LODGE AUDIT

Auditing Lodge Financial Records

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. 

The audit committee should be familiar with the by-laws of the lodge and the by-laws of the Grand Lodge. The most important parts of the by-laws relate to the committee, itself, the Secretary and the Treasurer. Making sure that the Secretary or Treasurer is following the rules set forth in the by-laws is just as important as verifying the lodge's financial position.

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 toascertain 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 30^th  all financial back-up paperwork to include all finances
of the lodge.

_______
 

Financial back-up paperwork includes:

• The previous 12 months of bank statements (October 31^st through
  September 30^th) 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.

_______

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)
• Running balance of the account (which is recorded after each transaction)
   

A running balance is what your checkbook says your account balance is, after your having reconciled it with each month's bank statement. A reconciled balance is not simply using the balance figure that the bank statement shows and adjusting your checkbook to reflect the bank's figures.

Make a List of Financial Instruments:

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 31^st of the previous year through September 30^th 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.  

If your lodge has a large quantity of expenditures, you can make a selction of random invoices and receipts and match them with the checks. A good selection contains 5-10% of the total number of invoices and receipts which were paid. It is a good practice to document that you only review a selection of invoices and receipts in your report.

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.