Electric Cooperative

QUARTERLY CHAPTER NEWSLETTER 1st Quarter 2007

National Director Russ Wasson T he President’s Messag e National Rural Electric Co-op Association (NRECA) On January 1 1, 2007 your ECC Directors met in the Delta (703) 907-5802 Crown meeting room at the Atlanta, GA airport to plan the 6th President Annual ECC Tax, Accounting, and Finance Conference. It was Gary Bartlett an historic occasion. This will be the first ECC conference Peace River Electric Co-op, Inc. offered to its members that is being held in conjunction with the (863) 767-4608 National Society of Accountants for Cooperatives (NSAC) Vice President Annual Convention and Tax Seminar. This arrangement will Eileen Goodwin provide members several benefits, including: WIN Energy REMC (812) 882-5140 • More economies of scale to offer higher quality facilities

Secretary and speakers. Theresa Crepes, CMA, CPA • An opportunity for the electric cooperative finance and Mid-Carolina Electric Co-op accounting professional to increase their strategic (803) 749-6468 perspective by interacting with other type co-op issues. Treasurer • A more focused and concentrated content agenda Todd Gabel specifically developed for top finance and accounting Midwest Energy , Inc. (785) 625-1412 professionals.

IN THIS ISSUE: Silver Star Coordinator The conference fee will be less than what members would Craig Lewis Rappahannock Electric have to pay to attend the NRECA Tax, Accounting, and n President’s Message - 1 Cooperative Finance Conference plus the electric cooperative tax pre- n National Directors’ Report - 2 (540) 891-5880 n Tackling the Removable conference will be free to ECC members. In addition, Device Threat - 4 Membership Chair attendees will be given a significant discount to the T eler gee n AccountingWeb.com - 5 Jeanette Johnson CFO Conference which will be held October 24-26 in n Treasurer’s Report - 7 Boone REMC Monterey, CA. T eler gee is a consortium of CPA firms from n Chapter New Members - 8 (765) 482-2390 around the country representing hundreds of telephone and Mentor Coordinator electric cooperatives. Y ou will be hearing more about Mark Maxwell Teler gee in future communications. Clay Electric Cooperative (352) 473-8000 This is an historic year , one that will expand the electric Newsletter Editor cooperative finance and accounting professional’ s strategic Russ Wasson National Rural Electric Co-op perspective necessary to confront the issues of tomorrow. Association (NRECA) (703) 907-5802 Gary Bartlett, Pr esident Electric Co-op National Office 136 South Keowee Street Dayton, OH 45402 937-222-6707 T el 937-222-5794 Fax Electric Cooperative Quarterly Chapter Newsletter N ational in 2007 than previous years. W e significant economic and social will also be reaching out to our roles in their communities. Below Director’s Re por t cooperative neighbors such as the are some facts about the Movement We are currently in the process of National Cooperative Business that demonstrate their relevance planning the Electric Cooperative Association, the credit unions, and contribution to economic and Chapter meeting as well as the telephone, housing, purchasing, etc. social development. NSAC Annual Meeting which will NCBA currently estimates that 154 take place August 5-8 th in million Americans are members of Large segments of the Minneapolis, Minnesota. I recently cooperatives. Many of us are population are members returned from the National Council members of multiple cooperatives. of co-operatives of Farmer Cooperatives annual The cooperative business model is meeting where the NSAC the only business model that • In Ar gentina, there are over Planning Committee synchronizes the needs of the 17,941 co-operative societies chaired by Don owners with the needs of the with 9.1 million members. Frederick of USDA and customers. • In Belgium, there were 29,933 the NSAC Board met The increased activity at the FASB co-operative societies in 2001. • to plan the agenda ensures that we must view In Canada, 1 in 3 individuals is a for the annual accounting as a strategic necessity , member of a co-operative (33%). meeting. I believe not as something to be done after The Desjardins co-operative that we are working the fact. As you all know, many of movement in Québec has over 5 with an outstanding the FASB proposals can have a million members. • agenda at this point, one drastic impact upon our financial In Colombia over 3.3 million which will offer statements. We must continue to be people are members of co- cooperative accountant proactive now and in the future, operatives or 8.01% of the professionals insights into particularly as international population. (Sour ce: CONFECOOP. complex technical topics as they convergence of accounting Sector Cooperativo Colombiano 2005) • relate specifically to cooperatives. standards continues to evolve. The Costa Rica counts over 10% of its population as members of Also, we will have speakers on international cooperative community is significantly larger co-operatives. related issues such as technology • Finland, S-Group has a and economics. Y ou will be than the cooperative community in the United States. membership of 1,468,572 learning more about the Electric individuals which represents Cooperative chapter meeting as Statistical 62% of Finnish households. well as the NSAC Annual Meeting (Sour ce: SOK Corporation Annual in the near future. I look forward Inform ation on the Report 2004) to seeing you in Minneapolis! Co-operative • In Germany, there are 20 million The NSAC Board has been M ovement people who are members of co- discussing reaching out to other operatives, 1 out of 4 people. cooperative’ s and focusing on The Co-operative Movement • In Japan, 1 out of every 3 cooperative specific education for brings together over 800 million families is a member of a co- all of our cooperative accountant people around the world. The operative. brothers and sisters. Specifically , United Nations estimated in 1994 • Kenya 1 in 5 is a member of a we are focused on delivering more that the livelihood of nearly 3 co-operative or 5.9 million and value to the membership by billion people, or half of the and 20 million Kenyans directly keeping the cost per CPE dollar as world’s population, was made or indirectly derive their low as possible. In light of this, secure by co-operative enterprise. livelihood from the Co-operative we will be offering more webinars These enterprises continue to play Movement.

