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TO: Interested
Onliners
FROM:
Jim Bramer, Retired CPA-Auditor
FILE:
0207-04/jrnl
RE: J I Ms
J R N L for the month of July 2004
Originated: July 2004
This process allows me to share some rather personal comments/thoughts (and sometimes written Prayers) about Ministry Finance issues and matters concerning Righteous Personal Finance for Christians during this month. Please go to 0200 for further explanation and links to earlier JIM's JRNLs. The four digit (or sometimes xxxx-xx six digits) links xxxx below come from www.bcidot.org sources. See list of Ministry Finance Lingo", or "Frequently Used Vocational Terms" at the bottom of this document. If you would like to receive the upcoming monthly JIM's JRNL during the first week of the subsequent month, please join the following Yahoo Group: ---- http://groups.yahoo.com/group/JIMsJRNL/. Caution --- the non www.bcidot.org web links that I reference below do NOT necessarily imply my endorsement. Further, if any of the links below do not work, let us know which one at LINK@bcidot.org. Incidentally, our more recent www.bcidot.org Web Docs, or writings, can be found at 9712. and 9716.
Before me is an magazine article on the subject of Online Banking. In my view, relevant topics therein for both Small Ministries and BLVRs include the following:
- Throughout the world, more than 100 million entities are now utilizing Online Banking with the following in mind.
On a 24/7 basis, you can access the equivalent of your Bank Statement -- or know the details and running balance of your Bank Account.
You can transfer money from your Savings to your Checking Account - or vice versa.
You can Pay Bills -- the use of Online Banking to do this has increased 500% in the past two years. Go to 0926 and 0165 for more info on these matters.
Security has greatly improved - the following might be of interest. Our web site, for example, is www.bcidot.org -- secure web sites begin with "https."
Most Banks will reimburse you for any unauthorized activity originating from their Online Banking system.
Please note this quote: "The Bank will never call or email you to ask for your password. Never. Under no circumstances should you make this known."
Moving DonaMail Deposit info into QuickBooks (3)
Most of you know that, for smaller Ministries, I advocate the use of Bookkeeping software (like QuickBooks - QBooks) and then a separate database that has a people emphasis (or DonaMail). Below is a recent addition to this named Forum which covers QBooks topics unique to Ministries: http://groups/yahoo.com/group/qbunch
"To remind you --- I use the term DonaMail to define a database file that has a people emphasis. See more info about DonaMail and this topic within http://www.bcidot.org/all/0021-02.html.
Many of us would be interested in how you link your DonaMail system deposit results by fund into QBooks. For instance the DonaMail product found at http://www.helpmate.net seems to do a good job of linking it electronically. My view is that a memorized Cash receipt manual process within QBooks adequately meets this need. Especially at Churches where a weekly deposit is the norm.
Please share your experiences re this process here on this Forum".
Let me know at JimRetCPA@bcidot.org if you have some comment on this topic.
School Accounts Receivable (SCHAR) info via QuickBooks (4)
Please read 0927. Here you will find that I have recently expressed a desire for QuickBooks, or like kinds of software, to provide the means for a Parent at a School (or anyone else who owes money) to use the Internet to provide info about what they owe the Christian School. Plus also be able to go to the Internet and pay their bill to the School via their Credit/Debit Card or via something else like that shown at www.paypal.com.
Today I found out - please Click Here -- that QuickBooks already provides such resources. I believe it can be a real blessing as a School manages this extremely "next to cash" asset. Let me know at JimRetCPA@bcidot.org if you have any comments/questions.
Three Legged Entries to account for Capital Expenditures at a Church or Ministry (5).
By Capital Expenditures I am specifically referring to Equipment or Furniture acquisitions, or what many of us call Fixed Assets. For our purposes, Capital Expenditures also includes Mortgage Payments, or like kind of regular obligations due upon purchase of Land, Building or Equipment (LB&E). The usual accounting and reporting objectives include the need to:
- Increase, or add to, the existing Fixed Assets within the LB&E; or we capitalize such expenditures.
