Verhovayak Lapja, 1947 (30. évfolyam, 1-24. szám)
1947 / Verhovay Journal
PAGE 4 Verhovay Journal September 10, 1947 Verhovay Journal Journal of the Verhovay Fraternal Insurance Ass’n. OFFICE OF PUBLICATION 7907 West Jefferson Ave. Detroit 17, Mich. PUBLISHED SEMI-MONTHLY BY THE Verhovay Fraternal Insurance Association Managing Editor: JOHN BENCZE Editor: COLOMAN REVESZ Editor’s Office: 436—442 FOURTH AVENUE PITTSBURGH 19, PA. Telephone: COurt 3454 or 3455 All articles and changes of address should be sent to the VERHOVAY FRATERNAL INSURANCE ASSOCIATION 436—442 FOURTH AVENUE PITTSBURGH 19, PA. SUBSCRIPTION RATES: United States and Canada ....................................... $1.00 a year Foreign Countries ....................................................... $1.50 a year ADVERTISING DEPARTMENT: P. O. BOit 7, WOOLSEY STATION — LONG ISLAND CITY 5, N. Y. Entered as Second Class Matter at the Post Office at Detroit, Michigan under the Act of March 3, 1879. Audit Report Verhovay Fraternal Insurance Association July 1, 1943 to June 30, 1947 CRAWFORD AND ELLENBOGEN ACCOUNTANTS AND AUDITORS 1412-14 BERGER BUILDING PITTSBURGH, PA. JOHN E. CRAWFORD JOSEPH ELLENBOGEN, C. P. A. Juy 30, 1947 Mr. Ernest Kunstadt, Chairman Auditing Committee Verhovay Fraternal Insurance Association Verhovay Building Pittsburgh, Pennsylvania • Dear Sir: We have made an examination of the Balance Sheet of the Verhovay Fraternal Insurance Association, Home Office, as at June 30, 1947, and of the Statements of Income and Disbursements for the period July 1, 1943 to June 30, 1947. In connection therewith, we examined or tested accounting records of the Association and other supporting evidence and obtained information and explanations from officers and employees of the Association; we also made a general review of the accounting methods and of the income and disbursement accounts for the period July 1, 1943 to June 30, 1947. We have made a detailed audit of the transactions relating to bonds, stocks, real estate, and mortgage loans. We submit herewith our report consisting of the following Exhibits and Schedules, all of which are subject to the comments attached to and made part of this report. Comments on Balance Sheet Funds Comments on Receipts and Disbursements (Exhibits “A” to “K” and Schedules 1-19.) We want to take this opportunity to thank the officers and employees of your Association for the courtesy and cooperation accorded us during the course of this audit. Respectfully submitted: CRAWFORD AND ELLENBOGEN. Joseph Ellenbogen Certified Public Accountant. COMMENTS ON BALANCE SHEET GENERAL The books of your Association, in accordance with your established practice consistently maintained, are kept on a cash basis. Your Association does not accrue assets or liabilities on the books. Therefore, the audit was confined to the assets of your Association as shown on your books at the Home Office. We have not examined the branch offices and the financial condition of your branches. Your Association, in compliance with the law and rules of the Insurance Departments of the various states, submits annually a report to the Insurance Department as of the close of each year. This report lists, in addition to the Ledger Assets, the Non-Ledger Assets (such as accrued interest and accrued premiums, etc.) and the unpaid liabilities as of the close of the year. The Legal Reserves, as required by law, are computed on an actuarial basis and the computation of these reserves. as shown on your statements was accepted by us as correct. The annual report lists, furthermore, the assets which are not admitted by thef insurance laws and regulations of the various states and consists mainly of the excess cost or book value of your investments of stocks and bonds over the admissable value. LEDGER ASSETS Real Estate at book value $31,462.26 For a detail of your real estate account we refer to Schedule 10 of this report. Your Association owned five parcels of Real Estate on June 30, 1943. These five parcels of real estate represented the Social Homes of branches of your Association and have been paid off with the exception of Branch No. 296 at Springdale, Pennsylvania. Branch No. 129 Columbus, Ohio acquired a home on May 13, 1946 at a purchase price of $10,000.00 and an appraised value of $10,500.00. Your Home Office advanced to the branch for this home $7,000.00 of which an amount of $6,750.00 was outstanding on June 30, 1947. We have examined all documents evidencing ownership and related papers and found same in order. The properties owned by your Association were purchased for the use of your branches in the pursuit of their social and cultural functions. They were sold in turn to the respective branches under contract of sale at cost bearing interest of 4 % per annum. Under