By Sacco Review Reporter
The Sacco Societies Regulatory Authority (Sasra) has urged Saccos to reconcile ‘other assets’ in their books of accounts to ensure there is transparency as the absence of the other assets in their financial statements is a possible conduit of fraudulent activities.
“The Authority calls upon the Non-Withdrawable Deposit Taking (NWDT) Saccos to take proactive measures aimed at reconciling these “other assets” and reduce the potential of fraudulent activities using these assets, as well as present their true, fair and accurate financial positions,” Sasra urged.
It also made a similar call to deposit taking Saccos, which continue to classify a portion of their assets as other assets in their books of accounts.
Data from the Sacco Supervision Annual Report, 2021 revealed the other assets for DT Saccos stood at 9.7 per cent while for NWDT Saccos stood at 27.16 per cent at the close of 2021.
With the NWDTS under the armpit of the regulator, there are high expectations that this high percentage rate of the other assets in the books of accounts is likely to reduce.
Accounting Tools defines other assets as a grouping of accounts that is listed as a separate line item in the assets section of the balance sheet.
It contains minor assets that do not naturally fit into any of the main assets categories such as current assets and fixed assets.
This might include advances to employees, deferred tax assets and prepaid expenses.
According to Regulations 2010, a DT-Sacco “shall not invest in non-earning assets or property and equipment in excess of ten percent of the total assets, of which land and buildings shall not exceed five percent, unless a waiver to that effect has been obtained from the Authority.
Similarly, a NWDT-Sacco shall not invest in land and buildings and equipment in excess of ten per cent of total assets, unless a waiver to that effect has been obtained from the Authority, provided the investment in land and buildings shall not exceed five percent of the total assets.
It also states that donated assets and foreclosed assets are excluded in arriving at this percentage.
According to the report, a Sacco’s property, equipment and other assets investment portfolios are made up of investments in properties, prepaid lease rentals, intangible assets, property & equipment, and other assets and they are generally considered as non-earning assets.
Investment in property, equipment and other assets of DT-Saccos with investments in properties such as land accounted for over 42.89 per cent while the investments in property and equipment constituted 40.31 per cent.
On the other hand investment in property, equipment, and other assets of NWDT-Saccos shows that the proportion of investments by NWDT-Saccos in land amounted to a paltry 5.68 per cent of the portfolio investments while the investments in property and equipment accounted for the highest proportion of the portfolio investment at a whopping 62.32 per cent.
“The low investments by NWDT-Saccos in land is consistent with the fact that unlike their DT-Saccos counterparts which have heavily invested in land and buildings, the NWDT-Saccos generally operate in rented premises and very few have invested in any land or housings,” the report indicates.