Province of East Kent. GUIDANCE NOTES for the LODGE or CHAPTER TREASURER. Prepared by W.Bro. John Cooper, Provincial Grand Treasurer

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1 GUIDANCE NOTES for the LODGE or CHAPTER TREASURER Prepared by W.Bro. John Cooper, Provincial Grand Treasurer Please retain these notes and pass them to your successor in office Treasurer's duties and Lodge Accounts. The duties of the Treasurer and the requirement to produces annual accounts is governed by Rule 153, Book of Constitutions. This states: All moneys due to or held for the Lodge shall be paid or remitted to the Treasurer direct, who shall without undue delay deposit the same in an account in the name of the Lodge at a Bank to be approved by resolution of the Lodge. The Treasurer shall make such payments as are duly authorised or have been sanctioned by the Lodge. All cheques must bear the signature of the Treasurer and (unless the Lodge resolves to the contrary) of at least one other member authorised by the Lodge. The Treasurer shall regularly enter a complete record of all moneys passing through his hands in the proper books of account, which shall be the property of the Lodge, and which together with all Lodge funds and property in his possession, shall be transferred to his successor upon investiture. He shall prepare a statement of accounts annually at a date to be determined by the members, showing the exact financial position of the Lodge, which statement shall be verified and examined by a Committee of members of the Lodge annually elected for that purpose. Copies of the accounts and of the certificate signed by this Examiners Committee that all balances have been checked and that the accounts have been duly examined, shall be sent to all members of the Lodge together with the summons convening the meeting at which they are to be considered. Such meeting shall be not later than the third after the date to which the accounts are made up. The books of account shall, be produced for inspection in open Lodge at such meeting, and on any other occasion if required by a resolution of the Lodge. The same procedure of annual accounts, examination and presentation to members of the Lodge shall "mutatis mutandis" (in a similar fashion), be followed in relation to any other funds maintained by or in connection with the Lodge (whether by the Treasurer or by a Charity or other Steward) such as Lodge Benevolent Funds, the funds of Charity or Benevolent Associations, Dining Funds, Charity Box collections or other moneys receivable from individual members of the Lodge or any of its Officers. Page 1 of 5

2 You will note that Rule 153 requires accounts to be prepared for all funds maintained by or in connection with the Lodge. Many Lodges prepare a composite account covering all activities e.g. subscriptions / running costs, charitable collections / payments etc. Although there is no objection to a single bank account for these activities, each activity should be reported as a separate fund, particularly the charity and benevolent activities, to ensure these do not subsidise the Lodge s running costs. NB. Receipts and payments relating to social activities must never be included in the accounts relating to Lodge funds (Board of General Purposes 02/12/59) The Treasurer's Role The Treasurer's role is, therefore, to: Deposit without undue delay all monies received by the Lodge into a Bank account. Make such payments as are properly authorised by the Lodge. Record in proper books of accounts monies passing through his hands. Prepare an annual Statement of Accounts showing the exact financial position of the Lodge. In addition the Treasurer must ensure the financial stability of the Lodge and that it remains solvent. This requires the Treasurer to plan the Lodge finances for at least two years ahead. He will need to anticipate the level of expenditure in future years to enable him to consider whether the annual subscriptions will be sufficient to meet that expenditure with the existing level of members. It is a fact of life that almost any item of expenditure will increase from year to year and it is wise to assume that it will be higher than the current rate of inflation, as this will help give some degree of cover if the membership of the Lodge declines. To increase membership subscriptions, the correct procedure must be followed and, if a Lodge does not meet many times in a year, the Treasurer may need to advise the brethren of an increase early in the Lodge s Masonic Year However, it may be that, despite prudent planning, the Lodge's finances deteriorate and it is not possible to restore them immediately. In this case it will be necessary to consider whether any economies can be made in the Lodge's expenditure. This will not be easy, but it is the Treasurers responsibility as the guardian of the Lodge's finances to carefully set out the position, explain the options open to the Lodge, and put forward his proposals to help the Lodge's finances recover. It may be that for a Lodge's finances to recover a plan has to be put in place that will take several years to come to fruition and the Treasurer's role becomes very important in ensuring that the plan is maintained and amended as required. A worthwhile aim is for an outgoing Treasurer to ensure that his successor has at least a reserve of a year s expenditure in the Bank before any subscriptions are collected for the new financial year. This will of course be easier in some Lodges than others. Page 2 of 5