2 Electric Cooperative Quarterly Chapter Newsletter • In India, over 239 million people health care services for 15.5% USD 11 billion. The Korean are members of a co-operative. of the population. Coffee co- fishery co-operatives also report • In Malaysia, 5.4 million people operatives market 33.78% of a market share of 71%. are members of co-operatives. Colombian coffee. Financial co- • In Kuwait, the Kuwaiti Union of • In Singapore, 32% of the operatives hold 5.8% of the Consumer Co-operative population (1.4 million people) financial service market. Societies handled 80% of the are members of a co-operative. (Sour ce: CONFECOOP. Sector national retail trade. • In the United States, 4 in 10 Cooperativo Colombiano 2005) • In Latvia, the Latvian Central individuals is a member of a co- • In Cyprus, the co-operative Co-operative Union is operative (25%). movement held 30% of the responsible for 12.3% of the market in banking services, and market in the food Co-operative are handled 35% of all marketing of industry sector . significant economic agricultural produce. • In Moldova, the actors in national • In Denmark, consumer co- Central Union of economies operatives in 2004 held 37% of Consumer Co- the market. (Sour ce: Coop Norden A B operatives were • In Belgium, co-operative annual r epor t 2004) responsible for pharmacies have a market share • Finnish co-operative groups 6.8% of the of 19.5%. within Pellervo were consumer market. • In Benin, FECECAM, a savings responsible for 74% of the meat • In Norway, dairy and credit co-operative products, 96% of dairy products; co-operatives are federation provided USD 16 50% of the egg production, 34% responsible for million in rural loans in 2002. of forestry products and handled 99% of the milk • In Brazil, co-operatives are 34.2% of the total deposits in production; responsible for 72% of the wheat Finnish banks. consumer co- production, 44% of barely, 43% • Hungary, consumer co- operatives held of soy, 39% of milk, 38% of operatives members of Co-op 25% of the market; fisheries co- cotton, 21% of coffee and 16% of Hungary are responsible for operatives were responsible for maize. Agricultural co-operatives 14.4% of the national food and 8.7% of total Norwegian exports; exported over USD 1.3 billion. general retail sales in 2004. forestry co-operatives were • In Bolivia, Cooperativa de (Sour ce: Co-op Hungar y, S tatistical Data responsible for 76% of timber Ahorro y Crédito “Jesús 2004) and that 1.5 million people of the Nazareno” Ltda. (CJN) handled • In Japan, the agricultural co- 4.5 million Norwegians are 25% of the savings in Bolivia in operatives report outputs of member of co-operatives. 2002. USD 90 billion with 91% of all • In Poland, dairy co-operatives • Canadian maple sugar co- Japanese farmers in are responsible for 75% of dairy operatives produce 35% of the membership. production. world’s maple sugar production. • In Kenya, co-operatives are • In Singapore, consumer co- • In Côte d’Ivoire co-operatives responsible for 45% of the GDP operatives hold 55% of the invested USD 26 million for and 31% of national savings and market in supermarket purchases setting up schools, building rural deposits. They have 70% of the and have a turnover of USD 700 roads and establishing maternal cof fee market, 76% dairy, 90% million. clinics. pyrethrum, and 95% of cotton. • In Slovenia, agricultural co- • In Colombia, 6,462 co-operatives • In Korea, agricultural co- operatives are responsible for were responsible for 5.25% of operatives have a membership 72% of the milk production, 79% the GDP in 2005. Saludcoop, a of over 2 million farmers (90% health co-operative, provides of all farmers), and an output of Continued on page 6

