krta how this report can bring value to your cooperative
Post on 17-Jan-2016
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KRTAHow this report can bring value to your cooperative
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Created and Owned by America’s Electric Cooperative Network
Changes to the KRTA Report- Added a Modified Blended Interest Rate Ratio
- Separate report available on CFC website- Will show median and count but no rankings for all
peer groups
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Created and Owned by America’s Electric Cooperative Network
Tool Pak
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Created and Owned by America’s Electric Cooperative Network
TVA Peer Group- TVA has an excellent power supply peer group
- 2013 there were 42 system reporting in the peer group
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Created and Owned by America’s Electric Cooperative Network
How I Used the KRTA Report
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Created and Owned by America’s Electric Cooperative Network
KRTA AnalysisTwo ways (of many) that I think the KRTA can bring value…
1.Internal Control Tool
2.Identify SWOT’s
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Created and Owned by America’s Electric Cooperative Network
Internal Control Looking for anomalies
Go through the entire report and identifying questions
Smell Test
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Created and Owned by America’s Electric Cooperative Network
Internal ControlWith major change comes the opportunity for existing issues to be brought to light or new issues to be created.
– CIS/FIS Conversions– AMI Conversions– Turnover/Personnel Changes/Retirements– New Auditors
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Created and Owned by America’s Electric Cooperative Network
KRTA AnalysisExamples of findings from KRTA Report
– Capitalizing payroll– Employee time entry– Tax Allocations
- Accounting procedures
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Created and Owned by America’s Electric Cooperative Network
Example
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Created and Owned by America’s Electric Cooperative Network
Example
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Created and Owned by America’s Electric Cooperative Network
ExampleWrite-offs
This is an example of where the change in state rank told more than the ratio itself.
Ratio 59 Amount Written Off as a % of Operational RevenueYear Ratio State Rank04 0.43 905 0.37 1206 0.48 607 0.30 1108 0.20 1009 0.42 810 0.62 511 0.73 212 0.78 113 0.62 1
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Created and Owned by America’s Electric Cooperative Network
Summarize Internal Control– Any break from the norm should be investigated
– Remember the “smell test”
– Your rank can tell you a lot
– Any ratio that leaves you at one end of the scale or the other is one you might want to focus on.
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Created and Owned by America’s Electric Cooperative Network
SWOT– Strengths: Areas that are identified as strengths need to be
communicated to the Board and membership. Co-ops do not “brag” enough (reliability, cost, rates)
– Weaknesses: Often items that are partly outside your control. Need to be analyzed as a management team and strategies developed for improvement
– Opportunities: Areas where management thinks improvement can be made inside a strategic window
– Threats: Identify areas that might be subject to negative change (power costs, labor)
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Created and Owned by America’s Electric Cooperative Network
Strengths1. Things we are doing well
– Financial– Blended interest rates– Sales related
2. Things that have improved – Write-off’s– Line loss– Reliability
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Created and Owned by America’s Electric Cooperative Network
Weaknesses What are the inherent weaknesses of our coop that
are outside our control– Density– Load– Expense related
Informs Directors there are on management’s radar while also informing directors that some things are out of managements control
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Created and Owned by America’s Electric Cooperative Network
Opportunities Help strengthen management’s case for allocating
resources– Write-off’s– Overtime– Expenses– Losses
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Created and Owned by America’s Electric Cooperative Network
Threats What issues are on the horizon? Where is the coop now and where might we end
up?– Power cost– Large commercial sales– Financial– Rates– Equity
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Created and Owned by America’s Electric Cooperative Network
Summary Communicate - Get the conversation started
Plant seeds
No surprises
Thank YouQuestions?
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