SOP Library
SOP NO:
TS-ES25
(List of Exhibits/Attachments)
Mission
:
Technical Support Services
Area:
Technical Research & Services (TS)
Title:
Revised SOP on Cooperative Development Incentive Fund (CDIF)
Date Approved/Issued:
01/27/2016
Date Effective:
01/27/2016
Digest:
I. TERMS OF REFERENCE
A. Rationale
B. Objective
C. Scope
D. Basis
II. IMPLEMENTING GUIDELINES
A.
STATEMENT OF POLICIES
1. Only rice and corn Farmer’s Organizations (FOs) such as Farmer’s Cooperatives (FCs) or Farmer’s Associations (FAs) which have legal juridical personalities and are registered as active and/or operational with any of the following Government Agencies shall be granted CDIF’s:
a. For Farmer’s Cooperatives
Cooperative Development Authority (CDA)
b. For other Farmer’s Organizations
b.1 Securities and Exchange Commission (SEC)
b.2 Department of Labor and Employment - Bureau of Rural Workers (DOLE - BRW)
2. The CDIF shall be taken from the Cereal Procurement Fund (CPF).
3. The CDIF shall be applied to FO deliveries that are in accordance with the approved NFA standard grains specification for palay and corn.
4. The CDIF rate or any increase thereof shall be approved by the NFA Council upon the recommendation of the NFA Administrator.
5. Supervision, monitoring and sample verification of the authenticity or legality of the juridical personality of the availee (Farmer’s Organization) of the CDIF program shall be under the function of Industry Services Department (ISD). Doubtful or questionable Farmer’s Organizations should be endorsed for investigation to the Regional/Provincial Investigator under Security Services and Investigation Department (SSID). ISD shall monitor the CDIF availment, utilization and balances of the field offices.
6. Implementation of the CDIF program in the field offices shall be undertaken by the Provincial Industry Services Officer (PISO) of the Industry Services Section (ISS) in the Provincial Office. At the Regional Office, the CDIF Program shall be coordinated by and with the Regional Industry Services Officer (RISO).
7. The utilization coverage of the accumulated CDIF shall be on the following projects;
a. Project A - Payment for the amortization of PHF availed by the FO under the Farm Level Grains Center III (FLGC III) and/or NFA-Japan International Cooperation Agency (JICA) Facility Assistance Program (FAP I and FAP II).
b. Project B – Payment to outstanding obligation/payable and/or loan arrearages of the FO with the NFA.
c. Project C – Payment for the acquisition/equity/installation/repair and maintenance of PHF and production facilities/registration of the FO’s preferred PHF /payment of insurance premium of the PHF/payment for appropriate NFA license to operate the PHF and grains businesses/payment for real estate tax/es and for lot/s mortgaged to NFA or purchased by NFA for FLGC projects.
d. Project D – Payment for the rental for PHF availed under the NFA Facility Assistance Program or payment for the custom hire of corn processing center facilities or any of its components.
e. Project E - Provided that the FO has no outstanding obligations/payables and/or loan arrearages with the NFA ,the CDIF shall be used to pay the FO’s amortization of the FO’s existing PHF loan and/or production loan from any lending institution (Land Bank of the Philippines, Development Bank of the Philippines, Philippine National Bank, Quedancor etc.). The subject PHF should be operational and in the possession of the FO.
f. Project F – Serves as deposit of FO for the empty sacks (MTS) to be borrowed from NFA.
g. Project G – Payment for the FOs’ expenses in training to be conducted by the NFA in coordination with the concerned NFA field office and Central Office.
h. Project H - The accumulated CDIF shall be used by the FOs for the purchase of NFA rice, fertilizers and certified seeds. Withdrawal of NFA rice shall be subject to the following:
h.1. Availability of stocks in the area of withdrawal
h.2. Endorsement of ISD to GMOD
h.3. GMOD’s approval
8. FOs which are beneficiaries of Farm Level Grains Center III (FLGC III) and/or NFA - Japan International Cooperation Agency (JICA) Facility Assistance Program can utilize their CDIFs only for paying the FO’s PHF amortization under the FLGC Project and/ or NFA-JICA FAP. However, if the FO’s accumulated CDIF exceeds the FO’s combined FLGC and NFA-JICA FAP two-year amortization, the balance may be withdrawn for utilization in other projects, subject to the approval of the NFA.
