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Business School, Agricultural University of Hebei Province, Baoding 071001, China

1 Introduction

Since 2010, China’s urbanization has accelerated, and a large number of rural youth labor forces have swarmed into the city. The elderly and women become the main rural labor, so China’s agricultural development urgently needs to transform. The report of the 18th National Congress of the Communist Party of China clearly pointed out that we should adhere to and perfect the basic operation system in rural areas, develop farmers’ specialized cooperation and stock cooperation, cultivate new operation subjects, develop various forms of large-scale operation, and construct a new agricultural operation system that combines intensification, specialization, organization and socialization[1]. In other words, the development of "new types of agricultural businesses" has become an inevitable trend for China to promote modernization and urbanization. In this paper, with the farmers’ cooperatives as a starting point, we analyze the status quo of financial management of new types of agricultural businesses in China, in order to help the new types of agricultural businesses to achieve the healthy and stable development.

2 Problemsinthefinancialmanagementoffarmers’ cooperatives

2.1Developmentstatusoffarmers’cooperativesinWeixianCountySince the 18th National Congress of the Communist Party of China, the county party committee and the county government of Weixian County have attached great importance to the development of new types of agricultural businesses, strongly encouraged to support the development of farmers’ specialized cooperatives, and introduced a series of assistance and encouragement policies[2]. Under this kind of policy support, this development of the county’s farmers’ specialized cooperatives is very fast. Up to now, there are 53 specialized farmers’ cooperatives in the county, with more than 4 000 members, covering 45 administrative villages and 12 600 rural households. The annual output value is nearly 80 million yuan for agricultural and sideline products, and the income is over 5 million yuan for members. Among them, the large cooperatives include Weixian He Yongxiao Agricultural Machinery Service Specialized Cooperative, Weixian Xiaoyang Cotton Specialized Cooperative, Weixian Jianbin Agricultural Machinery Service Specialized Cooperative, Weixian Wotian Agricultural Machinery Service Specialized Cooperative, Weixian Jing Fengbao Agricultural Machinery Service Specialized Cooperative and Weixian Jianyou Planting Cooperative. The statistical data of the whole county in recent three years are shown in Table 1.

2.2Problemsinthefinancialmanagementofcooperatives

We survey and analyze the financial management status of several large-scale specialized cooperatives in Weixian County. The related data are shown in Table 2.

Table1Changesinthesizeoffarmers’specializedcooperativesinWeixianCountyduring2003-2015

YearThenumberofcooperativesinthecountyThenumberofmembersTotalannualoutputvalue∥104yuanThenumberofcooperativeswiththeannualoutputvaluemorethan5millionyuanYear?endincome104yuan2013281907275033862014402860416044122015533975800010498

Note: Data are from the Party and Government Portal Network in Weixian County.

Table2Thefinancialstatisticsofsomefarmers’specializedcooperativesinWeixianCounty

CooperativesThenumberofmembersAnnualoutputvalueThenumberoffinancialpersonnelThenumberofpeoplewithcertificatesThenumberofaccountingpersonnelWhetherthereisanoverexpenditureintheannualaccountingAnnualincreaseintheincome104yuanHeYongxiaoAgriculturalMachineryServicePro?fessionalCooperative46110211No23．00WeixianXiaoyangCottonProfessionalCoopera?tive76304201Nobudget9．88WeixianJianbinAgriculturalMachineryServiceProfessionalCooperative3961301Nobudget4．68WeixianWotianAgriculturalMachineryServiceProfessionalCooperative3582211Nobudget5．25WeixianJingFengbaoAgriculturalMachineryServiceProfessionalCooperative4352301Nobudget4．30WeixianJianyouPlantingCooperative32120201Nobudget12．80

Note: Data are from the Party and Government Portal Network in Weixian County.

Through the data analysis on the operation of cooperatives, it can be found that the prominent problems in the current financial management of farmers’ cooperatives can be summarized as follows.

