Aud1ts & Numb3rs: Information for Secretaries and Treasurers
Audits and Numbers (reprinted with permission)
By William J. Thomas, Grand Master of the Grand Lodge of New York
I received a frantic call from a Brother recently: “I’ve been assigned to the Lodge Audit Committee, and I don’t know what I’m supposed to do. I asked both the Master and the Chairman of the Committee, and they didn’t seem to know either. Help!”
I could visualize the sweat on his brow, the distress in his eyes – and the Masonic signs he must be making.
This seems to be one of those questions that everyone has, but nobody wants to verbalize. Who wants to admit that he doesn’t know something that should be common knowledge to everyone?
Common knowledge? Or is it?
I can assure you that it is NOT common knowledge to everyone, and ignoring the question is much like the ostrich putting his head in the sand, and hoping that it will go away.
But I can also assure you that the work is not complicated. Here are some simple guidelines to help get your started.
Have you ever taken a look at the oldest records of your Lodge? I mean the REALLY old ones, written in a bound book, with impeccable penmanship? I copied an excerpt from my Lodge’s 1874 Ledger for you, and was impressed with the sheer beauty. But it is also very simple.
Note that there are only three things that happen with monies of the Lodge:
- Money comes in
- Money goes out
- Money remains in an account
The Audit Committee’s work is simply looking at those three things and confirming that they happened. Nothing more need be done. And most Lodges’ financial transactions are few enough and simple enough that it can be done in short order.
Here’s the short course:
- Make a list of all the Lodge accounts, including account number, location:
- Bank accounts
- Savings accounts
- Investment accounts
- Cash accounts
- Make your audit:
- Use monthly statements to confirm the beginning balances.
- Confirm the monies going in, and confirm the source (addition).
- Confirm the monies going out, and confirm the vouchers (subtraction). Vouchers should include a paper trail, including a receipt and what it was for. Your by-laws might have additional requirements, such as finance committee review or Lodge approval of payment.
- Use monthly statements to confirm the ending balances.
- Write a report for each account
- The balances agree, or
- The balances don’t agree, and give your opinion why they don’t agree.
And that’s it.
- You don’t need an accounting degree.
- You don’t need to pay for an expensive outside audit.
- You don’t need special software.
There are some pitfalls:
- Cash in: The paper trail with cash is feeble at best, as lends itself to questions. Nobody is being accused of irregularities, and it is much easier to document transactions with a non-cash paper trail.
- Cash out: Avoid cash disbursements completely
- Third-hand receipts: Vouchers should reflect who paid for something and how. It’s difficult to follow a paper trail that travels among multiple people.
- Avoid cash
- Keep the payment system simple
- Avoid cash
- Make monthly audits, rather than waiting until the end of the year
- Avoid cash
- If you don’t understand the answer to a question, ask it again until you understand the response. Don’t be hoodwinked by terminology that is otherwise simple.
- Finally, avoid cash
Yes, there are other issues to consider. This is not an all-inclusive primer. But it will help get your started.