1. Fiduciary Reports 1 Presented to the Supreme Council, Southern Jurisdiction, A.&A.S.R. August 20, 2011 By: Ill. James D. Cole, 33˚ Fiduciary Responsibilities

2. 2Fiduciary Reports What Fiduciary Responsibilities? Trust of members/donors Trust of members/donors Significant Financial Activity in Orients: Significant Financial Activity in Orients: $425 M in facilities $425 M in facilities $409 M in financial investments $409 M in financial investments $64 M in annual receipts $64 M in annual receipts Protect tax status Protect tax status

3. Fulfilling Duties Put capable people in place Put capable people in place Ensure good policies Ensure good policies Stay informed Stay informed Fiduciary reports and monthly/quarterly reports Fiduciary reports and monthly/quarterly reports 3Fiduciary Reports

4. Put Capable People in Place Seek business/finance experience Seek business/finance experience Above all, someone who communicates Above all, someone who communicates Avoid “good old boy who has always……..” Avoid “good old boy who has always……..” Monitor burnout Monitor burnout 4Fiduciary Reports

5. Policies for Active/Deputy Use See website: scottishrite.org/sp2011 Valley Financial Management Suggestions Valley Financial Management Suggestions Valley example -Conflict of Interest Policy Valley example -Conflict of Interest Policy Valley example – Whistle Blower Policy Valley example – Whistle Blower Policy Valley example- Document Retention Policy Valley example- Document Retention Policy Council’s Per Diem Policy Council’s Per Diem Policy Council’s Fraternal Support Allowance Policy Council’s Fraternal Support Allowance Policy 5Fiduciary Reports

6. 6 How to Manage Fiduciary Reports Ensure timely and accurate completion Ensure timely and accurate completion Communicate reminder before January 1 Communicate reminder before January 1 Set deadline of May 15 to Active/Deputy Set deadline of May 15 to Active/Deputy Submit to Council before July 1 Submit to Council before July 1 Compare to prior years Compare to prior years Closely monitor key data Closely monitor key data

7. 7Fiduciary Reports SIX Key Items to WATCH Sustained losses Sustained losses No audit No audit Almoner's funds Almoner's funds Foundations Foundations IRS Form 990 IRS Form 990 Noncompliance with Articles/Bylaws Noncompliance with Articles/Bylaws

8. 8Fiduciary Reports Sustained Losses Loss = annual disbursements > receipts Is it sustained or isolated? Is it sustained or isolated? Valley – may need dues increase, or alternative revenues Valley – may need dues increase, or alternative revenues Foundation – need to increase gifts or reduce expenses Foundation – need to increase gifts or reduce expenses Title Holding – increase rents or reduce expenses Title Holding – increase rents or reduce expenses

9. 9Fiduciary Reports Summary Information SJ Valleys: SJ Valleys: Receipts $52.1 M; Disbursed $51.7 M Receipts $52.1 M; Disbursed $51.7 M SJ Orient Entities: SJ Orient Entities: Receipts $12.3 M; Disbursed $13.7 M Receipts $12.3 M; Disbursed $13.7 M SJ Valley Foundations: SJ Valley Foundations: Receipts $13.1 M; Disbursed $11.3 M Receipts $13.1 M; Disbursed $11.3 M

10. 10Fiduciary Reports The Problem of No Audit Exposes assets to loss Exposes assets to loss Could impact future gifts Could impact future gifts Could impact public image Could impact public image Observed problems: Observed problems: Significant assets/activity – no audit Significant assets/activity – no audit Significant assets – attempt to use an internal audit Significant assets – attempt to use an internal audit

11. 11Fiduciary Reports Problems Noted - Almoner's Funds No separate fund reported (Statutes XV-9) No separate fund reported (Statutes XV-9) Little or no activity Little or no activity Excess cash/savings Excess cash/savings Receipts significantly and continuously exceeding disbursements Receipts significantly and continuously exceeding disbursements

12. 12Fiduciary Reports Problems Noted - Foundations No audit when -- significant assets/activity No audit when -- significant assets/activity Little or no activity Little or no activity Could lose tax status Could lose tax status

13. 13Fiduciary Reports Problems Noted - IRS Form 990 Not filed timely Not filed timely Not sent to Active/Deputy Not sent to Active/Deputy Not sent to Supreme Council Not sent to Supreme Council Endanger tax status – group exemption Endanger tax status – group exemption 990 is public document 990 is public document Available online Available online Could hurt public image Could hurt public image

14. Noncompliance with Articles/Bylaws For foundations, title holding entities, etc. Required annual meetings Required annual meetings Number of directors Number of directors Name of entity? Name of entity? 14Fiduciary Reports

15. 15Fiduciary Reports Questions or Need Help? CONTACT: Jorge Franchi, CFO Or Jim Cole, Grand Treasurer General Jim Cole, Grand Treasurer General