Issued: October 2016 TABLE OF CONTENT - CPA SACCOcpasacco.com/wp-content/uploads/2016/11/Annual-Report-2016.pdf · Issued: October 2016 TABLE OF CONTENT ... • Credit risk is dealt

Issued: October 2016

TABLE OF CONTENT

1. Who we are................................................................................................................................ 3

2.0. Cooperate governance statement...................................................................... 5

2.4. Sustainability report............................................................................................... 6

2.7. Risk management..................................................................................................... 8

2.8. Our Organizational Structure............................................................................. 8

2.9. Board Members......................................................................................................... 9

2.10. SUPCO Members....................................................................................................... 9

Agenda for the 3rd AGM......................................................................................................... 11

1.0. Admission of new members ............................................................................... 12

2.0. Minutes for the 2nd Annual General Meeting and the Action Report.. 14

3.0. Report of the Board................................................................................................. 28

Audited Financial Statements for FY 2015/2016..................................................... 43

CPA SACCO Budget Projection For 2016/17............................................................... 56

SUPCO Report .......................................................................................................................... 57

2. Annual Work Plan and Budget FY 2016/2017.............................................................

3. Proposed amendments to the SACCO By-laws.............................................................

4. Appointment of External Auditors for FY 2016/17.................................................

5. Maximum Liability for FY 2016/17................................................................................

1CPA SACCO Annual Report 2015/2016

2 CPA SACCO Annual Report 2015/16

PART 1 ORGANISATIONAL

INFORMATION


1.0. WHO WE ARE1.1. Back Ground

CPA SACCO is a brainchild of the Members Service Committee of the Council of the ICPAU. It was formed by Accountants in a promoters’ meeting on 31 July 2013. It was registered with the Registrar of Cooperatives on 4th October 2013 under REG No. 10417/RCS. The main purpose of the SACCO is to provide members with Savings, Loans and related services like investment platform.

The current membership stands at 305 with an asset base of UGX 400 million. The detailed financial position and performance is set out in the audited financial statements. We look forward to transforming this SACCO into a bigger financial institution for the Certified Public Accountants of Uganda.

1.2. Vision “To become a benchmark of Accountants’ business investments globally.”

1.3. Mission“To be our members’ partner of choice in providing quality financial services to meet their business and personal financial needs.”

1.4. Core ValuesIntegrity: The business is run with utmost integrity, presenting all our SACCO operations in an accurate and timely manner.

Professionalism is always observed to attract and retain the confidence of our members and other stakeholders.

Teamwork: CPA SACCO maintains a working environment of openness, trust and mutual respect and ensures that each team member feels that his/her contribution is valued.

Member Focus: quality financial services are offered while upholding the member as the owner, user, funder, controller and prime beneficiary of CPA SACCO,

1.5. Membership categories The following are eligible to join the CPA SACCO family as outlined;

1. Member of ICPAU.2. CPA graduates.3. Staff of ICPAU.4. AATU Members, ATC.5. Staff of the CPA SACCO after serving the probation.

1.6. Why join the CPA SACCO? The SACCO benefit members in many ways including;


• Creation of savings culture among the members• Achieving Professional network throughout the country.• Develop together – like Obama puts it, “together we can”.• Creating a pool of funds easily accessible.• Access to loans at affordable interest rate of 1.5% per month.• Shorter loan processing cycle.• Accumulating personal savings with an interest reward of 6% per annum Prorata.• Earn dividends on shares.

1.7. What we offerWe have a variety of products from which a member may choose basing on his/her choice.

1.7.1 Savings Products

• Regular Savings Account• Special /Target Savings Account• Minor and Spouse Savings Account• Fixed Term Deposit Account• Group savings Account

1.7.2 Loan Products

• Ordinary Member’s Loan• Salary Loan• Emergency Loan• Business loan• School fees loan• Weekend loan

1.8. Ours Service Providers.As any other business, we have our business partners who enhance our service delivery and these include;

Service Provder Name/Address

Insurers Jubiliee Life Insurance, Jubiliee Insurance Center, West Podium’Plot 14 Parliament Avenue P.O.Box 7122 Kampala

Bankers

Centenary Rural Development Bank LtdP.O. Box 1892 Kampala, Plot 3A2-3A3, Kampala, Uganda

Housing Finance Bank LtdKampala Road Branch, P.O. Box 1539 Kampala

Auditors J.b Musisi and Associates (Certified Public Accountants)Plot 214, Rubaga Road Access Building, Room No. 503, P.O. Box 23191 Kampala


Accounting Soft Ware Support Pearl Accounting Solutions LtdBuganda Road Flats Block 668 2nd FloorP.O. Box 36095, Kampala

1.9. Key Stake HoldersThe following are the major key stake holders of the CPA SACCO Ltd;

• Members• Members to the Institute of Certified Public Accountants.• Government and regulatory bodies• Staff• Bankers• Business competitors• Apex Institutions (UCSCU/UCA)• Media

2.0. CORPORATE GOVERNANCE STATEMENTCPA SACCO ensures that its operations and structures are governed by clearly defined principles of Corporate Governance to ensure good governance, transparency, full disclosure and accountability to all stake holders as stipulated in the Cooperative Societies Act Sec. 29, section 26 of the cooperative regulations and the SACCO bylaws.

The SACCO holds the Annual General Meeting every financial year whose aim is to foster a culture of compliance to the best practices within the Cooperative sector in Uganda. The Annual General Meeting (AGM) is the supreme organ of the society as provided under the Cooperative Societies Regulation of 1992 which governs the SACCO operations of the cooperatives in Uganda.

2.1. Members’ ResponsibilityIn the AGM members are mandated to elect Board and SUPCO members and appoint External Auditors. Therefore, holding the Board responsible and accountable for effective corporate Governance and accountability to members. At this Annual General Meeting members will be electing the new Board and Supco democratically (one person one vote) as stipulated in section 18 of the the Cooperative Societies Act cap 112 together with our Bylaws.

2.2. CPA SACCO Board MembersThe Board comprise of seven elected members with a variety of skills and experience required to steer and guide the members on overall objective of the society. Its responsibility is to provide strategic direction, to act on behalf of the society, evaluate performance, supervise management and report to members in the AGM. Through their formal meetings they are able to pass resolutions, flow up implementation, evaluate and control any decision and it is one of the ways through which the Board members’ performance can be measured. The Board members that served in office during the reporting period are:


MEMBERS’ ATTENDANCE FOR THE FINANCIAL YEAR 2015/2016NO BOARD MEMBER 2014/2015 2015/20161 CPA Mugume Christine 23/24 17/202 CPA Mwase Daniel 13/24 09/203 CPA Namubiru Faridah 12/24 08/204 CPA Agnes Biryetega N 13/24 14/205 CPA Kawuma Joseph 08/24 07/206 CPA Oola Simon 18/24 12/207 Godfrey Neema 14/24 12/20

2.3. Board Committees:The Board appointed and operationalized the loans committee, finance and investment committee which focus on the major operational guidelines with loan and investment management decisions for the SACCO to obtain the maximum returns desired.

2.4. Sustainability ReportThe Board and management are committed to sustainability which can be evidenced not only in financial performance but also in the member’s relations, employee satisfaction, improvement in service delivery and customer service. This has resulted in sustainable and steady growth of the SACCO.

To us, Customer service include needs identification, analysis and response to members in the most effective way within and outside the SACCO premises.

In addition to the above, if sustainability is to be achieved, there has to be continuous membership and financial growth. This can only be achieved through continuous;• Savings mobilization• Membership mobilization• Sensitization and mobilization meetings• Marketing • And Training

2.5. AffiliationThe CPA SACCO is a member of Uganda Cooperative Savings and Credit Union (UCSCU) which is the apex body of all the SACCOs in Uganda.

2.6. Managing Strategic ObjectivesThe Board manages strategic objectives by continuous review of the strategic plan. Below is the highlight of the objectives, strategies and performance indicators.

OBJECTIVE STRATEGY PERFORMANCE INDICATORSTo grow, develop and retain members in the SACCO

• Utilizing the ICPAU forum to sensitize and recruit members.

• Personal selling

• Member education.

• Develop a community strategy.

• Membership grew from 230 to 305 members which is 32% growth.

• Produced an updated brochure which has been circulated to members.

• Frequent ICPAU seminars attendance by management.

• Customized emails reminding members to transact.

• Allocation of SACCO members to the Board for individual follow-ups.


Business development; share capital, savings and loan portfolio growth

• Provide competitive return on capital.

• Provide competitive return on savings

• Provide a variety of loan products.

• Provide friendly interest rates.

• Share capital growth from UGX 73 million to UGX 134 million an 85% growth.

• Growth in savings from UGX 81 to UGX 188 million which is a 132% growth.

• Introduction of other savings products.

• Growth in total income from UGX 17 million to UGX 46 million which is a 275% growth.

• Growth in loan portfolio from UGX 71 million to UGX 216 million which is a 205% growth.

Institutional development

• Adopt working model.

• Develop communication model.

• Handled the recruitment process for 2 posts.

• Installed an accounting system.

• Effective online communication.

• Consultancy expenditure on Human resource professional.

• Engagement in training programs.

• Attendance of the ICPAU seminars by management.

• Capacity building program.

Partnership and collaboration

• Obtain information relating to key development stakeholders

• Attained Membership to UCSCU

• Payment of annual subscription to UCSCU.

2.7. RISK MANAGEMENTAvailing financial services to members involve significant risk identification, assessing and mitigating of the risks, which is a key priority to CPA Sacco. The Sacco has comprehensive risk governance mechanism in place covering accountability, oversights, and measures and reporting.

The Board takes full control over all ascertained risk factors and endeavors to reduce them to acceptable levels. For instance; • Liquidity risk is managed by managing and monitoring investments effectively and regularly.• Operational risk is managed by ensuring implementation of all policies.• Credit risk is dealt with through life insurance cover for all loans and regulating loan amounts

issued to members basing on the findings of the loans committee.• Compliance is by adherence to all regulatory requirements in reference to the Cooperative

Societies Act, Cooperative Societies Regulation, Bylaws and policies.• Reputation risk is managed with diligence of all members and associates of the Sacco • Information risk is dealt with by continuous information updates and maximum security for

confidential matters.


