Verhovayak Lapja, 1947 (30. évfolyam, 1-24. szám)
1947 / Verhovay Journal
September 10, 1947 VerhovayJournal PAGE 5 AUDIT REPORT Continued from Page 4 $498,745.02 consisting of liens amounting to $72,732.90 and loans' amounting to $426,012.12. We verified the liens and loans with your individual card records and tested the card records with the documents on file. We found the tested loans and liens within the limits of the reserve values and found your records of your loans and liens department lin good order. (a) Liens — the liens were granted to policy holders in January 1924 when your Association changed from the flat assessment to the legal reserve basis. Your Association passed a resolution in the year 1936 according to which interest charges were waived on liens as a special privilege to the then members of your Society and no interest charges on liens have been made since. As a consequence of this resolution, repayments on liens were slow; they amount to $20,224.75 in the four year period under review. This amount consists largely of repayments on liens of deceased certificate holders, and on surrendered certificates. (b) Loans — your Association charges on loans 4% interest and handling charges as provided for in your By-Laws. Interest is charged on January 1 for the entire year in advance and this charge is properly adjusted whenever there is a change in the loan during the year. The interest charge on January 1, 1947 amounted to $16,807.81 of which amount approximately one half was earned by June 30, 1947. It is interesting to observe that the total amount of loans and liens during the period under review decreased by $139,349.02 in spite of the substantial increase in the volume of your business and in the number of certificates in force. For many years the book value of your bonds was substantially in excess over the admitted value (which is the amortized or investment value established by the Insurance Department), but this amount has been reduced to $54,312.47 as of December 31, 1946. It is necessary that your Association should continue its efforts to improve the quality of your bond holdings to guarantee the financial soundness of your Association. Your Association recovered on various bond issues which had been written off prior to June 30, 1943 an amount of $20,528.63 and the possibility exists that there might be an additional recovery on Harding Lawrence Building Bonds. All the other issues that have been written off have been fully liquidated. Stocks at Book Value — $31,596.71 The stocks owned by your Association on June 30, 1947 were acquired by exchange prior to the period under review except 126 shares of Chicago and North Western Railroad, which your Association acquired by an exchange of bonds. As a result of a reorganization procedure your Association had to exchange its holdings in Chicago North Western Railroad Bonds into the common stock of that company as mentioned above and suffered as a result of this exchange a loss of $11,941.63 on July 31, 1944. The book value of the stock is in excess of the admitted value (market value) of these stocks. This excess of book value over market value amounted to $11,859.51 on December 31, 1946. We are referring in this connection to Schedule 6 showing the stocks owned by your Association and to Schedule 9 of this report showing the changes of the stock holdings during the four year period under review. Bonds at Book Value — $7,652,576.95 A lisf of the Bonds owned by your Association on June 30, 1947 is represented in Schedule 3 of this report. We have made a physical inspection and count of these Bonds and found them to be in good order and accounted for with unmatured coupons attached. Schedule 4 is a summary of the Bonds owned by your Association and shows the following subdivisions: Class of Bonds * U. S. Government States and Municipal Railroads Public Utilities Book Value Percentage of Total Bonds $2,057,960.00 26.88 558,362.66 7.30 780,218.50 10.20 4,256,035.79 55.62 The backbone of the assets of your Association is the securities and, therefore, they require particular attention. The quality of your securities has been substantially improved and great credit is due to your Supreme Treasurer and his immediate associates for the work which he did and the results which he accomplished during the four year period under review. Your holdings in Government Bonds have increased from 9.436% of the total holdings in securities to 26.88% and the holdings in State and and Municipal Bonds and Public Utilities have been replaced to a great extent by holdings in the same category of a much better quality. The extent of this work can be best realized by the fact that securities in a total amount of $4,811,496.60 have been sold during the four year period under review and securities in a total amount of $7,222,855.86 have been purchased during the same period. The total amount of purchases and sales approximates twelve million dollars. We have made a thorough analysis of your transactions