Two Sides of Same Coin         0094-01  ZZall

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

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                             TO:  Interested Ministries                                                                                      FROM: Jim Bramer,  Retired Auditor-CPA
                                                                                                                                                                  FILE:  0094-01/all 

                              RE:  Two Sides of the Same Coin                                                                     Originated:  November 1999                                       


            OK, please bear with me ......

           Financial management of the Operations of a Christian Ministry is like the analogy of two sides of the same coin.  Maybe even "two sides of the same fence" or "equal yet separate" as to the status of your finances at a point in time.  Liken Side "A"  -  Liquid Assets Management  to that associated with resource management in general while Side "1" relates to Imposed Limits Management  (this is ever before both Christian Ministries as well as Christian Family Units issues and related care.  To further this analogy, let me share:

S I D E " A" -  LIQUID  ASSETS  MANAGEMENT

           SIDE "A" shows the Operation's  pool of liquid assets (Please note that I have not included any assets and related liabilities as to "Land, Buildings and Equipment", etc)  represented by Balances at a point in time as shown by a portion of the Sample Balance Sheet - Photo, as recapped below.  This responds to the "WHERE" is the money issues --- again, at a point in time.

Checking/Savings @ Credit Union

101

Checking

$ 1

102

Money Market-rate x.xx

$ 25,395

103

CD-rate x.xx due xx/xx/xx

101,858

104

CD-rate x.xx due xx/xx/xx

$ 50,145

109

Office Petty Cash

$ 52

110

Imprest Checking

$ 1,500

 140 Memo Accts re Fixed Assets  0102

Total Checking/Savings

$ 178,951

120

Accounts Receivable

$ 4,214

170

SCRIP Store Advance

$ 523

Total Asset Pool

$ 183,688

         The contents of this "Asset Pool" needs to be prudently managed in a secure fashion so that these balances earn a yield  (Interest Income) between the time they are on deposit and when they are ultimately used to carry out the purpose of the Ministry.    Please Go Here for some details about all of this.  We recommend short term investments in what we call  replicating  financial institutions. Make every effort to work with a financial institution that has a SWEEP system whereby your checking account at the Bank always shows virtually zero at the end of a business day because residual balances are always in a   Daily Interest Bearing Savings (DIBS) accounts of the appropriate type. 

   TRUISM ---- Get your "Undeposited Money" on hand to the Bank ASAP; further, make sure all Bank Account Balances are earning the maximum amount of yield.

        Please remember that this SIDE "A" has a "pool" perspective .... for uncluttered management purposes, none of the short term investments or Bank accounts are "married" to a specific Fund or obligation shown below within SIDE "1" .  Sometimes it is appropriate to distribute their allocated share of the pool's yield to applicable Fund Balances within SIDE "1" below.

         Other unique management features of SIDE "A"  include: 

  •      Utilize Sweep arrangements when possible; Comply with Internal Control issues whereby undeposited monies are deposited ASAP

  •      When automatic Sweep arrangement is not possible, each deposit ideally goes directly to a DIBS account (not to the checking account); 

  •      Then daily transfer of funds to cover checks that daily clear the bank;

  •      Have a safety-net Line of Credit (LOC) in case transfers are not timely made;

  •      Make full use of Online services where you can at any time access and view your bank account status and activities.

  •      Please  Go Here  for information about a  BREC-SWEEP  system whereby you manually do the sweep process at the same time as you do your weekly Bank Reconciliation.

    S I D E "1" -  IMPOSED  LIMITS  MANAGEMENT

    SIDE "1"  emphasizes the need to manage the portion of the liquid Balance Sheet (Photo) representing Obligations, plus Fund Balances/Net Assets with Imposed Limits ( it responds to the question of  "WHAT are these monies here for or WHY do you have these monies?") that are assumed by the Operations of the Ministry.  Please also know about the issues set forth when you  Click Here.   Please note the following samples:

  •     Normal payables due to Vendors and to the Credit Card Company.

  •     Monies temporarily held for others for whatever purpose.

  •     Unspent Donor Preferences/Restrictions - Temporary; targeted for portions of the usual Ministry Operations or for ongoing Ministry Projects;  

  •     Plus monies SetASide  from the operating budget for specified anticipated needs.

  •     Board Discretionary - Unrestricted: or available as needed for operational budget to be determined by the governing board;

    Please see sample below:

Liabilities:

200

Payable to Vendors

$625

220

Due on Credit Cards

$6,328

260

Others

$779

Total Liabilities

$7,732

Fund Balances/Net Assets:

**Donor Restrictions**

300

Ministry Staffer Designations

$ 39,588

310

Other Donor Designated

$ 5,124

334

Special Missions Fund

$ 7,773

337

Short Term Mission Trip

$ 2,880

 339

All Other such Designations

$ 1,243

$ 56,608

**Board Discretionary**

350

Contingency Reserve

$ 60,000

355

Board SetASides

$ 12,761

$ 72,761

Total Net Assets

$129,369

Year To Date General Fund Excess

$46,587

Total

$183,688

     "Features of "Imposed Limits" management re SIDE "1" include such issues as: 

  •      In order to make informed decisions, your accounting system needs to provide daily knowledge of  Obligations/Fund Balance status and activity - see above status sample.. 

  •      The Ministry should be on the expense Accrual Basis of accounting to insure full and complete reporting

  •      The Ministry should have a Board policy as to the possibility of temporarily borrowing among the above Net Assets of $72,761 plus the Year To Date General Fund Excess   of $46,587. 

  •      Any Year To Date General Fund   deficit of the current year can not exceed the above Board Discretionary amount of $72,761.


       For example,  the  usual way to process a check that you write is to first record it at your check stub (or equivalent) and reduce the Bank Account in Side "A" above.  Then you simultaneously add it to the expenses in the General Fund or reduce the balances that reside in Side "1" above.  For more info along these lines, please go to the lady that we respectfully address as ALICE when you Go Here .

    As explained within this Publication,  we recommend that the following groups of Net Assets/Obligations show up within separate Sets of QBooks  as they are updated and utilized generally in/around the year end.


    Hopefully this "Two Sides of the Same Coin" analogy will assist your  MFTeam  in its ongoing need to be a good steward of these "separate yet equal" management issues and resources.


     The bulk of this Publication originated in November 1999 and was   .    UPTD: March 09, 2012  

ABOUT  US   |  OUR PURPOSE   |  TABLE OF CONTENTS   |  SEARCH  MATTERS  |  HELP DETAILS   |  FUND ACCTG VIA COMPUTERS   |  GLOSSARY