2.8. Organizational Chart

AGM

VETTING COMMITTEE

SUB COMMITTEES

•Loans Committee

•Education & Mobilization Committee

•Finance & Investment Committee

SUPERVISORY COMMITTEE

BOARD

GENERAL MANAGER

ACCOUNTANTLOANS OFFICER RELATIONSHIP/ MARKETING OFFICER


2.9. THE BOARD MEMBERS

CPA Mugume Christine Chairperson

CPA. Mwase Daniel CPA. Namubiru CPA Agnes BiryetegaVice Chairman/ Treasurer Gen. SecretaryChairman Loans Committee

CPA. Oola Simon CPA. Kawuma Joseph Mr. Neema Godfrey Member Member Member

2.10. SUPCO MEMBERS

CPA Ochan Bernard CPA Viko C. Macheline


PART 2

THE 3RD AGM AGENDA

AGENDA FOR THE 3RD ANNUAL GENERAL MEETING SCHEDULED FOR


28 OCTOBER, 2016

1. Adoption of the Agenda

2. Opening prayer

3. Admission of New members.

4. Minutes of the 2nd Annual General Meeting

5. Presentation of Reports

• Report of the Board

• Adoption of Audited Financial statements for FY 2015/2016.• The SUPCO report FY 2015/2016

• The Budget projections and Annual work plan for 2016/2017

6. Matters arising from (5) above7. Elections of new BOD members and SUPCO8. Speech-Guest of honor9. Closure


1.0. ADMISSION OF MEMBERS

LIST OF ELIGIBLE MEMBERS TO BE ADMITTED AT THE CPA SACCO 3RD AGM

NO MEMBERSHIP NAME STATUS SHARE CAPITAL MEMBERSHIP

1 CSM/0211 Ailigat Rose Okello ICPAU MEMBER 700,000 150,0002 CSM/0217 Drici Robert Golli ICPAU MEMBER 100,000 150,0003 CSM/0218 Namara Winifred ICPAU MEMBER 100,000 150,0004 CSM/0220 Mbabazi Bamuhigire Sarah ICPAU MEMBER 200,000 150,0005 CSM/0222 Amuge Mary ICPAU MEMBER 600,000 150,0006 CSM/0223 Kawasiima Christine ICPAU MEMBER 200,000 150,0007 CSM/0224 Otete Albert ICPAU MEMBER 1,000,000 150,0008 CSM/0229 Nantongo Sarah ICPAU STAFF 100,000 150,0009 CSM/0231 Nyapendi Keto Kayemba ICPAU MEMBER 100,000 150,000

10 CSM/0232 Mugabe Stephen ICPAU MEMBER 100,000 150,00011 CSM/0237 Musisi Bosco ICPAU MEMBER 100,000 150,00012 CSM/0238 Ssentamu Brenda ICPAU MEMBER 1,000,000 150,00013 CSM/0239 Otim Gilbert Denis ICPAU MEMBER 100,000 150,00014 CSM/0240 Nalwanga Brenda Irene ICPAU MEMBER 500,000 150,00015 CSM/0241 Kikome Christine ICPA STAFF 100,000 150,00016 CSM/0242 Yiga Isdore W. Ssalongo ICPAU MEMBER 100,000 150,00017 CSM/0243 Owino Rosemary ICPAU MEMBER 400,000 150,00018 CSM/0244 Akonye Okonye Fixon ICPAU MEMBER 300,000 150,00019 CSM/0245 Biraaro Perpetua K ICPAU MEMBER 300,000 150,00020 CSM/0246 Kizza Mariam Okonye ICPAU MEMBER 100,000 150,00021 CSM/0247 Steven Enabu Etyeku ICPAU MEMBER 500,000 150,00022 CSM/0248 Lutwama Rogers James ICPAU MEMBER 100,000 150,00023 CSM/0249 Tumusiime Denis ICPAU MEMBER 100,000 150,00024 CSM/0250 Richard Byarugaba ICPAU MEMBER 10,000,000 150,00025 CSM/0251 Ssimbwa Phiona ICPAU MEMBER 300,000 150,00026 CSM/0252 Ahumuza Peter ICPAU STAFF 100,000 150,00027 CSM/0253 Nambajjwe Veronica ICPAU MEMBER 100,000 150,00028 CSM/0254 Munyambabazi Emmanuel ICPAU MEMBER 200,000 150,00029 CSM/0255 Mirembe Rebecca ICPAU MEMBER 3,000,000 150,00030 CSM/0256 Nanyange Justine T ICPAU MEMBER 1,000,000 150,00031 CSM/0257 Orone Innocent ICPAU MEMBER 100,000 150,00032 CSM/0258 Wanyama Mark ICPAU MEMBER 500,000 150,00033 CSM/0259 Namungo Justine ICPAU MEMBER 100,000 150,00034 CSM/0260 Annet Kyankunda ICPAU MEMBER 100,000 150,00035 CSM/0261 Nyachwo Patricia ICPAU MEMBER 1,000,000 150,00036 CSM/0262 Mary Violet Kajjumba CPA GRADUATE 500,000 150,00037 CSM/0263 Violet Nabakembo Corry ICPAU MEMBER 200,000 150,00038 CSM/0264 Ssenjobe charles Sssentongo ICPAU MEMBER 200,000 150,00039 CSM/0265 Namono Solome ICPAU MEMBER 100,000 150,00040 CSM/0266 Muyinda Gelard ICPAU MEMBER 300,000 150,00041 CSM/0267 Ediomu David Tiimothy ICPAU MEMBER 100,000 150,00042 CSM/0268 Ediomu Moses ICPAU MEMBER 100,000 150,00043 CSM/0269 Khisa Moses Mitielo ICPAU MEMBER 100,000 150,00044 CSM/0270 Josephine Igoe ICPAU MEMBER 500,000 150,000

45 CSM/0271 Robert Jack Busuulwa ICPAU MEMBER 100,000 150,000


46 CSM/0272 Oyesiga Onesmus ICPAU MEMBER 500,000 150,000

47 CSM/0273 Agaba Allen CPA GRADUATE 100,000 150,000

48 CSM/0274 Kamuluguya Ronald ICPAU MEMBER 500,000 150,000

49 CSM/0275 Nseka Kiyaga Dorothy ICPAU MEMBER 100,000 150,000

50 CSM/0276 Ocheng David ICPAU MEMBER 1,000,000 150,000

51 CSM/0277 Kimera Patrick Joel ICPAU MEMBER 100,000 150,000

52 CSM/0278 Nsumba Lamech ICPAU MEMBER 100,000 150,000

53 CSM/0279 Nyanzi Hassan Sulaiman ICPAU MEMBER 1,100,000 150,000

54 CSM/0280 David Musoke ICPAU MEMBER 100,000 150,000

55 CSM/0281 Kizito Paul ICPAU MEMBER 100,000 150,000

56 CSM/0282 Wabomba Dennis ICPAU MEMBER 100,000 150,000

57 CSM/0283 Sserunkuuma David Erish ICPAU MEMBER 100,000 150,000

58 CSM/0284 Kyambadde Peter ICPAU MEMBER 500,000 150,000

59 CSM/0285 Nakkazi Elsie ICPAU STAFF 100,000 150,000

60 CSM/0286 Adrale Julie ICPAU STAFF 100,000 150,000

61 CSM/0287 John Linnon Ssengendo ICPAU STAFF 100,000 150,000

62 CSM/0288 Akuza Joseph ICPAU MEMBER 100,000 150,000

63 CSM/0289 Lubega Yiga Joseph B ICPAU MEMBER 100,000 150,000

64 CSM/0290 Mwebaze Jack ICPAU MEMBER 100,000 150,000

65 CSM/0291 Muhumuza Charles ICPAU MEMBER 100,000 150,000

66 CSM/0292 Nannyomo Hadijah ICPAU MEMBER 200,000 150,000

67 CSM/0293 Abooki Roset ICPAU MEMBER 300,000 150,000

68 CSM/0294 kavumbu Samuel Kamya ICPAU MEMBER 200,000 150,000

69 CSM/0295 Nanyanzi Asiat ICPAU MEMBER 100,000 150,000

70 CSM/0296 Wabwire Thomas Edimond ICPAU MEMBER 100,000 150,000

71 CSM/0297 Tumuranzye Joab ICPAU MEMBER 1,000,000 150,000

72 CSM/0298 Jjingo Raymond ICPAU MEMBER 300,000 150,000

73 CSM/0299 Ashim Tumwebonire ICPAU MEMBER 100,000 150,000

74 CSM/0300 Obeele Edward ICPAU MEMBER 100,000 150,000

75 CSM/0301 Byekwaso Godfrey ICPAU MEMBER 500,000 150,000

76 CSM/0302 Walugyo Samuel ICPAU MEMBER 100,000 150,000

77 Csm/0303 Mbabazi Annet ICPAU MEMBER 100,000 150,000

78 CSM/0304 Natoolo Annet Kaweesa ICPAU MEMBER 600,000 1500,000


2.0. MINUTES OF THE 2nd ANNUAL GENERAL MEETING OF THE CPA SACCO HELD ON WEDNESDAY, 21st OCTOBER 2015 AT 2.00PM, AT GRAND IMPERIAL HOTEL

AGM 2/1.1 ATTENDANCE NO MEMBER NO. NAMES

1 CSM/0015 CPA Mugume Christine

2 CSM/0020 CPA Mwase Daniel

3 CSM/0023 CPA Namubiru Faridah

4 CSM/0025 CPA Nanteza Agnes Biryetega

5 CSM/0027 Mr. Neema Godfrey

6 CSM/0012 CPA Kawuma Joseph

7 CSM/0029 CPA Ochan Bernard

8 CSM/0041 CPA Viko Mercheline

9 CSM/0193 CPA Makwasi Christopher

10 CSM/0119 CPA Lutaaya Jacqueline Busingye

11 CSM/0136 CPA Namakula Margaret

12 CSM/0137 CPA Dankaine Innocent

13 CSM/0178 CPA Twinomujuni Michael

14 CSM/0138 CPA Mugeni Andrew Mauka

15 CSM/0144 CPA Opio Williams Ajoka

16 CSM/0218 CPA Ndyabawe Alice

17 CSM/0182 CPA Nangalama Daniel

18 CSM/0005 CPA Musoke David Bulega

19 CSM/0108 CPA Namawanda Ruth

20 CSM/0117 CPA Nkajja Derick

21 CSM/0184 CPA Sameer Thakkar

22 CSM/0093 CPA Muwanga John. F. S

23 CSM/0113 CPA Lwetabe Henry

24 CSM/0130 CPA Kibirige Timothy

25 CSM/0047 CPA Nakamya Maureen

26 CSM/0125 CPA Kyewalabye Rogers

27 CSM/0077 CPA Kabuchu Alfred

28 CSM/0050 CPA Orobia Laura Aseru

29 CSM/0116 CPA Tirwakunda Deus

30 CSM/0101 CPA Oyera Carolyn Papoak

31 CSM/0069 CPA Mpwerirwe Obed

32 CSM/0186 Mr. Kugonza Richard

33 CSM/0011 CPA Kawere Andrew Bradford

34 CSM/0217 CPA Ntulume Samuel

35 CSM/0219 CPA Musoke Esta

36 CSM/0196 Mr. Biine Cones


AGM 2/1.2 ABSENT WITH APOLOGY1 CPA Oola Simon 2 CPA Ntangaare John Bosco3 CPA Musana Samuel4 CPA Teega Susannie K5 CPA Ocama Emmanuel6 CPA Nakuhu Grace7. CPA Kwizina Thomson8 CPA Okot Davidson