- Reduce the amount of liability for the principal portion of said Debt Service payment.
But further considerations for Church or Ministry accounting often includes the following:
- At times there are designated monies or SPFunds given for such purposes so that this SPFund itself needs to be reduced by such disbursements.
- But usually the source of such payments is the General Fund - GPF, or the GPFund. This GPFund operating fund, of course, also needs to be reduced by the total Debt Service or both the Principal and Interest expenditure.
- Such payments are Budget line items like all other items funded by the GPF - GPFund.
Let's suppose the following:
- At the first of the year our books showed a Church owed $35,446.77 on their Mortgage.
- The Church made a $1,200.00 monthly payment of Interest and Principal and the amount of Principal was $766.88, leaving an unpaid balance of $34,679.89.
- Also, via our GPFund, the Church budgeted and paid $2,330.88 for new Office Furniture and Equipment.
- Plus one of our Sunday School Classes (per their SPFund) raised money and then bought some Musical Instruments for $3,566.12.
Please note I have used the Journal Entry format below for the sample (1) THREE LEGGED ENTRIES, but the result usually comes about via a multiple line check distribution of the following "Legs."
Leg Number 1 Charge the GPF Budget $1,200.00 Leg Number 1 Reduce the Bank Acct $1,200.00 Leg Number 2 Reduce the Mortgage Pay (3) $ 766.88 Leg Number 3 Increase the LB&E Equity (2) $ 766.88 Leg Number 1 Charge the GPF Budget $2,330.88 Leg Number 1 Reduce the Bank Acct $2,330.88 Leg Number 2 Increase the LB&E Asset $2,330.88 Leg Number 3 Increase the LB&E Equity(2) $2,330.88 Leg Number 1 Charge the SPFund $3,566.12 Leg Number 1 Reduce the Bank Acct $3,566.12 Leg Number 2 Increase the LB&E Asset $3,566.12 Leg Number 3 Increase the LB&E Equity (2) $3,566.12
(1) When you go to 0127-02 you will find that we often recommend a separate set of books for Land, Building and Equipment (LB&E) that is updated at least annually. This means that the entry for the above Legs 2 and 3 would be handled differently.
(2) Leg Number 3 usually have separate named LB&E Equity accounts that clearly shows why the equity increases ..... in this case, either "Provided by the GPFund" or "Provided by a SPFund."
(3) After posting this entry, the updated mortgage debt as shown by your books and the amortization table is $34,679.89.Please go to the following links for more applicable details on such topics: 0041-13 0041-14 0102-02
We believe strongly that a Ministry should NOT have a Calendar Year End. The Staff of a Ministry is "very" busy during the months of December and January; many Ministries derive a large portion of their Donations during December. Holidays, plus calendar year payroll tax accounting, add to the '"hub-bub;" so why add more with having a Ministry calendar year end that also includes the budget process taking place during this time period.
One of the fiscal and operational year end objectives is to "look back and then plan forward" during the budget process .... this is very hard to do during these months. Please consider Spring year ends for Churches; summer time year ends for Schools and early Fall year ends for other Ministries.
CAUTION: Do not forget that your financial computer system has a Payroll calendar year emphasis.
A Ministry should prudently Invest their Monies on Deposit (7)
When you read 0094-01 you will notice that the thrust is to answer these two questions: "WHY does the Ministry have this money?" -- especially in light of imposed limits, or usage, and "WHERE is the Money Located?" This is done within 0094-01 as if you were viewing two sides of the same coin.
In the past month or so, I have been dealing with a Ministry who insists on marrying various bank accounts (WHERE is the Money Located) to the applicable Fund Balance (WHY does the Ministry have this money). They believe that it is necessary for Fund Balance integrity to assign each bank account to an applicable Fund Balance, etc. They are having a problem with the Pool concept of "WHERE is the Money Located" that we advocate and discuss at 0006-01. Let me know at JimRetCPA@bcidot.org if you would like to view how their Photo or Balance Sheet is structured. Their effort has unnecessarily resulted in administrative/accounting difficulties/headaches and poor management/stewardship of Short Term investment of their Monies on Deposit.