3 Electric Cooperative Quarterly Chapter Newsletter DISCUSSION WHITEPAPER T he Security T hre at Devices,” Gartner suggested that These devices also present a huge organizations forbid attachment of “Ta ckling the potential security headache, that privately owned portable storage Removable bypasses many of the security devices to corporate PCs. The measures that organizations have report also recommended that D evice T hre at” put in place. Any individual with desktop PCs be carefully configured to remove or disable Jane is an office temp. She has access to a computer within an drivers needed to use such been recruited by a rival firm to organization can quickly copy unauthorized devices. steal your company client list. information and walk out of the During lunch the office is virtually front door undetected within This, however, is easier said than deserted, so she plugs her 512Mb minutes. As the devices generally done. USB memory stick into connect to the USB (or firewire) T he Solution the PC she is using and port, W indows will happily install copies several folders the device automatically and So what can be done to protect and your client database doesn’t require the user to have from this threat? The obvious from the local and any administrator rights. solution would seem to be to network drives. She Information copied to the device disable USB support, thereby unplugs and pockets can be anything that can be preventing the PC from installing the memory stick accessed by the user of the the Flash Drive in the first place. and continues her computer; this could be the This however is not as easy as it work. The whole process customer database, source code might appear as USB / Firewire takes less than 5 minutes, for unreleased software, expensive devices cannot be managed and nobody knows that she research or even the computer ’s through W indows Group Policies has stolen more than own password file. Besides – and what about legitimate USB 300Mbytes of your corporate cleaners, temps, contractors and keyboards and mice –how would data. This all too possible scenario disgruntled employees looking to they continue to function if all illustrates a growing security concern. move to a competitor or leak USB support were to be disabled? The fear is that people will use USB information to others, access can The best technical solution is to memory sticks, iPods, MP3 players, install a dedicated third party Smartphones, PDA’s and the like to also often be gained by outsiders product such as DeviceLock, upload malware, steal data from using simple social engineering corporate networks, and share stolen techniques. T o date most which is designed from the ground software, MP3 or A VI files. organizations have made it up to control, and audit access to difficult for users to copy large all aspects of the PC’ s removable Introduction amounts of data by restricting device configuration, including Most people now own some form devices such as CD writers to IT USB ports, bluetooth, W ifi, of removable storage device. USB staff. Additionally , email monitoring Firewire, CD writers, floppies, Memory stick, flash drive, smart and content filters prevent users tape drives and more. phone, iPod, PDA, music player , emailing files and firewalls and More information on DeviceLock digital camera - the list is nearly monitoring software minimizes the can be found at http:// endless. W ith no moving parts and opportunities for transfer of permanent storage they are more w w w .pestscan.co.uk/devicelock information over the Internet. reliable and rugged than CDs, and A Computer Usage Policy is also they typically offer up to 2Gb or None of these, however , prevent the essential. In addition to specifying more of storage space. The benefits copying of data to or from a the use of Internet and email, this of these devices are obvious; fast, memory stick. should make explicit statements painless transfer of files between banning storage of organization virtually any computer , and durable, In its report, “How to T ackle the portable data storage. Threat from Portable Storage information on personal devices -