AGM 2/1.3 IN ATTENDANCE1 Nabakka Christine 2. Ndiraromukama Sylvester3. Musisi Bosco

AGM 2/2 ADOPTION OF THE AGENDAThe Agenda was adopted as follows:1. Adoption of the Agenda2. Prayer and National Anthem3. Opening Remarks4. Admission of New Members5. Approval of Minutes the 1st Annual General Meeting and presentation of Action report.6. Communication from the Chair and presentation of BOD Report for FY 2014/15. 7. Presentation of Financial Statements and the Auditors Report for FY 2014/15.8. Presentation of Annual Work plan & Budget for FY 2015/16.9. Presentation of Supervisory Committee Report for FY 2014/1510. Presentation of amendments to SACCO Bylaws11. Fixing Maximum Liability for the FY 2015/1612. Appointment of External Auditors for FY 2015/1613. Matters arising from (6 - 9) above 14. Guest of Honor’s Speech 15. Closure of meeting

Motion to adopt the Agenda was moved by CPA Laura Orobia Aseru and seconded by CPA John Muwanga.

AGM 2/3 PRAYER AND NATIONAL ANTHEM

Members Prayer

• Sang the National Anthem.• Led by CPA Christine Mugume.

Action by

AGM 2/4 OPENING REMARKS Program Coordinator

Welcomed informed

• Members to the 2nd AGM.• Members that the quorum required (in accordance with the

bylaws) had been attained and therefore the meeting could start.

Vice chairperson


The ChairpersonCalled • The meeting to order and welcomed members and thanked them for

their participation in the SACCO activities.

AGM 2/5 ADMISSION OF NEW MEMBERS

Presented

Members Inquired

Were informed

Motion Resolved

• A list of members eligible for admission to the CPA SACCO. • Whether due diligence had been undertaken before registering

members. • That in addition to the specifications in the bylaws about admission

requirements, only members in good standing with the Institute could be admitted.

• Moved by CPA Bernard Ochan to admit new members.• Seconded by CPA Innocent Dankaine• To admit 76 members to CPA SACCO.

Neema Godfrey

AGM 2/6 MINUTES OF THE 1st ANNUAL GENERAL MEETING AND PRESENTATION OF THE ACTION REPORT

Presented Motion

AdoptedSigned

• Minutes of the 1st Annual General Meeting (AGM).• To adopt the minutes was moved by CPA Bernard Ochan and

seconded by CPA Innocent Dankaine.

• The minutes as a true record of the proceedings of the 1st AGM.• The minutes of the first AGM.

Chairperson and secretary

ACTION REPORTPresented

Agreed

• The following matters from the minutes of the 1st AGM o Complete development of relevant Policies. o Continue mobilizing and growing the SACCO.o Build relationships with key strategic partners.o Invest in long term business ventures.o Procure and put in place an IT platform.o Appoint mobilizers in every sector or institution.o Develop more products.

• To adopt the Action Report.

Godfrey Neema

Members

AGM 2/7 COMMUNICATION FROM THE CHAIR AND PRESENTATION OF BOD REPORT

The Chairperson

Thanked

Introduced

Informed members that

Members for saving their resources with their own CPA SACCO and for effective participation to ensure good governance.

The Institute for continuing to house the SACCO. The Guest of honor for accepting the invitation and sparing his

precious time to grace the meeting.

Members of the BOD, the Administrative Officer and thanked them for their commitment.

Members of the Supervisory Committee (SUPCO) and briefly explained their role of keeping the BOD in check to ensure proper governance and accountability SACCO.

The SACCO currently has one employee Ms. Christine Nabakka.


Presented

Noted that

Reported that

The way forward

PRESENTATION OF BOD REPORT A report of the BOD highlighting the performance of the SACCO.

The SACCO had performed as follows in the FY 2014/15:Performance indicator As at October 2014 (UGX) As at 16/10/2015 (UGX)

2014 2015Share Capital 51,350,000 97,300,000

Savings 25,455,000 102,649,618 Membership Fees 16,700,000 29,000,000 Loan Disbursements - 71,000,000

Treasury Bills (23rd July) - 50,000,000

96,255,000 349, 949,618 CPA SACCO had introduced new Products which are open to

members. The following key activities were undertaken during the year: Enhanced SACCO management systems and structures. Developed and completed most of the Policy documents. Procured and installed an accounting package. Grew the SACCO membership from 145 to 230. The BOD developed a working relationship with key strategic

partners for purposes of knowledge sharing. o Became a member of UCSCU. o Undertook skills development trainings o At the request of the BOD, a presentation was made by CEO of

Mhasibu SACCO (ICPAK member) and CEO of Y-Save at ICPAU’s annual seminar in Sept 2015.

The SACCO was faced with the following challenges during the FY:o The SACCO business is still at low levels could not hire

additional human resources as planned. o Saving by members is still low. o Members are not enthusiastic to attend the general meetings

limiting the business of the SACCO to a very small number. • The Board shall focus on the following key areas in order to

develop and strengthen the SACCO: o Membership growth and development o Savings and buying more shares to create capital base for long

term investments. o Invest in long term business ventures o Member training and awareness of new products

AGM 2/8 PRESENTATION OF FINANCIAL STATEMENTS AND AUDITORS REPORT

Presented The Financial statements to members. CPA Faridah Namubiru

Auditor’s Report

Presented

Adopted

• The auditor’s report prepared by J.B Associates.

• The financial statements and external auditor’s report

CPA Bosco MusisiMembers

AGM 2/11 PRESENTATION OF ANNUAL WORK PLAN & BUDGET FOR FY 2015/16.Presented ObservedMotion Approved

• The Work plan & budget.• That it was a fair budget.• To adopt the work plan and budget.• Was seconded.• The work plan and budget for the FY 2015/16.

CPA Faridah Namubiru Mem-bers CPA Sameer Thakkar CPA Daniel NangalamaMembers


AGM 2/12 PRESENTATION OF SUPERVISORY COMMITTEE REPORT

Presented Appreciated

Noted that

Reported that

• The SUPCO report highlighting their key findings and recommendations.

• The BOD for their efforts towards development of the SACCO. • Compared to last year, the level of compliance is over 80%. • System update:

Accounting system had been procured with no service contract in place

CPA Bernard Ochan

Advised

Reported that

Noted that

Advised

The BOD

• Data migration into the new systemThere was no proper guidance on migration of data to the new accounting system. It would have been easier to start with the opening balances other than capturing all information from the previous financial year.

• The Investment Policy had not been completed yet investments had been made in fixed deposits and Treasury Bills.

• Members’ register:Thirteen (13) of the members in the members’ register had partly paid up. The BOD to follow up the said individuals.

Clarifiedthat:• A signed contract with Pearl Accounting Solutions exists.• The system purchased in June 2015 was not yet fully operational,

was at testing phase. • An Investment policy had been drafted and being reviewed by the

BOD.• Loan approvals are done on-line though some approvals had not

been attached on the application forms. • The 13 individuals on the members’ register were founding

members who paid part of the membership fee and efforts are being made to follow them up.

CPA Bernard Ochan

AGM 2/13 AMENDMENT OF SACCO BYE LAWSPresented Explained

Proposed

Members

• A memo to the members in amendment of the bylaws.• That currently the membership of the CPA SACCO comprises

of registered members of ICPAU and staff of the Institute only.

• That membership eligibility criterion be expanded to cater for other related categories as illustrated below.

No. Membership CategoryEffective Date

1. Members of the Association of Accounting Technicians of Uganda01/01/16

2. CPA Graduates01/01/16

3. Staff of CPA SACCO (After completing probation)01/01/16

Godfrey Neema


Responded

Moved the motion

• Suggested that students should be incorporated in the SACCO.

• That it was not advisable to include students because many of them tend to be bad debtors at training Institutions.

• Accountants from other accountancy organizations should be encouraged to become members of ICPAU, since it is open to all.

• To include the following categories to the membership of the CPA SACCO Ltd.

o Staff of CPA SACCOo CPA Graduateso Members of the Association of Accounting

Technicians of Uganda

• Seconded the motion

Godfrey Neema

CPA Jacqueline Lutaaya

CPA Alfred Kabuchu

AGM 2/14 FIXING MAXIMUM LIABILITY

Informed

Proposed

Moved a motion

• That in consideration of the envisaged level of business, the BOD sitting on 13 October 2015 recommended to maintain the Maximum Liability of CPA SACCO Ltd for the FY 2015/16 at 500M.

• To members that the maximum liability for FY 2015/16 be maintained.

• To adopt the proposed maximum liability in accordance with borrowing regulations.

• Seconded motion.

Godfrey Neema

CPA Andrew Kawere

CPA Daniel Nangalama

AGM 2/15 APPOINTMENT OF EXTERNAL AUDITORS FOR FY 2015/16

The BOD proposed that

Informed

Moved a motion

• J.B Musisi & Associates, the outgoing external auditors are re-appointed.

• That the Finance Act allows for 3 years. If the auditor expressed interest and has not had problems, then members can consider them for re-appointment.

• To re-appoint J.B Musisi & Associates as the external auditors.

• Seconded motion.

Members

Members

CPA Obed Mpwerirwe

CPA Jacqueline Lutaaya

AGM 2/16 MATTERS ARISING FROM VARIOUS PRESENTATIONS

2.16.1Attendance of meetings

Responsibility and accountabilityMembers advised the BOD

2.16.2

Governance and BOD performance:• To avoid an impression that some BOD members do not attend

meetings, all meetings attended should be recorded.

