Report of the Committee on Finance and Accounts
Submitted By Robert B. Malwitz, Chairman, Finance and Accounts
Most Puissant Grand Master, General Grand Officers and members of this General Grand Council, this report of your Finance and Accounts Committee covers the period from August 25, 2017 through July 31, 2020.
The Committee reviewed the Investment Accounts of the General Grand Council using the reports provided from the investment advisor, Edward Jones. We found the following: There are three separate accounts: (1) a Corporation Fund, (2) an Operations Fund and (3) a Life Membership Fund.
The Corporation Fund had a balance on August 25, 2017, of $137,396.49. On July 31, 2020, the balance was $204,808.99 This was an increase of $67,412.50
The Operations Fund had a balance on August 25, 2017 of $193,719.73. on July 31, 2020, the balance was $190,602.46. This was an decrease of $3117.37
The Life Membership Fund had a balance on August 25, 2017, of $180,570.25. the balance on July 31, 2020, was $179,640.06 this was a decrease of $930.19.
The beginning total in the account with Edward Jones on August 25, 2017, was $511,686.47. On July 31, 2020, the total amount in the account was $575,051.51.
The total increase/decrease for the period covered was an increase of $63,365.04 or 12.4 percent.
After reviewing the funds activities we observed the following transactions of note:
- In the January 2020, Life Membership Fund statement $16,005.00 was transferred to the Wells Fargo checking account to cover the per capita cost of the paid life members.
- In the January 2020, Life Membership Fund statement $8303.10 was used to purchase 607.84 shares of American Bond Fund of America A and $8,925.84 was used to purchase 424.232 shares of American Capital World Bond A.
- We note that in November of 2017, $2,800.00 was used from the Operations fund to purchase software upgrades.We note that in March 2020, $6,000.00 was transferred from a Goldman Sachs (Life Membership Fund) money market fund to purchase shares of Goldman Sachs investments. We note that $5,000 was transferred from a Goldman Sachs ( Corporation Fund) money market fund to purchase shares of Goldman Sachs investments. And $7000 was transferred from a Goldman Sachs (Operations Fund) money market fund to purchase shares of Goldman Sachs investments.
- We note that in April, 2020, $29,288.66 was transferred to the purchase of various equities. ($8,260.19 in the Life Membership Fund, $9,000.00 in the Corporation Fund and $12,028.47 in the Operations Fund)
- We note that over the period of the triennium several dollar amounts were transferred monthly to the Wells Fargo checking account to cover current expenses. This process was anticipated when the budget was prepared and is consistent with past triennium practices.
We agree that these transactions are proper and within normal budget activity.
We recommend that going forward the chair of the Finance and Accounts committee be provided the monthly reports from the investment broker, in this case Edward Jones, so the report of this committee can be completed in timely manner.
In addition to the above review of the investments of the General Grand Council two questions were posed to your committee.
Can the budget be altered reflect changes in income generated and expenses incurred?
- It is well recognized that budgets are only guidelines and can be altered to meet current conditions. Income may be lower or higher than expected. The change in income may require a change in the anticipated expenses incurred. In addition, new expenses may arise that necessitate a change to the adopted budget. If anticipated expenses occur in a budget category funds may have to be moved to cover the expense which will of necessity change the available funds in the categories affected. As long as the programs affected and or adopted do not exceed the actual income the Committee feels that the alterations to the budget are acceptable.
Can the General Grand Council adopt a budget alteration to support programs that support Masonic Youth organizations, in this case DeMolay, which were not in the budget adopted for this Triennial?
- The Committee agrees that we should support Masonic youth organizations so long as the program(s) to be financially supported do not cause the budget expenditures to exceed the actual income. We acknowledge this may cause some budget categories to change and it may require moving funds from one or more accounts to align the budget. We feel however that this support furthers the mission of the General Grand Council and is a worthwhile endeavor.
We do recommend, however, that any programs that add budget line items be formally included in future budgets.
The committee was asked to review the budget for the next triennium. We did this and find that it appears to be within the funds of the General Grand Council revenue stream and fulfills the normally accred expenses as well as the programs expressed by the Deputy General Grand Master. We therefore, find the proposed budget to be proper. We also note that in accordance with the above statement that budgets are subject to change and if conditions warrant changes can be made to the proposed budget.
The Constitution of the General Grand Council in the By- Laws section states:
ARTICLE IV – OF DUTIES OF STANDING COMMITTEES
SECTION 401 DUTIES OF THE COMMITTEE ON FINANCE AND ACCOUNTS
The duty of the Committee on Finance and Accounts is:
- To manage the day-to-day investments of the General Grand Council within such criteria as determined by the General Grand Council Trustees
- To retain or change the services of brokers, financial consultants or professional managers with the approval of the General Grand Council Trustees
- To assist the General Grand Trustees with the General Grand Council Triennial finance report
- To make recommendations to the Trustees as to the finances of the General Grand Council.
Current practice is not consistent with this section of the Constitution/By-laws. The Trustees currently fully manage the investments and revenue expenditures of the General Grand Council. Section 401 of Article IV of the By-Laws states that the Committee will be involved in making recommendations to the trustees. The Finance and Accounts Committee has nothing to do with the day-to-day management of the investment funds nor the selection of the professional managers.
It is the opinion of the Committee that to fulfill its constitutional duties:
- It has to become part of the financial decision process. To accomplish this it has to become an active participant in the management of the General Grand Council funds to include the review of funds expended v. the projected and actual income and make such recommendations to the Trustees as they feel are proper, that the Committee be involved in the discussions/preparation of future budgets.
- In addition, it has to become actively involved with the investment accounts to fulfill its functions under the By-Laws.
- It is further recommended that a monthly reconciliation of the budget be done by the General Grand Recorder, General Grand Treasurer and the Finance and Accounts Committee. (Note: this has been discussed with the General Grand Recorder.)
In conclusion, your committee on Finance and Accounts has been pleased to serve the General Grand Council and offers the Committees continued support going forward.
Robert B. Malwitz, Chairman