4 Electric Cooperative Quarterly Chapter Newsletter and specifically Flash Drives. By R elease of GAPP provides step-by-step guidance on making clear statements the how businesses and other entities common user defense of ‘I didn’t -A Global Priva cy can use the document. The realize it meant that?’ is negated. Framework document references domestic and A total ban on Flash Drives could international privacy regulations, be added, but their size and AccountingWEB.com - January incorporating complex privacy portability means that they may 17, 2007 - The American Institute requirements into a single privacy still ‘accidentally’ be brought into the of Certified Public Accountants objective supported by 10 privacy office. Good security awareness and (AICPA) and the Canadian Institute principles. Each principle is training is also effective in ensuring of Chartered Accountants (CICA) supported by objective, users know about and understand have announced the recent release measurable criteria that need to be the policy and the reasons for it. of Generally Accepted Privacy met. Examples of policy Principles (GAPP) – a Global A good Computer Usage Policy will requirements, Privacy Framework. also state that breach of the policy communications and may lead to disciplinary action and The new GAPP is available in two controls, including potential dismissal, giving the versions, one for business and monitoring controls organization the authority to sack management and the other for CPAs are provided as offenders. in public practice that provide support for the consulting and attestation services. criteria. The AICPA T o prevent unauthorized access This document supersedes the and CICA tracked users should be instructed to lock AICPA/CICA Privacy Framework the impact of the their PC when they leave it and published in 2003. In developing 2003 policy framework use a password protected the GAPP the AICPA and CICA and found that it had been screensaver with a minimum expanded on the framework to accepted and widely used: timeout of 5 minutes or less should address risk arising from • be used. This can also be enforced As the basis for international privacy using W indows group policy. independent considerations and outsourcing. privacy audits by several large Conclusion “Managing privacy risk can be organizations, even a more significant challenge Flash Drives are an example of an • By commercial entities in for organizations operating in a interesting and useful technical developing products and multi-jurisdictional environment,” device that presents a new services, and challenge to IT security . This is says Everett C. Johnson, CPA, • best tackled with a logical and chair of the AICPA’s Privacy T ask By business as a benchmark in practical approach to the problem Force and a retired partner with creating internal privacy that considers the real world and Deloitte & Touche LLP. practices. business issues and solves these “Organizations need to be aware of Several organizations worked in through not only technical significant privacy requirements in conjunction with the AICPA and solutions, but using a mixed all the jurisdictions in which the CICA on the GAPP, including approach involving processes and organization does business. In Information Systems Audit and people, common of many addition, the use of outsourcing, Control Association (ISACA) and information security issues today . which allows businesses to focus the Institute of Internal Auditors. A on their core competencies while downloadable version of still meeting customer needs, raises “Generally Accepted Privacy significant additional privacy Principles; A Global Privacy considerations.” The new GAPP Framework”can be can be found at document includes a section that w w w .aicpa.or g/privacy and w w w .cica.ca/privacy .

