Franklin Rural Electric Cooperative

“The cooperative is comprised of a single class of approximately 1,462 member-owners, each of which has equal rights in ownership, governance, and voting rights at the annual meeting, with the exception of member-owners who are elected to the board of directors.”

“Each of the three districts are represented by one or more board members which member-owners of the cooperative have the authority to elect at the annual meeting. Each year directors are elected at the annual meeting.”

“Changes to the governing documents (articles of incorporation) must be approved by the member-owners after they have been approved by the board of directors. Approval occurs when at least 50% of the member-owners vote in favor of the changes. Changes to the by-laws may be made by the board, by a vote of 75% of the directors.”

“A copy of form 990 was presented to and reviewed by the board of directors at the monthly board meeting prior to submitting it to the irs.”

“A conflict of interest policy will be signed by each director annually or when a new director is appointed. The board president will address any conflicts of interest and take appropriate action if any director is not complying with the conflict of interest policy.”

“A review of all employees' compensation in comparable cooperatives of similar size and location is discussed by the board of directors, there is no written contract. This process was last conducted in 2019. This process is documented in the minutes.”

“Governing documents, conflict of interest policy, and financial statements are available upon request to the members, authorized agents, and attorneys.”

“The irs instructions state that patronage dividends paid by section 501(c)(12) organizations to their members should be reported on line 4. The organization has interpreted patronage dividends paid to mean patronage dividends allocated or to be allocated for the current year. Since this allocation is not an expense under generally accepted accounting principles (gaap), this has resulted in a reconciling item to net assets in part xi on page 12 of the form 990 and in part xii on schedule d.”

“Capital credits retired -278,344. Patronage dividends allocated 266,427. Change in other equities 497. Retired capital credits gain 8,559. Scholarships paid 15,337. Other change in assets -1,001.”

“The board of directors assume responsibility for oversight of the audit of its financial statements and selection of an independent accountant. This process has not changed from the prior year.”