Controlling Dualism in Sharia Cooperative and Spirit of Institutional Progressivity

Act no 1 of 2013 on micro-fi nance insti tuti on makes controlling dualism for a micro-fi nance insti tuti on, cooperati ve, including sharia cooperati ve. In that act, every micro-fi nance insti tuti on that operati ng its business must choose between a cooperati ve or limited liability company (PT) as a legal enti ty. According to the act on cooperati ve and act on the microfi nance insti tuti on, Sharia cooperati ve can be supervised by Finance Service Authority (OJK) or cooperati ve and micro-medium enterprise service. This dualism makes diff erences in how to determine controlling insti tuti ons for sharia cooperati ve. One of the contributi ng factors is the diff erences in controlling regulati on between act on cooperati ve and act on the microfi nance insti tuti on. The result of this research shows that there are diff erences in controlling between act on cooperati ve and act on the micro-fi nance insti tuti on. The way of controlling, according to act on cooperati ve emphasizes principles to give autonomy, independency, and leniency to a cooperati ve. Whereas, the controlling model which implemented by OJK emphasize on prudenti al banking principles.


Introducti on
The development of cooperati ve in Indonesia is quite signifi cant. A data published by the cooperati ve department, as of 31 December 2019, shows that there is 123.048 acti ve cooperati ve and 35.761 with NIK certi fi cate (Depkop 2020). NIK certi fi cate is insti tuti onally acti ve (at least held annual members meeti ng in the last 3 years). It has 22.463.738 members spread over 34 provinces in Indonesia. Related to enterprise producti vity profi le, cooperati ves in Indonesia have a total asset in amount of Rp152.113.137,04 with business volume up to Rp154.718.530,14 and net income in amount of Rp6.269.253,51. ~ Vol. 5, Nomor 2, 2020 The huge numbers of cooperative, demands intensive controlling and coaching. If this function is dysfunctional, then, the growth of inactive cooperatives will increase. In the last 4 years, Cooperative and Micro-medium enterprise has disbanded 81.686 cooperatives. In 2016, 45.629 cooperatives are disbanded. This is decreased in 2017, where 32.778 cooperatives are disbanded. In 2019, it reached 2.830 and in 2019 there are 499 disbanded cooperative (Maulana 2020).
For institution progressivity, a better and stable controlling system and the controlling instrument are necessary. This matter at least encourages by two interests, firstly, an interest in cooperative to not only survive but also to be sustainable. Secondly, Cooperative members' interests who want to secure their investment funds and give optimum profit from that investment. Therefore, Sharia cooperative is expected to have better controlling system.
Act no 1 of 2013 on the micro-finance institutions, makes controlling dualism to microfinance institutions (LKM) cooperative, including Sharia cooperative. Article 5 sentence (1) of that act emphasize that every operating micro-finance institution has to choose its legal entity, between a cooperative or limited liability company (PT) (Act no 1 of 2013). According to this act, then, LKM with a cooperative legal entity regulated by two kinds of act, Act no 25 of 1992 on cooperative and Act no 1 of 2013 on the micro-finance institution.
The appearance of Act no 1 of 2013 on micro-finance institutions gives new regulation for sharia micro-finance institution (LKMS) which has cooperative as a law entity. Article no 5 paragraph 217 stated LKMS is required to get permission from OJK. Whereas, in previous regulation, LKMS with cooperative as a legal entity is required to obey on Act no 25 of 1992 on cooperative. In both regulation, there is regulation dualism to LKMS with cooperative as a legal entity. It can be found in Act no 13 of 2013 on the micro-finance institution and act, Act no 25 of 1992 on cooperative and its derivative regulation, which is Ministerial Decree of Cooperative and Micro-medium Enterprise No 16/PER/M.KUKM/IX/2015 on saving and loan business operation and sharia financing. This regulation gives legitimation for LKMS to make cooperative as its law entity. So, controlling and coaching will be given by the board of cooperative services. It shows that there is an effort to mutual claim to give legitimacy to LKMS with cooperative as a legal entity (Amin 2019).
Finally, controlling dualism tends to make uncertainty for sharia cooperative to determine its controlling system. This study used literature studies. This study aims to find out the differences in controlling and surveillance in the act on cooperative and act on micro-finance institution.

Controlling Concept
Subardi quoted Stoner and Wankel's statement, that control can be defined as manager efforts to convinces that organization moves to the main objective. If one of the organization's parts moved in the wrong direction, the managers eager to find out the cause and bring it right on the track (Subardi 1992). The objective of controlling is a systematic effort to observe and investigate whether various functions and activities in the organization is work as planned (Siagian 2002).
Meanwhile, McFarland stated that control is the process by which an executive gets the performance of his subordinates to correspond as closely as possible to chosen plans, orders, objectives, or policies (Handayaningrat 1994). Controlling is a function of management that counts on appraisal and correction to objective accomplishment (Manulang 1990).
From various definitions of controlling above, it concluded that controlling is oriented to the Organization's objective, plan, and actuation. Controlling tend to correct mistakes. A control checked if the subordinate's performance fits the plan. A controlling includes investigating aspects if and an accomplishment is suitable to the objective. Furthermore, control is made to ensure an accomplishment is suitable for the executive's policies. Controlling cannot stand alone, but it is always related to other basic management functions, there are planning, organizing and actuating (Glendoh 2000).
Controlling function in management is a systematic effort to determine work standard and objective, and designing a feedback information system, comparing an accomplishment to planned standard, or determines if there is a significant digression and takes a required action to ensure effective usage of organization's resources for organization's objective (Sule and Saifullah 2006). There are controlling function (Baihaqi 2016); 1. Determine and terminate breakdown causes before it happens. 2. Prevent and fix the occurred error. 3. Prevent any digression possibility and workload diversion.