2.2.1Weak awareness of financial management in cooperatives. Due to the unique limitations of farmers’ cooperatives, the financial management awareness of is generally not high for the cooperative managers and members, and there is not enough understanding on the financial management, accounting and other important financial matters. In the management, most of cooperatives place emphasis on production and marketing links, and handle such business with high proficiency, but often ignore the financial management. There is a serious shortage of financial personnel in some cooperatives, and there is only one person for accounting. The cooperative members or the village committee accountants act as the accounting staff in many cooperatives, and even many cooperatives do not have accounting staff, only the person in charge of cooperatives is responsible for the day-to-day account management[3].

2.2.2Imperfect financial management system of cooperatives. In 2007, the Ministry of Finance promulgatedFinancialAccountingSystemforFarmers’SpecializedCooperatives(forTrialImplementation), which stipulates that cooperatives should establish a sound financial management system. However, due to the low threshold of cooperative establishment and the weak awareness of financial management for the responsible persons of cooperatives, the financial system of most farmers’ cooperatives can not meet the corresponding standards. In reality, many farmers’ cooperatives do not have a sound financial system, although some farmers’ cooperatives have established some financial systems, they are never implemented, and some cooperatives have not even formulated a financial management system. It is mainly reflected in the following aspects:

(i) There are fewer accountants than usual. A very small number of farmers’ cooperatives have professional accounting staff, and among the 20 cooperatives surveyed, only 2 of them have professional accounting staff. Although some cooperatives set up the accounting post, the village committee accountants take this post as part-time job in most of the cooperatives. They generally have very busy official business or other things to deal with, can not specialize in the financial management of cooperatives. Some cooperatives do not even set up an accounting post, and the cooperative manager is directly responsible for the day-to-day financial registration management.

(ii) The accounting book registration lacks strict standard. Many cooperatives’ account setting and use lack strict standard, and there are many widespread problems such as arbitrary accounting, inconsistency between account books and funds, inconsistency between account and practice, and inconsistency between account books and vouchers. The accounts of some members of cooperatives do not have a complete record of funds, and the use of funds is not consistent with the reimbursement vouchers. Many cooperatives do not have complete accounting statements, so that cooperatives can not conduct effective financial management, it can not reflect the overall financial situation of cooperatives, which is not conducive to financial disclosure and financial supervision of cooperatives[4].

(iii) Accounting information is not complete. Many farmers’ cooperatives are organized by village committees, there is no independent office space, and it has to work together with village committees. However, due to the limited office space of the village committee, the accountant of the cooperative has no independent working area. As a result, the accounting files and information are often placed at random, and are easily lost and damaged, resulting in discrepancies in the bill of account at the time of later verification of account, making it difficult to establish complete books and statements.

(iv) Bill audit lacks strict standard. Owing to the limitations of the rural economy, many farmers’ cooperatives are unable to make out invoices for their normal expenses. This has become a common phenomenon in the transaction of farmers’ cooperatives, resulting in a lot of fictitious bills in the cooperatives. Even some large-scale transactions, such as the purchase of means of production, should be issued official invoices, but due to the negligence of the accounting staff, there are sometimes fictitious bills or note reimbursements in these transactions, which provides an opportunity for some people to embezzle the collective property of the cooperative.

2.2.3Lack of strict standard in the management of cooperative funds. The management of funds is the most important item in the financial management, while the proper management and rational distribution of funds is an important factor related to the long-term sustainable development of cooperatives, and is also the core attraction for the members of cooperatives. However, it is found in the survey that many cooperatives are faced with the capital management problems, seriously restricting the further development of cooperatives.

(i) The account management of cooperative members lacks strict standard. Article 36 ofLawonFarmers’SpecializedCooperativesclearly provides that farmers’ cooperatives shall establish member accounts for each member. The member account is the exclusive account of the member in the cooperative, which mainly records the contribution of the member, quantified share of the accumulation fund of the member, and the trading volume of the member with the cooperative. It is an important basis for economic transactions and distribution of benefits between members and cooperatives. In the survey, it is found that many farmers’ cooperatives only record the original capital contribution of the members on the account of the members, but the volume of the transaction between the members and the cooperatives is not recorded. The distribution of government grants by some cooperatives, as well as the specific amounts allocated at the end of the year, are not recorded in members’ accounts. Whether the cooperatives quantify the funds allocated for the members is not recorded in the accounts of the members. As the members of the farmers do not know about the relevant laws and regulations, and no one raises objections to the account of the members, this has led to jobbery in some cooperative managers, who may embezzle the government grants or cooperative public property, causing a serious violation of the interests of cooperative members.

