Author: cooperatives

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

If ever there was a gap between a job’s glamour and its importance, such is the case for a board secretary. It is of utmost importance to have the right person taking the minutes. Usually cooperative boards appoint a board secretary who records minutes during the meeting, transfers the minutes into a professional, readable format and submits the minutes to the board for approval at the next …

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

Board minutes are an official record of corporate business. They provide a record of action or evidence of interaction. Copies of the Articles of Incorporation, bylaws and minutes of recent board meetings are the primary documents subpoenaed when the cooperative is involved in any legal action. It is imperative that board minutes are always considered a priority and recorded professionally.…

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

The Sarbanes Oxley Act of 2002 mandated that firms which issue publicly traded securities must have a formal audit committee. The act also included requirements for the composition and functioning of the audit committee. Although the Sarbanes Oxley Act does not apply to most cooperatives, this increased focus on the board’s role with respect to the audit has encouraged cooperatives to evaluate forming an audit committee or …

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

The cooperative audit should include a review of the balance sheet, income statement and statement of cash flows. The underlying documents supporting the information is given in these financial statements, along with verification of accounts receivable and payable balances with cooperative customers, and a review of the inventory quality, quantity, valuation, records and procedures. The auditor also will verify the existence of recorded securities and review justification …

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

A good understanding of how an audit committee should work is critical to the financial professionals who are part of the cooperative’s internal and external audit teams. An audit committee must have four important concerns:

1. Selection of the auditor
2. Determining the scope of the audit
3. Exercising diligence
4. Ability to ask the hard questions

Selecting the outside auditor is one of most important jobs of the audit committee. …

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

Securing an annual audit of the cooperative’s financial records is the responsibility of the board of directors. Because the board acts as the trustee of the cooperative’s assets, it is responsible for safeguarding, auditing, and appraising the cooperative’s financial resources. The audit is a fundamental part of this trustee responsibility, and the cost of the audit should be considered a normal business expense.

The fiduciary responsibilities of …

Authors: Phil Kenkel, Oklahoma State University, phil.kenkel@okstate.edu, and Bill Fitzwater,
Oklahoma State University

The term “audit” refers to actions that can be either internal or external in nature. The internal auditing function of a business is performed by an internal auditor to determine conformity in record keeping and operations with predetermined standards, such as inventory valuation, appropriate issuance of transportation contracts, etc. While this is an important function for cooperative businesses, in this article, we are concerned with the external …