Reports, Ministry Finance         0084-01       ZZall

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                            TO:  Interested Ministry Leaders                                                                                                   FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                                           FILE:  0084-01/all

                            RE:  Reports,  Ministry Financial                                                                                                   Originated:  August 1994                      

        Money is a significant cog in the wheel that results in a meaningful Ministry, as it is another fuel, or resource, which must be understood, managed and appropriately used. Regardless of your vocational background (Academic, Missionary, Pastorate, etc.) you MUST, as a Ministry Leader, understand the Ministry's Financial Report/Statements.
         Behind the numbers appearing in such reports is the financial story of the Ministry; a story you need to 'grasp' and understand so that, as a major decision-maker, you can use them as 'fodder' to make prudent decisions. You must join in being a good steward of the "fuel" since there never seems to be enough to get the job done! This required skill should allow you to:

  • Be an informed steward and thereby make prayerful financial judgments.
  • Anticipate/plan for the financial future as unto the Lord.
  • Provide financial perspective; not 'jump' to wrong conclusions; detect danger signals; appropriately relate financial data to non-financial statistics and/or data.
  • Observe seasonal financial trends.
  • Evaluate financial status and available net resources.
  • Get answers to the following type of relevant questions:

-- Why is revenue up or down?
-- Why are so many people who owe us money (in a school, for example) late in paying us?
-- Why do we owe so much money?
-- Are our actual to budget variances caused by the fact that the staff did not stay within their budget, or were we unrealistic when we planned our financial future (set up the budget)?
 -- Are we paying enough to make appropriate investments in our people, programs, and facilities ??
-- How do our current operations compare to others like us, etc; or how does it compare to our own history, etc.?
-- Are financial policies and procedures being followed?
 -- Did we need to know more about out constituency who are helping us fund this ministry?

         So, if you do not already have these skills, I suggest that you review the questions above, add your own, and seek answers to your questions from appropriate sources..  Financial Reports, that have to do with Current Operations emphasis, would include renditions of the following:

                                                       BALANCE SHEET - STATEMENT OF FINANCIAL CONDITION

    This depicts what the Ministry owns and the related Ministry Obligations by scope or type.  Click here for a Church Example.  View this as you would a 'Photo' since it is a status report at a specific point in time.
    This report can be viewed as an Operational Double Edged Sword --- both sides with same amount of total dollars, or equal in length and depth (thus the term "Balance Sheet"), but each side serves different purposes.  Visualize a Class room black board.  On the left side of the black board would be the contents of one side of the sword and on the right would be the contents of the other side.  Click here for more information along these lines.  Please also consider the content of  0933  when you pursue this financial report.

                                              L E F T    S I D E   Content:

Resources, or Operating physical Assets, such as:

  1> Cash on Hand and/or Bank and Savings Account balances under Deposit Float Management.
   2> Plus any money owed to the Ministry under 'pay us on time'  Management control. 

                                    R I G H T   S I D E  Content:

Obligatory relationships, such as:. 

   1> Outsider Obligations; such as amounts due Vendors and/or  unremitted payroll taxes.
   2> Insider Obligations; examples include Donations accepted for Ministry Special Purposes pertaining to Ministry staff or Mission Projects, plus money voluntarily SetASides for certain reasons.  Expenditures are controlled by the "if there is a balance in the fund we can spend it" approach.
    3> Board Discretionary Obligations  (General Fund) ; monies come in and are managed by Ministry Departments subject to expenditure Budget control.  Or the Board authorizes a Departmental Expenditure Budget by types of expenses and the departments must stay within such boundaries.

       This view of your  "Balance Sheet", or "PHOTO",  your fiscal status should help you identify your resources and obligations and enhance you being a good financial steward.

                                        STATEMENT OF INCOME/EXPENSES IN RELATION TO BUDGET

    These Departmental income and expenditure reports give you flow of action information since the beginning of your fiscal year. View this as you would a 'VIDEO' of the activity, usually just within your General Fund,  since it covers a Ministry's finance activity at a beginning point in time through an ending point in time. Click here for a Church Video example that includes Actual to Budget reporting..
     As referenced above,  various expenditures by type, or by line item, have been anticipated and approved for the fiscal year.  The Board and Ministry Departments are obligated to know and budget control their Expenditures beginning the first of the fiscal year.   Click Here for information about a alternative method for controlling your expenses.

KEY ITEM TREND STATEMENTS

    A brief declaration of Key Ministry financial information of your choosing enables you to follow the direction, or trends, of such relevant financial statistics. This is often done in non-financial graph or chart format.

      As in any profession, finance and reporting (accounting) has its own terminology and your Financial Reports may say something slightly different but mean the same thing as the above samples. Be sure and ask questions and get answers from your staff so that you KNOW exactly what your Ministry finance terms mean --- you MUST know so you can make intelligent decisions based on understood financial facts. 

 QUOTE:   Financial Reports worth preparing should be worth reading and understood by those who should know!

      .  The bulk of this Publication originated in August 1994 and was  UPTD: May 02, 2008

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     (1) An Online Document, or WRIT (Writing), may be applicable to all Ministries, or it may be designed for just groups like: Evangelical Church, School, Missionary Agency or Organization, Christian Camp/ Conference, or other named group.
     (2) WRIT formats include the perspective of  Jim@bcidot.org   via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, a hypothetical Online conversation with members of the MFTeam; GLEANINGS, or Scripture within context of the MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; and via FAQ, response to Frequently Asked Questions