/principal to notify the teachers' cooperative concerned of his/her comments, objections, and counter-proposal within the aforesaid period of ten ( 10) days, shall be construed to mean that he/she has fully agreed with the terms and conditions stipulated therein. Hence, there will be no reason for the school head/principal not to approve and sign the MOA. 7.5.4 After the lapse of the thirty (30) day period and no MOA has been executed by the parties concerned due to refusal of the school head/principal to sign it without valid reason, the party aggrieved by such refusal may bring the matter by way of an appeal to the Division/City Superintendent concerned, who in tum shall act on it within a period of fifteen (15) days from receipt thereof. The decision or resolution of the Division/City Superintendent shall be appealable to the Regional Director within fifteen (15) days from receipt thereof. 7.6 Renewal of Existing Memorandum of Agreement (MOA) 7 .6.1 The school head/principal and chairperson of the teachers' cooperative shall have thirty (30) days upon receipt of the proposal to renew the existing MOA, execute a new Memorandum of Agreement covering the operation and management of the school canteen by the teachers' cooperative for another term. 7.6.2 In order not to interrupt the operation of the school canteen managed by the teachers' cooperative, a written notice to renew and to continue the operation and management of the school canteen shall be submitted to the school head/principal at least thirty (30) days before the expiration of the original and/or existing MOA together with the draft new MOA. Upon receipt thereof, the school head/principal, within ten ( I 0) days, shall make a written reply to the chairperson of the teachers' cooperative indicating therein his/her comment, objections and/or counter-proposal on the terms and conditions stipulated in the draft new MOA. Thereafter, within the aforesaid period of thirty (30) days, the school head/principal and the chairperson of the teachers' cooperative shall meet and mutually agree on the terms and conditions of the new MOA and amendments, if there are any. 7.6.3 Failure on the part of the school head/principal to notify the teachers' cooperative concerned of his/her comment, objection 12 and/or counter-proposal within the aforesaid period of ten (10) days, shall be construed to mean that he/she has fully agreed with the terms and conditions stipulated therein. 7.6.4 After the lapse of the thirty (30) day period and no renewal of the MOA has been made by the parties concerned due to refusal of the school head/principal to sign it without valid reason, the party aggrieved by such refusal may bring the matter by way of an appeal to the Division/City Superintendent concerned, who in tum shall act on it within a period of fifteen (15) days from receipt thereof. The decision or resolution of the Division/City Superintendent shall be appealable to the Regional Director within fifteen (15) days from receipt thereof. 7.7 A copy of the pro-forma Memorandum of Agreement is hereto attached as Annex "A" for reference. 7.8 Use of Canteen Facilities 7.8.1 The teachers' cooperative may be allowed to use the ex1stmg canteen facilities rent-free for its operations. However, the cost of repair, maintenance and expansion of the said facilities shall be borne by the teachers' cooperative. Separate water and light meters shall be installed in the canteen and bills covering water and electricity consumed in the aforesaid school canteen shall be borne by them. The teachers' cooperative shall be given a grace period of three months from the start of its canteen operations to effect the installation of separate water and light meters. 7.8.2 The teachers' cooperative may allocate a small space within its school canteen premises, which shall not be more than one-eighth (1 /8) of the floor area and must be enclosed, where consumer goods/items may be sold to its members or where the cooperative may undertake other business ventures. Such consumers' store and other business ventures of the teachers' cooperative within the canteen or school premises are not covered under these guidelines; instead, these shall be covered by a separate agreement between the school head/principal and the chairperson of the teachers' cooperative. 7.8.3 The school shall be free from damages and any liability that may arise from the teachers' cooperative's operation of the school canteen and use of its facilities. 7. 9 The teachers' cooperative shall not allow any of its officers and members to use his/her/their official time in attending to and supervising the activities, operations and management of the school canteen. 13 7 .10 Sharing of Proceeds The sharing of the gross margin derived from the teachers' cooperative managed canteen shall be as follows: (a) Eighty percent (80%) for the teachers' cooperative and twenty percent (20%) for the school. However, the school head/principal and teachers' cooperative may agree on other percentage of sharing depending on the peculiar situation of the school: Provided that the share of the school shall not be less than twenty percent (20%). Remittance of the schqol share shall be due every fifth day of the month. (b) The school head/principal or his/her duly authorized representative shall receive the school share from the teachers' cooperative and issue the corresponding acknowledgment receipt duly signed by the school head/principal or his/her duly authorized representative. Any authorized disbursement made chargeable against such share shall be recorded, accounted for and supported by receipts. (c) The share of the school shall be utilized as follows: Supplementary feeding program for undernourished 35% pupils/students School clinic fund 5% Faculty and student development fund 15% H.E. instructional fund 10% School operations fund 35% TOTAL 100% 7 .11 All resolutions, decisions and actions taken by the Board of Directors of the teachers' cooperative relative to finances, privileges and benefits accruing to the membership of the Board shall be reported to the General Assembly during its annual meeting for confirmation. 7 .12 Designation of Coordinator 7.12.1 The teachers' cooperative shall assign its canteen manager to coordinate with the H.E. Department on the schedule of practicum activities in the teachers' cooperative-managed canteen. Food items produced by the H.E. classes during their practicum may be sold in the canteen and any proceeds generated from it shall form part of the rev~lving fund created for this purpose. 14 8.0 SPECIFIC GUIDELINES FOR LABORATORY CANTEENS 8.1 Every secondary school, regardless of its enrollment size, shall have a laboratory canteen where students shall be trained on food planning, preparation, retail trade, selling and safety as part of their H.E. classes. It shall be supervised by the designated H.E. canteen teacher. 8.2 The designated H.E. canteen teacher shall prepare the schedule of service of the practicum students. Such schedule shall be approved by the H.E. Department Head or the school head/principal. 8.3 The designated H.E. canteen teacher shall ensure the full participation of the pupils/students in the planning, purchasing, handling, storage, preparation, serving and sale of safe and nutritious foods/meals . 8.4 The schedule of the practicum students shall be posted on a bulletin board within the school canteen premises. No pupil/student shall serve in the canteen beyond his/her practicum schedule. 8.5 Income derived from the laboratory canteen shall be utilized as follows: Supplementary feeding program for undernourished 40% pupils/students Student development fund (laboratory subsidy, skills 30% training, contests) H.E. development fund 30% TOTAL 100% 9.0 GROUNDS FOR TERMINATION OF OPERATION OF THE SCHOOL CANTEEN 9.1 Any deviation from the guidelines particularly the operational practices that prove detrimental and prejudicial to the welfare of the pupils/students, teachers and the school in general that may be committed by the school or the teachers' cooperative shall be a ground for termination of the operation of the school canteen. Any violation of the terms stipulated in the MOA shall be sufficient ground for the termination of the MOA and the suspension of the privilege of the teachers' cooperative to manage and operate the school canteen. 9.2 For purposes of these guidelines, the following acts are considered detrimental and prejudicial to the students and pupils (a) Failure and/or neglect to submit financial report - The failure to submit the monthly financial report within thirty (30) days after the end of each regular monthly operation or failure to submit the 15 audited annual financial report within sixty (60) days after the end of each fiscal year. (b) Sub-leasing the whole or part of the school canteen premises - All entities operating school canteens shall not sub-lease to any third party the whole or part of the school canteen premises. Neither shall private concessionaires be allowed to be involved in the operations of the school canteen. ( c) Selling of cigarettes and/or intoxicating beverages to students and/or condoning the use thereof within the school canteen premises. (d) Failure to secure the necessary permits including annual health and sanitation permits as above-mentioned and to have them posted m the mentioned places. (e) Failure to report and account for donations and incentives received from private suppliers of food items and beverages. (f) Use or disbursement of canteen funds contrary to the provisions of these rules and guidelines which includes devoting and re-aligning said funds to any other endeavor not included in these guidelines. (g) Compelling the pupils/students to buy or consume all food items from the canteen and prohibiting them to bring their own "baon" or food to school; in the same manner, compelling the teachers to dispose of all the food items in the canteen tray under the supervised recess (for elementary schools). (h) Compelling a pupil/student to perform canteen related tasks that are detrimental to his/her welfare (i) Failure to deposit the proceeds of the canteen in the account that is "in trust for" the school. Similarly, depositing the proceeds of the canteen in the name of a person not mentioned in these guidelines or into private or personal accounts, including those in the name of the school head/principal or teacher-in-charge. U) Failure to present upon request of the proper authorities, such as the school head/principal, the school level auditing committee, and the Commission on Audit, the financial documents pertaining to the operations of the school canteen. (k) The use of the canteen premises for any other endeavor not included or sanctioned by these guidelines including, buf not limited to, the use of the canteen as warehouse or stockroom of prohibited items and/or food and beverage expressly prohibited in these guidelines 16 including all other merchandise which are not for the use of the school canteen and which do not belong to the school. (1) All other violations of the terms and conditions of the Memorandum of Agreement or any of the provision of these guidelines which are analogous to the foregoing. 