(ii) The allocation of government financial subsidies is not strict. In recent years, the state has made it a national policy to help the new types of agricultural businesses, to construct the new agricultural operation system, and to accelerate the construction of modern agricultural economy. In such context, the local government continues to increase the policy support for the farmers’ professional cooperatives in the county, and the financial subsidy input is increasing, which provides financial support and technical guarantee for the sustainable development of farmers’ cooperatives. Cooperatives should establish exclusive accounts for financial grants, do a good job of accounting, correctly use financial grants, and make this money really used in the operation and development of cooperatives, so that all members benefit. However, it is found in the survey that there are huge loopholes and security risks in the management of financial subsidies for many cooperatives. For example, some cooperatives use illegal means to obtain government financial subsidies, they use the way of false transactions and collude with suppliers of means of production to make out false invoices for illegal acquisition of the government production subsidy. There are also some cooperatives that directly offset the costs incurred by the cooperatives with government production subsidy in the current period, and embezzle capital that should have been transformed into the cooperative development fund in disguised form, thereby preventing this portion of the assets from entering into the account book. In the year-end distribution, it naturally can not be quantified to the membership account, thereby achieving the purpose of converting government grants into personal assets.

(iii) Serious financing behavior of close relatives and random expense reimbursement audit. The close relatives or relatives of cooperative managers are in charge of finance and accounting in many farmers’ cooperatives, and there are many problems in accounts. The financial expenses of the cooperative are entirely up to the person in charge, and there is no need to go through the examination of the financial staff, or some of the financial expenses originally do not comply with the provisions. However, due to the close relationship between the person in charge of the cooperative and the financial manager, the green light will be given or the financial personnel, for fear of offending others, deliberately enter some private expenses into account in various names, thereby seriously infringing on the interests of the cooperative.

2.2.4Poor quality of financial staff of cooperatives. From the financial staff setting in the county cooperatives published by Weixian County, it is found that there is only one person responsible for cooperative financial accounting. Most of them are part-time accountants, and only some large-scale cooperatives have full-time accountants. The accounts of farmers’ cooperatives are simple and seasonal, and the cost of employing full-time accountants is high, and most of the cooperatives are set up by village committees. For the sake of cost and familiarity with rural economic business, the accountant of village committee will concurrently hold the post of accountant of cooperative. From the survey data, we can see that almost all of financial accountants in the cooperatives have no accounting certificate, and there are less than five cooperatives with certified cooperatives in the whole county, accounting for less than 10%. There are also some cooperatives whose financiers are not familiar with their financial policies. For example, the state has half tax or partial tax-free preferential policy for cooperatives, but the financial staff do not know about it, resulting in some wrong accounts, unable to form a complete financial statement, thus increasing the burden for the cooperatives.

2.2.5Difficult financing for cooperatives and inadequate funding. Due to the limitations of farmers’ cooperatives, farmers provide limited registered funds when joining the cooperatives. In addition, the financial management of cooperatives is not perfect, and the financing channels of cooperatives are not enough, so it is difficult to raise funds. In recent years, the state has issued a series of policies to encourage and support the new types of agricultural businesses, and encourage banks to provide loans to farmers’ cooperatives. However, because of the non-transparent financial management and imperfect financial statements in the cooperatives, most of the banks are not willing to take the risk of loans. Moreover, due to seasonal factors, the demand of cooperatives for loans does not match the main lending business of banks[4], making it difficult for cooperatives to get funds from banks. The resulting lack of capital for cooperatives makes it impossible to expand the scale of business, and the equipment and new technology can not be updated, seriously restricting the sustainable development and growth of cooperatives.

3 Recommendationsforstrengtheningthefinancialmanagementoffarmers’ cooperatives

The above financial management problems of farmers’ cooperatives have their own internal reasons, and also external economic environment reasons. The external environment can not be regulated and controlled by the cooperative itself, we put forward some recommendations only from the internal financial management of the cooperatives.

