TO: Interested Churches
FROM: Jim Bramer, Retired CPA-Auditor
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
Our Church's annual income is almost $500,000 per year and we have a new building project underway. My 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.
This sounds like you have some 'growing pains' -- trust all goes well. If 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.
Please explain some of benefits in doing this as it sounds like a lot more work.
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.
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
Wow, Jim ...... this is awesome!
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.
Should the building project have a separate checking and savings account?
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.
As I am a civil engineer by occupation. and not an accountant, the topics of "Clearing Accounts" are not clear to me.
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 Acct" would duplicate these cash flow transactions (in the opposite direction) and their distribution would be to applicable types of BLDG receipts and disbursements.
--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
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