the terms of the contracts of sale the branches are obligated to pay the purchase price on agreed upon terms and to pay taxes and insurance premiums on the property and to maintain the property at their own expense. Your Association retains legal title to the property until final payment is made. As we have mentioned above your Association owns at the present time two of such homes, one of which was purchased during the period under review. The Insurance Department of the Commonwealth of Pennsylvania has pointed out in previous examinations and in its last examination, made as of December 31, 1944, that your Association should discontinue investing funds of the Association in this type of assets. Nevertheless, your Association has made an investment in the home at Columbus, Ohio during the period under review. The home of Branch No. 229 at E. Chicago, Indiana was sold at a price exceeding the balance owed to your Home Office by $5,832.58, and the Home of Branch No. 443 at Detroit, Michigan was sold leaving an excess over the balance owed to your Association in the amount of $7,849.72. These two amounts have been deposited in your Trust Fund to the credit of the respective branches and are still in the Trust Fund. As a result of the merger with the Workingmen’s Sick Benefit Federation, your Association acquired the home office of that Federation. The Federation carried the home office on their books at a value of $22,652.00 and has been taken over by your Association at the same book value. This building is located at 222 Cable Avenue, East Pittsburgh, Pennsylvania and was appraised in May 1942 at $55,372.00. Nevertheless, as we have been informed by your officers, your Association expects to suffer a loss when disposing of that property. * Home Office Your Association acquired its own home office in December 1943 at a price of $45,000.00. Additional improvements increased the cost to an amount of $131,126.12 as of June 30, 1947 and we have been informed by the Supreme Officer’s of your Association that you owed an additional $5,458.37 for improvements of the building on June 30, 1947. This amount has been paid since. The appraised value of the building, according to an appraisal made at the time of purchase, was much higher than the purchase price of $45,000.00. The amount spent so far for improvement of the building was $86,126.12. We suggest that your Association should reduce the book value of the home office building annually at least by an amount equivalent to depreciation. Machinery — at book value of $38,292.24. Your Association installed new bookkeeping machines first on a rental basis. The machines were bought outright in 1947. We recommend that the book value of this machinery should be reduced annually at least by the amount of depreciation. Mortgage Loans — $45,866.78 We are referring to Schedule 11 of this report for an analysis of your mortgage loans showing the balance as at June 30, 1943, the payments during the period under review and the balance on June 30, 1947. All the mortgage loans acquired prior to time of merger with the Workingmen’s Sick Benefit Federation were first liens on real estate, owned and used by your branches. There is little difference between the outright purchase of Branch Homes by your Association and the granting of mortgage loans on such homes. In this connection we are referring to our comments on real estate. On July 1, 1943 there were seven mortgage loans on Branch Homes outstanding of which five have been fully repaid during the period under review. The mortgage loan to Branch No. 14 at Cleveland, Ohio amounted to $48,595.33 on June 30, 1943 and was reduced to $33,369.23 as of June 30, 1947. It is our impression that Cleveland should make greater effort to pay off the mortgage and we have observed from your records that your Home Office had difficulties in the collection of this loan. The second loan on a Branch Home outstanding on June 30, 1947 is the loan to Branch No. 187 at Granite City, Illinois which showed a balance of $1,235.74 as of June 30, 1947. Branch No. 170 at Medina, Ohio overpaid the loan by $1,334.47. This amount was deposited in the Trust Fund to the credit of the Branch. Your Association acquired by merger in 1947 additional mortgage loans which amounted to $11,261.81 as of June 30, 1947. This amount is made up of five mortgages. All these mortgages are of a commercial nature and one is insu^d by the F. H. A. ^ The total investment in real estate (including the Home Office Building) and mortgage loans amount to $208,455.16 or an approximate 2.4% of your total assets compared to more than 3% as of June 30, 1943. Liens and Loans on Certificates of Members — $498,745.02 The combined totals of liens and loans as of June 30, 1943 amounted to (Continued on page 5)
