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LODGE AUDIT
Auditing Lodge Financial Records
2010 Members:
Kenneth Lyons
Scott Penvose
Steve Teal
The Lodge Audit Committee offsets the Treasurer's job of providing an accurate and reliable set of accounting checks and balances to ensure that the lodge's financial position is stated correctly.
This Lodge Accounting committee annually (or as deemed necessary at any time) examines the records, books, accounts and vouchers of the Secretary and Treasurer. Timely reporting reduces any inadvertent oversights or omissions on the Treasurer's part and is no different than an audit performed on a company or a bank.
WHY: The Lodge Audit Committee audits all accounts, and makes a written report thereof at the first regular communication of the Masonic year so that the new Master is assured that the books are correct. Only after the audit is performed can the Master request the Lodge Budget Committee to prepare his budget for the new year. (This is the same as counting down the till of a cash register before the new day begins or a new employee comes on duty.)
After having been presented and accepted by the Lodge, the annual audit is to be placed into the minutes. Each and every lodge member must have access to this data on a regular basis in order to be able to make informed choices before voting.
Without this audited information, no member should ever make a motion to "vote their conscience" without having first ascertained how much is in the lodge checkbook. To do so, shows that the member does not have the lodge's best interests at heart.
Before any and all monetary decisions can be voted upon, the Lodge Treasurer or Secretary should be called upon to state what the current balance of the lodge checkbook is and whether any other demands will be placed upon those funds which the new request for funds may, in fact, jeopardize. (This is no different than a joint bank account in which you ask your spouse or partner whether they feel that a new expenditure is affordable and can be incurred.)
Simon-Sez: It is the job of this lodge financial committee to ascertain whether or not your beginning balance, plus income, minus expenses agrees with the Treasurer's balance-on-hand figure(s). This is your sole task. You do not need an accounting degree nor special audit software to perform a lodge audit. (However, accounting software speeds up the process, once you learn how to use it.) If you have never performed any accounting, before, (or simply need a refresher), simply follow the steps, below.
WHEN:
You may adjust all dates, below, to correspond to your specific Masonic year.
Treasurer shall provide to the Lodge Auditing Committee on or before
November 30th all financial back-up paperwork to include all finances
of the lodge.
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Financial back-up paperwork includes:
* The previous 12 months of bank statements (October 31st through
September 30th) and their corresponding checkbooks properly filled
in for each financial instrument.
* All interest brought forward in a correct and organized manner.
* All interest statements from bank accounts, CDs, etc.
* All receipts for each expenditure over the previous year.
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HOW:
All checkbooks shall be reconciled and up-to-date before being
presented to the Auditing Committee.
Checkbook entries must include:
* Payee Name (to whom the check was written)
* Amount of each expenditure
* Description of item paid for (Grand Lodge dues, Bylaws printing, etc.)
* Interest brought forward (up-to-date) (if account is interest-bearing)
* Reconciled balance of the account
Make a List of Financial Instruments:
Cash on Hand Where is it located?
General Fund Bank Name
Savings Accounts Bank Name
Certificates of Deposit Bank Name
Any and all Special Funds Bank Name or Where Held
For each financial instrument which the lodge owns, the Treasurer will make available to the Lodge Audit Committee the following information for the previous 12 months beginning with October 31st of the previous year through September 30th of the current year
* Beginning balance of each reconciled account
* Income received into each account
* Expenses paid out of each account
* Interest Earned on each account
* Balance on hand
Simon-Sez: In other words, the Treasurer provides the Lodge Audit
Committee with a:
1. Beginning balance and the date of that beginning balance for each
financial instrument. (Bank Account, Certificate of Deposit,
Savings Account, Money Market Account, etc.)
2. Reconciled and up-to-date checkbook and bank statements for
each account.
3. CDs: Interest earned statements.
4. Cash: (if applicable) If there is cash-on-hand, the committee
should physically view and count the cash-on-hand.
(This does not show any distrust of the Treasurer. It is
necessary to provide an accurate audit.)
Match Each Check with its Invoice: Once you have the above information, you will begin with the first bank entry after the beginning balance date and ascertain that for each check written, there is a receipt, statement, bill, invoice, etc. that matches it. If there is no receipt, make a list of checks written which do not have a corresponding receipt.
Go through the entire previous year and match the check to the invoice/receipt.
A summary statement is the compilation of each of these financial instruments and summarizes the following:
Total Cash in Bank
Total Cash in CDs
Total Funds
Does your beginning balance, plus income, minus expenses agree with the Treasurer's balance-on-hand figure(s)?
If Yes: You simply need to present your findings to the lodge.
If No: Possible problem resolutions are:
1. Go back over your numbers to see if you have made an error. Re-add and
re-subtract and double check your adding machine tapes.
2. Double check your beginning balance(s) to make sure you used the
correct beginning balance(s). (The (s) denotes the balances in more
than one account. If you only have 1 General fund, then you will
only have 1 checkbook beginning balance.
3. Check each bank reconciliation, which the Treasurer has reconciled each
month to make sure all checks written have cleared the bank. You may
have an outstanding check(s) which was never cashed, or a deposit
which was made, but not entered in the checkbook.
4. Was a check written for an amount which differs from the amount on the
bank statement? If so, go through the checkbook and match the amounts
on the statement with the amount and description of each item entered in
the checkbook.
Lodge Audit Committee Presentation:
The Lodge Audit Committee shall present its findings to the lodge during the first meeting in December.
At this time, the Committee Chairman's report should include:
1. Whether the Committee agrees with the Treasurer's ending balance.
2. Read the list of checks written which did not have a corresponding receipt.
3. Report on any discrepancies found.
_______________________________________________
Dissatisfaction with the Lodge Auditing Committee's Findings
Should the Lodge Audit Committee not be fully satisfied, receive any unsatisfactory responses, or non-documentation from the Treasurer' in the interests of all members of the lodge, the committee should be empowered by the lodge's By-Laws to employ an outside, disinterested, third party such as a CPA firm to perform an outside audit of the lodge.s accounting practices without approval of the general membership.
Before employing a third party auditing service, the Lodge Audit Committee must:
1. Advise the lodge of their decision to entertain bids for the services of
an outside auditing firm.
2. Receive a minimum of three (3) bids for services
3. Establish a timeline for completion.
After completion of the outside audit, the Lodge Audit Committee shall advise the lodge of the results in a timely manner at the next stated communication after receiving the results of the outside audit.
Simon-Sez: It is strongly suggested that if your Lodge By-Laws do not state that all expenditures be paid in check form and not cash, that you change your Lodge By-Laws to state that all lodge expenditures be made by check only and not cash. Many times it is difficult to remember to receive receipts for cash expenditures, thus making the Audit Committee's task much more difficult to match up a cash expenditure with no matching receipt. Expenditures paid by check create an easy to follow paper trail and make the task of Blue Lodge Accounting much, much easier and expedient to perform. If the Lodge Audit Committee finds cash outlays without receipts, it should include this fact, along with the number of these cash expenditures and the amounts in question, in its Audit report back to the lodge.
©..2009 Winter Garden Masonic Lodge. All Rights Reserved.
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