As repeatedly stated, the commitment of members as well as the participation by members, are the life-blood of the association, and the association should adopt important changes in its form to ensure the loyalty of members.
Though the association should be based on democratic control which may be interpreted in the concepts of open membership and non-discrimination, there must be among the members a certain degree of compartability and bond of association on which to base commitment of and participation by members. This may be effected in the category of full-time fishermen of the PN's membership.
If circumstances permit, it is recommended that fishing boat crews be classified under a separate category from that of Section 11(1)a of the Fishermen's Associations Act 1971, and that the PN should organize these crews into some kind of separate group within the framework of PN, and select their representatives to form a committee to deal with their particular interests.
It is also recommended that the majority of seats in the board of directors be given to those who shall be elected from among members under the category of 11(1)a, full-time fishermen (owner operators), whose volume of business with the PN will provide a major boost to the viability of the association.
The PN is administered and run by two quite distinct groups; on one hand, elected laymen chosen by the members, and on the other, appointed managers and personnel selected by the board of directors.
Successful leadership in the PN depends on the mutual confidence between laymen and management, neither one trying to overlap the authority of the other.
However, due mainly to the weakness in the ability of elected lay leaders, the management which has been seconded by the government through LKIM, has played a major role over policy making and board functions, which resulted in members considering the PN as a government agency.
Furthermore, the management which has been seconded by LKIM, is also weak in managerial capability, especially lacking technical and business experience. This has been a dominant factor in the chronic difficulties in the management of the PN.
It is strongly recommended that the management seconded by LKIM be withdrawn from the PN, and that the PN recruit and appoint a professional management. This procedure requires the approval of the Registrar or Minister.
Though training and seminars have repeatedly been given to members of the board of directors of the PN, no remarkable improvements in managerial ability and aggressiveness have so far been observed as a result of such seminars and courses.
Therefore, it is recommended that a case study and/or workshop seminar be organized with all members of the board of directors of the particular PN on the actual state of management of the association. It seems that the lectures given to them in the past have not been effective to upgrade their ability and skills.
It is also recommended that the preparation and conduct of such a case study and/or workshop seminar be undertaken by the National Fishermen's Association (NEKMAT) as part of its extension service, since a major function of the national association should include training and education. The cost of such seminars should be borne by the national association as the association must take an obligation upon itself to provide particular services to all area fishermen's associations in return for annual subscriptions paid indirectly by them and profits made on particular economic activities, e.g. diesel and gear supplies.
The accounts of every fishermen's association should be audited by the Registrar or by some person authorized by the Registrar at least once every year, as provided by Section 25 of the Fishermen's Associations Act 1971.
The accounts of the Tumpat Area Fishermen's Association have been audited by an external auditor authorized by the Registrar for many years. However, such audits have been carried out only on the accounts of the PN based on accounting principles. These reports have been of second rate value and incorrect in some parts as mentioned in the paragraph 8.3. above.
In principle, the audit of any association should be undertaken regularly not only on accounts based on proper accounting principles but also on the execution of power of the board of directors and management entrusted by members to exercise that power and the performance of economic and social activities, based on the Act and regulations, the constitution and rules of the association concerned, and the resolutions adopted by the general meetings of such an association. Furthermore, such audit should be carried out by a person or persons representing not only the Registrar but also the interest of the members of such an association.
If the circumstances permit, it is recommended that a provision shall be stipulated in the Act to establish a board of auditors within each of the fishermen's associations by which members shall be elected or appointed from among members of such association to act as auditors.
It is also recommended that the audit carried out by such a board of auditors be directly assisted by a team of internal professional auditors provided by LKIM. In addition, the team of LKIM internal auditors should visit every fishermen's association to provide periodic assistance not only to the board of auditors but also to the management.
Furthermore, the Registrar should remove any of the authorized external auditors once their performance is found to be of incompetent, as has been seen in the auditor's reports for the Tumpat Area Fishermen's Association.
As mentioned previously, the Tumpat PN has extended its economic activities in a variety of projects some of which have been a heavy burden to the PN's finances.
Accumulated losses of the Tumpat retail shop have already reached more than M$150 thousand, and if losses accrued from the Geting retail shop, which are not represented in the current accounts of the PN, were to be added to the losses of the Tumpat retail shop, the accumulated total losses would have been a heavy burden for the PN management.
The Tumpat repair shop project together with the anticipated repair shop in Geting had invested almost M$100 thousand in machinery, equipment and tools. The shop has now been leased out to a private enterpreneur at a monthly rental of M$400 complete with machinery, equipment and tools.
It is therefore strongly recommended that the Tumpat Area Fishermen's Association should close these projects and an attempt should be made to sell the assets, e.g. merchandise in the retail shop and machinery and equipment in the repair shop, and any cash funds obtained in this manner could be used to increase the net working capital of a major project such as fish marketing.
Furthermore, the PN should concentrate its management effort on a major line of economic projects which should be directly related to the fishing industry, such as fish marketing and input supplies. If a fish auction is implemented in the anticipated fish complex in Tumpat area next year, the business volume of the PN should be increased with adequate net profits.
The Tumpat PN has carried heavy receivables the majority of which had already been frozen for many years especially in the retail shop and fuel supply projects. Though the fish marketing project is also carrying quite large amounts in its receivable account, most of them can be regarded as current accounts.