10.0 MONITORING AND ENFORCEMENT 10.1 Monitoring teams in the regional and division offices shall be created to ensure adherence to standards on quality, handling, and serving of food, and canteen equipment/facilities in the school canteens and that food safety standards and hygienic practices are strictly observed and implemented. It shall also monitor adherence to the guidelines on the operation of school canteens which shall be integrated in its monitoring of health and nutrition program and projects at the division level. The monitoring team shall be composed of the following: ,- Regional Office o Medical Officer V / Dentist III o ES II (Science and Health / Nutrition / HE / THE) o Nutritionist-Dietitian ,- Division Office o Medical Officer IV / Dentist II o ES I (Science and Health/ Nutrition I HE/ THE) o Nurse-In-Charge o Nutrition Coordinators 10.2 Grievance Mechanism (a) Complaints from parents or concerned individuals of the community pertaining to canteen management and operations, i.e. pricing, quality of foods, etc., shall be filed and settled with the division grievance committee in the case of school-managed canteens; and with the school grievance committee in the case of complaints against a teachers' cooperative-managed canteen. The provisions of the grievance procedure under the DepED Rules of Procedures shall govern the conduct of the proceedings without prejudice to the application of other pertinent rules that may be applied suppletorily. (b) Any grievance arising from any form of dissatisfaction relative to the operations of the canteen which does not constitute an administrative disciplinary action shall be submitted to the 17 appropriate grievance committee and which shall be decided by the latter within five (5) days from the termination of the grievance proceedings. A copy of such decision and report of the findings of the grievance committee shall be furnished the parties and the school head/principal. (c) In the case of dispute involving a teachers' cooperative-managed canteen, any party dissatisfied with the findings of the decision of the School Grievance Committee may elevate the same to the Division Grievance Committee, whose decision shall be appealable to the Regional Grievance Committee within fifteen (15) days from notice thereof. 10.3 Sanctions (a) Any violation of the foregoing guidelines in the case of the teachers' cooperative-managed canteen shall warrant the termination of the operations of the canteen after due notice to the parties concerned which shall proceed after a summary hearing on the matter and after due process. (b) For other violations not mentioned in the preceding section, which are considered simple violations, a warning shall be issued by the school head/principal for the first infraction and a repeat of such violations shall warrant an investigation and shall thereafter, in the interest of the students and the pupils and the welfare of the school, be a ground to terminate the Memorandum of Agreement entered into between the parties pertaining to the operations of the school canteen. (c) In the case of school-managed canteens, any violation of these guidelines shall warrant appropriate administrative sanctions against the school head/principal and other canteen teachers who are directly or indirectly involved in the operations of the school canteen and who are classified as canteen designated teachers as defined under these guidelines. (d) In the same manner, such violations of the school head/principal including the canteen-designated teachers shall be dealt with administratively after due notice and hearing. ( e) In all the foregoing, such persons accountable for violations of these guidelines shall, aside from the administrative sanctions, also be liable both criminally and civilly, when sue~ violations warrant. 18 11.0 EXCLUSIVITY OF JURISDICTION 11.1 The School Grievance Committee or the Division Grievance Committee, as the case may be, shall have exclusive original jurisdiction over all complaints and/or grievances arising from or relative to the operations of the school canteens. Any complaint and/or grievance brought directly to the office of the Schools Division/City Superintendent, the office of the Regional Director, or the Office of the Secretary shall be dismissed and referred to the appropriate School or Division Grievance Committee. 12.0 VENUE OF ACTION 12.1 In cases of actions arising from conflicts relative to the operations of the school canteen brought before and cognizable by judicial bodies in case of civil actions, the contracting parties to the Memorandum of Agreement shall be encouraged to agree to the venue of the action to be placed in the appropriate courts of the city or municipality where the school sits. 13.0 REPEALING CLAUSE 13.1 All existing guidelines, memoranda, orders and other issuances of similar nature which are inconsistent with this Order are hereby deemed repealed and superseded. 14.0 TRANSITORY PROVISIONS 14.1 The Department maintains the policy that there is no valid contract of lease of a school canteen to a private concessionaire as declared in DepED Order No. 95, s. 1998 which took effect on November 10, 1998. Pursuant to said policy, all contracts of lease of school canteens to private concessionaires executed or renewed after November 10, 1998 are hereby deemed terminated for being contrary to law and public policy. Violations of this policy shall be dealt with administratively. 14.2 Except those entered into in violation of DepED Orders, circulars and other issuances, pre-existing Memorandum of Agreement on the operation of school canteens with teachers' cooperatives that may be disqualified under the current guidelines shall remain effective subject to the compliance by the cooperative with the Criteria for Qualification herein set forth within six (6) months from the effectiyity of this Order. Otherwise, the same shall be deemed terminated. 19 14.3 A teachers' cooperative with a valid pre-existing Memorandum of Agreement shall not be removed or otherwise displaced from the space where it is currently operating the school canteen. 14.4 Pre-existing MOAs which provide for a term exceeding three (3) years are hereby amended accordingly subject to renewal by the contracting parties to another term of not more than three (3) years. I 5.0 These guidelines shall take effect immediately. Wide dissemination of this Department Order to all concerned is desired. Encls.: As stated Reference: DepED Orders: Nos. 95, s. 1998 and 72, s. 1999 Allotment: 1-(D.O. 50-97) To be indicated in the Perpetual Index under the following subjects: CHANGE COOPERATIVES POLICY RULES AND REGULA TI ONS SCHOOLS 20 Inclosure No. 1 to DepED Order No. 8, s. 2007 PROFORMA MOA FOR THE MANAGEMENT AND OPERATION OF SCHOOL CANTEENS BY TEACHERS' COOPERATIVES MEMORANDUM OF AGREEMENT KNOW BY ALL MEN BY THESE PRESENTS: This Memorandum of Agreement is entered into by and between: (Name of Teachers' Cooperative) ANNEX "A" a teachers' cooperative duly organized and registered under Philippine laws with CDA Registration No. and with office address at (Office Address of the Teachers' Cooperative) and represented in this act by its duly authorized President/Chairperson, hereinafter referred to as the "COOPERATIVE;" and the DEPARTMENT OF EDUCATION, a government entity under Philippine laws, with office address at Meralco Avenue, Pasig City, and represented in this act by its duly authorized representative, (Name of School Principal) Principal of (Name of School and Address) and (Name of City/Division Schools Superintendent) Superintendent of the Division of and hereinafter referred to as "DepED." WITNESSETH: That WHEREAS, R.A. No. 6938, otherwise known as the Cooperative Code of the Philippines provides under Article 2 thereof that it is the declared policy of the state to foster the creation and growth of cooperatives as a practical vehicle for promoting self reliance and harnessing people power towards the attainment of economic development and social justice; WHEREAS, in response to this mandate, the DepED strongly supports the organization of cooperatives among teachers and non-teaching personnel of DepED to train them to be entrepreneurs and to enable them to improve their financial standing; WHEREAS, in line with this, DECS Order No. 55, s. 1996 as amended by DECS Order No. 95, s. 1998 and DECS Order No. 72, s. 1999, mandated the tum over of school canteens to teachers' cooperatives; WHEREAS, DepED Order No. 8, s. 2007 provides for the revised implementing guidelines for the management and operation of school canteens in public elementary and secondary schools, including those that are managed and operated by the COOPERATIVE; WHEREAS, the COOPERATIVE meets the criteria provided for under said DepED Order No. 8, s. 2007 for the management and operation of the canteen of (Name of School) NOW THEREFORE, premises considered, the parties hereby agree on the following terms and conditions of this Memorandum of Agreement: 1. Responsibilities of DepED The DepED shall allow the COOPERATIVE to manage and operate a canteen in an available suitable area within the school premises rent free upon signing of this MOA. The DepED shall not allow the operation of another canteen and other forms of food vending activities by any party, except for the school-managed canteen, or laboratory canteen in the case of secondary schools, within the school premises nor allow access thereto to street vendors and other unsupervised and unregulated food sources. The DepED shall designate a Home Economics teacher who shall ensure the continued use of the school canteen as a laboratory for the students/pupils. He/She shall prepare the schedule of the pupils/students who will undergo practicum activities in the school canteen, and he/she shall ensure that such schedule is strictly followed. He/She shall also ensure the full participation of the students/pupils in the planning, purchasing, handling 2 and storage, preparation, serving and sale of safe and nutritious meals as part of their laboratory classes. The DepED, though the Regional Directors and Schools Division Superintendents, shall create monitoring teams in the regional and division offices which shall conduct periodic inspection on the quality, handling and serving of food, canteen equipment/facilities, and sanitation. The monitoring team shall ensure that food safety standards and hygienic practices are strictly observed and implemented. The DepED, through the school principal or his/her duly authorized representative, shall receive its share amounting to % of the gross margin derived by the COOPERATIVE from canteen operations and shall issue the corresponding acknowledgment receipt accordingly. Such share of the school must be utilized in accordance with the pertinent provisions of DepED Order No. 8, s. 2007. The statement of receipts and disbursements shall be conspicuously posted on the school's bulletin board for public access. The school principal, in behalf of DepED, shall provide proper support for the viable operations of the school canteen by implementing rules and regulations that would promote order, discipline, and cleanliness in the school premises, particularly in the vicinity of the canteen. The DepED shall observe due process in the event of pre-terminating this MOA and returning the operations of the school canteen to the school administrator. 