5 Electric Cooperative Quarterly Chapter Newsletter Continued from page 3 co-operatives) is the largest employer in the province of of cattle; 45% of wheat and 77% Québec. of potato production. • In Colombia, the co-operative • In Sweden, consumer co- movement provides 109,000 jobs operatives held 17.5% of the and an additional 379,000 as market in 2004. (Sour ce: Coop owner-workers in workers co- Nor den AB annual r epor t 2004) operatives. They provide 23% of • In the UK, the largest the jobs in the health sector , 18% independent travel agency is a of the jobs in the transport sector , co-operative. 13% in the worker/industrial • In Uruguay, co-operative produce sector , 1 1% in the financial 90% of the total milk sector and 9% in the agricultural production, 340% of sector . (Sour ce: CONFECOOP. Sector honey and 30% of Cooperativo Colombiano 2005) wheat. Sixty percent of • In France, 21,000 co-operatives co-operative provide jobs to 700,000 people. production is • In Germany, 8,106 co-operatives exported to over 40 provide jobs for 440,000 people. countries around the • In Italy, 70,400 co-operative world. societies employed nearly one • In V ietnam, co- million people in 2005. (Source: operatives contribute Camere di Commercio d’Italia, 8.6% of the Gross “Secondo rapporto sulle imprese Domestic Product cooperative”) (GDP). • In Kenya, 250,000 people are • In the United States more than 30 employed by co-operatives. co-operatives have annual • In Slovakia, the Co-operative revenue in excess of USD 1 Union represents more 700 co- billion. In 2003 the top 100 US operatives who employ nearly co-operatives had combined 75,000 individuals. revenues of USD 117 billion. In addition, approximately 30% of W e, quite honestly , must do a better farmers’ products in the US are job of capitalizing on our strength marketed through 3,400 farmer- and diversity to ensure that owned co-operatives. cooperatives continue to not only prosper , but thrive here in the US Co-operatives cre ate and as well as internationally . I look maintain employment forward to working with you on this quest. • Co-operatives provide over 100 million jobs around the world, 20% more than multinational enterprises. • In Canada, co-operatives and credit unions employ over 160,000 people. The Desjardins movement (savings and credit 6 Electric Cooperative Quarterly Chapter Newsletter

Treasurer’s Report

For Qtr. For Qtr. For Qtr. For Qtr. Y T D Ending Ending Ending Ending 12/31/06 9/30/06 6/30/06 3/31/06

Revenues Membership dues 1470.00 545.00 300.00 2075.00 4390.00 Annual meeting fees -0--0--0- -0- -0-

Contributions for early bird -0--0--0- -0- -0- prizes at annual meeting Cooperative acctng. course fee Basic accounting course -0--0--0- -0- -0- Advanced acctng. course -0--0--0- -0- -0- Interest 171.92 254.10 236.88 212.27 875.17 Other -0--0--0- -0- -0-

Total 1641.92 799.10 536.88 2287.27 5265.17

Expenses Annual meeting, including 14740.03 1310.88 -0- 1944.82 17995.73 early bird prizes Cooperative accounting -0--0--0- -0- -0- courses Postage and supplies -0--0--0- -0- -0- Directors’ expenses -0--0- 659.87 -0- 659.87 Other Newsletter printing 251.18 -0--0- 313.20 564.38

Total 14991.21 1310.88 659.87 2258.02 19219.98

Excess of revenues over (13,349.29) (511.78) (122.99) 29.25 (13,954.81) expenses Cash balance, beginning 56,548.52 57,060.30 57,183.20 57,154.04 57,154.04 Cash balance, ending 43,199.23 56,548.52 57,060.30 57,183.29 43,199.23

7 Electric Cooperative Quarterly Chapter Newsletter

L yvonnia S. Poppell Kent R. Springman N ew Members Jackson Thornton & Co., PC Continental Cooperative Services October 2006 to Mar ch 2007 P.O. Box 96 212 Locust Street Montgomery, A L 36101-0096 Harrisbur g, PA 17101 Sherri L. Gibson 334-834-7660 717-901-4454 Baldwin County Electric [email protected] [email protected] Membership Corp. P.O. Box 220 Foster Hildreth W illiam Joseph Setlif f Summerdale, A L 36580 Orcas Power & Light Goodman & Company 251-989-0116 183 Mt. Baker Road 110 Exchange Street [email protected] Eastsound, W A 98245 Danville, V A 24541 360-376-3515 434-792-5334 Paulla I. Harris [email protected] Midwest Energy, Inc. Stephen B. Burroughs P.O. Box 898 M. Scott Blassingame North Carolina Electric Membership Hays, KS 67601 Central Service Association Corp. 785-625-1417 P.O. Box 3480 P.O. Box 27306 [email protected] T upelo, MS 38803 Raleigh, NC 2761 1-7306 662-842-5962 919-875-3099 Heidi H. Lee [email protected] [email protected] Jackson Thornton & Co., PC P.O. Box 96 Montgomery, A L 36101-0096 334-834-7660 [email protected]

Electric Cooperative Chapter Newsletter 136 South Keowee Street Dayton, Ohio 45402 w w w.nsac.coop