New Treasurer at a Church dialog 5091-02 ZZchu

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                  TO:  Interested New Church Treasurers                                                                           FROM: Jim Bramer, Retired CPA-Auditor
                                                                                                                                                                       FILE:  5091-02/chu

                  RE New Treasurer at a Church dialog                                                                             Originated:  July 2003             


          Below is a hypothetical Online Email thread (THRD) between  Jim@bcidot.org  and one of the these Ministry Finance Team members: PAT (Ministry Executive), LEE (Ministry Volunteer Treasurer), and FRAN (Ministry Computer Bookkeeper).   


From:  Lee

    Jim,  I am the new Church Treasurer at our Church where we handle about $500,000 per annum.  I am not an accountant but I guess I would classify myself as a "savvy" Church leader since I have served on Boards of Church Leadership for quite a long time.  Also,  I am an owner of a retail business where I have tried to stay on the "cutting edge" as to the use of Computers at businesses.
    Further,  I have observed that former Treasurers at our Church seemed to find it necessary "to jump through a lot of hoops" via their computer systems in order for them to keep track and report on money that comes into the Church for designated/restricted purposes. I want to do my job thoroughly, and completely, but there must be more efficient ways of using the computer to do this.  Can you help me?

From:  Jim@bcidot.org 

    I sure hope so, Lee.  Please begin by "digesting " the contents of  0041-01 and 0601-06  web pages below:

        >> Ministry Fund Accounting         http://www.bcidot.org/all/0041-01.html
        >> Use of Quickbooks to
              do Ministry Fund Acctg            http://www.bcidot.org/qbb/0601-06.html


   Please also note, Lee,  that after January 2008  Brad has a meaningful  website  that might also be of help to you when you  Go Here   and please note the free WebBOOK contents after October 2009  when you  Go Here

From: Lee -

    Let's suppose that you and I were across the desk from one another and you were providing me with some insights that would help this non-accountant new  Church Treasurer  do a good job.  What would we be discussing?

From: Jim -

     Well, I think first we would review in general what the Church Treasurer is expected to do.  Please go to 0074  for a more detailed list of tasks.  But, in a nutshell, it seems that is at least  the following fiscal stewardship responsibilities are involved in such an effort:

A -- Completely and efficiently account for money received at the Church;
B -- Properly disburse such money within imposed limits;
C -- Timely know and report the amount of generic Money on Deposit and which area belongs to it.
D -- Or immediately be able to report after posting transactions which Fund have an investment in the "Pooled" Money on Deposit; we do NOT want a different checking account for each Special Purpose Fund.
E -- Timely know and report if general operating costs are within the pre-authorized Budget
F -- Appropriately handle the financial and reporting aspects of Donation records.

From Lee -

    This list helps, but please discuss in depth what you call "imposed limits" above.  Is this the same thing that you cover within your  0041  web page with respect to "Special Purpose Funds"? 

From Jim -

    That is correct --- this is the crucial and unique element of being a Church Treasurer.  You must track money that is to be used for certain areas of the Church --- "businesses" do not contend with this type of financial record keeping.  By the way, you might find after July 2006 the content of our new RIGHTEOUS CONTROL SPENDING website when you Click Here.

From Lee -

    OK, but first give me some help with regard to components of financials. 

Form Jim -

    Since you are a business man,  you can relate to the following breakdown and the need for the Church Treasurer to thoroughly understand such matters --- especially the "Fund Balance" area below:

Assets = Something tangible that you own; examples include:
        Money on Hand and/or deposited in a Bank
        Land, Buildings, Furniture Equipment and Vehicles
        Temporary Investments
        Unused Supplies or Inventory
        Prepaid Expense
Liabilities = Money (Debt) that you owe to someone else; examples are:
        Money or an asset in your possession that belongs to someone else
        Unpaid bills or charge accounts
        Unpaid mortgage or like obligations
        Unpaid procurement installment payments
Fund Balances - the difference between the above Assets or Liabilities; or your Net Assets; examples are:
        Net Assets represented by Land, Buildings, Furniture, Equipment and Vehicles (Fixed Assets)
       
Committed Net Assets-- Net donations or transfers that you must spend in the agreed way
            We call these "Special Purpose Funds" (plural)
        Uncommitted Net Assets -- The Board of leadership decides how to spend, etc.
            We call this primarily the "General Purpose Fund" (singular)
Income --- Examples include:
        Money coming in from General Purpose Fund (singular) Donations/Contributions
        Defrayment Receipts -- or expense reimbursements
        Any other Receipts that benefits the Ministry: Example is earnings from investing
            money that is not needed right now;
Expenditures -- Examples include:
        Costs related to having Staff
        Costs related to a facility/property plus equipment
        Payments for approved ministry goods and services
        Debt Retirement and/or  payments upon acquiring Land/Bldg/Equipment/Fixed Assets that require periodic special handling to increase assets or reduce liabilities.
        Any other approved cost that benefits the Ministry

