Help to Pastors re Ministry Accounting Issues 0060-02 ZZall

                                                         - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -


                             TO:  Interested Ministries                                                                                     FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                 FILE:  0060-02/all

                              RE:  Ministry Accounting Issues                                                                       Originated:  April 1994                              


   Below is a hypothetical Online Email thread (THRD) between Jim@bcidot.org  and members of the M)inistry F)inance Team - MFTeam: PAT (Ministry Executive), LEE (Volunteer Board Treasurer), and/or FRAN (Ministry Computer Bookkeeper).   Click here and go to List of threads (THRDs) at www.bcidot.org


TO; Jim 

            Perhaps you already know, Jim, that my background is as a Pastor (and some school teaching) and NOT in the area of business or finance. You finance people use terms like "Fund Accounting, or "Ministry Fund Accounting" -- please give me some explanation.

 FR: Pat -

       Most Ministries, Pat, like yours, are in existence to carry out a specific mandate and are often partially funded by restricted Donations. The Ministry MUST regularly know how much of the pooled Bank balance is for specific unspent restricted balances, plus how much of it is not spoken for. A Ministry's financial records/books must be structured to accommodate these needs and we refer to such a system as "Fund Accounting".

       This is NOT universal, but in order to hopefully shed further light on "Fund Accounting" we refer to unrestricted Donations (or the Ministry uses at its own discretion) as the G)ENERAL P)URPOSE FUND-GPFund (Singular) - Click here  for more GPFund details. Then we refer to donor restricted Donations as identified S)PECIAL P)URPOSE FUNDS - SPFunds (Plural). Plus the Ministry sometimes sets aside part of the GPFund for a Board designated purpose which is also placed within one of the SPFunds.  Please   click here for more SPFund details.

TO: JIM

        When a Ministry uses Fund Accounting, how does this information appear within the reports we get. Please give me some specific examples.


     
       To: PAT

           One such report is the Balance Sheet (this is technically known as the STATEMENT OF FINANCIAL POSITION). We encourage Ministries to refer to this as a financial "PHOTO, or a financial status report as of a point in time ... it might look like the following:

XYZ Ministry
PHOTO Statement as of  May 31, xxx1

ASSETS

Pooled Bank Accounts

Credit Union 

16,787.55

Total Assets (Click Here) re Fixed Assets) 

16,787.55

LIABILITIES & EQUITY

Liabilities

Unpaid Operating Bills

1,022.50

Plastic Payable

666.85

Total Liabilities

1,689.35

Total SPFunds

3050 � Restrictions

3051 � AA-Donor Restriction

3,500.00

3052 � BB-Self Funded Event

1,200.00

Total 3050 � Donor Restrictions

4,700.00

3000 � Board Discretionary

3001 � Board-Prior Yr GPF Gains

2,224.05

3002 � Board SetASide 

13,550.00

Total 3000 � Board Discretionary

15,774.05

Grand Total SPFunds

20,474.05

GPFund YearToDate-YTD Net (loss)

(5,375.85)

Total Fund Balances

15,098.20

Total Liab and Fund Balances

16,787.55

TO: JIM-

    I know we need to have all of this "PHOTO" financial information, and the above 'Fund Accounting' explanation helps. What impresses me is the need to know the status of such financial information 'right now' ---- no way can we wait until the end of the month for this information.  In other words, it is essential for us to be able to make a deposit, or either record a bill or write a  check, and know right away how much we have in each SPFund or in the GPFund. This sounds like a lot of work for Fran .... any thoughts on this?


        
  TO: PAT

    If appropriate,  please Go Here  for information on the very fine software product known as QuickBooks (TM) (QB)  .... as this system allows you to:

  • Account for, and Bank reconcile, the transactions in your Bank Accounts and ultimately reflect its current balance;
  • Then reflect transactions for amounts due Vendors plus do the Payroll including reflection of unpaid payroll taxes.
  • Then simultaneously increase or decrease balances in SPFunds (Plural)/GPFund (Singular);
  • And then ultimately reflect/report balances at the beginning of the fiscal year and the reasons why the SPFunds/GPFund Balances change during the current year -- or account for the Fund Income, Expenses and cross Fund activity.

WEEKLY REPORTS:

    I know you and FRAN use some of the following, but if I were in your shoes, I would want to have certain weekly reports on just where the Ministry is financially. Let me know if you would like to see some Financial report samples via the QuickBooks system. Let's suppose that on every Monday FRAN processed the Mail, makes a deposit, records the recent bills incurred and writes applicable checks. Your accounting system should produce the information you mention above.

TO: JIM

      How do "Budgets" fit into all of this, Jim?

TO: PAT

        We recommend that the budget info pertain only to your GPFund, or Ministry Operations .... it is sometimes called line item expense account budgeting and enables the Ministry to establish the monthly (not simply 1/12th of the annual) budget amount per account of your choosing. Your monthly reports should provide information so you know the amount of "ACTUAL TO BUDGET" (expense emphasis - not income) variance for both the month and the fiscal year-to-date (YTD).  See the YTD Example below. 
        Also Go Here  for info about an alternative budget method whereby you immediately assign discretionary GPFund receipts to applicable areas and you always know if you have money to spend thereafter, etc.  If you are a Small Ministry, you might find the resources found Here  of interest.

        I encourage you and FRAN to periodically project the GPFund actual at a point in time (like August xxx0) to the end of your fiscal year (February xxx1). Some Ministries take these 'Budget Projection' steps more frequently the closer they get to their fiscal year end.
        We believe that regular monitoring of the balance in each SPFund provides the necessary budget control over each SPFund Account.

Jul 1, xxx0 to May 31, xxx1

Actual

Budget

Variance

Income

AllElse Income

1,500.00

Donations Income

77,800.00

Earned Income

50,000.00

Total Income

129,300.00

Expense (line items)

Salaries and Benefits

57,500.00

57,666.67

-166.67

Supplies and Expenses

47,925.85

48,075.00

-149.15

Debt Servicing

15,000.00

15,041.67

-41.67

Fixed Asset Acquisitions

5,000.00

5,000.00

0.00

AllElse Expenses

2,750.00

2,758.33

-8.33

Total Expense

128,175.85

128,541.67

-365.82

        Net

1,124.15

1,141.66

-17.51

Cross Funds Expense

6,500.00

6,516.67

-16.67

        GPF YTD net (Loss)

(5,375.85)

   

TO: JIM

    Yea ..but that sounds like work .... big grin!!!

         TO: PAT

   Pat, you are  'on the go'   through-out the world, but you are one of the best I know in using your Laptop effectively.  Fran could have the System print samples like above to a file  - do the desirable personalization - and then attach these files to your Email.  Please click here as you might want to also consider this QuickBooks Online Edition option, etc.  Accordingly, you can carry out your 'hands on' management style from anywhere where you have access to the Internet. 
    As of November 2005, since you are a smaller Ministry, you no doubt will find of interest this  Editorial  about a potential eExchequer Service using
Web Based  or  Online Apps features of the Internet. 

TO: JIM

            OK ..thanx, Jim
.


   The bulk of this Publication originated in April 1994 and was   .  UPTD: November 15, 2010

HOME  |  ABOUT  US   |    OUR PURPOSE   |   SITEMAP   |  COMPUTER FUND ACCTG  |  HELPS   |  GLOSSARY