Masonic Lodge Treasurer

What is a Revolving Fund and a Petty Cash Fund? Are they the same?

What accounting method are the lodges using? Is it on Accrual Basis or Cash Basis?

What is the best Accounting Software to use?

---

Simon's Reply:

Revolving Lodge Fund:

A revolving fund is used a lot in governments and by non-profits. It is a fund in which a certain amount is appropriated for the coming year. At the beginning of each following year, it is replenished up to the original appropriated amount.

For example, let's say an organization appropriates $1,000 to spend on postage and they elect to put this in a revolving fund. The lodge treasurer will purchase stamps throughout the year, which depletes the fund.

At the end of the year whether the fund has $1 or $500, it is replenished up to $1,000 at the beginning of the next year and we start over again.

The thing to understand is that a revolving fund is not necessarily an account with money in it. It is an appropriation of the funds within the general fund. Although, it can be set aside in a separate "bank account".

Check your lodge's and Grand Lodge's By-Laws to before setting up any new accounts, though.

All lodge treasurers should be familiar with both Grand Lodge by-laws as well as his own lodge's by-laws.

Lodge Petty Cash Fund

A Petty Cash Fund is very similar to a Revolving Fund, however it is always a separate "account" and is kept in the form of cash.

It's simply a cash fund in which a small amount of cash is placed in the care of and used by a few individuals for small incidental purchases.

Receipts must be kept and turned in to the treasurer as the funds are spent. Once the treasurer receives the receipts, he will replenish the cash fund back up to a set amount.

In most cases, a Petty Cash Fund is kept at $100 or less. Usually the less, the better. The Petty Cash Fund is always used for small, incidental items that would otherwise be difficult to get the treasurer to write a check for.

The Petty Cash Fund is not a "free money fund". All purchases which are made must have receipts in order to receive reimbursement. Therefore, it's usually a good idea to lay some ground rules as to what the petty cash fund is for.

Typically, it is made available to lodge officers and/or a member who may, for instance have been delegated to replenish water and soda in the lodge refrigerator. If it is made available to everyone, abuse can occur, which can also make the treasurer's job more difficult in attempting to keep a constant supply of petty cash, on hand.

Cash or Accrual Methods of Lodge Accounting:

The cash method of accounting is probably the best and most recommended basis of accounting for a lodge. Many lodge treasurers may be good money managers, but few understand the concept of the accrual basis of accounting.

The difficulty with the accrual method is that when a treasurer who understands and uses the accrual method, retires, and someone else takes their place, it is most probable that the next treasurer will not understand the accrual basis. Therefore, in the long run, using the cash basis is best, as it is the easiest for everyone to understand and be able to use.

Lodge audits of the books are also easier to accomplish in a more harmonious manner when using a cash basis system of accounting.

I am not aware of any requirements for a lodge to use one or the other. Once again, knowledge of your lodge's by-laws is necessary.

Accounting Software

Accounting software comes in many shapes and sizes. I can not endorse any specific software. However, it would be beneficial to consider the same point made above. Will the next person who undertakes your job be able to easily understand your books? If the software requires a knowledge of basic accounting, chances are it may be difficult to find a person that understands the concept of debits and credits. Many people don't realize that in accounting, a credit doesn't always mean to increase an account and a debit doesn't always mean to decrease an account.

Nearly all accounting software requires some accounting knowledge. There are probably some software packages available for small, non-profit organizations that don't require an understanding of accounting, but I am not familiar with any of them.

Quicken

Lodge accounting can be accomplished with simple-to-use, simple-to-understand pieces of software such as Quicken, however, the treasurer will have to create each account, separately, (such as "Charity Fund", "General Fund", etc.) because Quicken was created as a personal, home finances accounting program. Even so, for treasurers who are not familiar with accounting, it probably has the fastest and easiest learning curve.

The benefit to a simple, yet powerful piece of software is that it can be handed down from treasurer to treasurer with a minimal learning curve for each of them, while still being able to use the computer's processor to add columns and provide totals.

Lodge Accounting Using Paper Method:

Some lodges use columnar accounting pads and keep their chart of accounts in this manner. This, too, is acceptable, however, it is more time intensive because each figure must be hand-written, hand-calculated and then, double-checked for accuracy. Another downside to this is that current financial reports submitted at each lodge meeting take more time on the part of the treasurer than with an automated piece of software.

QuickBooks

Treasurers with an accounting background typically choose to use QuickBooks, a well-known accounting software program. However, if you are a new treasurer who, even if you are an excellent money manager, if you have little or no knowledge of using this program, the learning curve can be somewhat steep. ...And, once again, the next treasurer will have to go through this learning process, (with your help during the transition), all over again, unless they are familiar with accounting and accounting software.

People who are familiar with accounting will still have a learning curve when beginning to use any accounting software program.

So, in my opinion, choose the simplest-to-use and simplest-to-understand method of keeping your lodge's books. In the long run, this will save you an enormous amount of time, both during your time as treasurer as well as when you must train the next person to carry out these treasurer duties.

I'd like to mention one more thing, since we're discussing keeping the financial records for a lodge. That is data backup.

Lodge treasurers put a lot of hours into lodge accounting. It is only a matter of time before your computer's hard drive will fail, your computer will receive a "bug", "virus" or an electrical issue will occur such as a brown-out of electrical power coming from your power company which may destroy all your hard work.

Backup of your lodge's financial records is essential.

There are numerous methods of backing up a lodge's files. Most are very inexpensive. Here are a few of them:

Backing Up Your Lodge's Financial Records

1. Burn to a CD or DVD after each usage and place copies in the lodge's safe or another safe place.


2. Use a USB jump drive, (thumb drive). These are fast, portable and can be used by all computers and laptops. They are also very inexpensive.


3. Use an online, remote data backup for your entire computer which you can set to backup your entire hard drive every day, for less than $ 10.00 a month. Two of the more popular remote data backup programs are Mozy.com and Carbonite.com.

There are several other reputable, remote online data backup providers. Please take the time to consider which method suits you the best so that all your work is not irretrievably lost.

I, personally, use Mozy's online remote data backup service because I don't want to have to remember to backup every day. When my computer "crashed" several months ago, I bought a new computer and simply went to Mozy and downloaded all my data files.

As you might imagine, I have a LOT of data and Masonic photos which I use on this site, (probably much more than most home users), so it took an entire day to download all my data back onto my new computer. Nevertheless, in 24 hours, I was up and running again and didn't lose a single thing!

But, it doesn't matter which one you choose, as long as you choose some method so you do not have to spend a month or more trying to recreate your data from bank statements and files of receipts, should your data become lost or your hard drive become corrupted.

Thanks for writing. Hope this helps to answer your questions.

Simon