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Funds Management in a Cooperative Society

Funds management shows that the difference between the rich and the poor is not so much in the difference in income but in the way the income earned is disbursed. I heard somewhere that if your ‘out-go’ is more than your ‘in-come’, then your ‘up-keep’ will be your ‘down-fall’. Individuals and organizations alike have made this mistake and the result is often devastating. That is why it is essential for all members of a cooperative society, especially the Management Committee to be knowledgeable with the disbursement of funds and how they can be properly managed for the growth of the cooperative.


We recognize the importance of financial responsibility at Prime Asset Housing Co-Operative Multi-Purpose Society Limited (PAHCMS LTD), and that is why we have an annual budget which is a planning tool used by management to efficiently use the organization’s resources. The budget is not just a collection of how much money will be received and how it will be spent but also includes what has to be done to have the income envisaged in the budget. It should clearly state if there’s going to be an increase in savings as a result of increase in membership and details of additional sources of income.

A report of the performance of this budget should be presented to the Management Committee at its monthly meeting so that they can be aware of the operational performance of the society. This gives them an informed view of the financial status of the society and in what areas they need to improve on or check. Having the budget reviewed quarterly to determine if the operations of the society are on course is also a good way of keeping track of the society’s financial goals.

Bye-law Provisions

In order to ensure proper and appropriate use of the society’s funds, the law and bye-law provides certain conditions that should apply and they include:

· The cooperative shall not invest its funds except as provided in the laws and bye-laws of the society

· The society is not allowed to give loan to a non-member but can loan to another society subject to the approval of the Director of Cooperatives

· No society has the right to distribute or pay dividend or bonus out of its surplus without the approval of the Director

· The society’s banks shall be “Trustee Accounts.” The signatories to such accounts shall be determined by the society and duly stated in its bye-laws

· It is usual practice for a society to take fidelity insurance for its secretary or cashier or any officer who handles cash or is involved in cash transactions on behalf of the society. However, in this time and age, most payments are made electronically to eliminate cash payments


As the Central Bank of Nigeria is to all banking institutions, regulating and monitoring their operations, so is the office of the Director of Cooperatives to cooperative societies. The Director recommends the investment the society should engage in, has in its authority, the right to approve the disposal of surplus funds, prescribe the returns to be submitted, the person to submit such returns and the form in which such returns should be submitted. He also has the right to authorize lending between two societies and is empowered under the Nigerian Cooperatives Act 1993 to audit or cause to be audited by him or by any other person authorized by him, the accounts of the society at the end of the fiscal year.

Another system used to ensure proper management of funds is the Law of Accountability. This is put in place by State Cooperative Society Laws and Regulations, Nigerian Cooperative Societies Laws and bye-laws of Cooperative Societies to emphasize specific areas of accountability for all functionaries so as to ensure a successful operation, stability and survival of cooperatives as an economic unit.

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