Role of THE Auditors



Role of the Auditors

Your role is to audit the accounts of your Lodge/Chapter, which have been prepared by the Treasurer and to report verbally thereon to the Brethren/Companions at a regular meeting when the accounts are proposed for approval. Before the accounts can be presented in Open Lodge you are to sign and date the Auditor’s report, which is an integral part of the accounts and unless there are substantial problems should be in the
following format:

Auditor’s report

“In accordance with Rule 153 Book of Constitutions, we have examined the above Balance Sheet and the attached Income and Expenditure Accounts, and have verified the bank and other balances shown. In our opinion they are in accordance with the books and records and give a true and fair view of the state of the affairs of the Lodge/Chapter as at ‘ddmmyyyy’ and of the surplus/deficit for the year ended on that date.”

Some brethren may ask, what is meant by ‘auditing the accounts’. Why can’t I just sign the accounts which the Lodge/Chapter Treasurer has prepared?

The reason is that you are independent of the Treasurer and have a duty to audit his accounts under Rule 153 Book of Constitutions. You should be thorough in your audit and in performing your work you should carry out the following: –


1. Ensure that the accounts presented to you include an Income/Expenditure Account and Balance Sheet for the General Fund/Benevolent Fund/Charity Fund. Ideally, they will be presented in the suggested format, as set out on the Provincial website under the drop down menu of ‘Information’.

2. Ask the Treasurer to briefly explain the accounts and indicate where in the cash book his figures originate.

3. Ensure that the accounts have been correctly totalled.

Bank Account(s)

4. Ensure that a cashbook has been maintained, either in a manual or computerised format, for each bank account held in the name of the Lodge/Chapter.

5. Review the bank reconciliation and ensure that the Treasurer has balanced his cashbook to the year-end bank statement for each bank account held.

6. Cross reference the balance on the Treasurer’s bank reconciliation to the bank balance disclosed on the Balance Sheet of the accounts.


7. Reconcile the total number of members in the Lodge/Chapter to the annual subscriptions receivable in the accounts, noting amounts paid in advance or in arrears. Be aware of new initiates where a pro rata subscription may have been paid.

8. Where members are in arrears with their annual subscription check whether they are liable to exclusion for non payment in accordance with the Lodge/Chapter By-Laws and Rule 181 Book of Constitutions.

9. Select a Lodge/Chapter meeting during the year under review and ensure that dining income, alms collection, raffle monies, subscriptions and any other income has been properly accounted for in the cashbook.

10. Ensure that all alms collections, raffle monies, miscellaneous donations, have been disclosed in the correct Income & Expenditure Account, i.e. General Fund/Benevolent/Charity Fund.


11. The figures in the income and expenditure account should be for the fiscal year that you are auditing. Previous year’s expenditure that has not been included in past year’s accounts should be recorded as a prior year adjustment, so that annual expenditure for any category is clearly is shown in the accounts.

12. Ensure that United Grand Lodge of England and Provincial Grand Lodge dues have been disclosed in the correct year. These dues are usually notified after the fiscal year end that you are auditing and should be included, as an accrual.

13. Prove that UGLE and PGL dues have been correctly accounted for, by reviewing annual returns.

14. For all other expenses in the year under review, look to see what the comparative figure was for the previous year and ask the Treasurer to explain any significant variances.

15. All expenditure items should have been paid in response to an invoice/receipt/voucher, so select a few items of expenditure from the cashbook and compare against supporting evidence.

Balance Sheet

The balance sheet is a schedule which gives a snapshot of the financial position of a Lodge/Chapter. It shows the value of assets, liabilities and accumulated funds at the fiscal year end.

16. The liabilities of a Lodge/Chapter will be creditors and include amounts due to UGLE/PGL for the year under review or possibly subscriptions paid in advance. Other liabilities may include debtors, which include amounts that have not been received, such as overdue subscriptions.

17. The balance sheet should show the Lodge/Chapter bank balances, allowing for creditors and debtors. There should be a breakdown of the General Fund/Benevolent Fund and if applicable Charity Fund. Under each of these headings the profit or loss incurred in the fiscal year that you are auditing should be added/deducted from the brought forward balances from the previous year. The new balances should equal the total of the bank balances, after taking account of creditors and debtors.

If you are happy with the accounts, then you can then sign and date your report. If however, you do have any problems or there are issues that the Treasurer cannot answer, please contact the Provincial Grand Treasurer or the Lodge/Chapter Support Team for assistance.

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