Form of Controlling According to Act on Cooperative
Cooperative operation is regulated on Act no 25 of 1992. On Act no 25 of 1992 articles no 21, emphasized that cooperative organization instruments consist of Members Meeting, Board, and Executive supervisor. Next, related to the executive supervisor regulated on article no 38, no 39, and 40. Therefore, Sharia cooperative control carries out by the executive supervisor internally. The executive supervisor can supervise on finance aspect, management, and Sharia aspect. Meanwhile, a member's meeting is the supreme level of decision making, where the board takes responsibility for their works. In this forum, internal control is done. The members of Sharia Cooperative have the right to give opinions and voting right in decision making. Because as the supreme level of decision making, they have the authority to determine the direction of company development. It shows that the spirit of independence and autonomy are very tough in internal control.
Another form of this spirit is the executive supervisor's appointment. In article no 38 is emphasized that the executive supervisor is appointed from and by members through Members Meeting. A requirement to be appointed as a board member of the executive supervisor stated in the article of association.
In article no 40 explains cooperative can demands audit service from a public accountant. There are an internal supervisor and external supervisor in cooperative controlling. The external supervisor is a supervisor from the government through the Cooperative and Microenterprise Coaching Department. The external supervisor gives administration control and empowerment through coaching and education. An internal supervisor is the internal controlling board to control the board's policies and operational activities including financing, HR, and things related to goods procurement, in the order it is not digressing from plan and objective. From the explanation above, it is known that the controlling method in Act of Cooperative more emphasizes principle principles to give autonomy, independency, and leniency to LKM cooperative (Masyithoh 2014).

Form of Controlling According to Act on Micro-finance Institution
Form of Sharia Cooperative controlling according to Act No 1 of 2013, by explains financial report once in 4 (four) months to Finance Service Authority. Furthermore, microfinance institutions have compulsory to announce financial reports for transparency.
~ Vol. 5, Nomor 2, 2020 In coaching, Finance Service Authority doesn't give direct coaching to listed LKMS, so coaching tasks bestowed to local government, meanwhile, few local governments didn't have an LKMS expert. This is happening because Finance Service Authority has controlling compulsory to all society's fund-collecting institutions (Amin 2019). Article no 28 paragraph 3 Act no 1 of 2013 on micro-finance institution stated that Finance Service Authority has the authority to appoint a local government to give coaching for micro-finance institutions listed by Finance Service Authority. Coaching and controlling delegates to city government or another stakeholder, there are; a. Financial report acceptance and inputting data to the application system. b. Implementation of LKM's financial report. c. Acceptance and analysis form another report. d. Another report follows up. e. Plan arrangement of work investigation, actuation of investigation, and LKM investigation result. f. Enforce administrative penalty for LKM besides revocation and fine penalty. g. Implementation of LKM with liquidity and solvability hardship support.
Micro-finance institution controlling is also regulated in OJK regulation on No.14/ POJK.05/2014 on Micro-finance institution controlling, especially article no 8 stated that in order to implementation of controlling and coaching function, OJK investigates LKM. This investigation to be delegated to local government where LKM operates or another institution appointed by OJK. The objectives of investigation are; a. Acquire current condition of LKM. b. Researching suitability between LKM condition and regulation. c. Ensure LKM actuate any effort to fulfill its mandatory to customers.
If a micro-finance institution violates regulations, there are few administrative penalties; a. Fine. b. Written warning. c. Freeze business activity. d. Executives or board member dismissal and appoints substitute until cooperative member meeting appoints new board members with OJK approval. e. Revocation. OJK regulation No.14/POJK.05/2014, gives a possibility for Finance Service Authority to do an investigation with or without local government or another institution. It must be done if; a. Financial abuse by executives, commissaries, or employees of LKM. b. Liquidity and solvability hardship endanger LKM business sustainability. c. Abuse of Sharia principle for LKM with sharia principle. d. Debt arrears finding or huge expense which affected LKM condition. e. Abuse in form of fictive finance or loan permission. f. Accounting error that caused LKM loss. g. Unpredictable condition except in a until f, where according to OJK consideration needs to investigate.
Act No 1 of 2013 on micro-finance institution generally regulates all LKM, and strictly regulate the operation with various sanctions. The controlling model implementation uses prudential banking principles. Cooperative LKM is regulated by this act with OJK controlling and supervision (Amin 2019).

Conclusion
Sharia cooperative with cooperative law entity automatically regulated by two simultaneous acts, there are Act No. 25 of 1992 on Cooperative and Act No. 1 of 2013 on micro-finance institution and its derivative regulation. Both have a different controlling method. The controlling method stated in act on cooperative emphasizes principles of autonomy, independence, leniency. Meanwhile, OJK controlling model emphasized prudential banking principles.