2. Responsibilities of the COOPERATIVE The COOPERATIVE shall hire a full time manager and canteen staff to manage and operate the school canteen and shall see to it that none of its officers and members shall use their official time in attending to the activities of the school canteen. The COOPERATIVE shall be responsible for the quality and handling of food served, canteen sanitation, the proper use of facilities, and in making available its canteen facilities for laboratory purposes of the students/pupils as required by the designated home economics teacher. The COOPERATIVE shall designate a teacher-board member who shall coordinate with the school's designated home economics teacher on the· schedule of practicum activities in the cooperative-managed canteen. The COOPERATIVE shall see to it that the hired canteen personnel/staff involved in the preparation and serving of food and beverages shall undergo training and continuous education on the proper handling of food. They shall secure certificate(s) of good health from the local/provincial/city/municipal health office and shall observe personal hygiene. They shall also be required to wear clean and proper attire when inside the school canteen premises. The certificates of good health with the ID photo of the hired helpers shall be conspicuously posted within the canteen premises and must be renewed every year. 3 The COOPERATIVE shall provide cheap, sanitary and nutritious food such as fresh milk, fresh fruits, fruit drinks, boiled root crops, high calorie indigenous recipes and the like and shall use iodized salt in food preparation. The daily cooked food menu indicating the nutritional requirements must be posted on a bulletin board within the canteen premises. The COOPERATIVE shall not sub-lease the whole or part of the school canteen p;-emises or to sub-contract the operation of said school canteen to third parties. The COOPERATIVE shall be responsible for repairs of the school canteen premises and facilities due to normal wear and tear. The COOPERATIVE shall install separate water and electric meters for the school canteen and shall be responsible for the payment of bills for the use of said utilities. Upon termination of this MOA and when the COOPERATIVE ceases to operate the school canteen, the COOPERATIVE shall retain ownership of all properties acquired by it for the operation thereof, except those properties or improvements which cannot be removed from the premises of the canteen without causing substantial damage thereto. The COOPERATIVE shall prepare monthly statement of operations and schedules prescribed in DepED Order No. 8, s. 2007 which shall be posted on the school's bulletin board for public access. At the end of the school year, it shall also post on the school's bulletin board its audited annual financial statement. The COOPERATIVE shall hold the DepED free and harmless from any and all liabilities and damages that may arise from its operation and management of the school canteen. 3. Term of the MOA The term of this MOA is for a period of three (3) years starting on the date of this MOA. This MOA may be renewed under the same terms and conditions for another years, upon notice in writing given by the COOPERATIVE thirty (30) days prior to its expiration. Failure of the COOPERATIVE to give said notice shall be construed as lack of interest on the part of the COOPERATIVE to continue managing and operating the school canteen. 4. Sharing of the Gross Margin Derived from the Operation of the School Canteen The sharing of gross margin derived from the operation of the school canteen shall be on a basis, percent( %) for the COOPERATIVE and percent L %) as the share of the school which shall be computed and remitted daily/weekly/monthly by the COOPERATIVE to the school. The share of the school shall be utilized in accordance with the pertinent provision of DepED Order No. 8, s. 2007. 4 The COOPERATIVE shall maintain proper books of accounts on the operation of the school canteen which shall be open for inspection and audit by the duly authorized representative of the school principal in the determination of the gross margin and the corresponding percent L % ) share of the school. The same books of accounts shall be made available for inspection at any time by the monitoring team of the division office and regional office. 5. Amendments This MOA, or any part thereof, may be amended on the basis of a review of the terms and conditions after a period of L ) year/month. Any amendments/ additions/modifications or supplement to this MOA must be made in writing and signed by all parties concerned. 6. Pre-Termination of the MOA This MOA may be pre-terminated by DepED if the COOPERATIVE is found guilty of operational practices that are detrimental or prejudicial to the welfare of the pupils/students, teachers and the school in general, or if it violates the operational management guidelines provided under DepED Order No. 8, s. 2007. The school principal shall submit in writing the specific reasons for pre-terminating this MOA, with supporting documents, to the Division Superintendent, which shall in tum conduct its proper investigation and make the necessary action and decision which shall be appealable to the Regional Director within fifteen (15) days after receipt thereof. IN WITNESS WHEREOF, the parties have affixed their signatures this day of at -------- by: DEPARTMENT OF EDUCATION (COOPERATIVE) by: (President/Chairperson) (School Principal) and (Schools Division Superintendent) Signed in the Presence of: 5 ACKNOWLEDGMENT REPUBLIC OF THE PHILIPPINES ) ) S.S. BEFORE ME, a Notary Public for and in , this day of , 20 , personally appeared the following affiants: Name Community Tax Receipt Date/Place Issued 1 2 3 known to me and to me known to be the persons who executed the foregoing Memorandum of Agreement consisting of ( ) pages including this page where the acknowledgment is written which are signed by the parties and their witnesses in every page. They acknowledged before me that this is their own voluntary act and deed. WITNESS MY HAND AND SEAL. NOTARY PUBLIC Doc. No. PageNo. Book No. Series of 20 6 lnclosure No. 2 to DepED Order No. 8, s. 2007 PRO-FORMA ANNUAL STATEMENT OF OPERATIONS (For School-Managed Canteen Operations) (Name of School) (Address of School) STATEMENT OF OPERATIONS For the Period Ending December 31, Current Year REVENUES Net Sales Sales (Gross) XXX Sales Returns and Allowances (xxx) Sales Discounts (xxx) XXX Cost of Sales Purchases XXX Purchase Returns and Allowances (xxx) Purchase Discounts (xxx) Freight In XXX Inventory XXX GROSS PROFIT XXX Add: Other Operating Income XXX GROSS INCOME FROM OPERATIONS XXX EXPENSES SELLING COSTS Salaries and Wages XXX Employees' Benefits XXX SSS/ECC/Philhealth/Pag-Ibig Contributions XXX Officers' Honorarium and Allowances XXX Office Supplies XXX Store Supplies XXX Storage/Warehousing Expense XXX Power, Light and Water XXX Travel and Transportation XXX Insurance XXX Royalties XXX Repairs and Maintenance XXX Rental XXX Taxes and Licenses XXX Communication Expense XXX Representation Expense XXX Page 1 of 3 Annex "B" Previous Year XXX (xxx) (xxx) XXX XXX (xxx) (xxx) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX PRO-FORMA ANNUAL STATEMENT OF OPERATIONS (For School-Managed Canteen Operations) (Name of School) (Address of School) STATEMENT OF OPERATIONS For the Period Ending December 31, Current Year Advertising and Promotion XXX Spoilage and Breakage XXX Provision for Probable Losses and Accounts Receivables XXX Commission Expense Delivery Expenses XXX Gas, Oil and Lubricants XXX Depreciation and Amortization XXX Total Selling Costs XXX ADMINISTRATIVE COSTS Salaries and Wages XXX Employees' Benefits XXX SSS/ECC/Philhealth/Pag-Ibig Contributions XXX Officers' Honorarium and Allowances XXX Office Supplies XXX Store Supplies XXX Storage/Warehousing Expense XXX Power, Light and Water XXX Travel and Transportation XXX Depreciation and Amortization XXX Insurance XXX Repairs and Maintenance XXX Rental XXX Taxes and Licenses XXX Professional Fees XXX Communication Expense XXX Representation Expense XXX Periodicals, Magazines and Subscription XXX Gas, Oil and Lubricants XXX Miscellaneous Expense XXX Provision for Probable Losses and Accounts XXX Receivables XXX Total Administrative Costs xxx· TOT AL EXPENSES (xxx) NET INCOME DERIVED FROM OPERATIONS XXX Page 2 of 3 Previous Year XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX (xxx) XXX PRO-FORMA ANNUAL STATEMENT OF OPERATIONS (For School-Managed Canteen Operations) (Name of School) (Address of School) STATEMENT OF OPERATIONS For the Period Ending December 31, Current Year UTILIZATION OF NET INCOME Supplementary Feeding Program for Undernourished Pupils/Students (35%) XXX School Clinic Fund (5%) XXX Faculty and Student Development Fund (15%) XXX · H.E. Instructional Fund (10%) XXX Schools Operations Fund (25%) XXX Revolving Capital (10%) XXX TOTAL UTILIZATION OF NET INCOME (100%) XXX Prepared by: Certified Correct: Page 3 of 3 Previous Year XXX XXX XXX XXX XXX XXX' XXX lnclosure No. 3 to DepED Order No. 8, s. 2007 PRO-FORMA ANNUAL STATEMENT OF FINANCIAL CONDITION (For School-Managed Canteen Operations) (Name of School) (Address of School) STATEMENT OF FINANCIAL CONDITION December 31, Current Year ASSETS Cash and cash equivalents XXX Accounts receivables XXX Inventory XXX Investments XXX Property, plant and equipment at cost XXX Less: Accumulated depreciation (xxx) TOT AL ASSETS XXX LIABILITIES Trade Payable XXX Interest Payable XXX Income Taxes Payable XXX Other Payables XXX TOTAL LIABILITIES XXX EQUITY School Revolving Capital XXX Add: Net Income Derived from Operation of Canteen XXX TOTAL EQUITY XXX TOT AL LIABILITIES AND EQUITY XXX Prepared by: Certified Correct: Annex "C" Previous Year XXX XXX XXX XXX XXX (xxx) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX lnclosure No. 3-B to DepED Order No. 8, s. 2007 Annex "C" PRO-FORMA STATEMENT OF RECEIPTS, DISBURSEMENTS AND UTILIZATION OF INCOME (To be prepared by the Laboratory Canteen Laboratory) (Name of School) (Address of School) STATEMENT OF RECEIPTS, DISBURSEMENTS AND UTILIZATION OF INCOME (CANTEEN LABORATORY) For the Period Current Month Previous Month Net Sales Sales (Gross) XXX