9. FO with past due accounts or arrearages with the NFA can only undertake Project B. The FO may undertake Projects C to H only when the FO’s financial obligation with the NFA becomes current/updated or settled. As such, CDIF utilization for Projects A and B shall be prioritized for approval over Projects C to H. It shall be the duty of the PISO to advise the FO on the choices of projects the FO can undertake as well as each projects prerequisites.
10. PHFs and production facilities covered under Projects C, D and E shall include but not limited to the following to improve their productivity:
A. Driers (Solar or Mechanical)
B. Threshers
C. Shellers
D. Hauling Trucks (Brand New or Second Hand)
E. Moisture Meters
F. Weighing Scales
G. Rice Mills
H. Corn Mills
I. Warehouses
J. Tarpaulins
K. Empty Sacks
L. Equipment for the control of storage pests
M. Production Facilities
11. To avoid possible abuse in the CDIF program and problems in the future, Internal Audit Services Department (IASD) shall include in its regular management audit in the field offices the verification of the existence of the accredited FO’s. Likewise, the IASD shall monitor the Provincial Office’s compliance to this SOP including the requirements for withdrawal as well as the utilization of the CDIF funds released to the FO’s.
12. The Regional Manager (RM)/ Provincial Manager (PM) shall be held liable for the withdrawal/utilization of CDIF to FOs with incomplete or fraudulent requirements.
13. All CDIF related communications and reports to ISD shall be relayed to ISD through fax/mail/email or any fastest means of communication.
B. GRANTING OF CDIF TO FO’S
1. Upon the accreditation and availment of the FO to any NFA procurement program, a
Memorandum of Agreement (
Annex A
)
on the grant and utilization of the CDIF shall be executed between the NFA Provincial Office and the FO Chairperson of the Board of Directors. The CDIF shall be granted to the FO only upon the execution of the MOA. One copy of the MOA shall be submitted to the Regional Office as basis in monitoring CDIF granted and utilization.
2. The CDIF shall be earned by an FO whenever its member/s sell their produce collectively in the name of the FO to NFA under its regular procurement program. The CDIF is based on the latest approved rate by the NFA Council. Total CDIF shall be reflected in the Purchase Receipt (PR).
3. The CDIF shall be treated as a trust liability in the NFA books of account.
4. A semestral
Advice on Accumulated CDIF Granted (
Exhibit 1
)
shall be sent to the FO at the end of June and December of every year. The PISO of the concerned NFA PO shall prepare the advice in consultation with the Accounting Section and shall disseminate the said statement to the FO, cc: R.O.
C. WITHDRAWAL FROM THE CDIF
For all CDIF withdrawals, the Provincial Office shall require from the FOs a notarized copy of the prior year’s annual Financial Statement (FS).
1. FOs shall be required to file an
Application for CDIF Withdrawal (
Exhibit 2
)
for every withdrawal from the CDIF. The application shall be supported by the following documents:
a. FOs Assembly Resolution/Board Resolution stating therein the specific project where the CDIF will be utilized.
The Provincial Investigator shall verify the authenticity of the FO’s Assembly/Board Resolution submitted to the NFA if the meeting is held outside NFA premises without the NFA PISO or any other NFA employee in attendance.
b.
Statement of Utilization of Previously Withdrawn CDIF (
Exhibit 3
)
supported by photocopy of Certificates certifying that the amount previously withdrawn was utilized in accordance with the purpose for its withdrawal;
c. The
List of Requirements to be submitted on CDIF Withdrawal under specific project is shown in
Exhibit 4
.