• Appreciated the BOD for the commendable work however, emphasis should be put on due diligence to avoid such glaring errors in reports presented to members.

• To seek technical expertise from members in regard to Policy formulation.

• To contact members who are willing to volunteer in supporting the BOD work.

• To constitute other relevant working committees and operationalize them.


Members observed

Resolved that

Members tasked the BOD

Business development:

• That savings are still on a low side.

• We introduce a mandatory savings product.

• Exit rules should be reviewed and presented for members’ input.

• To come up with a write up on how this should be operationalized.AGM 2/17 GUEST OF HONOR’S SPEECHThe CEO of Uganda Cooperative Savings and Credit Union of Uganda (UCSCU) made the following remarks:Informed members • That UCSCU is an apex body for all SACCOs in Uganda, of which CPA

SACCO is a member. It is regulated & supervised by the Ministry of Trade, Industries and Cooperatives. Membership is at 1237. It has a BOD and management team distributed across the country in all regions. The Headquarters is at Maganjo.

• It is not easy to manage a SACCO for professionals like Accountants. He therefore commended the BOD for their efforts. He advised all SACCO members to be involved in planning and other SACCO activities.

Mr. Ndiraromukama

Noted that

Advised

Informed

Reported

Thanked

Pledged

• The most important reason for the AGM was to transparently account to members. For some SACCOs, it takes more than 3 years to get a surplus; the reported profit of 3.8m in a year is a good achievement.

• SACCO strength is derived from numbers. Therefore, it is beneficial to consider other options and to benchmark.

• The Union discourages its members from sourcing external funding (especially from money lenders and commercial banks) because of the soaring interest rates. This could easily lead to the collapse of the SACCO.

• According to the audited financial statements, on average each member has bought only 1.5 shares and savings of 15,000 per month, in the last 2 years. This is deplorable. If we think saving is important we have to change the game.

• Members need to agree on a minimum monthly saving so as to grow the SACCO. If each of the 200 members bought 5 shares each year in 5 years, the SACCO would have 500m (if that was a target). The benefit of using own funds is that interest on savings is paid to members. Members share dividends from the increased profits instead of paying this to a 3rd party (lender), and the interest rates are much lower than those for commercial banks. That is the beauty of being a Cooperator.

• That training is one of the cooperative principles, this should involve training of the BOD, members and staff.

• Cooperators that there will be an international conference this year in Kenya-Mombasa from 27-30 October 2015, the SACCO is encouraged to participate.

• That UCSCU partnered with a Kenyan Insurance Co (CIC) which offers Risk Management Insurance to SACCOs. There’s an opportunity to buy shares in CIC starting October 2015.

• The CPA SACCO BOD for affiliating with UCSCU, for they stand to benefit from synergies in a bigger industry of SACCOs.

• To provide free training to the BOD and staff of CPA SACCO and requested them to send training schedule for proper planning.

Mr. Ndiraromukama

AGM 2/16 CLOSURE


The Chairperson • Thanked the guest of honor for gracing the AGM. She noted that savings of UGX25,000 is a challenge but it could be because of a poor savings culture in Uganda.

• If we saved enough, then numbers would not matter.• She also thanked him for the training offer.• Informed members that the BOD had planned to issue share

certificates but got a human resource challenge and will send them at a later date.

• Thanked all members for honoring the invitation.• Officially declared the meeting closed at 6.50pm.

Christine Mugume

------------------------------- ---------------------CHAIRPERSON SECRETARY

ACTION REPORT FROM THE 2ND AGM

RESOLUTION STATUS ACTION TAKEN

Get assistance for better financial presentations DONE Installed a system and it is fully operational.

Constitute and operationalise all BOD committees DONE Constituted two committees thus; the investment and

finance committee and the loans committee.

Loans committee should review the policy and their operations Done Information updated and circulated in the Brochures

to all members.

Finalise and approve the investment policy Done Investment policy approved by the BOD.

Set mandatory monthly savings and seek members’ approval for implementation. Done

The Board set UGX. 25,000 as a minimum mandatory monthly saving for every member. It is waiting for members’ approval for implementation.

Revisit exit rules, review, formalise them. On going Update is contained in the Board Report.

Make timely strategic plan review in conjunction with the annual work plans. Done Continuously done report available in the title

managing strategic objectives.

Bench mark with other SACCOs for increasing numbers. Done Visited Y-save and the UN SACCO and benchmarked on

the SACCO development strategies.

Schedule training plans for effectiveness and to exploit the UCSCU training opportunities. On going Board members were trained and management

attends the UCSCU trainings periodically.


3.0. REPORT OF THE BOARD

Guest of Honor,Distinguished Invited Guests, Esteemed CPA SACCO membersFellow co-operators, Ladies and Gentlemen,

On behalf of the Board and management, I am so humbled to welcome you to the 3rd Annual General Meeting of the CPA SACCO Limited. I congratulate you upon reaching our third year of operation, many do not live to see even their 1st birthday, and we have achieved it. However, we need to keep the fire burning. As members of CPA SACCO family, this is where we put our heads together for a common goal to review our performance and prepare for the progress in our CPA union to enrich ourselves while growing our professional SACCO.

In a special way, I take this opportunity to thank the Guest of Honour for accepting to bless this ceremony with his presence.

Esteemed delegates, let us observe a minute of silence to remember one of our beloved members who passed on during the past year, the late Opowo Betty Okoth. May her soul rest in peace.

Allow me to inform you that the two year term period for the current Board and the SUPCO has expired, therefore, before the closure of this meeting we shall elect a new Board and SUPCO to lead the SACCO for the next two years (2016-2018) as provided for in our By-laws and the Cooperative Societies Act Cap. 112. Members will be elected in a democratic way of one member one vote subject to eligibility criterion that was circulated to you earlier.

The Board is comprised of 7 members three of whom have voluntarily retired that is the General Secretary and one ordinary Board member, which leaves 4 members eligible for one other term. For the purpose of ensuring continuity, at least some members of the outing Board have to be re-elected.

3.1. Resultsofthefinancialyear2015/2016The SACCO registered a surplus of UGX. 25,781,591 and the details are set out in the Audited financial statements. This was a very great achievement by the Board of directors and all of fellow cooperators.

Performance highlights (based on core Business Areas):We achieved a significant percentages growth in our core business areas as tabulated below;

Fund Item Cummulative 2014/15 Cummulative 2015/16 % age Growth

Share Capital 97,300,000 134,635,000 35%

Savings Portfolio 102,649,618 265,600,215 159%

Membership fee 29,000,000 43,950,000 52%

Loan Portfolio 71,000,000 213,083,820 200%

Investments 50,000,000 339,525,900 579%

Retained earnings 9,923,887 32,874,843 231%


3.2. Share Capital And Deposits;Our share capital increased significantly by 35% as reflected in the table above over a period of 2 years, Savings also grew significantly by 159%. Members’ assurance of 300% of share capital and 200% of saving regarding accessibility to loans had great influence on share purchase and increase in savings. The higher percentage growth in savings is probably due to growing saving culture which satisfies the reason for our existence.

3.3. Funding Mix:It should be noted that, the Sacco has raised sufficient funds to meet the current operations and investment needs. However, in case need arise beyond the available funds, the Sacco is allowed to access credit facilities up to 500 million which is the maximum liability as fixed at the 2nd Annual General Meeting. Below is the table showing the fund mix.

PERCENTAGE PROPORTIONS OF THE FUND MIX

FUND AMOUNT PERCENTAGEMembers Equity 131,450,000 35.6%Share transfer reserve 1,846,907 0.5%Development reserve 1,846,907 0.5%Educational reserve 369,381 0.1%Retained earnings 32,874,843 8.9%Trade and other payables 9,737,464 2.6%Members’ savings 190,424,877 51.5%Income tax payable 795,888 0.2%Deferred tax 98,618 0.0%TOTAL 369,444,885 100.0%

Figure 1 FINANCING MIX OF CPA SACCO Ltd AS AT 30 JUNE 2016

Members Equity36%

Share transfer reserve

0%

Ddevelopment reserve

0%Educational

reserve0%

Reta ined earnings

9%Trade and other

payables3%

Members' savings

52%

Income tax payable

0%Deferred tax

0%

AMOUNT

Members Equity Share transfer reserve Ddevelopment reserve

Educational reserve Retained earnings Trade and other payables

Members' savings Income tax payable Deferred tax


3.4. Income AnalysisOur income significantly increased from 17 million to 46 million as reflected in the detailed financial report. This reflect a 375% growth and this has been due to increased level of business. Members being the source of income and funding, both areas should be doubled such that they are able to increase our income in the next financial year to achieve better growth rates within ourselves as professional accountants of Uganda.

3.5. Credit OperationsWe were able to increase our loan portfolio from UGX 71 million to UGX 237 million. This increased the level of interest income from UGX 71 to UGX 213 million in the financial year 2015/2016. Members are encouraged to borrow from their own SACCO which is a way of enriching themselves by earning interest on savings, growing their professional SACCO and investment at large. The number of loans also increased from 7 to 18 loans thus increasing the beneficiaries. However, the number of loan applications is still low compared to membership in the SACCO.

YEARS INTEREST INCOME OTHER INCOMES

2015 2,360,964 12,799,805

2016 29,899,716 16,134,000

3.6. Expenditure AnalysisThe Board managed to maintain operating expenses as low as possible by utilizing the available opportunities to do business. Lot more has been saved in terms of rent which would be paid and the marketing expenses are still low because of the opportunity to utilize the ICPAU platform at minimized costs. The operating costs increased especially the interest expense which is an achievement resulting from implementing the savings policy, the administrative and employee expenses also increased but the increase is not proportional to the increase in income. This justifies the efforts by the Board to cut operating costs as much as possible. Below is the summary of the expenditure for the SACCO.

YEAR INTEREST EXPENSE ADMINISTRATIVE EXPENSE EMPLOYEE EXPENSE

2015 0 4,727,672 6,848,000

2016 6,563,150 5,983,879 7,366,000

3.7. Membership AnalysisThe current SACCO membership stands at 305.The table below summarises the membership growth over the past three years of the SACCOs existance.

