A FARMERS MUTUAL FIRE INSURANCE COMPANY. 7 



all his knowledge of farm risks and mutual insurance principles, the 

 secretary is seldom a skilled bookkeeper or accountant. In excep- 

 tional cases it may be found expedient to elect a secretary who at 

 the time has no farm property to insure and therefore can not be 

 a member of the company in a technical sense. He may be a retired 

 farmer, for example, who for years has been an active member of 

 the company. 



While the directors as a body are responsible to the members, it 

 involves needless expense to have them meet to pass upon routine 

 business. On the other hand, it is undesirable to leave too much to 

 the judgment of a single individual. The best plan, probably, is to 

 provide for an executive committee to pass upon all matters of 

 importance which are more or less routine in their nature. The 

 president, secretary, and vice president properly constitute such a 

 committee. The first two are connected actively with the details 

 of the business in any case. There seems good reason for making 

 the vice president the third member of this committee, since his 

 duties as a committee member will keep him in touch with all angles 

 of the business and qualify him for the duties of acting president, 

 which he may be called upon to perform. By this plan the regular 

 meetings of the board of directors may be reduced to about four a 

 year. Special meetings of the board should be called whenever any 

 extraordinary problems confront the company. 



Another important committee for which all companies should 

 provide is an auditing committee. It is almost impossible to over- 

 emphasize the importance of a thorough annual audit of the books 

 of the company. It is an added incentive to the officers in charge of 

 the books to keep their records accurate and in good form. 



While cases of misplaced confidence appear to be rare in companies 

 of this kind, nevertheless provision should be made to prevent the 

 possibility of misconduct or misuse of funds. Even though the 

 reputations of the officers are such that fraud on their part seems 

 impossible, it is desirable to maintain sound business practices and 

 to guard against insinuations by some disaffected member. The 

 officers themselves should insist upon a thorough annual audit as a 

 matter of self-protection. It may be desirable to have the books 

 audited annually by an experienced accountant, but this involves 

 considerable expense. Under ordinary circumstances, especially for 

 the company of moderate size, the most practicable auditing com- 

 mittee consists of members of the company. In a committee of three 

 the chairman and at least one other member should be selected at 

 the annual meeting from outside the board of directors. It may be 

 well to have the third member selected by the board from their own 

 number in order that no needless misunderstandings may arise. 