3 The Treasurer should ensure the speedy collection of members subscriptions. This is a task made easier by working in conjunction with the Lodge Secretary as he can assist in chasing outstanding subscriptions. If necessary the Lodge may have to resort to exclusion for non payment of subscriptions as required under Book of Constitution Rule 148 (2 years) or the Lodge By-Laws if for a shorter period. Sundry Matters The Treasurer needs to be conversant with the By-Laws of the Lodge as this will be the authority on which he is able to make payments and deal with financial matters. It is sensible to ensure that the financial limits are adequate to meet the requirements. Over the years, the Lodge may have received funds earmarked for certain defined areas of expenditure. These funds are called "designated funds" and the Treasurer is responsible for ensuring that they are only used for this purpose, if still valid. If the purpose of the fund is no longer applicable the Treasurer will need to transfer any remaining funds to an alternative purpose or into General Funds. Reference to the By- Laws will be required and these must be followed. If the By-Laws are silent on the matter the Treasurer will need to obtain approval from the members in Open Lodge. If the fund arises from a bequest and is of a material amount if the purpose no longer exists it may be necessary to obtain legal advice. The Treasurer is responsible for ensuring that any other Officers who handle funds in the name of the Lodge, keeps records of their transactions and that once a year, at the same time as the Treasurers records are examined, his books are presented to the Examination Committee. This will include the Charity Steward, Almoner, Dining Steward, etc. Over a period of time, a Lodge may have a special event such as a Centenary or other notable event which requires an exceptional outlay by the Lodge. These dates are well known in advance and the prudent Treasurer will recommend to the Lodge that plans are made well in advance of the event so that funds can be raised and allocated to ensure that the costs of any such event does not cause financial problems for the Lodge. The Treasurer should ensure that any Lodge property is adequately protected and insured and that any additions are added to the Lodge inventory. The Treasurer should regularly review banking and investment arrangements to ensure that the Lodge is getting the best return from its assets if substantial funds are involved. This may require an expert in the particular field who may not be in the Craft. When a new Treasurer is appointed, the outgoing Treasurer should assist the new incumbent by liaising with the Lodge Bankers to obtain and sign new Bank mandates. The Retiring Treasurer should summarise the transactions and reconcile the Page 3 of 5

4 records up to the date of handover. The handover of all records and ancillary matters should occur within one month of the appointment of the new Treasurer. Computerised Accounting If a computer system is used to maintain the Lodge s financial records, it is important that the Secretary or other senior Lodge member has access to it, either directly or by back-up, in case anything happens to the Treasurer. If passwords are used, make sure that they are known to the relevant members. Memory sticks are relatively inexpensive and it is strongly recommended that computerised accounting records are regularly copied to one of these, or similar. Banking arrangements To protect the Treasurer from any allegations of malpractice it is recommended that all Bank accounts require two members to sign cheques or Bank transactions (other than transfers between accounts) with possibly three or four authorised signatures to allow for the eventuality of holidays, illnesses, etc. With Banks increasing need to comply with "money laundering" legislation, it is sensible to add new signatories on a regular basis rather than find the Lodge is left with only one signatory or worse, no signatories. At no time should Lodge monies be banked into a personal account. Accounts The annual accounts should be easy to follow and show comparative figures so that the members can easily understand what has happened from one year to another and how the funds at the end of the year are held. Some Lodges will have certain items of income and expenditure that are peculiar to their own Lodge, or have assets which are not shown on the Balance Sheet, and these will need to be disclosed so that the Brethren are totally aware of the position. There is not a prescribed set of Accounts and a Lodge may adopt whatever format it feels adequately explains the financial transactions to its members. The two basic formats are: Receipts and Payments Account Income and Expenditure Account The former is the simpler but if one bank account is operated and there are a number of funds eg The General Fund and the Charity Fund the bank balance must be split between those funds. Page 4 of 5

5 Examples of these two types of accounts are available, and can be downloaded, from the Provincial Website: Audit / Examiners Whilst there is no guidance on the selection of, or deemed capabilities of, the "examiners" of Lodge accounts, a prudent Lodge will appoint two individuals who possess the requisite skills to achieve the aims of such examination. Ideally an examiner should not be the Master, Secretary or Charity Steward of the Lodge for reasons of independence either actual or potential. A separate set of guidance notes is available for Accounts Examiners. Taxation Lodges are deemed by their very nature to be mutual associations and surpluses of subscriptions over expenditure are not subject to taxation. However some Lodges will have sources of investment income such as rents, dividends and Bank interest, which need to be declared to the Inland Revenue (HMRC). In practice HMRC will not impose collection of tax if the liability is under 100. This approximately equates to investment income of 500. Whilst there is an obligation on the Lodge to notify HMRC of its investment income, it is likely to state that unless investment income exceeds 500 it will not require a Corporation Tax Return to be completed and will only expect to be contacted every five years to confirm that the situation has not changed. It is the Treasurer's responsibility to provide this confirmation. The private residence of the Treasurer will normally determine the Lodge s Tax District. If a Lodge has other sources of income, eg Bar profits, further advice should be obtained. The Provincial Office and Provincial Treasurer are available to assist you and your Lodge or Chapter. Don't leave a problem to fester; resolve it with our assistance. John Cooper, PGStB, PPrJGW, Provincial Grand Treasurer, December 2010 Page 5 of 5