INSTITUTE OF CERTIFIED PUBLIC
ACCOUNTANTS OF KENYA
THE FUTURE OF SACCOS AND FINANCIAL
REPORTING IN KENYA
BY
CPA SOLOMON ANGUTSA ATSIAYA
CEO KENYA POLICE SACCO
Credibility
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Professionalism
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Accountability
KENYA SACCO
PERSPECTIVE
The Sacco movement has evolved
in the past over 45 years into a
formidable force for the social and
economic
transformation
of
Kenyan people.
In Kenya we have over 7,000
registered Sacco's i.e. 41% of total
17,000 Co-operatives
SACCO SECTOR IN
KENYA
Has over 7,000 but only 177 are deposit
taking (Do FOSA business)-Originally 251 DT
SACCOs
15 DT SACCOs with Assets over Kshs. 5 B
58 DT SACCOs with Assets BT Kshs. 1-5B
103 DT SACCOs with Assets less than
Kshs. 1B
Credibility
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Professionalism
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AccountAbility
SACCO SOCIETY’S
MANDATE
To provide an opportunity for accumulating
savings.
To provide an investment opportunity
To create a source of funds for on lending at fair
and reasonable rate of interest.
To provide a platform for economic and social
development.
To provide credit facilities for purposes of
providence and production.
Provide affordable financial services
LEGAL FRAME WORK
The Co-operative Societies (Amendment) Act of
2004 (cap 490)-Act of parliament-(All)
The Sacco Societies Act, 2008-Act of parliament
(SACCOs)
The Sacco Societies Regulations-SASRA
The Co-operative societies rules-Minister
The SACCO Society’s By-laws-Internal
ADM Resolutions
CONSUMER RATIONALE
1.Gone are the days of the business offering what they
think is good for the customer and at their own terms.
2.Gone are the days of monopoly and duopoly where
the customer would have no choice.
3.Effects of Interest Capping.
4.Today’s customers are more enlightened, more
educated and very much exposed in many areas be it
technology, education, politics media etc.
CONSUMER RATIONALE
5. Customers are becoming more demanding and
are demanding value for their money.(quality)
6. Customers are looking for new solutions.
7. Customers are looking to feel valued and
appreciated.
8. Customers are spoilt for choice.
9. Customers have a voice that is loud, clear and
very influential.
10.It costs 9 times more to attract a new customer
than to retain an existing one
GROWTH PILLARS
Governance and Transformative
leadership
Membership-Growth & Retention
Financial Performance/Capabilities
Products and Services
Operational efficiency- Systems
Human Resources/Capital
INNOVATION AS
WAYFORWARD?
Innovation is the profitable
implementation of ideas
Implementing new ideas that
create value “
”
Innovation Network, US
The intersection of invention and
insight, leading to the creation of
social and economical value “US, National
Innovation Initiative”
RATIONALE
An innovation can increase profits
on the value side (customers value
an innovation enough to pay more
for it)
OR
On the cost side(the Company
produces a product offering in a
more efficient way)
FROM WHICH SIDE
Innovation can occur anywhere in
the firm business and by anyone.
There is great potential
There is no shortage of ideas and
invention in the work. The
challenge is to introduce these
successfully to a market.
BENEFITS
Reduces waste and environmental
damage
Creates growth, increase
productivity, Economic wealth (avoids
stagnation)
Provides better goods and services at
cheaper price-standard of living
More interesting work for employees
Survival –Remember KODAK
TYPES OF INNOVATION
Value Innovation
Management
Innovation
Revolutionary
Service Innovation
Innovation
Revolutionary
Business Model Innovation
Innovation
Structural Innovation
Market Innovation
Process Innovation
Strategic Innovation
Product Innovation
Technological Innovation
Brand Innovation
Disruptive Innovation
PRINCIPLES FOR
INNOVATION
Be action oriented
Make product, process or service
simple and understandable
Make the product process or service
customer based
Start Small
Aim high
Try, Test, Revise
Learn from past failures
WISDOM
“He who innovates will have for his
enemies all those who are well off
under the existing order of things
and only a lukewarm support in
those who might be better off under
the new”
(Niccolo Machiavelli, The Prince)
MOBILE TECHNOLOGY
Kenya has over 38 million mobile
subscribers in year 2017-Kenya has the
highest mobile money usage in the
world -88%
Kenya has an estimated 5.5 million
face book & 2.5 Million twitter users
Kenya has 37.7 Million internet users
most of them on mobile-Internet users
in year 2,000 was 200,000.
RATIONALE?
Kenya is 1st highest tweeting nation
77% on mobile in Africa
By 2050 70% of Kenya population
will be urbanised
There are more I phones or Samsung
Galaxies sold than born babies every
day i.e. 74.5 Million I phones sold in
the 1st quarter in 2015.
