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Tagum’s Culture: Compliance, Excellence and Transparency

Posted July 03, 2024

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At the Cooperative Leaders’ Congress in Davao City on May 5, Tagum Cooperative CEO Juris Perez gave her reaction to the presentation of Atty. Orlando Negradas on the BSP’s framework for regulation of banking and other financial institutions. Her reaction is based on the experience of Tagum Cooperative as an ISO-certified organization and ACCESS * branded as well.

Here's a trivia: Do you know 73% of customer prioritize trust and security when choosing a financial institution?  That is based on recent studies.   Co-op members and potential clients look for an institution with financial stability that  efficiently manages it assets and liabilities, maintaining adequate reserves, and implementing sound risk management practices. 

So the big word here is "Trust".

Trust is a significant and positive predictor of member commitment.  Trust is a crucial element in any cooperation and collaboration.  Trust promotes cooperation, fosters creativity and innovation, enhances communication and builds social capital.

Trust is essential for the success of collective actions, particularly in the management of common, pooled resources.

Atty. Negradas’ presentation highlighted the importance of conducting risk assessment in financial institutions.  And part of risk mitigation is to enforce financial standards for banks' compliance for the protection of depositors and investors.

Some cooperatives, like Tagum Cooperative, aside from complying with CDA requirements . . . we also self-regulate ourselves.  This is to address members' clamor for financial transparency and assurance for their deposits. 

Transparency builds trust.

And by providing members all information about the products and services available to them, not only helps them make appropriate financial decisions, but also creates trust for the cooperative.

Due to this , Tagum Cooperative has chosen to exercise financial standards compliance as a framework for transparency, accuracy and accountability in financial reporting.

Compliance helps the cooperative identify and manage risk effectively.  

And by adhering strictly to regulations, we can prevent fraudulent activities that actually do happen.

Money laundering and other financial crimes can harm the operations.

Furthermore, compliance to standards is important as it serves as benchmarks for quality, safety, efficiency, and inter-operability.

Compliance with standards ensures regulatory requirements are met, and also fosters trust among members and stakeholders.

We all want financial stability for our cooperatives, right?

But it takes prudence to guard the stability of our coops. 

It is the duty of our coop to maintain sound financial position over time.  Enabling our coops to fulfill its mission, meet its obligations, and sustain its operations effectively.  

This stability is crucial for the long term viability and success of our cooperatives, and is typically assessed through various financial indicators and metrics.

Key factors contributing to financial stability includes:

1. Sustainable Revenue Streams

2. Effective financial Management

3. Diversified Funding Sources

4. Strong Capital Structure

5. Risk Management

6. Responsible Governance

7. Compliance to Regulations

In Tagum Cooperative we observe strategies that we embraced for effective implementation of financial standards compliance.  

a) Leadership Commitment is crucial for effective implementation of financial standards complance.  This sets the tone for the entire organization to adhere to standards

b) Robust information and technology system ensures that financial processes are well structure and equips staff to handle compliance requirements.  When tasks are automated, it minimizes errors and boosts transparency, again facilitating adherence to standards

c)   Internal Control Policies establish guidelines and procedures to safeguard assets, prevent fraud, and ensure accuracy in financial reporting.  By enforcing strict internal controls, we mitigate risks

d) Institutionalized Strategic Planning integrates compliance considerations into our goals and objectives.  By aligning compliance efforts to our strategic initiatives, businesses can effectively prioritize and allocate resources to meet regulatory requirements;

e) Quality Management Systems promote a culture of continuous improvement and compliance.  This focuses on the processes, monitoring performance, and implementing corrective actions to, again, maintain adherence to standards;

f) Regular Audits allows us to evaluate our compliance efforts, identify areas for improvement, and detct any non-compliance;

The benefits of a cooperative complying with regulations and standards are:

1) Enhanced Reputation - we build a reputation of trustworthiness and reliability

2)  Improved Decision-Making. accurate and transparent financial data make possible informed decision making

3) Risk Mitigation - compliance with financial standards minimizes the risk of fraud and avoiding regulatory penalties

Co-ops need to prioritize compliance.  It is the pillar of trust and a mark of integrity. It fosters trust, enhances credibility, enables sound decision-making, and mitigates risk.


Tagum Cooperative is ISO Certified 9001:2015 in Quality Management and is ACCESS branded by the Association of Asian Confederation of Credit Unions.  Both certifications were acquired by the co-op by undergoing stringent periodic audits and inspections.  Among the “challenges” that Tagum Cooperative management is dealing with are the PAR 30 of 5.93% in December 2023 and also minimizing the escalating costs (which shows in the standard ratios of operating expenses to Total Assets).  


* ACCESS stands for A-One Competitive Choice for Excellence in Service and Soundness, a certification given by the Association of Asian Confederation of Credit Unions to credit and savings cooperatives that meet the stringent standards.


Tags

  • Atty. Negradas
  • Bangko Sentral ng Piipinas
  • BSP
  • Co-ops Mindanao
  • Juris Perez
  • national confederation of cooperatives
  • philippine federation of credit cooperatives
  • regulation cooperatives
  • Self-regulation
  • Tagum Cooperative

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