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    TO:  Interested  Churches                                                                             : Jim Bramer, Retired Auditor-CPA
                                                                                                                                    FILE:  5025-02/chu

     RE:  "Self Funding"  and "Expected Receipts"  
             QuickBooks (QBs)  Companies 
                                                         Originated:  June 2006                             

        Please let us know at   Jim@bcidot.org  if the following "QUESTIONS and ANSWERS - Q&As" need clarification:    Click here and go to List of FAQs at www.bcidot.org


    I have just read Brad's comments about their Church's Self Funding endeavors found at  3444 .  Below is a copy of his information for that Church who has a March 31st fiscal year end.  I have some questions about the Church he mentioned who has set up separate QBs Companies to meet some unique needs of such "Self Funded"  events/programs, etc., plus an "Expected Receipt" effort. 
    For clarity purposes within this Q&A effort,  I will refer to the original QBs Company as
ORIGINAL (5) and the SEPARATE  (6)  QBs Companies as SEPARATE#1  for "Self Funding" accounting and SEPARATE#2  for "Expected Receipts" accounting.  See more information below.  What exactly are these  SEPARATE  processes trying to accomplish as this helps to manage these operations ?


Inventory or Advance

Deposit made



 Operations Timing

(1) Net

for facility, etc.



Event/Program - per QB Equity Accounts




or Reservations



  Annual Camp A



$ 7,000

  Annual Camp B



$ 2,500

  Annual Conference 1



$ 1,000

$ 500

$ 2,775

  Annual Conference 2



$ 1,500

$ 250

$ 500

  Mdse on Hand - like unsold Choir CDs etc April Mar                 $ 500

  Annual Vacation Bible School



$ 1,575

  AWANA or like Midweek

         Children's Program



$ 15,123

$ 12,500

  Event/Program A



$ 187

$ 2,397

$ 2,000

  Variety of Church Events



$ 7,500

  Summer Athletic Program



$ -

$ 200

$ 500


$ 12,687

$ 20,045

$ 18,275

Net Difference

$ 14,457

(1) Covered by the Annual GPFund Budget


    Below is ORIGINAL's condensed March 31, XXXX fiscal year end Balance Sheet - note that this overdraft of $14,457 is shown in the SPFunds area below as "Self Funded Events/Programs." 


Checking and Savings

$ 74,538

Petty Cash Funds

$ 1,850

Other Assets

$ 2,845

Total Assets

$ 79,233


Due to Vendors

$ 2,745

Due on Credit Cards

$ 12,899

    Total Liabilities

$ 15,644

Equity-Special Purpose Funds

Donor Restricted Fund Bals

$ 5,496

Missions Fund Bals

$ 12,875

Board Discretionary Fund Bals

$ 54,250

Self Funded Events/Programs (overdraft)

($ 14,457)

GPFund Net Income for the Fiscal Year

$ 5,425


$ 63,589

Total Liabilities and Equity

$ 79,233

ANSWER #1:       

    Thank you for asking this basic question .... why go to all this trouble with other QBs companies, or other SEPARATE  efforts?.  Please also go to  0611  where I discuss issues about multiple QBs companies at a Church.  Below are the major reasons for doing this.

 The need to account for �Expected Receipts� via QB's "Account Receivable"  feature.(4)

        When you go to 5012 you will notice in the Big Pix report that the money inflow handled to date was divided up as follows:

    Type of Incoming Money  Amount  Per-Cent
General Fund Donations  $    77,800 33
Restricted/Special Purpose Donations  $111,000 47
     Sub-Total  $188,800 80
Event Fees or Defrayments -   $    50,000 20
Grand Total  $   238,800 100

        The majority of the money handled came in as Donations and flow via the applicable Donation processing internal controls system and effort. But $50,000 (20% of this total) was money that came in from the Events/Programs where participants were expected to make Defrayment payments.  This is not "Income" per se and we sometimes are prone to overlook the amount of money that is involved.  I refer to this area of the Ministry as "Expected Receipt" money and not the usual "Accounts Receivable (AR)"  term that is used in a commercial environment.  But almost everything about "Expected Receipts" parallels AR accounting as you have the needed checks and balances that might include the following:

    1>    Handle registration payments within context of a simultaneous sale and payment, etc. (It is not a cash sale per se because a record is needed of who the cash sale was made to, etc.) 
    2>.   Establish and book how much someone has yet to pay
    3>    Then monitor and follow-up via the applicable QBs AR Aging reports, etc.
    4>    And ultimately, of course, see that they pay the "Expected Receipt" money, etc. 
    5>    Establish a database of needed information re people who are registered for any Church Event/Program  ... like capturing Kid's Parents info and/or specific needs in case of an emergency etc.
    6>    Provide a list (ideally this can involve labels which can be provided via a conversion via an Excel doc, etc.) of those registered for such reasons as handing out admission tickets, etc.

