16 BULLETIN 860, U. S. DEPARTMENT OF AGRICULTURE. 



Article V. — Duties of Directors. 



Section 1. Management of business. — The Board of Directors shall have gen- 

 eral supervision and control of the business and the affairs of the Association 

 and shall make all necessary rules and regulations not inconsistent with law 

 or with these By-Laws, for the management of the business and the guidance 

 of the officers, employees, and agents of the Association. They shall have 

 installed an accounting system which shall be adequate to the requirements of 

 the business, and it shall be their duty to require proper records to be kept of 

 all business transactions. 



Note. — The Bureau of Markets ha'' devised systems of accounts for several lines 

 of cooperative business, such as grain elevators, fruit organizations, creameries, live 

 stock shipping associations, and stores. Information regarding systems of accounts 

 may be obtained by writing to the Bureau of Markets, U. S. Department of 

 Agriculture. 



Sec. 2. Employment of manager. — The Board of Directors shall have power 

 to employ and to dismiss a business manager, and to fix his compensation. 



Sec. 3. Bonds. — The Board of Directors shall require the Manager and all 

 other officers, agents, and employees charged by the Association with responsi- 

 bility for the custody of any of its funds or property to give bond for the same. 

 Such bond shall be furnished by a responsible bonding company approved by 

 the Board of Directors, and the cost thereof shall be paid by the Association. 



Note. — It is advisable to have bonds furnished by a bonding company for the reason 

 that such companies usually investigate the past record of all applicants for bond, 

 and also endeavor to keep a check upon their habits and behavior while bonded, thus 

 rendering a specific service in addition to the bond protection. 



Sec 4. Meetings. — The Board of Directors shall meet four times per year, at 

 least once in each quarter, at the principal office of the Association. Special 

 meetings of the Board shall be held upon call of the President or upon written 

 request of [three] members of the Board. 



Sec 5. Annual audits. — At least once in each year the Board of Directors 

 shall secure the services of a competent and disinterested auditor or accountant, 

 who shall make a careful audit of the books and accounts of the Association 

 and render a report in writing thereon, which report shall be submitted to the 

 members of the Association at their annual meeting. This report shall be based 

 upon an actual physical inventory of all property, produce, merchandise, and 

 moneys belonging or owing to and by the Association, and the last report shall 

 furnish the basis for determining the book value of the shares of capital stock. 



Sec. 6. Depreciation. — Annually the Board of Directors shall cause to be 

 charged as part of the operating expense of the Association an amount not less 

 than — per cent of the original value of all buildings, — per cent of the original 

 value of all machinery, and — per cent of the original value of all office fixtures 

 and equipment, which amount shall be reserved for depreciation. 



Note. — Five per cent on frame structures, 21 per cent on concrete and brick, and 10 

 per cent on machinery and office fixtures is generally regarded as reasonable. The 

 rate of depreciation should be fixed with reference to kind of property and deductions 

 allowable in making income tax returns under the Internal Revenue Laws. 



Sec 7. Educational work. — The Board of Directors are authorized to con- 

 duct educational work for the purpose of stimulating interest in cooperative 

 activity: to subscribe for and have sent to the members such cooperative lit (Ma- 

 ture and publications as they may determine upon, and to obtain membership 

 for this Association in any State association or other organization of coopera- 

 tive companies which may tend to further the object and purposes of this Asso- 

 ciation. 