With all of such matters in mind, remember these Truisms:
- The Ministry must keep complete/accurate records of "WHY does the Ministry have this money?", or they must do the needed Ministry Fund Accounting, and it does not need to know it's location in order to manage this vital Ministry information. see 0041-01.
- The major function of the ""WHERE is the Money Located?" is to invest it prudently. see 0006-01
- This includes never having excess balances in Non Interest Bearing Checking Accounts.
- One Fund can only borrow from another Fund under the applicable set of circumstances, etc. or upon Board approval.
A Clergy Savvy Tax Preparer Shares some common Errors (8)
Since I am retired, I do NOT do any Personal Income Tax returns. Let me know at JimRetCPA@bcidot.org if you would like to communicate with this Clergy Savvy Tax Preparer who shared the following with me:
"Another tax season has come and gone and I wanted to share some of the things that came across my desk that have to do with incorrect reporting of Ministry or Clergy income. Please see the specifics below:
1) Minister W-2's which had FICA (Social Security) and Medicare withholdings. Ministers are ALWAYS considered self employed for Social Security purposes and should NEVER have FICA (Social Security) and Medicare withheld. Ministers pay their Social Security and Medicare tax through filing their tax return and paying Self Employment tax.
2) Minister had W-2 issued PLUS a 1099 which contained income from auto allowance and bonus - both from the same church where he was Pastor. A minister that works for a church is a common law employee for all purposes except Social Security. Therefore, all income and allowances should be reported on a W-2 and not on a 1099.
3) Minister's housing allowance was included in Box 1 of the W-2, taxable wages. Fortunately, this one was caught in time so that an amended tax return could be filed and the Minister got some money back. I wonder how many other Ministers incorrectly paid income tax on their Housing Allowance?
4) Minister was paid for half of his Self Employment tax by the Church. But the Church did not include this payment in the Minister's taxable wages. Almost anytime a Minister is provided compensation (except housing allowance and reimbursement) it is taxable income.Well, those are some of the things which may be of interest to Churches and their Finance Committees. I spent considerable time providing information to Churches so they could get their reporting in order and would be glad to help anyone who has a question."
We track how many come to our www.bcidot.org web site which was started in 1999. In June 2003 we reached the 10,000 mark and in this month of July 2004 we reached the 15,000 mark. I guess we are getting on some Internet Search engines.
Potentially Helpful Links for JIMs JRNL Readers (1):
Ministry Finance Truisms http://www.bcidot.org/all/0069-01.html Clutter Correction http://www.crown.org/newsletter/default.asp?issue=318&articleid=313&MemberID=396870 Church and Edited Onliner Dialogs http://www.bcidot.org/chu/5000-00.html ECCU - More than Money (PDF) http://www.eccu.org/downloads/mtm04sum.pdf Stop Identity Theft http://moneycentral.msn.com/content/Banking/FinancialPrivacy/P41275.asp Nick Nicholaou resources (1) http://www.mbsinc.com/component/option,com_docman/Itemid,95/ Resources via Crown http://www.crown.org/other/links.asp Sweep Bank accounts http://www.allbusiness.com/articles/content/3042.asp (1) Must sign in first
Prayerful Thots:
Heavenly Father, You are sovereign, Frankly, oh Lord, help us live with this truth constantly before us !!
Possible "Ministry Finance Lingo", or "Frequently Used Vocational Terms" appear below:
CBA = Church Business Administrator, CBAer; CMS = Church Management Software/System; CPA = Certified Public Accountant; GAAP = Generally Accepted Accounting Principles/Practices; GPFund or GPF = General Purpose Fund; MFTeam or MFT= Ministry Finance Team; QBOE = QuickBooks Online Edition; QBooks or QB = Quickbooks; SPFunds or SPFs = Special Purpose Funds
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Click Here and go to a list of earlier JIM's JRNLs - Contact JimRetCPA@bcidot.org
This document was updated last on: December 08, 2006