Year Members2014 1452015 2302016 305


MEMBERS ANALYSIS FOR 3 YEARS

0

50

100

150

200

250

300

350

Members

YEARS

MEM

BERS 2014

20152016

2014 2015 2016

3.8 Information Management SystemThe SACCO maintain its information using the Pearl Accounting Software which provides all information relating to members’ accounts and the details. It is also able to send system generated statements to the members and financial information from which the financial statements are drawn.

3.9. Achievements:Inthefinancialyear2015/2016weregisteredanumberofachievements.Thefiguresindicated below are up to October 2016;

1. Fully installed the accounting software, trained the staff and the BOD.2. The 2015/2016 Audited financial statements were fully based on the system generated

information.3. Revenue increased from UGX 17 million in 2015 to UGX 46 million in 2016.4. Cummulative short term investments from UGX 50 million in 2015 to 365 million in 2016.5. Cummulative loan disbursement from UGX 71 million in 2015 to UGX 328 million in 2016.6. Cummulative saving from UGX 102 million in 2015 to UGX 237 million in 2016.7. Signed a contract with Jubilee Insurance Company Ltd for credit risk cover against

disbursed loans.8. Increased membership from 230 to 305 members.9. Improved communication through system generated members’ statement.10. Implemented the savings policy and now we award interest on savings on a monthly basis11. Participated in financial reporting awards 2015.12. Developed and put in place the investment policy, share dividend policy and membership

policy

3.10. ChallengesDespite the evident improvement in the financial performance of the SACCO, we are still faced with challenges which are also crucial in gearing the level of income and business as well.

• Limited savings; based on 6 months, the average savings is 15 million and an average of 45 members save regularly. According to the table below, of 305 members each member saves 49,180/= per month by averaging the savings of 45 members only, what ould happen if we all saved.


Savings Analysis based on six months

Month Savings Number of Members January 12,200,000 30February 21,535,000 60March 14,701,666 40April 6,096,000 26May 15,771,877 50June 20,927,500 65Average 15205340.5 45

• Limited share capital purchase; we still have more than 18,500 shares out of the 20,000 authorized share capital, implying that the number of shares issued stands at 1,314 , at a membership 305, on verage, each member owns 4 shares.

• Limited human resource; only have one staff member in charge of all activities.• Limited loan applications by members; inability of members to transact with the SACCO.• Absence on monthly mandatory savings limits the amount of monthly deposits• Membership is still low as compared to the target market• Members inability to transact with the SACCO

3.11. Way forwardIn the FY 2016/17 we plan to implement the following:

• Upon approval by the members at this AGM, we shall implement the 25,000/= mandatory minimum monthly saving and also encourage each member to purchase at least one share per month. If this measure is embraced by all the existing members and the new ones to come, the SACCO will be guaranteed of UGX 2 billion in the next five years. With this kind of funding, the Board will be in position to undertake bigger and more viable investments for the benefit of members.

Five years’ projection for savings and share capital assuming 300 members only, at UGX 25,00 savings per month and 1 share per month for 5 consecutive years.

Fund Members Monthly Amount Year 1 5 YearsSavings 300 25,000 7,500,000 90,000,000 450,000,000 Shares 300 100,000 30,000,000 360,000,000 1,800,000,000 Total 125,000 37,500,000 450,000,000 2,250,000,000

• We strongly suggest to implement the 25,000 mandatory minimum monthly saving and at least purchase of one share by each individual per month. After five years this would guarantee 2 billion. However, this is a bottom line but members are encouraged to even go beyond and we grow our professional SACCO while enriching our selves

• We request all members to get involved in sensitizing and educating Accountants to have more members joining the SACCO remember numbers matter in any economic viable operations. We also request members to be ambassadors in all regions where they stay as we widen our market coverage.

• The second person will be recruited in the next financial year, however given the level of business the pay remains insufficient to maintain staff yet staff maintenance is a key factor for organizational growth.


• With the authority of the AGM we suggest that employment benefits like medical insurance and overtime is introduced to supplement the salary to motivate the staff to stay for long and grow the SACCO.

• Training and capacity building while focusing on efficiency and effectiveness of both the staff and the BOD members.

CONCLUSION:Once again, we thank you for entrusting us with the responsibility of the CPA SACCO leadership for the past two years up to this particular time. I would like to thank each of you for turning up to this 3rd AGM. Management and Board commits itself to continue working together to keep the positive growth trends of CPA SACCO as we prepare to transform this SACCO into a big financial institution, preferably the Accountant’s Bank as our dream stands.

Let’s all remain focused on our vision and mission as we pursue unlimited opportunities for our members. I therefore call upon you to come up and join the steering team (the Board) for new ideas to grow our SACCO.

In a special way, I would like thank the following;

• The Government of Uganda for fast tracking the revival of cooperatives in Uganda.

• The Ministry of Trade, industry and Cooperatives, for supporting us on legal and technical matters.

• Our partners like; ICPAU, Cooperative Alliance and UCSCU for supporting the cause of CPA SACCO.

I strongly believe, we shall achieve our dream as CPA SACCO members no matter how long it takes to do so.

I wish you good deliberations and a safe journey back home after the meeting,

God bless you all!

For and on behalf of the Board of CPA SACCO Limited

…………………………………CPA Christine MugumeBoard Chairperson


THE AUDITORS REPORT AND FINANCIAL

STATEMENTS FOR YEAR 2015/ 2016


CPA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

INDEPENDENT AUDITOR’S REPORT AND FINANCIAL

STATEMENTS

FOR THE YEAR ENDED JUNE 30TH, 2016

J.B Musisi & Associates (Certified Public Accountant) Access building Room 503, Plot 241 Rubaga Road, next to ORYX energies fuel station P.O. Box 23191 Kampala, Uganda Tel: + 0757-94-62-97 (Office) Mob: + 0772-44-68-30 Email:[email protected].


CPA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30TH 2016

1

GLOSSARY OF TERMS

TABLE OF CONTENTS 1 GLOSSARY OF TERMS 2 CPA SACCO LTD INFORMATION 3 1. INTRODUCTION 1.1 Background to the SACCO 4-5 2. AUDIT OBJECTIVES 2.1 Overall audit objectives 5 2.2 Specific audit objectives 5 2.3

2.3.1 2.3.2 2.4

Audit approach Financial Statements Internal Controls Audit scope

6 6

7 7

3. BOARD MEMBERS’ REPORT 8

4. STATEMENT OF BOARD’S RESPONSIBILITIES 9 5. INDEPENDENT AUDITORS’ REPORT ON THE FINANCIAL STATEMENTS 10-11

6. STATEMENT OF COMPREHENSIVE INCOME 12 7. STATEMENT OF FINANCIAL POSITION 13 8. STATEMENT OF CHANGES IN EQUITY 14 9 STATEMENT OF CASHFLOWS 15 10.

NOTES TO THE FINANCIAL STATEMENTS

16-26


1

GLOSSARY OF TERMS


2.3.1 2.3.2 2.4


6 6

7 7





16-26


1

GLOSSARY OF TERMS


2.3.1 2.3.2 2.4


6 6

7 7





16-26


1

GLOSSARY OF TERMS


2.3.1 2.3.2 2.4


6 6

7 7





16-26



2

CPA - Certified Public Accountants.

SACCO - Savings and Credit Co-operative Society

AGM -Annual General Meeting.

BOD -Board of Directors

ICPAU -Institute of Certified Public Accountants of Uganda

PAYE - Pay As You Earn.

URA -Uganda Revenue Authority.

MSC -Member Services Committee

BOU -Bank of Uganda



3

SACCO INFORMATION SACCO NAME: CPA Savings and Credit Co-operative Society Limited SACCO ADRESS: CPA SACCO LTD, Plot 58 Bukoto Street, Kololo P.O. Box 12464 – Kampala, Uganda Tel: +256 312 262 333 or +256 752 151 408 Email: [email protected] or [email protected] BOARD MEMBERS:

BANKERS: Centenary Rural Development Bank Ltd P.O. Box 1892 Kampala, Plot 3A2-3A3 AUDITOR: J.B Musisi & Associates (Certified Public Accountant) Access building Room 503, Plot 241 Rubaga Road, next to ORYX energies fuel station P.O. Box 23191, Kampala, Uganda Mob: + 0772-44-68-30/+0757-94-62-97 Email:[email protected]

NAME POSITION CPA Mugume Christine Chairperson CPA Mwase Daniel Vice Chairperson CPA Namubiru Faridah Treasurer CPA Nanteza Agnes Biryetega Secretary CPA Kawuma Joseph Member Mr .Neema Godfrey Member CPA Oola Simon Member LOANS COMMITTEE MEMBERS NAME POSITION CPA Mwase Daniel Chairperson CPA Namubiru Faridah Member CPA Nanteza Agnes Biryetega Member Mr. Neema Godfrey Member


3





3





3





3






4

1.0 INTRODUCTION

Certified Public Accountants Savings and Credit Co-operative Society Limited (CPA SACCO) on

August 22rd 2016 appointed J.B Musisi & Associates (Certified Public Accountant), to audit the

financial statements of the CPA SACCO LTD for the year ended June 30th 2016. I have now

completed the audit and hereby submit my report.

1.1 Background of CPA SACCO LTD

CPA SACCO LTD was initiated by the Members’ Services Committee, (MSC) a committee of the

Council of the Institute of Certified Public Accountants of Uganda (ICPAU). The MSC realized

that Accountants in Uganda needed some formal togetherness and encouragement to save. To

mitigate the problem, the CPA SACCO LTD was therefore formed as a SACCO for professional

Accountants of Uganda.

The SACCO was registered on October 4th, 2013 under the Uganda Co-operative Societies’ Act

(Cap 112) and the Uganda Co-operative Societies’ Regulations 1992. It is also regulated by its

registered By-laws supported by policies and procedures. As a Co-operative, CPA SACCO LTD is

owned by its members, who finance, control and benefit from its products and services.

SACCO’S VISION

“To Become a Benchmark of Accountants’ Business Investments Globally.”

SACCO’S MISSION

“To Be Our Members’ Partner of Choice in Providing Quality Financial Services to Meet their

Business and Personal Needs”.

SACCO’S CORE VALUES

In order to achieve its Vision and Mission, CPA SACCO LTD’s operations are guided by the

following Core Values: Integrity, Professionalism, Teamwork, Member Focus and Innovation.

SACCO’S CORE OBJECTIVES

The objectives of the SACCO as stipulated in the registered By-laws are, in summary:

To mobilize savings from members and promote a spirit of thriftiness

Provide other financial services such as loans to members for their economic

development.



