16 BULLETIN 860, U. S. DEPARTMENT OE AGRICULTURE. 
Aeticle 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 has 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, 2| 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 ivork. — 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 litera- 
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. 