NEW DEVELOPMENT
FOSA (Quasi Banking )Innovation
Micro Credit services to the Community
Wealth Creation through Investments
Long term financial products i.e.
Mortgages
Technological Developments-Virtual
Banking, Mobile, ATM, Agency Banking
NEW DEVELOPMENT
Sharia Compliant Products- Current
Government policy
Financial Products-Share Capital,
Bonds, Fixed income, Commercial
Papers
Sinking Benevolent Funds for Co-ops
WHY FINANCIAL
REPORTING
Financial reporting is the act of
reporting on the financial performance,
and the financial handling of a specific
Co-operative
It provides the owners with information
on how funds are used and allocated.
It provides a level of transparency in the
a Co-operative financial system
RATIONALE
Measure financial soundness & growth
Measures profitability/loss of the
business
Analyzed & interpreted-reflect areas of
strengths & weakness
Indicate periodic performance/growth
Prepared at the end of the financial year
in preparation of the General meeting
Legal requirement
LEGAL MANDATE
CSA sec 25 & SSA sec 40
Every Co-operative society shall keep
proper accounts which shall;
Prepared in accordance with IAS/IFRS
 Reflect the true and fare state of the
financial affairs
Explain transactions i.e. receipts &
payments, Assets & liabilities
RESPONSIBILITY
Reg.60 (2).
The BOD shall ensure that
management maintains proper and
accurate records that reflect the
true and fair position of the Sacco
society’s financial condition.
BASICS
Source
documents:
receipts,
payments, purchases, sales, etc
Processed/posted
to
General
Ledger
General Ledger summarised to
produce trial Balance
Trial Balance used to generate final
accounts
Flow of Accounting
Information
The Trial Balance used to produce
Statement of Financial position
Statement of comprehensive Income
Statement of Changes in Equity
Cash Flow Statement
The System based on Double entry
bookkeeping
Statementof
Comprehensive Income
Matching Incomes and Expenses=Surplus(Loss)
•Helps Invent ways to grow income;
-Widen the product base with new products
-Introduce other activities i.e. FOSA,
Microfinance, financial investments & otherwise,
•Costs Management i.e. depressed costs
-Budgetary controls i.e. Within budgetary limits
-Computerization i.e. Efficiency
-Economies of scale i.e. Increase Volumes
-Quality Management- Quality is free
Statement of Financial
position
A classified summary of the value of the society
entity i.e. it depicts the business financial state of
affairs or position.
Accounting equation where Assets=Capital
+Liabilities
-Assets- Resources controlled by the society
-Capital-Contribution from the owners i.e.
Share Capital, Retained earnings, Statutory
Reserve fund, General Reserves e.t.c. It is very
strategic to heavily capitalize your society.
Statement of Financial
position
Liabilities-Contribution from the
outsiders i.e. Members deposits,
external loans & otherwise
The financial strength of a society
can be reflected through the Balance
sheet items.
Adaption of IFRS
Many countries moving towards
adapting IFRSIFRS allow greater comparability and
this helps investors better determine
where there investments should go
IFRS are principle based rather than
rule based, hence more flexibility in
adaptation
WHY IFRS FOR SACCOS
IFRS provides a set of principles
to be followed while accounting for
transaction and events in financial
statements. IFRS was adopted by
IASB with the objective to have
uniform accounting standard across
all countries.
WHY IFRS FOR SACCOS
Provides mgt greater discretion and
flexibility
in
preparing
financial
statement
 Value relevance of accounting
information
Comparability
Decision Making
Investors options
WHY IFRS FOR
SACCOS
Trade across border and raise
capital globally
Provide consistent presentation of
financial statement along with
uniform measures for recognition,
measurement and disclosures of
financial transaction
Part IX-FINANCIAL
PERFOMANCE REPORTING
Reg. 52-58
Issues;
Internal Auditor-review internal controls & financial
matters of the society
External Auditor appointment -3 years
Submission of audited accounts within 3 months after
the end of the year, before publicationAuthority return at end of every quarter on or before
the 15 day of the following month.
Part IX-FINANCIAL
PERFOMANCE REPORTING
Authority return on Statement of Income &
Expenditure and a Statement of financial
position showing results of its operations for
the preceding month by the 15 day.
The Sacco shall submit to the authority on
the quarter date & year date Financial
Statements in the prescribed format without
deviating from Form 6,7& 8.
LONG LIVE
THE CO-OPERTAIVE MOVEMENT
IN KENYA
Contacts-mail [email protected]
Mobile; 0722-381327
Credibility
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Professionalism
.
AccountAbility