5

While remaining focused as a financial institution, do any other activities that enhance

the above two broad objectives.

The objectives are pursued while observing financial principles of safety and

soundness.

2.0 Audit Objectives

J.B Musisi & Associates (Certified Public Accountant) a registered firm by the Institute of

Certified Public Accountants of Uganda (ICPAU) Reg: No. F084/13 was appointed by the

members of the SACCO at the second AGM to carry out the audit of the SACCO’s books of

account. The audit of these financial statements covers the year ended June 30th 2016.

2.1 The overall objective of the audit is to:

Carry out the audit of the SACCO for the year ended June 30th 2016, in accordance with

the International Standards on Auditing and express an opinion on whether the financial

statements present fairly in all material respects, revenues received and expenditures

incurred.

Check and ascertain the effectiveness of internal controls and compliance to required laws

and regulations.

2.2 The specific objectives of the audit are to;

a. Ascertain whether the financial statements agree with the accounting records.

b. Ascertain whether the financial statements are in agreement with the SACCO objectives.

c. Verify whether the figures in the financial statements are adequately supported by source

documents and that there is a proper filling system.

d. Examine whether there are adequate procedures in place regarding the recording and

preparation of the financial statements.

e. Evaluate and obtain a sufficient understanding of internal controls related to the specific

funds received and assess control risk and identify reportable conditions.

f. Obtain evidence on whether the Board minutes and new ideals discussed are put into

consideration.


5

While remaining focused as a financial institution, do any other activities that enhance

the above two broad objectives.

The objectives are pursued while observing financial principles of safety and

soundness.

2.0 Audit Objectives

J.B Musisi & Associates (Certified Public Accountant) a registered firm by the Institute of

Certified Public Accountants of Uganda (ICPAU) Reg: No. F084/13 was appointed by the

members of the SACCO at the second AGM to carry out the audit of the SACCO’s books of

account. The audit of these financial statements covers the year ended June 30th 2016.

2.1 The overall objective of the audit is to:

Carry out the audit of the SACCO for the year ended June 30th 2016, in accordance with

the International Standards on Auditing and express an opinion on whether the financial

statements present fairly in all material respects, revenues received and expenditures

incurred.

Check and ascertain the effectiveness of internal controls and compliance to required laws

and regulations.

2.2 The specific objectives of the audit are to;

a. Ascertain whether the financial statements agree with the accounting records.

b. Ascertain whether the financial statements are in agreement with the SACCO objectives.

c. Verify whether the figures in the financial statements are adequately supported by source

documents and that there is a proper filling system.

d. Examine whether there are adequate procedures in place regarding the recording and

preparation of the financial statements.

e. Evaluate and obtain a sufficient understanding of internal controls related to the specific

funds received and assess control risk and identify reportable conditions.

f. Obtain evidence on whether the Board minutes and new ideals discussed are put into

consideration.



6

2.3 Audit Approach

I designed my audit approach in accordance with the International Standards on Auditing and the

terms of reference in order to achieve the audit objectives.

The audit was performed using a risk based audit approach, which requires general planning

and identification of areas of audit significance, as well as evaluating risk inherent in significant

accounts.

I reviewed the SACCO operations to ascertain whether they are geared at the implementation

of the intended objectives and whether the execution was in line with the budget.

I performed detailed tests of expenditure incurred by reviewing the evidence supporting the

documents and confirm whether they are related to the SACCO activities.

Specifically, I carried out the following procedures; 2.3.1 Financial Statements

Verified the financial statements prepared to ascertain whether they agree with the accounting

records of the SACCO.

Checked if the financial statements correspond with the SACCO Budget and the Work Plan.

Ascertained the income received by the SACCO detailed on note 2 & 4 (Page 19) of the financial

statements, unutilized fund during the audit i.e. cash in bank and cash at hand have been

disclosed in the statement of financial position on page 13.

Ascertained and reviewed the SACCO debtors and confirmed the due balances from members and

theses have been disclosed.

Carried out substantive tests on the recorded costs to ascertain whether they are supported by third

party documents and reports of the activities carried out, payment vouchers dully cancelled signed

and stamped paid.

Ascertained whether internal appropriate and approved procedures for authorizing disbursements

were adhered to. This was tested by checking requisition forms, payment vouchers and other

payment memos to ensure that they were authorized by the responsible people during the year.

Ascertained whether bills have been marked or cross-referenced and attached to the payment

vouchers for approval of the authorized Board.

Assessed whether financial transactions were completely and adequately recorded in the books of

account.



7

2.3.2 Internal Control Structure

Reviewed and evaluated the SACCO ’s internal control structure to assess the system of control in

place regarding funds handling and administration.

Reviewed bank accounts and the control over those bank accounts.

Ascertained whether there was any Co-operation agreement in place or whether the execution

of the SACCO’s budgeted activities were compliant with the budget.

Verified whether the records in the financial statements were adequately supported by source

documents and that there was a proper filling system in place.

Obtained sufficient understanding of the design of relevant control policies and procedures and

evaluated whether those policies and procedures had been implemented.

Evaluated the control environment, the adequacy of accounting systems and control procedures.

Evaluated the internal controls established to ensure compliance with the planned activities or

budget.

2.4 Audit Scope

The audit undertaken involved a review of the SACCO’s income and expenditure as per the

approved budget. The audit of the financial statements was done for the year ended June 30th

2016.






CPA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED

INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016

STATEMENT OF COMPREHENSIVE INCOME

2016 2015

Notes U Shs U Shs

Interest income 2.0 29,899,716 2,360,954

Interest expense 3.0 (6,563,150) -

Net interest income 23,336,566 2,360,954

Other operating income 4.0 16,134,000 12,799,805

Operating income 39,470,566 15,160,759

Administrative expenses 5.0 (5,983,879) (4,727,672)

Employee expenses 6.0 (7,366,000) (6,848,000)

Finance expenses 7.0 (295,551) (218,400)

SURPLUS BEFORE TAX 25,825,136 3,366,687

Income tax expense 18(a) (37,545) (856,961)

SURPLUS FOR THE YEAR 25,787,591 2,509,726

The statement of comprehensive income is to be read in conjunction with the notes forming part of the financial statements set out on pages 16 to 26 and the report of the independent auditor on page 10-11

JB Musisi and Associates(Certified Public Accountant) 12

CPA SACCO LimitedAnnual financial report 2015/16



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CPA SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED INDEPENDENT AUDITOR'S REPORT AND FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2016

STATEMENT OF CASH FLOWS2016 2015

Notes U Shs U ShsCASH FLOW FROM OPERATING ACTIVITIESInterest receipts 2.0 29,899,716 2,360,954 Interest payments 3.0 (6,563,150) - Fee and other income 4.0 16,134,000 12,799,805 Payments to employees 6.0 (7,366,000) (6,848,000) Payments to suppliers and other payments (6,279,430) (4,946,072) Adjustments for:Equipment written off 13 (72,000) - Depreciation 13 229,629 376,272 Amortisation 14 666,000 666,000 Cash generated before working capital changes 26,648,765 4,408,959 Movement in Working Capital itemsIncrease in loan portfolio 11 (38,127,829) (61,172,957)

Increase in trade and other receivables 9 (7,556,136) 1,360,000

Increase in trade and other payables 15 6,547,382 885,082 Increase in members' savings 16 109,310,351 66,319,526

Net cash used in operating activities 96,822,533 11,800,610 Income tax paid - - Net cash outflows from operating activities 96,822,533 11,800,610

CASH FLOWS FROM INVESTING ACTIVITIESFinancial instruments 10 (159,823,750) 30,000,000 Investments - (300,000) Intangible asset - (2,000,000)

Net cash used in investing activities (159,623,750) 27,700,000

CASH FLOWS FROM FINANCING ACTIVITIESProceeds from members' share capital 17 57,950,000 32,800,000

Net cash generated from financing activities 57,950,000 32,800,000

Net Decrease in cash and cash equivalents (4,851,217) 72,300,610 MOVEMENTS IN CASH AND CASH EQUIVALENTSAs at 1 July 102,497,481 30,196,871 As at 30 June 8.0 97,646,264 102,497,481

The statement of cash flow is to be read in conjunction with the notes forming part of the financial statements set out on pages 16 to 26 and the report of the independent auditor on Page 10-11.




CPA SACCO LTD SAVINGS AND CREDIT CO-OPERATIVE SOCIETY LIMITED INDEPENDENT AUDITOR’S REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2016

16


1 ACCOUNTING POLICIES

The principal accounting policies adopted in the preparation of these financial statements

are set out below: -

(a) Basis of preparation

The financial statements of CPA Savings and Credit Co-operative Society Limited have

been prepared in accordance with the IFRS and the requirements of the

Co-operative Societies’ Act (CAP 112). The financial statements are prepared under the

historical cost basis of accounting.

(b) Interest income, Fees, Commissions and other income

Interest income, fees, commissions and other income are generally recognized on an accrual

basis, when the financial service has been provided by the SACCO.

(c)

Loan and advances

Loan and advances are carried at original amount less provision made for impairment

losses. A provision for impairment of loans is established when there is objective evidence

that the SACCO will not be able to collect all amounts due according to the original terms

of the loan. The amount of the provisions is the difference between the carrying amount

and the recoverable amount.

(d) Cash and cash equivalents

Cash and cash equivalents include cash at hand, deposits held at call with banks, other

short term highly liquid investments with original maturities of three months or less,

including: cash and amounts due from other banks.



17

(e) Plant, Property and Equipment

All Plant, Property and Equipment are stated at historical cost less depreciation.

Depreciation is recognized in the statement of comprehensive income on the reducing balance

basis over the estimated useful lives of each part of an item of Plant, Property and Equipment

since this most closely reflects the expected pattern of consumption of the future economic

benefits embodied in the asset.

The annual rates used for this purpose are: -

Computer ……………….………...…..………...33.3%

Office Furniture & Equipment…............20%

(f) Financial instruments

A financial instrument is any contract that gives rise to a financial asset of one entity and

a financial liability or equity instrument of another entity.

i) Financial assets Initial recognition and measurement

All financial assets are recognized initially using the trade date accounting which is the

date the SACCO commits itself to the purchase. All financial assets are recognized initially

at fair value plus, in the case of financial assets not recorded at fair value through profit

or loss, transaction costs that are attributable to the acquisition of the financial asset.

