Did you know that cooperatives have their own accounting regulations?
Posted: Mon Dec 23, 2024 6:59 am
Cooperativism is characterized by promoting social values based on cooperation and social responsibility, based mainly on the principles of democratic participation of members, free membership and commitment to the community, among other social values and principles as described in the ICA (International Cooperative Alliance) .
The accounting function in cooperative societies allows for the orderly recording of business activity operations, reflecting the economic, financial and asset situation, applying the general accounting standards and Order EHA/3360/2010 , of December 21, which approves the standards on the accounting aspects of cooperative societies.
The participation of the members in the decision-making of the company is one of the main characteristics of cooperatives, as well as the contribution of each of them to the share capital, not only through financial contributions at the start of the activity but also through other contributions that occur throughout the business activity, due to another of the cooperative principles which is the free adhesion and withdrawal of the members.
Characteristics of the Cooperative's Equity
All these circumstances mean that the cooperative must apply kuwait number example accounting regulations to the peculiarities of its operation, mainly through:
A specific chart of accounts, adapting those accounts related to the financial contributions of the members.
A specific provision for the creation of reserves, which affects both the company's net worth and liabilities.
It is therefore essential to know the specific accounts of the share capital, as well as the rules relating to the constitution of legal reserves, which in the cooperative have a specific percentage, higher than in traditional commercial companies, since they allocate a significant part of the surplus to guarantee the development of the activity.
Cooperative societies describe in their bylaws the conditions of each member , associate or worker, based on their financial contribution and contribution to society.
In this regard, and to understand the legislation on the specialties of constitution, administration and accounting, it is necessary to refer to the legal standards of reference within the framework of cooperativism: Law 27/1999, of July 16, on Cooperatives and the Cooperative Regulation (REC) RD 136/2002, in addition to the regional regulations and other European social legislation, which outline the social concepts of this type of society in each area of application.
Knowing the applicable legislation, it is possible to identify, especially at the accounting and tax level, compliance with administrative, accounting and tax obligations in each Cooperative , depending on its activity and the characteristics of each association.
accountant in a cooperative
Constitution of Legal Reserves
The legal regulation affecting cooperatives establishes that they must establish a mandatory legal reserve, and that they may also establish other reserves:
Mandatory Legal Reserve (FRO) (20%-50%): This is a guarantee fund for the development of the cooperative's activity and will have a determined percentage between 20% and 50% depending on the company.
Legal Refund or Update Reserve (FR): Intended to update and regularize the social contributions of outgoing members of the cooperative, charged to the available profit or social reserves.
Voluntary or Guarantee Legal Reserve (FV): Serves as a guarantee in anticipation of the viability of the company's economic activity.
All of them with their specific percentages and legally delimited purposes, in addition to which they must make a mandatory provision to Provisions:
Education, Training and Promotion Fund (FEFYP) (5%): Intended for the development of training activities aimed at the cooperative community in general, and the promotion of cooperativism, social and professional progress at a local level in particular.
The accounting record of reserves and provisions is included in the annual accounts in accordance with the legally agreed amounts.
Knowing and applying Accounting for Cooperatives is essential to record all the operations of your particular economic reality, being especially important to know exactly the accounting and tax obligations that must be respected.
Learn about the preparation of annual accounts in cooperative societies
Do you know how provisions and mandatory reserves work in cooperative societies?
The accounting function in cooperative societies allows for the orderly recording of business activity operations, reflecting the economic, financial and asset situation, applying the general accounting standards and Order EHA/3360/2010 , of December 21, which approves the standards on the accounting aspects of cooperative societies.
The participation of the members in the decision-making of the company is one of the main characteristics of cooperatives, as well as the contribution of each of them to the share capital, not only through financial contributions at the start of the activity but also through other contributions that occur throughout the business activity, due to another of the cooperative principles which is the free adhesion and withdrawal of the members.
Characteristics of the Cooperative's Equity
All these circumstances mean that the cooperative must apply kuwait number example accounting regulations to the peculiarities of its operation, mainly through:
A specific chart of accounts, adapting those accounts related to the financial contributions of the members.
A specific provision for the creation of reserves, which affects both the company's net worth and liabilities.
It is therefore essential to know the specific accounts of the share capital, as well as the rules relating to the constitution of legal reserves, which in the cooperative have a specific percentage, higher than in traditional commercial companies, since they allocate a significant part of the surplus to guarantee the development of the activity.
Cooperative societies describe in their bylaws the conditions of each member , associate or worker, based on their financial contribution and contribution to society.
In this regard, and to understand the legislation on the specialties of constitution, administration and accounting, it is necessary to refer to the legal standards of reference within the framework of cooperativism: Law 27/1999, of July 16, on Cooperatives and the Cooperative Regulation (REC) RD 136/2002, in addition to the regional regulations and other European social legislation, which outline the social concepts of this type of society in each area of application.
Knowing the applicable legislation, it is possible to identify, especially at the accounting and tax level, compliance with administrative, accounting and tax obligations in each Cooperative , depending on its activity and the characteristics of each association.
accountant in a cooperative
Constitution of Legal Reserves
The legal regulation affecting cooperatives establishes that they must establish a mandatory legal reserve, and that they may also establish other reserves:
Mandatory Legal Reserve (FRO) (20%-50%): This is a guarantee fund for the development of the cooperative's activity and will have a determined percentage between 20% and 50% depending on the company.
Legal Refund or Update Reserve (FR): Intended to update and regularize the social contributions of outgoing members of the cooperative, charged to the available profit or social reserves.
Voluntary or Guarantee Legal Reserve (FV): Serves as a guarantee in anticipation of the viability of the company's economic activity.
All of them with their specific percentages and legally delimited purposes, in addition to which they must make a mandatory provision to Provisions:
Education, Training and Promotion Fund (FEFYP) (5%): Intended for the development of training activities aimed at the cooperative community in general, and the promotion of cooperativism, social and professional progress at a local level in particular.
The accounting record of reserves and provisions is included in the annual accounts in accordance with the legally agreed amounts.
Knowing and applying Accounting for Cooperatives is essential to record all the operations of your particular economic reality, being especially important to know exactly the accounting and tax obligations that must be respected.
Learn about the preparation of annual accounts in cooperative societies
Do you know how provisions and mandatory reserves work in cooperative societies?