Constructing the Supervision Model in Sharia Cooperative Entities

The purpose of this study is to formulate model of supervisory system for sharia cooperative entities. This supervisory system can detect early signs of business failure preventing greater impact for the. This study used qualitative method with descriptive-exploratory approach. The object of the research was the Department of Cooperatives and MSMEs of the Special Region of Yogyakarta. The informants were chief supervisors, Heads of Supervisory Bureau and supervisory staffs at the Department of Cooperatives and MSMEs, members and staffs of shariah cooperative, entities under the supervision of the public institution. The data collection methods were a series of interviews and analysis of shariah cooperative entities financial report as well as relevant rules and regulations. The findings showed five indicators of failing shariah cooperative entities, they are: 1. disruption of liquidity funds to fulfill obligations to the members, 2. Illogical profit sharing, 3. long-term investment that disrupts cash flow, 4. bad financing, and 5. non-compliance towards SOP resulting in fraud.