Fair value is the amount for which an asset can be exchanged, or a liability settled,

between knowledgeable willing parties in an arm's length transaction. The fair value for

the treasury bills is determined using the quoted bid price at the reporting date.

ii) Financial assets derecognition

Financial assets are derecognised when the rights to receive cash flows from the

investments have expired or the company has transferred substantially all risks and

rewards of ownership.

(g) Intangible assets

CPA SACCO LTD acquired a computer software, the software is capitalized on the basis of

the cost incurred to acquire and to bring it to use. The cost is amortised on the basis of

the expected useful life of 3 years.



18

Costs associated with developing or maintaining computer software programs are

recognized as an expense as incurred. Costs that are directly associated with the

production of identifiable and unique software products controlled by the SACCO, and

that will probably generate economic benefits exceeding costs beyond one year, are

recognized as intangible assets.

Computer software……………………………33.3%

(h) Refundable dues to Non-Members

These relate to funds refunded to applicants who did not fulfill the requirements or

admission as members of the CPA SACCO LTD, i.e members who did not purchase share

capital at least a normal value of Shs. 100,000 as required by the SACCO By-laws

Article 3(a). Funds refundable include entrance fees, savings and subscriptions.

(I) Deposits from members

Deposits from members are recognized and accounted for on receipt basis as liabilities.

Interest expense is accrued on the deposits on monthly basis at an interest rate of 0.5%.

(J) Tax

Income tax expense is the aggregate of the charge to the statement of comprehensive

income in respect of current income tax and deferred income tax.

i) Current income tax

Current income tax is the amount of income tax payable on the taxable profit for the

year determined in accordance with the Ugandan Income Tax Act (CAP-340). Current

income tax assets and liabilities for the current period are measured at the amount

expected to be recovered from or paid to the taxation authorities.

ii) Deferred income tax

Deferred tax liabilities are generally recognized for all temporary differences and the

deferred tax assets are recognized to the extent that it is probable that taxable profits

will be available against which deductible temporary differences can be utilized.

Deferred tax assets and liabilities are measured basing on tax rates determined by

Ugandan Income Tax Act (CAP-340)



NOTES TO THE FINANCIAL STATEMENTS (Continued)

2016 2015U shs U shs

2.0 (a) INTEREST INCOMEInterest on loan advances 12,408,624 1,297,973 Total 12,408,624 1,297,973

(b) OTHER INTEREST INCOMEInterest on treasury bills held to maturity 15,933,030 - Bank interest 1,558,062 1,062,981 Total 17,491,092 1,062,981

Total Interest income 29,899,716 2,360,954

3.0 INTEREST EXPENSEInterest expense on members' savings 6,563,150 - Total 6,563,150 -

4.0 OTHER OPERATING INCOMEEntrance fees 13,250,000 10,160,000 Loan Process Fees 2,740,000 - Loan application fees 60,000 25,000 Savings Withdraw Fees 74,000 - Pass books 10,000 12,000 Interest income on fixed deposits - 2,602,805 Total 16,134,000 12,799,805

5.0 ADMNISTRATIVE EXPENSESAGM Expenses 1,465,250 1,075,000 Stationery & Printing 630,000 565,000 Subscription to UCSCU 500,000 230,000 Consultancy fee 900,000 500,000 Reimbursement expenses 36,000 302,400 Audit fees 800,000 750,000 Maintenance expenses 300,000 - Stolen phone expense 128,000 - Transport & Travelling - 113,000 Committee meetings 150,000 - Local Service Tax 30,000 - Training expense 50,000 - Communication expense 99,000 150,000 Depreciation 229,629 376,272 Amortisation expense 666,000 666,000 Total 5,983,879 4,727,672






2016 2015U shs U shs

6.0 EMPLOYEE EXPENSESSalaries & wages 5,956,000 5,300,000 Staff facilitation 1,410,000 1,548,000 Total 7,366,000 6,848,000

7.0 FINANCE EXPENSESBank charges 295,551 218,400Total 295,551 218,400

JB Musisi and associates(Certified Public Accountant) 20

CPA SACCO LimitedAnnual financial report' 2015/16




2016 2015U Shs U Shs

8 CASH AND CASH EQUIVALENTS

Cash at Bank 97,646,264 102,497,481 Total 97,646,264 102,497,481

9 TRADE AND OTHER RECEIVABLESSubscription Fee in arrears 1,200,000 3,640,000 Share Capital in arrears 50,000 50,000 Investment income receivable 7,694,750 - Accrued loan interest 2,301,386 - Total 11,246,136 3,690,000

10 FINANCIAL INSTRUMENTS (Short term investments)Treasury bills with BOU 159,823,750 - Total 159,823,750 -

11 LOANS AND ADVANCES TO MEMBERS

As at July 1st 61,172,957 - Total disbursements 141,185,000 71,500,000 Total repayments (103,057,171) (10,327,043) As at 30th June 99,300,786 61,172,957

12 INVESTMENTShares 300,000 300,000 Total 300,000 300,000

The period end cash and cash equivalents comprise of the following:-

On 17 February 2016, CPA SACCO Limited obtained a treasury bill with BOU with a face value of 100,000,000/=, further obtained a treasury bill with BOU on 13 April 2016 with a face value of 75,000,000 both redemeable in 6 months.

Investment represent Shares held in UCSCU by CPA SACCO LTD to which it's affiliated.





13 PROPERTY AND EQUIPMENTOFFICE FURNITURE COMPUTERS TOTAL

& EQUIPMENTSDepreciation rate 20.00% 33.30%

U Shs U Shs U ShsCOSTAs at July 1st 2015 200,000 1,550,000 1,750,000 Disposals (200,000) - (200,000)

As at June 30th 2016 - 1,550,000 1,550,000

DEPRECIATIONAs at July 1st 2015 72,000 860,422 932,422 Charge for the year - 229,629 229,629 Eliminations (72,000) - (72,000)

As at June 30th 2016 - 1,090,052 1,090,052

CARRYING AMOUNT

As at 30th June 2016 - 459,948 459,948

COST

As at 1st July 2014 200,000 1,550,000 1,750,000

Additions - - - As at 30th June 2015 200,000 1,550,000 1,750,000

DEPRECIATIONAs at 1st July 2014 40,000 516,150 556,150 Charge for the year 32,000 344,272 376,272 As at 30th June 2015 72,000 860,422 932,422

CARRYING AMOUNTAs at 30th June 2015 128,000 689,578 817,578

14 INTANGIBLE ASSETS

Software accounting programme

COST 2016 2015

Amortisation rate @ 33.3% U Shs U Shs

As at 1st July 2,000,000 -

Additions - 2,000,000 As at 30th June 2,000,000 2,000,000

AMORTISATION

As at 1st July 666,000 - Charge for the year 666,000 666,000 As at 30th June 1,332,000 666,000

CARRYING AMOUNTAs at 30th June 668,000 1,334,000

J.B.Musisi and Associates(Certified Public Accountant) 22





2016 2015U Shs U Shs

15 TRADE AND OTHER PAYABLESAudit fees payable 800,000 750,000 Subscription fees payable 500,000 - Maintenance fees payable 300,000 - Savings interest liability 6,563,150 - Insurance liability 690,000 - Salary payable - 600,000 PAYE payable 120,000 120,000 Refundable dues to non-eligible members 575,000 675,000 Software payable - 1,000,000 Other payables 189,314 45,082 Total 9,737,464 3,190,082

16 MEMBERS' SAVINGSOrdinary SavingsAs at 1st July 81,114,526 14,795,000 Savings during the year 176,135,689 72,919,526 Withdrawals during the year (66,825,338) (6,600,000) As at 30th June 190,424,877 81,114,526

17 MEMBERS' EQUITY

As at 1st July 73,500,000 40,700,000 Additions during the year 57,950,000 32,800,000 As at 30th June 131,450,000 73,500,000

At the close of the financial year members held 1314.5 shares of Shs 100,000 each






18 TAXATION

2016 2015NOTES U Shs U Shs

a Income statement Current tax 19 - 795,888 Deferred tax 20 37,545 61,073 Tax charge 37,545 856,961

b Balance sheet Balance brought forward 795,888 - Charge for the year 19 - 795,888 Total 795,888 795,888

c Deferred taxationBalance brought forward 61,073 - Deferred tax charge 20 37,545 61,073 Total 98,618 61,073

CPA SACCO LIMITED is registered as a savings and credit society, which is involved in financial activities and therefore falls under "Financial Insitutions" as desribed in the Income Tax Act CAP-340,Section 2-interpretation, thus subjected to income tax at the year end.


CPA SACCO Limited Annual financial report 2015/16



NOTES TO THE FINANCIAL STATEMENTS (Continued)2016

19 TAX COMPUTATION U Shs

Profit per statement of comprehensive income 25,825,136 Add: Depreciation 229,629

: Amortisation 666,000 26,720,765

Less: Wear and tear (223,200) : Interest income on treasury bills (17,491,092) : Entrance fees (13,250,000)

Adjusted loss for the year (4,243,527) Add: Tax Loss B/FAdjusted Loss C/F

Tax @ 30% -

CLASS I CLASS IV TOTAL40% 20%USHS USHS USHS

558,000 128,000 686,000 - (128,000) (128,000)

558,000 - 558,000 Allowance (223,200) - (223,200)

334,800 - 334,800

1. WEAR AND TEAR SCHEDULE

W.D.V. 30 June 2016

W.D.V. 1 July 2015DisposalSub-total



X X



20 DEFERRED INCOME TAX COMPUTATION

Carrying Tax base Temporaryamount amount difference

U Shs U Shs U ShsClass I 459,948 334,800 125,148 Class IV - - - Total 459,948 334,800 125,148

Loans and Advances 11,246,136 11,246,136 - Trade and other payables 9,737,464 9,737,464 - Members' Equity 131,450,000 131,450,000 - Total 141,187,464 141,187,464 - Temporary differences 125,148

Timing differences 125,148 @ 30% 37,54537,545

Deferred tax liability 37,545

Deferred tax charge to statement of Comprehensive income 37,545

Deferred income taxes are calculated on all temporary differences under the liability method at the applicable rate of 30.0%. The movement on the deferred income tax account is as follows:-