3.1IncreasingtheawarenessoffinancialmanagementinthecooperativesThe person in charge of the farmers’ cooperatives and all the members should fully realize the importance of financial management to the long-term sustainable development of the cooperatives. A good and standard financial management system is the prerequisite for the cooperative to become bigger and stronger. Cooperatives should constantly enhance their awareness of financial management, strengthen the study on the relevant provisions ofLawonFarmers’SpecializedCooperativesandFinancialAccountingSystemforFarmers’SpecializedCooperatives(forTrialImplementation), and conscientiously abide by the relevant systems. The government department in charge of cooperatives should also strengthen the awareness of financial management and financial supervision of cooperatives, and support the sustainable development of cooperatives by organizing the training of financial management of farmers’ cooperatives, implementing financial software management, supporting the construction of financial informatization of cooperatives, and strengthening the financial supervision of cooperatives[5].

3.2RegulatingandperfectingthefinancialmanagementsystemofcooperativesCooperatives shall abide by the relevant provisions ofFinancialAccountingSystemforFarmers’SpecializedCooperatives(forTrialImplementation), formulate a standardized and perfect financial management system, and strengthen the financial management of cooperatives. Through strengthening the relevant business training, supplementing the staff, regulating the book registration system, setting up the special financial accounting office, establishing the standardized financial accounting files and strengthening the supervision of financial audit, we can improve the financial management ability of the cooperatives and ensure the sustainable development of the cooperatives. The standardized and perfect system of farmers’ specialized cooperatives shall include the system of accounting checking, accounting subjects, accounting statements, accounting vouchers, accounting book and accounting file management system, regular accounting information publication system, account processing procedure system, asset inventory system, internal control system and income and expenditure examination and approval system.

3.3EstablishinganinternalsupervisionsystemforcooperativesandregulatingthefundmanagementCooperatives should establish and perfect their own internal supervision mechanism, and members enjoy the right to management and supervision. On the basis of the election of all the members, a special fund management committee should be set up to manage the account of the members, financial grants, verify and supervise the major transactions and expenditure of the cooperatives, so as to effectively manage the accounts of the members and ensure that the special financial grants can be used exclusively and be really used in practice. At the same time, it also prevents the abnormal operation in the financial management of close relatives in cooperatives, and protects the vital interests of the members.

3.4ImprovingthequalityoffinancialpersonnelFarmers’ cooperatives should standardize and improve the financial management system, employ full-time financial accounting personnel to engage in the cooperative’s account operation and financial work. Cooperatives should actively respond to the financial personnel quality training activities organized by the competent government departments, or the cooperatives themselves should conduct relevant financial and accounting training. At the same time, the cooperatives should have at least one licensed accountant in order to enhance the scientific financial management ability. Cooperatives should independently manage the responsibility, account, money and material according to the relevant system requirements. The financial personnel practice the appointment system, and it is necessary to select as far as possible the personnel who have the specialized quality and understand the cooperative’s business process. The competent authorities should actively organize the training of financial personnel of cooperatives, to improve their professional quality and level, and strive to meet the basic requirements of holding certificates for financial personnel of cooperatives.

3.5ActivelyexpandingfinancingchannelsforcooperativesandprovidingadequatefundingforthemselvesCooperatives should actively adapt to the changes of market economy, adjust their own financing ideas, expand the cooperative’s financing channels from various aspects, and enhance their ability to resist risks. First of all, the cooperative should innovate its own fund-raising mechanism, set up different shares to join the cooperative as well as the cooperative shares held according to the scale of the cooperative and the financial strength of farmers, in order to enhance the financing ability of the cooperative itself[6]. Secondly, cooperatives should actively employ private financing channels, and the cooperative’s financing needs are seasonal, in line with the characteristics of private lending, so the cooperatives can try to use private financing channels to enhance their financing capacity[7]. Thirdly, cooperatives should make use of government policy support, actively demand loans from banks, credit cooperatives and other national policy-oriented financial institutions. Based on the policy guarantees provided by the government, it is necessary to actively raise funds from national policy-oriented financial institutions, in order to improve their financial strength.

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