XXX Sales Returns and Allowances (xxx) (xxx) Sales Discounts (xxx) (xxx) XXX XXX Cost of Sales Purchases XXX XXX Purchase Returns and Allowances (xxx) (xxx) Purchase Discounts (xxx) (xxx) Freight In XXX XXX Inventory XXX XXX GROSS PROFIT XXX XXX EXPENSES Selling Costs XXX XXX Administative Costs XXX XXX (xxx) (xxx) NET INCOME FROM OPERA TI ONS XXX XXX UTILIZATION OF NET INCOME Supplementary Feeding Program (40%) XXX XXX Student Development Fund (laboratory, subsidy, skills training, contests) (30%) XXX XXX H.E. Development Fund (30%) XXX XXX TOTAL UTILIZATION OF NET INCOME (100%) XXX XXX Prepared by: Certified Correct: Inclosure No. 4 to DepED Order No. 8, s. 2007 Republic of the Philippines OFFICE OF THE PRESIDENT COOPERATNE DEVELOPMENT AUTHORITY Annex "D" MEMORANDUM CIRCULAR NO. 2005-10 Series of 2005 TO SUBJECT ALL CDA DEPARTMENT AND REGIONAL DIRECTORS, REGISTERED I CONFIRMED CONSUMERS COOPERATIVES AND THOSE WITH CANTEEN AND/OR CATERING SERVICES STANDARD CHART OF ACCOUNTS FOR CONSUMERS COO PERA TNES AND THOSE WITH CANTEEN AND/OR CATERING SERVICES Pursuant to Section 3 of Republic Act No. 6939, an Act creating the Cooperative Development Authority defining its Powers, Functions and Responsibilities, the Authority hereby issues this Memorandum Circular prescribing the use of Standard Chart of Accounts for Consumers Cooperatives and those with Canteen and/or Catering Operations. I. Scope This Circular shall be applied in accounting and reporting of all consumers cooperatives and those with canteen and/or catering operations, duly registered/confirmed by the Cooperative Development Authority pursuant to Republic Act No. 6938, otherwise known as the Cooperative Code of the Philippines. II. Definition of Terms 1. Consumer Cooperative A consumer cooperative is primarily engaged in the procurement and distribution of commodities to members and non-members. Commodities may include consumable and non-consumable items. Consumer operations also include canteen and catering services. 2. Consumers Cooperative in Schools with Canteen/Catering Services Refers to ancillary services in the school that sells cooked food items to • the pupils/students and serves as a support mechanism to the effort to eliminate malnutrition among the learners. 3. Accounting Accounting is the art of recording, classifying, summanzmg, in a significant manner and in terms of money, transactions and events which are in part at least of a financial character and interpreting the results thereof. Accounting is a service activity. Its function is to provide quantitative information, primarily financial in nature, about economic entities intended to be useful in making economic decisions. 4. Bookkeeping It is the systematic and chronological recording of all financial transactions that take place in the cooperative. The importance of bookkeeping are as follows: to have a record of whatever changes there are in the financial condition of the consumer cooperative; to protect funds; to serve as the guide in the formulation of policies and activities for the coming year; to serve as source of information necessary for the Board to properly set the policies of the cooperative; to serve as basis of reports to members; for management to enable them to run the affairs of the cooperative and for the submission of the financial statements as mandated by the government. 5. Books of Accounts Set of books where financial transactions are recorded, classified and summarized. These are classified into books of original entry and final entry. The books of original entry are the books where entries from source documents are first recorded. These are cash receipts book, cash disbursements book, general journal and special journals such as sales book and purchase book. The books of final entry called general ledger and subsidiary ledger are the books where entries in the books of original entry are posted to the corresponding accounts. It is also called a "reference book" of the accounting system where transactions are classified and summarized. This is the source of data for the trial balance and eventually the financial statements. 2 6. Financial Statements Financial statements are the means by which the information accumulated and processed in financial accounting is periodically communicated to those who use it. They are designed to serve the needs of a variety of users, particularly owners and creditors. Through the financial accounting process, the myriad and complex effects of the economic activities of a cooperative are accumulated, analyzed, quantified, classified, recorded, summarized and reported as information of three basic types: (a) financial condition, which related to a point in time; (b) financial operations; and ( c) cash flow, which both relate to a period in time. Notes to Financial Statements, which may explain headings, captions or amounts or present information that cannot be expressed in terms of money and those descriptions of accounting policies are integral parts of the statements. A. Statement of Financial Condition (Balance Sheet) presents three major categories: (a) assets; (b) liabilities; and ( c) equity, the difference between the total assets and total liabilities. The statement of financial condition at any date presents the financial status of the cooperative at a particular point in time in conformity with generally accepted accounting principles. B. Statement of Operation (Statement of Net Surplus) presents the revenues, expenses, gains, losses and net surplus / (net loss) recognized during the period. It presents the results of the cooperative's service directed activities during the period in conformity with generally accepted accounting principles. The information presented in the statement of operation is usually considered the most important information provided by financial accounting because the net surplus is a paramount concern of those interested in the economic activities of the cooperative. C. Cash Flows Statement is a formal statement summarizing all operating, investing and financing activities of a cooperative. In simple language, the statement of cash flows provide information about cash receipts and cash payments of a cooperative during a period. III. Objective and Purposes The basic purpose of prescribing the standard chart of accounts is to provide guidelines in the use of account and account titles in the preparation of financial statements for the use of consumers cooperatives and those with canteen and/or catering operations. Specifically the standard chart of accounts shall: 3 a) ensure uniformity and common understanding of accounts; b) guide in the installation of accounting and internal control systems; c) facilitate the conduct of audit; d) enhance transparency, define responsibility, and identify accountability e) serve as guide in setting standards and discipline in measuring the financial safety and soundness; and f) facilitate the analysis and evaluation of financial management performance, monitoring, supervision and business linkages. IV. Standard Chart of Accounts for Consumers' Cooperatives and those with Canteen and/or Catering Operations ACCOUNT TITLE DEFINITION STATEMENT OF FINANCIAL CONDITION ASSETS CURRENT ASSETS Economic Resources of Cooperatives that are recognized and measured in conformity with generally accepted accounting principles. It includes assets that are convertible to cash or cash equivalents within 12 month period. Cash on Hand Money (bills and coins), checks ( except postdated checks), postal money order (PMO), and demand drafts still in the possession of the cooperative's custodian. These are cash items awaiting deposits. Cash in Bank Money deposited in the bank and federations under the name of the cooperative, i.e. savings, current, time deposits, and combo-account which are unrestricted and readily available when needed. A subsidiary ledger shall be maintained for each account. Petty Cash Fund Amount of money set aside for small expenditures, maintained under an imprest system. The total amount of expenditures properly supported by documents plus the remaining cash balance shall be equal to the amount of the fund. It is a cash fund, withdrawn from the general cash account and made available for small purchases of supplies, taxi fares or staff meals, etc. Revolving Fund The amount set aside to cover disbursements for recurnng transactions. This may include emergency purchases, deposit withdrawals, etc. involving reasonable amount set by BOD. Transactions covered by this fund is subject to immediate liquidation in accordance with their policy. 4 Change Fund Reasonable amount of money set aside by BOD to change bigger amount of bills to smaller denominations. Short Term Investments in marketable securities, government bonds, and Investment other mutual funds that are readily convertible into cash when the need arises. Advances to Officers Duly approved cash advances for official business to officers and Employees and employees subject to immediate liquidation and/or refund. Accounts Receivable The amount due from member and/or non-member patrons Trade - Current resulting from sale of merchandise/goods and/or catering/ canteen services which are expected to be collected in the regular course of business or over a definite period of time. Aging of receivables should be prepared. Accounts Receivable Total collectibles due from members and/or non-member Trade - Past Due patrons which remain unpaid beyond the terms set by the BOD. The receivable shall remain in this account until fully paid or until arrangements are formalized for its renewal/extension/ restructuring or collection/foreclosure. Accounts Receivable Collectibles from member and non-member patrons whose Trade - Restructured accounts were restructured upon full payment or settlement of interests due and/or penalties. Accounts Receivable Total collectibles from past due accounts under legal action. Trade - In Litigation The receivables shall remam m this account during the pendency of the legal proceedings and until fully settled. Allowance for Allowance set aside in the books of the cooperative to provide Probable Losses on for possible losses due to uncollectible accounts. This account Accounts Receivable may also be referred to as Allowance for Doubtful Accounts. Trade This is a contra account to Accounts Receivable Trade. Installment Amount due from members and non-member patrons for sale Receivables - Current of merchandise/goods on a deferred payment or installment plan. Aging of installment receivables should also be prepared. Installment Total collectibles due from installment receivables which Receivables - Past remain unpaid beyond the terms set by the cooperative. Due 5 Installment Receivables Restructured Installment Receivables - In Litigation Allowance for Probable Losses on Installment Receivables Receivable from Accountable Officers And Employees Other Receivables Input Tax Deposit to Suppliers