J.B Musisi and Associates(Certified Public Accountant) 26



THE CPA SACCO BUDGET PROJECTION FOR 2016/17 2015/2016 2016/2017

REVENUE BUDGET ACTUAL Interest income on savings 27,000,000 1,558,062 3,000,000Interest income on loan - 12,408,624 43,103,092Investment income 53,800,000 15,933,030 25,149,250Other incomes 35,750,000 loan processing 2,740,000 5,000,000Loan application fees 60,000 150,000Membership 13,250,000 60,000,000Stationery 10,000 -Sale of marketing items like T.shirts (100 T-shirts) 100 3,000,000Saving withdrawal 74,000 200,000TOTAL 116,550,000 46,033,716 139,602,342EXPENDITURE Interest expenses 8,750,000 6,563,150 10,000,000Administrative expenses 44,190,000 4,453,879 8,600,000Governance cost 9,260,000 - 16,000,000Employee expenses 21,440,000 7,366,000 23,900,000Statutory cost 1,671,750 - 1,671,750Stationery cost - 630,000 1,000,000Bank charges - 295,551 350,000

Financing cost 500,000 - -Professional fees/Consultancy - 900,000 2,000,000

Repair and maintenance - - 2,000,000TOTAL RECURRENT EXPENDITURE 85,811,750 20,208,580 65,521,750SURPLUS/DEFICIT BEFORE TAX 30,738,250 25,825,136 - 74,080,592Tax payable/ provision for tax 9,221,475 -37,545 2,000,000Profit after tax 21,516,775 25,787,591 72,080,592Statutory reserves 5,379,194 Share reserves 5% 1,289,380 - 3,604,030Development fund 5% 1,289,380 - 3,604,030Education reserve fund 1% 257,876 - 720,806Proposed dividends 6,455,033 6,455,033 15,000,000Retained earnings 9,682,546 49,151,727

CAPITAL EXPENDITURE Furniture and filing cabinet 1,000,000 - 1,000,000Office equipments(computer and printer) 3,500,000 - 3,500,000Camera - - 400,000Money detector - - 200,000

Software 1,300,000 - -

DEFICIT/SURPLUS -5,799,998 25,787,591 - 44,051,727


SUPERVISORY COMMITTEE REPORT


CONTENTS1.0 EXECUTIVE SUMMARY................................................................................................................. 60 PART A2.0 STAFFING OF THE SACCO............................................................................................................ 613.0 LOAN APPROVALS........................................................................................................................... 614.0 INVESTMENT OPERATIONS....................................................................................................... 625.0 PAYMENTS BY MEMBERS USING MOBILE MONEY........................................................... 626.0 GOVERNANCE................................................................................................................................... 63

PART B 7.0 STATUS OF IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS ( 2015) REPORT................................................................................................................................ 63


1.0 EXECUTIVE SUMMARYThis report covers period July 2015 to June 30, 2016. The Supervisory committee has not been able to conduct quarterly reviews because of operational challenges within the Committee and from the SACCO; during the year the Supervisory committee worked with two members after one of its members resigned at the beginning of 2016 due to personal commitments. The committee's work was also interrupted by changes in the SACCO personnel during the year. As a result, the committee decided to conduct one comprehensive review covering period July 2015 to June 30, 2016.

This report is in two parts. Part A which gives details of issues noted during the current period 2015/16, and Part B on the status of prior year issues.

The following is a summary of current year issues noted: STAFFING OF THE SACCO

A substantive SACCO Administrator has not yet been hired by the SACCO although interviews were conducted to identify and appoint one. Management responds that they did not identi-fy a suitable person for the post and have decided to extend the exercise to next financial year 2016/17. In view of the current level of transactions, it is increasingly becoming difficult for one person to run the SACCO on a day to day basis. Management should consider hiring an extra person in the SACCO to easy the work load.

LOAN APPROVALS We noted that the credit committee of the SACCO reviews loan applicants, however more care needs to be exercised in reviewing applicants and subsequently granting of loans. This is because cases of loan defaulters ( as far as servicing of the loans is concerned), can be minimized at the time of applying for the loans. A case in point is where a member (no. CSM/0138) was assessed as fit for a loan facility yet the member was servicing three (3) other loans in different financial institutions.The BOD takes note of the observation and the loans committee will improve in analysing appli-cants.

MOBILE MONEY PAYMENTSWe noted that Mobile money payments by members are receipted by the SACCO Administrator who also has the Mobile money Password for withdrawing money. This exposes mobile money transactions to risk of fraud. We recommend that the password of the Mobile money should be restricted to the SACCO Treasure, who should also be in-charge of withdrawing mobile money transactions.

Management responds that receipt of money is an operational activity performed by management and in the current set-up and level of activity the treasurer, who is a board member just supervis-es records.


GOVERNANCE We noted for the period under review that 3 of the board members achieved below 50% attend-ance (37.5%, 37.5% and 32.5%). This affects deliberations and quality of decision of the board.We encourage board members to regularly attend meeting of the board so as to improved quality of board decisions. Management notes the observation and points out that several Board deliberations are done on-line in the interest of time and meeting are held to document resolutions.

DETAILED REPORT PART A

CURRENT YEAR OBSERVATION

2.0 STAFFING OF THE SACCO We noted that at the being of the year 2016 interviews for the posts of Administrator and Assistant Administrator were conducted but only Assistant administrator was taken on. Appointment of the Administrator put on hold because management failed to identify a suitable person for the position. However because of the increasing work load, one staff cannot continue to run the SACCO on a day to day basis. Errors and inefficiencies are likely to set in.

Recommendation Consider hiring an extra person in the SACCO to easy the current work load. Management comment

The process is ongoing and the second person will be hired in the course of the financial 2016/2017.

3.0 LOAN APPROVALS The credit committee of the SACCO reviews loan applicants, however more care needs to be exercised in reviewing applicants and subsequently granting of loans. This is because cases of loan defaulters ( as far as servicing of the loans is concerned), can be minimized at the time of applying for the loans. A case in point is where a member (no. CSM/0138) was assessed as fit for a loan facility yet the member was servicing three (3) other loans in different financial institutions. Such cases affect the SACCO's liquidity and exposes the SACCO risk of financial loss. Recommendation Management and in particular the credit committee should be more careful when review-ing applicants and subsequent approval of loans. Management comment The BOD takes note of the observation of the SUPCO committee. The loans committee will improve on analysing applicants. Recommendation Management should adhere to established policy procedure in undertaking investment decisions. Management response.All investments are approved by the BOD and minutes are available to support the decisions made.


4.0 PAYMENTS BY MEMBERS USING MOBILE MONEYWe noted that Mobile money payments by members for SACCO saving are receipt by the SACCO Administrator who also has the Mobile money Password for withdrawing money. This exposes mobile money transactions to risk of fraud. Recommendation The password of the Mobile money ought to be restricted to the SACCO Treasurer, who should also be in-charge of withdrawing mobile money transactions. Management commentReceipt of money is an operational activity performed by management as authorized by the BOD, the treasurer just supervises the records through the BOD.

5.0 GOVERNANCE We noted for the period under review that 3 of the board members achieved below 50% attendance (37.5%, 37.5% and 32.5%). This affects deliberations and quality of decision of the board.

Recommendation

We encourage board members to regularly attend meeting of the board so as to improved quality of board.

Management comment

Observation noted. However, several BOD deliberations are done online in the interest of time and meeting are held to document resolutions.

PART B6.0 STATUS OF IMPLEMENTATION OF PRIOR YEAR RECOMMENDATIONS ( 2015) REPORT

The objective is to assess the level of response to issues raised and ensure that they are addressed.

ISSUE RAISED MANAGEMENT RESPONSE THEN

RECOMMENDATIONTHEN

IMPLEMENTATION STA-TUS

System update: There was no Service Contract with Pearl Solutions who were hired to provide financial accounting System for the CPA SACCO and yet a payment of UGX 1,000,000 was already made.

That The Service Contract was available with the Chairperson only that the Administrator did not conduct her

Management to ensure properly signed contracts with clear terms including after sale service.

Partially Done. Service contract seen;Contract was supposed to be renewed every year and system upgrade done at an additional cost of UGX. 300,000.

At the time of reporting ( in September), the service contract had expired on 9th June 2016 and is yet to be renewed.


Management comments that the Service provider is still offering support in view of the 2015 lapse in service .

No progress report on the service provided so far.

System was still under test and was not being used yet.

Progress reports should be produced to ascertain the areas of improvement.

Board was trained on the system.

Migration of Data to the New System: There was no proper guidance on how to migrate data to the new System.

Proper guidance should be provided to the Adminis-trator so that postings are meaningful since previous figures affect the current balances.

Management should inves-tigate these anomalies and identify the causes.

DoneAll data has been success-fully migrated into the system.

Information from the system was incorrect and the review team had a challenge in verifying such information

The Accounts under review at the time were manually produced. It was agreed by the board that since the transactions were few, the administrator should post all of them from the beginning so as to test the desired reports and also for practice in processing data.

Management should streamline the system for ease of review and verifica-tion of balances

DoneAll information can now be obtained from the system.

Investment and the Policy Related to it:No Investment Policy and yet Fixed Deposit of 40m in ECO Bank and Treasury Bills were being processed.

Investment Policy still in Draft Form

Management should expedite the development of the Investment Policy so that the SACCO In-vestments are guided by agreed policies.

Done.Investment Policy in place

Credit Policy:Most of the Loans dis-patched did not comply with all the requirements as guided by the Credit Pol-icy Document. Failure to adhere to lending policies may lead to default in loan repayment.

Most approvals are done online, going forward they intend to print and file all online approvals

Some loans which lacked the required number of signatures was because some Committee members’ at the time and those pres-ent did not want to delay disbursing the loans. They would always sign later

Management should en-sure that all Credit Policy requirements are fulfilled before giving out loans

Done.

Committee members sign according to the require-ment of the Credit Policy.

Members’ Register:13 members in the reg-ister had not paid up the mandatory amount of UGX. 250,000/- to qualify as members.

Most of the debtors were founding members who paid part and were being followed to pay up.

The 13 members should be followed up to ensure that they pay the remaining balance.Management should con-sider putting the funds of the 13 members amount-ing to UGX 2,835,000= in a special account; say Cred-itors’ Account and only transfer to the members accounts when the individ-ual hasfulfilled membership re-quirements.

Partially done. Eight of the 13 members have still not fully paid and so are still being followed.

Funds were put on a liabili-ty account.

Documents

Issued: October 2016 TABLE OF CONTENT - CPA SACCOcpasacco.com/wp-content/uploads/2016/11/Annual-Report-2016.pdf · Issued: October 2016 TABLE OF CONTENT ... • Credit risk is dealt