and have found that the greatest care has been exercised and that each transaction was only executed after careful analysis. Your By-Laws (paragraph 44) restrict purchases of securities to an amount of $40,000.00 par value of any one concern and restrict the sale of securities in case there should be a loss on the sale. We believe that your Board of Directors were wise in modifying these provisions as they constitute a serious handicap in the proper performance of the duties of the Supreme Treasurer. These provisions are inadequate for the operation of a concern of the size of your Association. As we have pointed out in a previous paragraph the changes in your bond account are considerable. We are referring to Schedule 5 of this report for a complete summary of the changes in your Bond Account during the four year period under review. Your Association acquired by merger with the Workingmen’s Sick Benefit Federation bonds in the amount of $372,279.27 of which your Association still owned $362,369.35 as of -June 30, 1947. It is our impression that your holdings of bonds are of good quality now with the exception of some weak positions particularly in Railroad Bonds which were, acquired prior to the period under review. Cash on Hand and in Transit — $31,976.71 We have counted your cash on hand at the close of business June 30, Í947 and found the amount of $1,100.00 correct and accounted for. The cash in transit in the amount of $33,876.71 can be explained as follows: Your Association has consistently followed the practice of closing its books some time after the close of the month to wait for the recepit of premiums collected by the various branches. These amounts, although received after the end of the month, are included in the bank balance of the previous month on your books and statements. This simplifies the administrative work at your Home Office considerably, and while this practice is not exactly in accord with good accounting principles, we see no serious objection to the continuation of this procedure, but we suggest that the amounts received at your Home Office after the close of any month or after the close of the year should be shown separately as cash in transit and should not be included in the bank balance. This we have done on the Balance Sheet as at June 30, 1947. Cash in Banks — Checking Accounts $357,283.01 — Savings Accounts $76,072.22. V We refer to Schedule 17 of this report for a detailed listing of the various bank accounts and the balances as of June 30, 1947. The correctness of the amounts was verified by correspondence with the depositories. Deposits in Suspended Banks $1,302.84. A detail of this account is shown in Schedule 17 of this report. The corectness has been verified by correspondence with your depositories. The amount in suspended banks at the beginning of the period under review amounted to $2,682.06. It has been reduced to $1,302.84 partly through collection and partly through a write-off of an uncollectable amount of $644.80 due from the Erie Trust Company, Erie, Pennsylvania. Refused Checks — None There were refused checks on closed banks outstanding in the amount of $278.56 as at June 30, 1943. An amount of $36.54 was collected during the period under review and the balance of $242.02 was written olf as uncollectable. Participation Certificates — $448.80 This asset represents a balance on certificates received in settlement of a claim, originally amounting to $8,976.00, against the old Hazelwood Savings and Trust Company arising from a restricted deposit. This amount has been reduced during the period under review through collection of liquidating dividends by $1;795.20. SUMMARY OF GENERAL LEDGER ASSETS 1943 June 30 Real Estate ....................................................... $73,730.19 Real Estate — Home Office ........................... .........— Machinery ........................................................... .........— Mortgage Loans ............................................... 118,807.57 Loans & Liens ................................................... 638,094.04 Bonds at amortized value or cost ................. 4,719,703.95 Stocks — at cost ...................... 25,143.00 Cash on Hand ................................................. 1,000.00 Cash in Bank-checking acc’ts...................... 156,114.48 Cash in Bank Savings Accounts ...... 75,211.24 Cash in Suspended Banks .......................... 2,682.06 Refused Checks ................................................ 278.56 Participation Certificate ................................ 2,244.00 Total ................................................................... $5,813,009.09 1947 June 30 $31,462.26 131,126.12 38,292.24 45,866.78 498,745.02 7,652,576.95 31,596.71 1,100.00 391,159.18 76,072.22 1,302.84 448^80 8,899,749.12 Increase $131,126’l2 38,292.24 2,932,873.00 6,453.71 100.00 235,044.70 860.98 3.344,750.75 258,010.72 Decrease- $42,267.93 72.940’79 139,349.02 1,379.22 278.56 1,795.20 258,010.72 NET INCREASE $3,086,740.03