Inventories Collectibles due from installment receivables that were restructured upon full payment or settlement of interests due and/or penalties. Total collectibles from past due installment receivables under legal action. The receivables shall remain in this account during the pendency of the legal proceedings and until fully settled. Allowance set aside in the books of the cooperative to provide for possible losses due to uncollectible installment accounts. This account may also be referred to as Allowance for Doubtful Accounts. This is a contra account to Installment Receivables. Total collectibles from officers and employees arising from shortages and other losses due to neglect, fraud, misrepresentation and unliquidated cash advances. These are subject to immediate settlement/sanction. Transactions/adjustments not classified under any of the receivable accounts mentioned. These also represent: • the amounts currently owed to the cooperative by persons other than the members for services rendered • advances to members on account of their expense not previously covered by deposits such as msurance premiums on properties pledged to the cooperatives, taxes and other government imposts, inspection fees, w1re charges and other expenses Value-added tax due from or paid by a VAT registered/ registrable cooperative on the importation or local purchases of merchandise/goods or service including lease or use of property The amount paid in advance to suppliers. Cost or other appropriate value of merchandise and other goods on hand/in process which are intended for sale. A subsidiary ledger shall be maintained for each group of inventory. 6 Repossessed Cost or other appropriate value of merchandise sold but Inventories regained as a result of the default of the payments due from members/customers, including cost of reconditioning. Assets Held for Sale The amount of non-current assets and/or assets of a discontinued operation that the cooperative had held for sale and for which buyers have been identified. Unused Office/Store/ Unused Office/Store/Kitchen/Canteen/Catering Supplies on Kitchen/Canteen/ hand at the end of the accounting period. Catering Supplies Prepaid Expenses Payments made in advance in exchange for a future benefit usually within one year ( e.g. insurance, interest, advertising, rentals, etc.) LONG TERM Investments which the cooperative intends to hold for more INVESTMENT than a year Investment in Equity investments of the cooperative in coop bank/federation/ Cooperatives union only. There should be a disclosure if there is a decline in market value of all investments. Government Investments in securities and bonds issued by the government Securities/Bonds and its instrumentalities. Long Term All other investments not included in the above. Investment - Others PROPERTY AND Include all tangible assets with an estimated useful life beyond EQUIPMENT one year are used in the conduct of the business, and not intended for sale in the ordinary course of business. Land The acquisition cost of the land used for its main operation plus all incidental costs such as title, taxes, surveying fees, legal fees, restoration cost, etc. All these are reflected in a single cost (fair market value or appraised value if donated). Taxes paid by the cooperatives as a contribution to the cost of public improvements (special assessment) are treated as part of the cost of the land. In case of erosion of land, the cost or value of property will be reduced and directly charged to Depletion Expense. 7 Land Improvements Accum. Depreciation and Impairment Land Improvements Building Accum. Depreciation and Impairment Building Furniture, Fixtures & Office Equipment Accum. Depreciation and Impairment FF&OE Kitchen, Canteen and Catering Equipment/ Utensils Accum. Depreciation Kitchen, Canteen and Catering Equipment/Utensils Transportation/ Delivery Equipment The cost of depreciable improvements after land acquisition (i.e. pavement, fencing, water system, drainage system, sidewalks and others that are subject to depreciation over their useful lives). Total amount of depreciation/impairment cost on land improvement that are set up periodically and charged against the current operations. Acquisition/Construction cost of the building on the land owned/controlled by the cooperative and used for its main operation. Major repairs or improvements that will prolong the life of the building are considered additional cost. Total amount of depreciation/impairment cost on building that are set up periodically and charged against the current operations. The cost or appraised value or other appropriate value of movable (furniture), immovable (fixture), properties and office equipment used in the cooperative's ordinary course of business such as but not limited to desks, chairs, cabinets, computers including incidental expenses incurred in acquiring them, up to the time that they are received and ready for use. Total amount of depreciation/impairment cost on Furniture, Fixture and Office Equipment that are set up periodically and charged against the current operations. Cost of equipment, cutleries and other tools used in food preparation and serving including incidental expenses incurred in acquiring them up to the time they are received and ready for use. Sum of depreciation on Kitchen, Canteen and Catering Equipment/Utensils that are set up periodically against current operations. Cost of motor vehicles owned by the cooperatives such as motorcycles, pick-ups, vans and other vehicles used in the operation/transporting goods and services. 8 Accum. Depreciation Total amount of depreciation/impairment cost on Delivery & and Impairment - Transportation Equipment that are set up periodically and Delivery & Trans. charged against the current operations. Equipment Linens and Uniforms The cost of linens and the uniforms used by employees and staff including costs of tablecloth, curtains and similar items. Accum. Depreciation Sum of depreciation on linens and uniforms that are set up Linens and periodically against current operations. Uniforms Leasehold Rights & The cost of depreciable improvements on leased land or Improvements premises (i.e. renovations of office building, repainting, pavement, fencing, etc.) including cost of rights which are subject to amortization. INTANGIBLE ASSETS Non-physical assets from which benefits are obtained by the cooperative. Franchise The right for the exclusive use or distribution of products or services acquired from a franchiser. Copyright The right for the exclusive use or distribution of products or services acquired from an author or artists. OTHER ASSETS Assets which do not fit into any of the preceding classifications. Organizational Cost Expenses incurred pnor to the actual operations of the cooperatives such as promoting and organizing. This can be amortized for a period not exceeding five (5) years. Among others, these costs are: a. Legal fees in connection with the organization; b. Registration fees; c. Cost of printing share capital certificates and transfer of books, seal of the cooperative, etc; and d. Other cost of services rendered in the formation of the coop. Computerization The cost of acquisition or development of computer programs Cost and other software. This can be amortized over a period not exceeding three (3) years. (Subsidiary Ledger for development cost and for computer softwares shall be maintained.) 9 Other Funds and The fund set aside for funding of reserves (statutory and other Deposits reserves) established by the coop. This may be in the form of time deposit or other securities which are readily convertible to cash when needed. Holdout deposits on guarantee fund given by the cooperative to the funding institutions in compliance with the requirements of certain agreements. The cooperative has the option to create the sub-accounts. Due from HO/Branch/ The amount used to record receivables from Head Office/ Subsidiary Branches/Subsidiary. Assets Held for The amount of non-current assets and/or assets arising from a Disposal discontinued operation that the cooperative had held for sale and for which no buyers have been identified. Assets Acquired in Real and personal properties acquired by the cooperative Settlement of through judicial or extrajudicial settlement of accounts. Accounts Deposit on The amount paid as deposits on containers subject to refund Returnable upon return of the container. Containers Other Land Cost of land owned by the cooperative which is not used for its main operations. Other Building Cost of building owned by the cooperative which is not used for its main operations. Accumulated Sum of depreciation on other building that are set up Depreciation - periodically against current operations. Other Building Construction in The cost or appraised value of assets owned by the Progress cooperatives such as building and others, that are still under construction. Accumulated Total amount of depreciation/impairment cost on Assets under Depreciation and Construction that are set up periodically and charged against Impairment - the current operations. Construction in Progress 10 Miscellaneous Assets not falling any of the above categories. Assets LIABILITIES Economic Obligations of a cooperative that are recognized and measured in conformity with generally accepted accounting principles. CURRENT Obligations that are reasonably expected to be settled through LIABILITIES the use of existing current assets or the creation of other current liabilities and the same statement of conditions within the normal operating cycle of the cooperative which is usually one year. Savings Deposit Deposits made by members that can be withdrawn anytime at the option of the depositors. Time Deposits Deposits made by members in the cooperative over a specified period of time and withdrawable at a predetermined date. Accounts Payable - Amount of obligations/indebtedness to suppliers for purchase Trade of goods intended for sale. Accounts Payable - Amount of obligations/indebtedness to suppliers for purchase Others of goods not intended for sale ( e.g. supplies, periodicals and etc.) SSS/ECC/Philhealth/ Amounts withheld by the cooperative from the compensation Pag-Ibig Premium mcome of its employees representing their premmm Contributions Payable contributions to SSS, Philhealth and Pag-Ibig agencies. As an employer, the cooperative has its corresponding share of contributions and this should be set up every payroll period. SSS/Pag-Ibig Loans Amounts withheld by the cooperative from the compensation Payable income of its employees representing their payment of loans to SSS and Pag-Ibig agencies. Withholding Tax All taxes withheld as prescribed by law including but not Payable limited to the unremitted withholding tax deducted from the employees' salaries representing part of their possible income tax liability to the Bureau of Internal Revenue. 