From Lee -

    Yes, Jim (1) ---  apparently "imposed limits" apply to the above "Committed Net Assets."   They appear to be Income less applicable Expenses that have not been spent yet for the agreed purpose.  I would almost call them liabilities, but they are not really a debt per se  -- they simply need to be used for the "imposed limits" purpose.  You are right ---- this is different than anything at my business.
    Further, there seems to be three major functioning groups in churches where I have been :  >> Operations where Monies are under restricted Fund Bal controls >>  Operations where Monies are under Discretionary line item type of expense budget control  >> Plus, when applicable, finances related to a special endeavor such as a  "Construction/Building"  project.
    This is helpful (2)..... now please tell me some more about using accounting software which seems to greatly help in these unique fiscal matters.  Personally, I have been tremendously impressed with accounting software at our business since it enhances the processing and balancing of financial transactions. Or you enter the dollar transaction once, verify it and then let the system replicate that dollar information to wherever it is needed to accomplish our financial reporting structure and objectives.
    I have seen that most systems give the appearance of typing info into a uniform blank form, etc.  They usually maximize the use of, not only dollars, but graphics like when you type out a check, etc. Of course, you have at your disposal integrated databases of needed information that facilitates transaction processing and reporting.  They are a real blessing, in my mind.  Of course, we need to maximize their use at a Church.
    I greatly appreciate you providing the  0601  web page above with regard to the familiar accounting software product known as QuickBooks and its use at Churches, etc.

From Jim -

    Thank you for your insight about the use of computerized accounting systems  They can be a real blessing !!. 
    Now, let's talk about accounting system structure
(Infrastructure, if you please) which is ordinarily demonstrated by what we call a "CHART OF ACCOUNTS."  The following suggestions pertains to a Church about your size, or maybe even smaller.  We suggest a three digit (xxx) numbered  "CHART OF ACCOUNTS." that is divided up as follows:

1xx = Assets;
2xx = Liability
3xx = Special Purpose Funds (SPFunds)
4xx = General Purpose Fund Income  (GPFund)
5xx = General Purpose Fund payroll/benefits
6xx = General Purpose Fund operating expenses
7xx = Internal Transfer  tranx to/from GPFund to SPFunds

    Notice I have highlighted the above 3xx Special Purpose Funds (SPFunds).  To further structure and account for why your SPFunds change (via the QB Classes feature), please use a two digits (xx.) number. The two digits help you to distinguish between two digit matters and the above three digit matters, etc. More information on such matters can be found at  0041 -- also see some samples within 0799. where you can find some Chart of Accounts.
   
Please begin with as few 6xx "General Purpose Fund"  Operating Expense accounts as possible - expand the number of  6xx accounts only when really necessary. Too often we find that a Ministry unnecessarily establishes a 6xx account for almost every Vendor. The emphasis should be your type of expenditure and not who you pay.

From Lee -

    OK, but tell me more about the above 3xx, or Special Purpose Funds (SPFunds) --- and especially how to account for them within QuickBooks. 

From Jim -

    Please read the  Methods  portion of this web page where I set forth various known QuickBooks (QBs) methods to account for SPFunds.  You will note that I recommend Method One because, in my judgment, it best meets the SPFund issues below that the accounting system must efficiently address:

>>  You work from a common "pooled"  Bank Account;  you do not want a separate checking account for applicable SPFunds --
>>  You know the balance in the SPFund immediately after posting a transaction.
>>  A budget for a SPFund is not high profile because you can only spend the available balance
>>  Reporting of Income and Expenses of a SPFund also are not as high profile as the GPFund, but it can be arranged within QBs via their QB class feature.
>>  The General Purpose Fund (GPFund) only monitors it's budget by "line item", or by type of expense.

From Lee -

    Well, Jim, within the context of all of this, surely there is a need for some internal financial principles, or even 'rules or regulations' -- I guess you could call them Financial Policies.

From Jim -

    Please see the content of  0069  that speaks to what I call Ministry Finance TRUISMs.  This list is my view of such principles, yea  maxims,  that I believe pertain to Churches and other Christian Ministries.  You might also find the GLOSSARY list found at  0063  of interest.

From Lee --

    What about Financial Policies?

From Jim -

    I define a policy as "what we always do,  or what we never do,  under the understood set of circumstances."   Please see the sample of Church Financial Policies in  5005.  Of course, such applicable information greatly contributes to being good fiscal stewards.   Their establishment usually begins at the Finance Team and is approved by your Board of Leadership

From Lee--

    Very helpful, Jim.  Is there anything else you would like to tell me before "I leave your desk?"

From Jim -

    I would like to ask this question..... i
s there a need for a concise Online tutorial here on www.bcidot.org  designed just for the "New Treasurer"  of smaller churches?  Does it help for such a person to go through an Online accounting tutorial like that found at  0079  that covers the use of QBooks at a Ministry? 
    Please be aware of the resources and information as to some helps to a beginning Ministry as found when you Click Here

From  Lee -

     There might be .... I don't know ..... let me look at the content of  0079 above and get back to you.   


    The bulk of this Publication originated in July 2003 and was .  UPTD: March 09, 2012  Click here and go to List of threads (THRDs) at www.bcidot.org

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