2. The FO’s application for CDIF withdrawal shall be evaluated by the concerned provincial staff.
3. A
Memorandum Request for CDIF Withdrawal (
Exhibit 5
)
shall be prepared by the concerned provincial office for applications that are found in order. The Provincial Manager (PM) shall forward the Memorandum Request to the Regional Office including all the supporting documents recommending its approval.
4. Requests for CDIF withdrawal shall be approved by the Regional Manager or in his absence by the Asst. Regional Manager.
5. Withdrawal shall be made through the usual disbursement voucher system to be prepared by the PISO.
a. For acquisition of equipment/installation of facilities, the check shall be made payable to the supplier/dealer from whom the equipment/facility shall be purchased. Check payment shall be made only if a Certificate of Acceptance signed by the FO president or representative and NFA PO technical personnel is presented by the dealer/claimant.
b. For payment of existing loans, the check shall be made payable to the lending institution.
c. For the repair, maintenance, transportation cost and registration of facilities, the check shall be made payable to the FO.
d. For projects A, B, C (if transaction is with NFA), D, F ,G, and H, appropriate charges shall be made against the project account (e.g. NFA loan program, NFA license or rental),
e. Check payments to third party through the NFA, e.g. real estate tax, insurance premium, farm inputs and training expenses shall be made payable to the third party (e.g. supplier, banks, LGU’s, training provider, insurance companies, etc.).
6. The Regional Office shall inform the PO concerned and ISD, through
Wire/Facsimile (
Exhibit 6
)
, of all instances of approved requests.
D. REMITTANCE OF CDIF TO PROVINCIAL OFFICES
All remittances of CDIF to the Provincial Offices shall be evaluated and approved by the Regional Office concerned based on the submitted documents. If request is found in order, the Regional Office shall then prepare request for CDIF remittance of approved projects to ISD for validation and subsequent endorsement to BTFMD. The BTFMD shall then effect immediate remittance of CDIF to the Regional Office.
E. TREATMENT FOR INACTIVE CDIF
1. The FO’s CDIF shall be considered inactive or dormant when it has no transaction (no palay delivery nor withdrawal of CDIF) for a period of two (2) years. After this period, said CDIF shall be forfeited. This shall be stated in the MOA between the FO and NFA.
2. The PISO shall check on a monthly basis with the Accounting Section if any CDIF is nearing forfeiture.
3. Three (3) months prior to forfeiture, a
Notice For Inactive CDIF (
Exhibit 7
)
shall be prepared by PISO and shall be sent, through registered mail, to the FO with inactive CDIF.
4. A
Notice of CDIF Forfeiture (
Exhibit 8
)
shall be prepared by PISO and shall be sent, through registered mail, to the FO if the FO does not respond nor act on the notice within two weeks after its receipt of the notice. The notice shall be prepared in four (4) copies for distribution as follows:
Copy 1 - FO
Copy 2 - ISD
Copy 3 - RO
Copy 4 - PO– file
A
Monthly Report on Forfeited CDIF (
Exhibit 9
)
shall be submitted by the Provincial Office to the Regional Office. The RO shall in turn submit a consolidation report to the ISD on or before the 15
th
of the following month.
F. SANCTIONS ON FARMERS’ ORGANIZATION
An FO shall be sanctioned with the following, if found to have diverted the utilization of its CDIF to another purpose not approved by the NFA or have misrepresented in its CDIF transaction with the NFA:
1
st
offense - 2 years suspension
2
nd
offense - 4 years suspension
3
rd
offense - perpetual disqualification from any transaction with NFA and forfeiture of accumulated CDIF
G. MONITORING SYSTEM
1. The PISO shall monitor the CDIF balances per FO. The FO’s CDIF balances should tally with that of the Accounting Section.