11 Accrued Expenses Expenses that have been incurred but not yet paid as of date of statement of financial condition but payable within the next accounting period. This account represents the amount due to creditors/employees for services rendered/received and other expenses already incurred but not yet paid. Interest on Share Liability of the cooperative to its members for interest on share Capital Payable capital, which can be determined only at the end of every accounting period. Patronage Refund Liability of the cooperative to its members for patronage Payable refund, which can be determined only at the end of every accounting period. Due to CETF (Apex) An amount set aside for the education and training fund of an apex organization, which is 50% of the amount allocated by the cooperative m accordance with the provision of the cooperative's by-laws and the cooperative code. The apex organization may be either a federation or union of which the cooperative is a member. Loans Payable - The indebtedness of the cooperative to financial institutions, Current federations, unions, or individuals payable within the accounting/fiscal period and the current portion of the Long Term Loans Payable. Taxes, Fees and Other Expenses incurred for taxes, fees and other charges which Charges Payable remained unpaid as of the balance sheet date. Output Tax Value Added Tax on the sale of taxable merchandise/goods and services by any VAT registered/registrable cooperative. Deposit from Amount received as deposits by customers for containers, food Customers or other services. Deferred Gross The unrealized portion of the sales pnce of goods sold on Margin installment basis, net of related costs. This is a contra account to installment receivables. School Program An amount allocated by the cooperatives as support Support Fund mechanism to school program, which remams unpaid. Payable ( applicable to school-based cooperatives for canteen activity only) 12 Other Payables Other liabilities that cannot be classified under any of the preceding current liability accounts. LONG TERM Liabilities payable beyond one year LIABILITIES Loans Payable - The indebtedness of the cooperative to financial institutions, Long Term federations, unions, or individuals payable beyond one year. Revolving Capital The deferred payment of interest on share capital and Payable patronage refund, within a maximum period of 5 years, which should be agreed upon in the General Assembly. Retirement Fund Accumulated retirement benefit costs charged against the Payable mcome of the cooperative over the expected remammg working lives of participating qualified employees. OTHER LIABILITIES The totality of all other liabilities that cannot be classified after any of the preceding liability accounts. Deposit for Share Amount paid by the members for future subscription of Capital Subscription additional share capital when the authorized capital has been fully subscribed and paid pending amendment of the Cooperative Articles of Cooperation and By-Laws. Project Subsidy Fund Unused portion of the donation/grant for training, salaries and wages, etc. Mutual Benefit Fund Funds for special purposes such as member's welfare and Payable benefits, i.e. loan protection, hospitalization, death and, etc./, including KBGF/CGF not taken from net surplus. Due to HO/Branch/ Used to record amount payable to Head Office, Branch, Subsidiary Subsidiary. EQUITY Excess of a cooperative 's assets over its liabilities MEMBERS' EQUITY Interest of members in the cooperative Subscribed Share The amount of share capital subscribed by regular members Capital - Common payable over a certain period of time. Subscription The total unpaid subscribed share capital of regular members. Receivable - Common 13 Paid-Up Share Subscribed share capital paid by regular members to the Capital - Common cooperative that is not withdrawn during the term of his/her membership in the cooperative Treasury Shares Common shares bought back by the cooperative. This account Capital - Common should only be used in the event that there are no members who are willing to buy the shares of outgoing members. Subscribed Share The amount of preferred share capital subscribed by member Capital - Preferred (regular and associate) payable over a certain period of time. Subscriptions The total unpaid subscribed preferred share capital of regular Receivable - and associate members. Preferred Paid-Up Share Preferred share capital subscribed and paid by the members Capital - Preferred (regular and associate). Treasury Shares Preferred shares bought back by the cooperative. This account Capital - Preferred should only be used in the event that there are members who are willing to buy the shares of outgoing members. Undivided Net The accumulated net surplus of the cooperative that will be Surplus allocated and distributed at the end of each accounting period in accordance with Articles 86 and 87 of RA 6938, (to be used only on Interim Financial Statements). DONA TI ONS/GRANTS Amounts received by the cooperative as awards, subsidies, grants, aids, and others. This shall not be available for distribution as interest on share capital and patronage refund. STATUTORY FUNDS Mandatory funds established/set up in accordance with Articles 86 and 87 of the Cooperative Code. Reserve Fund Amounts set aside annually for the stability of the cooperative ( equivalent to at least 10% of net surplus) . A corresponding fund should be set up either in the form of time deposits with local banks or government securities. Only the amount in excess of the share capital may be used for the expansion and authorized investment of the cooperative as provided in its by laws. Coop. Education & The amount retained by the cooperative out of the mandatory Training Fund allocation as stipulated in the cooperative's by-laws. 14 Optional Fund Fund set aside from the net surplus (should not exceed 10%) for future use such as land and building, community developments, and others. STATEMENT OF OPERATIONS REVENUE ITEMS Gross increases in assets or gross decreases in liabilities recognized and measured in conformity with generally accepted accounting principles that result from those types of earning activities of a cooperative that can change owner 's equity. NET SALES Total sales reduced by sales returns, allowances and discounts. Sales Invoice pnce of all merchandise/ goods sold or services rendered whether paid or on account (segregate sales from members and non-members) . Installment Sales Sales to members and non-members or merchandise/goods on a deferred payment plan or installment plan. Sales Returns & Deductions from the invoice price due to damage, defects or Allowances errors in the kind or quality of product delivered to customers. Sales Discounts Deductions allowed to customers for settlement/prompt payment of their accounts. COST OF SALES Cost/value of commodity sold. Purchases Cost of merchandise/goods bought whether paid or on account. Purchase Returns & Deductions from cost due to damage, defects or errors in the Allowances kind or quality of merchandise/goods bought & received. Purchase Discounts Reductions in the cost of product bought due to the early payment. Freight In Cost of transporting merchandise/goods from the place of purchase to storage area. Should form part of the Cost of Goods Available for Sale. Direct Materials Cost of materials for the production of food for sale for catering and canteen operations. 15 Direct Labor Pertains to salaries and wages, employees benefits, SSS, Philhealth, ECC, Pag-Ibig contributions and Retirement Benefit Expenses paid to those directly involved in cooked food preparations such as cooks and kitchen helpers. Processing Overhead Cost of indirect materials, indirect labor and other overhead expenses such as but not limited to fuel, power, light and water for the production of food for sale for catering and canteen operations. Include normal spoilage and breakage. OTHER INCOME Income received by the cooperatives other than its main operation. Income/Interest from Income earned by the cooperatives from bank deposits and Investment investments made m financial institutions/government/ business organizations and federations. This shall include interest income derived from the deposit of statutory funds in the bank until utilized. Membership Fee Amount collected from the applicants upon approval of their membership in the cooperative. Commission Income An amount received by the cooperative from supplier as incentives. Realized Gross Income earned by the cooperative from the installment sales. Margin Miscellaneous Income All other income earned by the cooperative for which no specific account has been set up. Fines, Penalties, Fees imposed and collected by coop for delayed payments of Surcharges accounts. EXPENSES Gross decreases in assets or gross increases in liabilities recognized and measured in conformity with generally accepted accounting principles that result from those types of earning directed activities of a cooperative than can change member's equity. A. FINANCING COST Expenses related to borrowings of funds used for operations. Interest Expense on Interest incurred on borrowings. Borrowings 16 Interest Expense on Interest incurred on savings and time deposits of both regular Deposits and associate members. Other Financing Service charges, bank charges related to borrowings, filing Charges fees and other fees for borrowings incurred by the cooperative. B. SELLING COSTS Expenses related to distribution and selling of goods and services. Salaries & Wages Amount incurred for services rendered by employees including overtime pay. Incentives and Amount incurred for serviced rendered by sales, part-time and Allowances on-call employees. Employees Benefits Benefits given to employees other than salaries and wages such as 13 th month pay, bonus, allowances, termination or separation pay and others. SSS, Philhealth, The cooperative's share m the employees' premmm ECC, Pag-Ibig contribution to SSS, ECC, Philhealth and Pag-Ibig Premium Contribution Retirement Benefit The cost of providing retirement benefits to employees for Expense their services rendered. The cost of retirement benefits is recognized as an expense in the periods during which the services are rendered. Office/Store/Canteen/ Expenses incurred for stationery and various supplies used in Kitchen and Catering office/store/canteen/kitchen and catering for selling/trading Supplies Expenses operations. Freight Out/Delivery Amount incurred for the delivery of goods/services including Expenses traveling expenses of sales personnel from the place of production/store to buyer including lubricants. Spoilage, Breakage Expenses incurred for unavoidable decay, breakage, expiration and Losses or losses of goods beyond the normal condition. Storage/Warehousing Expenses incurred for temporary housing of merchandise/ Expenses goods. 