        When a participant does not pay, of course, it is not a Bad Debt per se and you don't necessarily pursue the unpaid balance in that manner.  Depending on the circumstances, you simply reverse the original charge or transaction.  As explained when you go to 0611 , and due to excess "clutter" within the operational QBs system, it is not desirable, in my opinion, to set up a QBs AR system within ORIGINAL for such purposes --- so this  SEPARATE process meets such needs.   Often the same party (family, etc) can be used per this "Expected Receipts" system for a number of different Church Events/Programs, etc.  A QBs trained staff member who is close to the Event/Program effort should do the needed database management and finance record keeping. This person might also prepare the bank deposit slip.


            What about "Expected Receipts" and reflecting these unpaid amounts as Income within your ORIGINAL set of QBs?


     >>  This SEPARATE#2 QBs file for just  the "Expected Receipts" record keeping is, or course,  on the "accrual basis" of accounting - or it is a reflection of Income when billed/earned, etc.      
     >>  We do
not want to commingle this 
"Expected Receipts"  unpaid income within any of the applicable "Self Funded Balances"  within either SEPARATE#1  or ORIGINAL.  In other words, we want both SEPARATE#1  and  ORIGINAL to be on the 'cash basis" and not show the "Expected Receipts" transactions as income until everything is converted to cash, etc.  In order to accomplish this, we set up "Offset" accounts within the QB Other Assets portion of SEPARATE#2  for every Event/Program's  "Expected Receipts" total within SEPARATE#1. Or none of this anticipated income is shown within SEPARATE#1's "cash basis"  Income Statement until the money is actually received, etc. This allows you to efficiently proof  back to the "cash basisSpecial Purpose Funds balances as shown within ORIGINAL.


        Obviously the Self Funded Events/Programs transactions (see the $14,457 overdraft figure within the sample above in Question #1) begin within ORIGINAL.  What are some of the issues related to setting up, transferring and proofing these transactions within the two SEPARATE  processes?


Events/Programs need to have their "Own Fiscal Year".

        As shown in the above example,  Self Funded Events/Programs often lap over from ORIGINAL's  fiscal year to the next, or as of March 31, xxxx.  For example, as of the fiscal year end money has either come in or gone out prior to the Event/Program itself.  Within the SEPARATE#1  processes you can arrange its fiscal year structure to accommodate such matters.

 The need for �Actual to Budget� reporting,  etc.

.        QBs provides for Budget accounting only within its regular Income/Expense areas that enables you to produce a QBs provided Income Statement.  When you read  0041  you will remember that we use the term Special Purpose Funds (SPFunds),  Then within  0601  you will notice that we recommend, for the reasons given, that such SPFunds are initially accounted for using QBs Equity account features and not the QBs regular Income/Expense areas.  You can not do Budget accounting within "ORIGINAL'S"  QBs Equity accounts.  But these Self Funded Events/Programs need to be under Budget spending control like any other of the Church's operations.  Thus within  SEPARATE#1  you structure it via the QB Class features to meet such a need --- or the activity of these Self Funded Events/Programs become QBs departments of the usual QBs Income Statements, etc.

The "Chart of Account" structure and "Transaction Processing" involves matters such as:

     >>  The need to set up QB Classes for each separate event/program that agrees with the QB Equity accounts total of $14,457 per the above information within Question 1
     >>  The need to establish a Bank account for the grand total of minus $14,457; this must always agree with information flowing from
ORIGINAL's set of records.  Of course, the name in this area of QBs is "Total Self Funded Accts" and not a bank acct name.
     >>  Establish applicable generic QB Income and Expense accounts for the types of Event/Program Income and expenses
     >>  Determine how to spread out the $14,457 balance forward at 03-31-xxxx among
SEPARATE#1  fiscal year and various QB Income/Expense accounts and SEPARATE#1's QB Classes
      >>  Post this Balance Forward data into SEPARATE#1  as a Journal Entry as of 03-31-xxxx.
     >>  Beginning  04-01-xxxx and thereafter, make hard copies of the
ORIGINAL's  QB Equity account registers and manually do the posting the transactions to the above SEPARATE#1's  Bank Accounts (we reference them as xxxx Offset Accounts). The process, of course, includes distributing therefrom to SEPARATE#1's applicable QB Income/Expenses and the event's QB Classes
     >>  For the first fiscal year
SEPARATE#1 's Net Income by QB class and the SEPARATE#1 's Bank Account (Event-Program, etc) will be the same within SEPARATE#1's Balance Sheet (xxxx Offset Accts)
     >>  After
SEPARATE#1 's  first fiscal year then utilize some of the features set forth within  0690  to carry forward Event/Program end of year balances to SEPARATE#1's  new year's Income Statement (via Other Income QB section).
     >>  Of course, there is the need to regularly proof
SEPARATE#1's balances to like information within ORIGINAL.

Question #4

        Do you have samples of some of this, etc?

Answer #4

Yes .... they are in the works.  Contact me at   Jim@bcidot.org  and mention 5025-02 samples.

     The bulk of this Publication originated in June 2006 and was . UPTD: March 09, 2012