2. The
CDIF Performance Report
(Exhibit 10)
shall be prepared monthly by the PISO. It shall serve as reference for monitoring CDIF utilization and balances. It shall be submitted to RO not later than the 15th of the succeeding month. For forfeited CDIF, the Accounting Section shall reconcile its records based on the report and prepare a journal entry to take up the amount of forfeited CDIF.
3. The PISO shall prepare a semestral
Statement of Aging of CDIF Balances Report
(
Exhibit 1
1)
to be submitted to RO not later than July 15 and January 15. The RISO shall then prepare a consolidated semestral Statement of Aging of CDIF Balances Report for submission to ISD not later than July 30 and January 30.
4. The ISD shall prepare a monthly CDIF Accomplishment Report (Executive Summary) to the Administrator, cc: Assistant Administrator for Marketing Operations, Deputy Administrator for Marketing Operations, IASD and ASD.
5. The ISD shall conduct random inspection of FOs and verify the FOs existence, the purpose of which the CDIF was utilized and the problems encountered under the program. ISD shall furnish IASD a copy of the inspection report if there is an indication of irregularities.
H. ACCOUNTING TREATMENT
1. Financial transactions relative to this special procurement package shall be closely monitored by the Accounting Unit. Likewise, financial records and reports shall be maintained to account for the program.
2. Accounting entries shall be as follows:
a. To record procurement of stock/replenishment of funds of Disbursing Officer (DO)/ Special Disbursing Officer (SDO)
DR : Raw Material Inventory - Palay
Inventory Account XXX
DR/CR: Accounts Payable-Grains Direct Proc XXX XXX
DR/CR: Cash DO/SDO-CPF XXX XXX
CR : Cash - Other Banks – Local Currency
Current Account – CPF Acct. XXX
b. To record/ set up the Cooperative Development Incentive Fund (CDIF)
DR : Proc-Palay-OMOE.CDIF - CDIF XXX
CR : Other Payables - CDIF XXX
c. To record charging of CDIF to Invty. Account
DR : Raw Material Inventory - Palay XXX
CR : C XXX
d. To record payment of CDIF to FO s based on the disbursement voucher processed.
DR : Other Payables - CDIF XXX
DR/CR: Accounts Payable-Grains Direct Proc XXX XXX
CR : Cash - Other Banks - – Local Currency
Current Account – CPF Acct. XXX
e. To record forfeited CDIF
DR : Other Payables – CDIF XXX
CR : Misc. Income – Forfeiture of CDIF XXX
f. To record application of CDIF to pay NFA loans or services
DR : Other Payables – CDIF XXX
CR : Receivable from FO (e.g. FLGC and other
NFA Programs) XXX
CR : Other Service Income – Facility Service XXX
A corresponding Credit Memo shall be prepared to evidence the settlement of the account.
The foregoing SOP supersedes SOP No.
TS-ES24
entitled
Revised SOP on Cooperative Development Incentive Fund (CDIF)
issued on June 19, 2012.
All rulings, policies and/or issuances inconsistent with the herein provisions are hereby superseded.
III. RESPONSIBILITIES
IV. FLOW CHART
Top Page
EXHIBITS
Annex A - Memorandum of Agreement
Exhibit 1 - Advise on Accumulated CDIF Granted
Exhibit 2 - Application for CDIF Withdrawal
Exhibit 3 - Statement of Utilization of Previously Withdrawn CDIF
Exhibit 4 - List of Requirements on CDIF Withdrawal
Exhibit 5 - Withdrawal of Cooperative Development Incentive Fund (CDIF)
Exhibit 6 - Pro-forma of Request for CDIF Remittance
Exhibit 7 - Notice for Inactive CDIF
Exhibit 8 - Notice of CDIF Forfeiture
Exhibit 9 - Monthly Report on Forfeited CDIF
Exhibit 10 - CDIF Performance Report
Exhibit 11 - Statement of Aging of CDIF Balances Report