17 Power, Light and Cost of electricity, water and/or gasoline/diesel, oil and Water lubricants used for generators which are incurred in business operations. Travel and Amount incurred for fares, gasoline and fuel for service Transportation vehicles borrowed or rented by the cooperative, toll fees, board and lodging, per diem and meal allowance of employees while on official travel. Commission Amount paid to sales personnel and others as incentives. Expenses Insurance Expenses incurred to insure the assets/properties/employees of the cooperative and the bonds of accountable officers and employees. Repairs and Expenses incurred in the repair and maintenance of each Maintenance facility and equipment except major repairs that do not prolong the life of the asset but increase capacity and safety measures. Rentals Amount incurred for the lease or rental of the building/ office space, the utilized portion of the rent paid in advance. Taxes, Fees and Expenses incurred for taxes, licenses, and fees including Charges registration fees, certification fees, amendments fees, due to government entities, both national and local. Communication Amount incurred for courier (letters), telephone, cellphone, e mail, fax, internet, messengerial, and all other means of communication. Representation Expenses incurred related to accommodating visitors and guests on official business. Advertising & Expenses incurred for advertising and promotion of Promotion cooperatives' products. Breakage & Losses Expenses incurred for lost or breakage of kitchen/utensils after on Kitchen Utensils deducting accumulated depreciation. Gas, Oil & Amounts incurred for gasoline, fuel and lubricants for service Lubricants vehicles, delivery vans and others. Miscellaneous All other expenses incurred by the cooperative not classified Expenses under any of the specified expenses account. 18 Depreciation/ Amount provided for wear and tear of property and equipment Amortization and amortization of intangible assets. Royalties The amount provided to authors for the right to the reproduction of books and related items that is made available for sale. Amortization of Amount provided for amortization of leasehold rights and Leasehold Rights improvements. and Improvement ,. ADMINISTRATIVE Expenses incurred related to general administration and '--'· COSTS management of the cooperative/enterprise. Salaries & Wages Amount incurred for services rendered by employees including overtime pay. Employees Benefits Benefits given to employees other than salaries and wages such as 13 th month pay, bonus, allowances, termination or separation pay, etc. SSS, Philhealth, The cooperative's share m the employees' premmm ECC, Pag-Ibig contributions to SSS, ECC, Philhealth and Pag-Ibig Premium Contributions Retirement Benefit The cost of providing retirement benefits to employees for Expenses their services rendered. The cost of retirement benefits is recognized as an expense in the periods during which the services are rendered. Officers' Honorarium Amount incurred for services rendered by directors, committee and Allowances members and officers . Trainings/Seminars An amount incurred for officers, directors and employees for attending trainings and seminars/ conducting semmars including expenses related thereto after exhausting the CETF local. School Program This is an amount allocated by the cooperatives as support Support mechanism to school program such as school food supplementation of identified under-nourished cases and administration contingency fund, outreach program and school development, etc. (applicable to school-based cooperatives for canteen activity only) 19 Office Supplies Expenses incurred for stationery and various supplies used for operation. Power, Light & Cost of electricity, water, power generating unit, gasoline, Water diesel, oil and lubricants incurred in business operations. Travel & Amount incurred for fares, gasoline and fuel for service Transportation vehicles borrowed or rented by the cooperative, toll fees, board and lodging, per diem and meal allowance of officers, employees and members while on official travel. Insurance Expenses incurred to insure the assets/properties of the cooperative and the bonds of accountable officers and employees. Repairs & Expenses incurred in the repau and maintenance of each Maintenance facility and equipment except major repairs that prolong the life of the asset. Rentals Expenses incurred for building/office spaces or facilities leased by the cooperative. Taxes, Fees and Expenses incurred for taxes and fees including reg. fees, cert. Charges fees, amendment fees due to government entities, both national and local. Professional Fees Fees and related expenses incurred for professional services rendered by lawyers, accountants, engineers and others. Communication Amount incurred for courier (letters), telephone, cellphones, e mail, fax, internet, messengerial, and all other means of communication. Representation Expenses incurred related to accommodating visitors and guests on official business. Meetings and Expenses incurred for meetings and conferences of directors, Conferences committee members and staff. Periodicals, Amount incurred for subscription or purchase of periodicals, Magazines & magazines and others. Subscription 20 General Support Expenses incurred for employing the services of security, Services janitors and messengers and other workers on contractual or on call basis. Gas, Oil & Amounts incurred for gasoline, fuel and lubricants for service Lubricants vehicles. Miscellaneous All other expenses incurred by the cooperative not classified Expense under any of the specified expense account. Bank Charges Bank fees and other charges excluding cost of checkbooks. Litigation Expenses Expenses incurred in legal cases. This expense starts upon filing of the case. Depreciation/ Amount provided for wear and tear of property and equipment Amortization and amortization of intangible assets. Depletion Cost of reduction in value of land caused by natural calamity charged to current operation. Provision for Allocation for estimated losses arising from probable Probable Losses on uncollectible account/installment receivable. Accounts/Installment Receivables Amortization of Amount provided for amortization of leasehold rights and Leasehold Rights and improvements. Improvement Collection Expense Amounts paid including commissions, incentives in effecting the collection of accounts. D. DEMOCRATIC Expenses incurred in providing for additional member's GOVERNANCE benefit and social services. COST General Assembly Expenses incurred in the conduct of general assembly, either Expenses regular or special. Members Benefit All expenses incurred for the benefit of the members. Expenses Affiliation Fee Amount incurred to cover membership or registration fees and annual dues to a federation or union and other networks. 21 Social & Community Expenses incurred by the cooperatives in its social community Service Expense involvement and provision of CGF and KBGF after exhausting the optional fund or if it is not so provided. Training/Seminars/ Amount incurred for officers, directors, members and Conferences employees for attending trainings and seminars including all Expenses expenses related thereto after exhausting the CETF (local). Provision for All expenses incurred for future benefit of members, such as Members' Future pensions of members, etc. not taken from Net Surplus. Benefits E. OTHER ITEMS - Special transactions arising from the operations of the SUBSIDY / GAIN cooperatives. (LOSSES) Project Subsidy An amount deducted from Project subsidy fund to subsidize project expenses. This shall appear in the statement of operation as a contra account to subsidized project expenses. Donation and Grant An amount deducted from Donation and Grant to subsidize Subsidy depreciation funded by donation and grant. Optional Fund An amount deducted from Optional Fund to subsidize Subsidy depreciation funded by Optional Fund and or community development expense. Subsidized Expenses Portion of the Project Subsidy Fund expended for training, salaries and wages and other expenses subsidized by donations and grants and optional fund. Gain or Loss on Sale Gain or loss derived from the sale of acquired assets/ of Property & properties and equipment. Equipment Gains or Loss in Income earned or loss incurred from the disposal or permanent Investment decline of value of investment. Gains or Loss on Sale Income earned or loss incurred from the sale of repossessed of Repossessed Item items. Gains or Losses from Gains or Losses arising from retirement or conversion of Foreign Exchange foreign currency exchange rate fluctuation per actual Valuation transaction. 22 Prior Years' Adjustment Adjustments on transactions affecting income and expenses incurred in the previous year(s) which are taken up on the current year. V. Pro-forma Financial Reports with supporting schedules Statement of Financial Condition (Annex "1 ") Statement of Operation (Annex "2") Statement of Cash Flows (Annex "3 ") VI. Sanctions Consumers' cooperatives and those with canteen and/or catering operations which fail to comply with this Circular shall be subject to the following sanctions: First non-compliance, the Authority shall issue warning to the concerned cooperatives; Second non-compliance, certificate of good standing shall not be issued by the Authority; Third non-compliance, the certificate of registration of the cooperative shall be cancelled after compliance with due process of law. VII. Transitory Provision All consumers cooperatives and those with canteen and/or catering operations shall within one ( 1) year from the effectivity of this Circular make necessary adjustments on their existing systems in order to comply with the Standard Chart of Accounts. Provided however, that the aforecited sanctions under Item VI shall not be imposed during the transition period. VIII. Repeals All circulars, regulations, issuances or parts thereof, inconsistent with any of the. provisions of this Circular are hereby repealed or modified accordingly. 