Construction or Facility Bldg Issues ZZchu

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


                    TO: Interested Churches                                                                            FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                               FILE: 5024-02/chu   

                     RE: Church Building-Construction Issues                                          Originated:  December 2002                       


          Below is a hypothetical Online Email thread (THRD) between  Jim@bcidot,org  and one of the these Ministry MFTeam members: PAT (Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper).     Click here and go to List of threads (THRDs) at www.bcidot.org


From  Lee:  

    Our Church's annual income is almost $500,000 per year and we have a new building project underwayMy understanding from reading some of your link contents within www.bcidot.org  is that we should manage the building project via a separate set of books from the general fund. Is this correct?   Oh,  by the way ..... we use Quickbooks (QB) to do our bookkeeping.

        From:   Jim@bcidot.org 

    This sounds like you have some 'growing pains'  -- trust all goes wellIf it were me, I would handle the receipts (to include both contributions and loan proceeds) and disbursement (often under project budget control) in a separate QB set of books.

From Lee:

    Please explain some of benefits in doing this as it sounds like a lot more work.

From: Jim

    OK ... but first let me show you below a suggested one page financial statement that gives you and other interested readers a overview of all of your annual Church finances.  Go to  5012  for more perspective on this approach.

        From Jim:

A B C D E F G H I
2                Annual Church Operating Financials    
3            October 1, xxx8 through September 30, xxx9     
      (See BUILDING Only Below)    
5 Church        Special  General  GPF Expend   
Totals       Funds  Fund (GPF)  Budget  Variance
7   Revenue:          
8 $159,035   Donations   $73,481 $85,554    
9     Internal Transfers $8,555 ($8,555)    
10 $4,579   Other     $4,579    
11 $163,614   Total   $82,036 $81,578    
12   Expenditures:          
13 $51,847   Salaries/Benefits   $51,847 $51,900 ($53)
14 $8,725   Rental/Debt Svc Costs   $8,725 $8,760 ($35)
15 $4,150   Facility Operating Exp   $4,150 $4,200 ($50)
16 $53,875   Mission Support $53,875     $0
17 $20,642   Church Expenses $3,500 $17,142 $17,040 $102
18 $25,845   Equipment Acquisition $25,845 $0 $0 $0
19 $165,084     Total $83,220 $81,864 $81,900 ($36)
20 ($1,470)    Excess Revenue (Expend) ($1,184) ($286)    
21   Begin Bal Oct 1, xxxx8  $10,455      
22   Ending Bal as computed $9,271      
  Spoken for as follows:        
24     Board Discretionary $2,955   Ending:   
25     Restricted   $4,201   Bank Bal $13,298
          General    
27     Missions   $2,115 Fund Bal (1) Less Bldg  $4,313
28         $0 below Total  $8,985
29       Total Funds $9,271 ($286) Cross proof is:  $8,985
               
               BUILDING FUND ACTIVITY    
              Through September 30, xxx9    
33 Receipts       Completed  Projects            Budget  
34 � Donations      #1 $12,500 $15,000  
35 �  B4 10-01-xxx8 $20,788   #2 $26,877 $25,000  
36 �  Since 10-01-xxx8 $24,319   #3 $11,639 $10,000  
37 �     Total   $45,107   #4 $27,723 $30,000  
38 � Loan Proceeds $32,500    Total $78,739    
39 Total    $77,607   (1) End      
40 Begin Balance    $      5,445   Bank Bal            $4,313    
41 Total $83,052   Total $83,052    

        From Lee:

    Wow, Jim ...... this is awesome! 

 From Jim:

    By two sets of books, I mean that the Church would have, as explained within 0601,  a Regular (REG) self balancing set of QBs to do above Special  and  General  record keeping per fiscal year.  Of course,  REG would provide payroll and detailed  Actual to Budget info.  Plus, as explained within  0102  ,  REG could also show Land, Building and Equipment (LB&E) data in such a way so that the LB&E equity does not complicate REG accounting/reporting.
     But, the benefits of the separate Building Fund (BLDG) self balancing set of QBs include:  1>  It accommodates the fact that a Building projects usually covers more than one fiscal year; and 2> you are able to render uncluttered Building project Actual to Budget information.  See  3333  for more information.
      At the end of your fiscal year, the Church would update the Land , Building & Equipment (LB&E)  accounts with the latest BLDG information.   

        From Lee:

    Should the building project have a separate checking and savings account?

 From  Jim:

    My preference would be to money manage with the content of the 0006 in mind.     Or all Check/Savings accts would appear within REG and you have a "Bldg Fund Clearing Acct"  in REG and a "REG Clearing Acct" in BLDG. Of course, these two clearing accounts must always be equal.

        From Lee:

    As I am a civil engineer by occupation. and not an accountant,  the topics of "Clearing Accounts" are not clear to me.

From Jim:

    All BLDG receipts and disbursements would flow through the common Bank account within REG and be posted directly to the above "Bldg Fund Clearing Acct" ------ not to any Church Revenue or Expense accounts. The account balance would in essence represent the BLDG Bank Balance.
    In the BLDG set of QBs the "
REG Clearing Acctwould duplicate these cash flow transactions (in the opposite direction) and their distribution would be to applicable types of BLDG receipts and disbursements.

       From Lee:

                    Thanx, Jim

--MINISTRY FINANCE "LINGO"  INCLUDE--


BLDG = Building or Construction Fund
Clearing Account = See above re REG and BLDG
General = General Purpose Fund or GPF
LB&E = Land, Building and Equipment Fund
QB = Quickbooks set of QBooks 
REG = Regular set of QBooks
Special = Special Purpose Funds or SPFs
                       


       This publication originated in December 2002  and was UPTD: April 24, 2010   

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