As the PN has decided to include credit among its selling tools, the PN should have established a credit policy to serve as the cornerstone of sound credit administration, directing and controlling the credit operations to attain the functions that may be expected from sound credit management. However, the PN has never attempted to establish such a policy nor a sound credit management system and this has caused the PN chronic problems of collection.
Therefore, it is recommended that the PN establish a well-organized but simple credit management system which may consist of two major parts; one may be called a credit policy, and the other a collection system.
When credit is offered by members or dealers for goods including fish and services, the management staff of the PN must decide whether to accept or refuse the credit transaction. Judgement and decision should be based on criteria instituted from the information readily and economically available and most pertinent to the problem.
A well-designed collection system may be compared to a series of screens over which the accounts are passed for the purpose of classification. The earlier screens are low in cost and handle the member or dealer gently to preserve good will. The latter screens are less routine and cost more to apply, may be somewhat sharper in action and thus do not preserve good will with such certainty, and tend to classify the reluctant debtors into much smaller and more exact assortments.
The credit policy and collection system shall be recommended in detail in a separate paper.
Successful management should be based on comprehensive management information gathered periodically during the course of business operations of the PN.
As already mentioned earlier, the Tumpat PN has never attempted to organize such information to monitor and evaluate progress of various economic activities.
The effective operation and administration of various activities of the PN should also be based on programmes to organize not only staff but also functions related to the activities. The programmes should cover not only economic activities but also administration of general affairs as well as social matters.
It seems that the management staff of the PN has run about in confusion to cope with situations arising from everyday operations without having any programmes or arrangements laid down beforehand. Therefore, the management has failed to forestall any problems and situations often arising from normal course of everyday operations of business activities.
It may be ideal for the PN to formulate long and medium term planning and strategies for its operations and management although, the PN is still not able to formulate such planning or strategy for more than one year. It is, therefore, recommended that the PN formulate one year plans of operation and finances of various economic activities figures of which should be divided on a monthly basis as a target of operation for each month. This practice should be continued until the PN builds up a firm foundation of day to day management.
Also, the implementation of day to day management should be supported by a simple but well-organized daily reporting system for the management staff to monitor progress of particular activities so that, if the progress of a particular project should be found out of line in any important aspect from figures represented in a daily report, the management staff will be able to bring the business activity back to the proper course promptly.
The formulation of a short-term programme for the economic activities of the PN together with the reporting system in detail shall be described in a separate paper.
The PN Tumpat is now distributing copies of the auditor's reports on the accounts of every economic project, general account and the consolidated accounts together with the report of the board of directors to members at the annual general meetings of the PN. These reports have amounted to massive volumes of papers.
It seems that none of the members paid any attention to the reports because of the complexity of figures presented in the financial statements. In addition, the costs of printing of such massive amounts of material have been a heavy burden on the PN.
The PN should summarize the auditor's report into a brief statement which may indicate and emphasize important aspects of operation and finances of the past year supported with some illustrations and graphs so as to stimulate the interest and concern of members.
A sample of a summarized annual statement shall be presented in a separate paper.
Though the PN accounting has not fully conformed with the system recommended in the accounting manual for area fishermen's associations prepared by LKIM in 1982, the manual is not necessarily competent in view of the existing situation of operations and finances of the PN, as well as of accounting principles.
Therefore, it is recommended that amendments be made to some parts of the manual, especially on the table of accounts and book-keeping procedures. In addition, to prevent misposting in book-keeping, it may be desirable to introduce an accounting slip to ensure a double-entry in book-keeping. The slip made in triplicate should be provided with columns to record titles of accounts, accounting codes and amounts for both debit and credit, of which the first copy shall be used to record the transaction in the general ledger, the second in debit of an account of a particular item, and the third in credit of an account also of the respective item.
Another improvement in the accounting system should be made in the closing of books for each day. If a daily balance sheet is arranged to post all transactions arising from a particular day's operations to the columns of debit and credit of the respective items of account with their monthly and annual cummulative totals or balances, it may be more easy and certain to confirm whether all entries recorded in the books for the day are balanced or not. This daily practice should be applied not only on various project accounts but also on the consolidated accounts.
Amendments and additions to be included in the existing accounting manual will be recommended in detail in a separate paper.
The PN now provides a separate cash account for each project and a general account with a separate bank account for each. Frequent borrowing and lending between different projects has occurred when the working capital ran out.
The financial control of the PN must be administered in an integrated manner by the general manager, and not be divided into different projects except for an allocation of petty cash, because the capital contribution is made totally to the PN by members and not separately to the projects. In this manner, there would be no loans, nor receivables or payables accrued between different project accounts within the PN. This would save unnecessary trouble in book-keeping and management.
Furthermore, contributions to various funds, e.g. the education support fund and the fishermen's emergency fund, as well as to the state fishermen's association should be made from the general account whose resources should be replenished by contributions from all economic project accounts. Expenses of the general meeting and the board of directors should also be disbursed from the general account whose resources should also be covered by those contributions made by all economic projects together with other necessary expenditures of the general account.
Therefore, it is recommended that a criteria of sharing such contributions among all economic projects should be established and standardized.