23 IX. Separability Clause Should any part of this Circular be declared invalid or unconstitutional, the rest of the provisions not affected thereby shall continue in full force and effect. X. Effectivity This Circular shall be published in two (2) newspapers of general circulation or official gazette and shall take effect fifteen (15) days after its publication. October 20, 2005 (SGD.) LECIRA V. JUAREZ Chairman 24 PRO-FORMA FINANCIAL REPORTS (A) STATEMENT OF FINANCIAL CONDITION Name of Cooperative Address of Cooperative Registration/Confirmation No. Statement of Financial Condition As of Account Title Current Year ASSETS Current Assets Cash on Hand Cash in Bank Petty Cash Fund Revolving Fund Change Fund Short Term Investment Advances to Officers & Employees Accounts Receivables Trade - Current Accounts Receivables Trade - Past Due Accounts Receivables Trade - In Litigation Accounts Receivables Trade - Restructured Less: Allowance for Probable Losses on Accounts Receivables Net Account Receivables Trade Installment Receivables - Current Installment Receivables - Past Due Installment Receivables - Restructured Installment Receivables - In Litigation Less: Allowance for Probable Losses On Installment Receivables Net Installment Receivables Receivables from Accountable Officers and Employees Other Receivables Input Tax Deposit to Suppliers Page 1 of 5 ANNEX "1" (to SCA) Prior Year Increase/ (Decrease) Account Title Current Year Prior Year Increase/ (Decrease) Inventories Repossessed Inventories Assets Held for Sale Unused Office/Store/Kitchen/Canteen/ Catering Supplies Prepaid Expenses Total Current Assets Long-Term Investments Investment in Cooperatives Government Securities/Bonds Long Term Investment - Others Total Long-Term Investments Property & Equipment Land Land Improvements Less: Accumulated Depreciation & Impairment - Land Improvements Net Building Less: Accumulated Depreciation & Impairment - Building Net Furniture, Fixtures & Office Equipment Less: Accumulated Depreciation & Impairment - Furniture and Fixtures Net Kitchen/Canteen/Catering Equipment and Utensils Less: Accumulated Depreciation & Impairment - KCCEU Net Transportation/Delivery Equipment Less: Accumulated Depreciation & Impairment - TIDE Net Linens and Uniforms Less: Accumulated Depreciation - Linens and Uniforms Net Leasehold Rights & Improvements (net) Total Property & Equipment Page 2 of 5 Account Title Current Year Prior Year Increase/ (Decrease) Intangible Assets Franchise Copyright Total Intangible Assets Other Assets Organizational Cost Computerization Cost Other Funds and Deposits Deposit on Returnable Containers Assets Acquired in Settlement of Accounts Assets Held for Disposal Other Land Other Building Less: Accumulated Depreciation - Other Building Net Construction in Progress Less: Accumulated Depreciation - Construction in Progress Net Miscellaneous Assets Total Other Assets TOTAL ASSETS LIABILITIES Current Liabilities Savings Deposits Time Deposits Accounts Payable - Trade Accounts Payable - Others SSS/ECC/Philhealth/Pag-Ibig Premiums Contributions Payable SSS/Pag-ibig Loans Payable Withholding Tax Payable Accrued Expenses Interest on Share Capital Payable Patronage Refund Payable Due to CETF (Apex) Loans Payable - Current Taxes, Fees and Charges Payable Output Tax Deposit from Customers Page 3 of 5 Account Title Current Year Prior Year Increase/ (Decrease) School Program Support Fund Payable Deferred Gross Margin Other Payables Total Current Liabilities Lon!( Term Liabilities Loans Payable - Long Term Revolving Capital Payable Retirement Fund Payable Total Long Term Liabilities Other Liabilities Deposit for Share Capital Subscription Project Subsidy Fund Mutual Benefit Fund Payable Total Other Liabilities TOT AL LIABILITIES EQUITY Members' Equity Common Share Capital - Authorized Share Capital - Shares @P par value Subscribed Share Capital - Common Less: Subscription Receivable - Common Total Paid-up Share Capital - Common Less: Treasury Share Capital - Common Net Paid-up Capital - Common Preferred Share Capital - Authorized Share Capital - Shares @P par value Subscribed Share Capital - Preferred Less: Subscription Receivable - Preferred Total Paid-up Share Capital - Preferred Less: Treasury Shares - Preferred Net Paid-up Capital - Preferred *Undivided Net Surplus Total Members' Equity Donations/Grants Statutory Funds Reserve Fund Page 4 of 5 Account Title Current Year Prior Year Increase/ (Decrease) Coop. Education & Training Fund Optional Fund Total Statutory Funds Total Equity TOTAL LIABILITIES & EQUITY *Used for Interim Financial Reports Page 5 of 5 (B) STATEMENT OF OPERATIONS SALES Less: Sales Discount Sales Returns and Allowances Total Net Sales Less: Cost of Sales (Annex 2-a) Gross Margin Less: Deferred Gross Margin** (Annex 2-b) Realized Gross Margin Add : Other Revenues Membership Fees Income/Interest from Investments Commission Income Fines, Penalties and Surcharges Miscellaneous Income GROSS REVENUES LESS: OPERATING EXPENSES (Annex 2-c) Financing Cost Selling Cost Administrative Cost Democratic Governance Cost TOTAL OPERATING EXPENSES NET SURPLUS before Other Items Add/Deduct: OTHER ITEMS: Project Subsidy Donation and Grant Subsidy Gain on Sale of Property and Equipment Gain in Investment Gain on Sale of Repossessed Item Gain from Foreign Exchange Transaction Prior Year Adjustments Total Less: Subsidized Expenses Loss on Sale of Property and Equipment Loss on Investment Loss on Sale of Reposssed Item Loss from Foreign Exchange Valuation Prior Year Adjustments Total NET SURPLUS (FOR ALLOCATION) Name of Cooperative Address of Cooperative Registration/Confirmation No. Statement of Operations For the Year Ended Regular Sales lnstallment Catering XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Annex "2" (to scAJ Curent Year Increase/ Canteen Grand Total Prior Year (Decrease) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX SCHEDULE OF COST OF SALES Regular Sales Inventory, beginning XXX Purchases (net) XXX Freight - In XXX Total Purchases XXX Add : Production Cost Direct Materials Direct Labor Overhead Total Production Cost Total Goods Available for Sale XXX Less: Inventory, end XXX COST OF SALES XXX lnstallment Catering XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX Annex "2-a" (to Statement of Operations) GRAND Canteen TOTAL XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX SCHEDULE OF INSTALLMENT RECEIVABLES WITH DEFERRED GROSS MARGIN As of December 31, Total Sales Invoice Invoice Invoice Date No. Name of Buyer Amount 1/2/05 001 Juana dela Cruz 11,000.00 6/14/05 002 Juan dela Cruz 15,000.00 Total Formula to compute Deferred Gross Margin ** Deferred Gross Margin = Balance Cost + Margin Example: Deferred Gross Margin = 2200 110% = 200 Cost+ MarQin 110% 110% X X Gross Profit Rate 10% 10% Gross Profit Rate 10% Total Cash Collected 8,800.00 6,000 .00 ANNEX "2-b" (to Statement of Operations) Deferred Balance Gross Mari:iin ** 2,200.00 200.00 9,000.00 818.18 1,018.18 ANNEX "2-c" (to Statement of Operations) SCHEDULE OF OPERATING EXPENSES: I ACCOUNTS Regular Sales lnstallment Catering Canteen GRAND TOTAL A. FINANCING COSTS Interest Expense on Borrowings XXX Interest Expense on Deposit XXX Other Financing Charges XXX TOTAL B. SELLING COSTS Salaries and Wages XXX XXX XXX XXX XXX Incentives and Allowances XXX XXX XXX XXX XXX Employees Benefits XXX XXX XXX XXX XXX SSS, Philhealth, ECC, Pag-lbig Contribution XXX XXX XXX XXX XXX Retirement Benefit Expense XXX XXX XXX XXX XXX Office/Store/Canteen/Kitchen and Catering Supplies XXX XXX XXX XXX XXX Power, Light and Water XXX XXX XXX XXX XXX Travel and Transportation XXX XXX XXX XXX XXX Insurance XXX XXX XXX XXX XXX Repairs and Maintenance XXX XXX XXX XXX XXX Rentals XXX XXX XXX XXX XXX Taxes, Fees and Charges XXX XXX XXX XXX XXX Communications XXX XXX XXX XXX XXX Representation XXX XXX XXX XXX XXX Gas, Oil and Lubricants XXX XXX XXX XXX XXX Freight Out/Delivery Expenses XXX XXX XXX XXX XXX Spoilage, Breakage and Losses XXX XXX XXX XXX XXX Storage/Warehousing Expenses XXX XXX XXX XXX XXX Commission Expenses XXX XXX XXX XXX XXX Advertising and Promotion XXX XXX XXX XXX XXX Breakage & Losses on Kitchen Utensils XXX XXX XXX XXX XXX Miscellaneous Expense XXX XXX XXX XXX XXX Depreciation/Amortization XXX XXX XXX XXX XXX Royalties XXX XXX XXX XXX XXX Amortization of Leasehold Rights and Improvement XXX XXX XXX XXX XXX TOTAL XXX XXX XXX XXX XXX C. ADMINISTRATIVE COST Salaries and Wages XXX XXX XXX XXX XXX Employees Benefits XXX XXX XXX XXX XXX SSS, Philhealth, ECC Pag-lbig Contribution XXX XXX XXX XXX XXX Retirement Benefit Expense XXX XXX XXX XXX XXX Officers' Honorarium and Allowances XXX XXX XXX XXX XXX Trainings/Seminars XXX XXX XXX XXX XXX School Program Support XXX XXX XXX XXX XXX Office/Store/Canteen/Kitchen and Catering Supplies XXX XXX XXX XXX XXX Power, Light and Water XXX XXX XXX XXX XXX Travel and Transportation XXX XXX XXX XXX XXX Page 1 of 2 SCHEDULE OF OPERATING EXPENSES: I ACCOUNTS Regular Sales lnstallment Catering Canteen GRAND TOTAL Insurance XXX XXX XXX XXX XXX Repairs a.nd Maintenance XXX XXX XXX XXX XXX Rentals XXX XXX XXX XXX XXX Taxes, Fees and Charges XXX XXX XXX XXX XXX Professional Fees XXX XXX XXX XXX XXX Communications XXX XXX XXX XXX XXX Representation XXX XXX XXX XXX XXX Meeting and Conferences XXX XXX XXX XXX XXX Bank Charges XXX XXX XXX XXX XXX Collection Expense XXX XXX XXX XXX XXX Periodicals, Magazines and Subscription XXX XXX XXX XXX XXX General Support Services XXX XXX XXX XXX XXX Gas, Oil and Lubricants XXX XXX XXX XXX XXX Litigation Expense XXX XXX XXX XXX XXX Miscellaneous Expense XXX XXX XXX XXX XXX Depreciation/ Amortization XXX XXX XXX XXX XXX Depletion XXX XXX XXX XXX XXX Provision of Probable Losses on Accounts/ lnstallment Receivables XXX XXX XXX XXX Amortization of Leasehold Rights and Improvement XXX XXX XXX XXX XXX TOTAL XXX XXX XXX XXX XXX D. DEMOCRATIC/GOVERANCE COSTS XXX General Assembly Expenses XXX Members' Benefit Expense XXX Affiliation Fee XXX Social and Community Service Expenses XXX Trainings/Seminars/Conferences Expense XXX Provision for Members' Future Benefits XXX TOTAL XXX Page 2 of 2 (C) CASH FLOW STATEMENT NAME OF COOPERATIVE ADDRESS OF THE COOPERATIVE REGISTRATION/CONFIRMATION NO. CASH FLOWS STATEMENT For the year ended December Cash Flow from Operating Activities: Cash provided by operation: Net surplus for Allocation Depreciation/Amortization Provision for Probable Losses on Accounts/lnstallment Receivables Changes in Assets and Liabilities (lncrease)/Decrease in: Advances to Officers & Employees Accounts Receivable Trade lnstallment Receivable Receivable from accountable officers & employees Other Receivables Input tax Deposits to suppliers Inventories Repossessed Inventories Assets held for sale Unused office/store/kitchen/canteen/caterinq supplies Prepaid expenses Intangible assets Other assets lncrease/(Decrease) in: Accounts payable SSS/ECC/Philhealth/PaQ-lbiQ Premium Contribution payable SSS/Pag-lbiQ Loans Payable Witholding Tax Payable Accrued Expenses Due to CETF (Apex) Taxes, fees and charges payable Output tax Deposits from customers Deferred Gross Margin School Prooram Support Fund payable Other payables Net cash from operating activities Cash Flow from Investing Activities: (lncrease)/Decrease in: Property & Equipment Investment Net cash from investing activities Cash Flow from Financing Activities: (lncrease)/Decrease in: SavinQs deposit Time deposit Paid-up Share Capital Donations/Grants Statutory funds Long term liabilites Other liabilities Interest on share capital & patronaqe refund Net cash from financing activities Net increase/(decrease) in cash Cash balance, beainning Cash Balance, end (The above statement is presented using Indirect Method Approach.) Annex "3" (to SCA) XXX XXX XXX XXX XXX (xxx} XXX XXX XXX XXX XXX XXX XXX XXX (XXX) (XXX) XXX XXX (xxx) XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX