This
document was updated last on:
November 09, 2008
Current
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TO: Interested
Onliners
FROM:
Jim Bramer, Retired
Auditor-CPA
RE: J I Ms
J R N L for the month of November 2008
FILE:
0211-08/jrnl
(Click Here
for "Blogger like" perspective/rationale)
Self Exams
01 -
Comments of a well known Church Finance Consultant:
A well known Church Finance consultant has shared the following with
me based on their experiences. I trust readers from Churches benefit by
it.
WHAT THE ACCOUNTING SYSTEM SHOULD/COULD DO:
I think one of the
greatest areas of need for churches is to have better grasp of what
their accounting system should, and could, be doing for them. Every
church I have gone into has needed a reconstruction of their "Chart of
Accounts" and reporting system. When I ask the bookkeepers why they do
what they do I usually get the same reply— “That’s how we have always
done it,” or “That is how the the persons in charge of
that department wants it.” Then, I ask the person in charge what
kind of information they would like to receive and they are usually
frustrated because they think the system will not produce what they
desire. Be sure these folk are on the same page.
CHURCH DEPARTMENT LEADER NEEDS TO BE RESPONSIBLE FOR THEIR BUDGET,
ETC.
It also helps to have a
qualified staffer that educates and work with other staffers to help
them better utilize the funds that have been entrusted to them. Too
often, finances are kept a big secret and not appropriately made known.
This information, given to those who are put in leadership positions and
held accountable for spending, should be empowered to manage a budget
and have access to the revenue and expense reports as often as needed.
ROTATING FINANCE COMMITTEE MEMBERS:
Another area that
continues to be a challenge for churches is keeping a consistent process
while using rotating "Finance Committee" members. Each new
"Finance Committee" member that comes on board has his/her own ideas of
what the bookkeeper should be reporting and how tasks are to be done.
My goal is to help set up systems where the values and processes stay
consistent and do not change as Committee members come and go. This
usually requires policies and procedures to be written and approved.
Once approved, they flow from year to year.
CANNED ACCOUNTING SOFTWARE PACKAGES:
If
the software vendors go in and set up the books via a canned package,
the church will not utilize the program to its fullest capacity. I look
beyond the Chart of Accounts and get a feel for how they are using the
info they currently receive. Then, I proceed to guide them through a new
process where the reports are providing adequate information to plan for
the future as well as accommodate today.
02 - xxxxxxxxxxxxxxxxxxxxxxxxxxx (xx)
03 -
xxxxxxxxxxxxxxxxxxxxxxxxx (03)
04 -
Ministry Budget Issues
(xx)
I trust you find helpful the following as to "Ministry Budget Issues".
-
Yes..... we need authorized
Spending Controls,
or a Budget. But we also must be a Ministry that can
rightfully respond to needs --- especially if we have
available resources.
-
Remember, the budget is supposed to be a "personification
of the known Ministry's plans as converted to dollars."
Plans do not remain the same for an entire 12 months, or
during an Annual Budget time.
-
The Ministry
must have the necessary accounting system, and structure, in
order to timely provide information to decision-makers as
they live within advance dollar authorizations, yea Budgets.
-
In a
Church situation, most congregations are the final spending
authority, but there must be some righteous ways to meet
needs between necessary congregational meetings.
-
A Church's
by-laws could provide the Board of Leadership with
authority to make as much as 5% of Annual Budget
changes without having to go to the congregation. If the
congregational approved Annual Budget is $500,000,
then, provided the General Fund has the resources,
$25,000 is available to the Board to meet new
operating ministry needs.
-
At your Ministry -- there may be merit in using a "TriAngular"
approach; (1) Salaries and Benefits of the present staff
remain in place for the entire fiscal year; (2) first
authorize Operational Costs and SetASides for the first six
months and (3) then such non payroll costs again for the
last six months.
-
Other
alternatives to a strict Annual Budget include the
following approaches: " Four by Three" Plan or Budget for 4
months forward only at a time; Or you take the 4 months to
date spending (or 8 months) and plan/budget forward from
there. Another is a "Six + Three + Three" Plan or you
plan/budget for the 1st six months; and quarterly
thereafter.
All of the usual
operating costs flow via this updated General Fund
Annual Budget when the income permits. Do NOT look to
Board discretionary funds for such purposes. Draw on
such Reserves or SetASides resources only for
'out of the ordinary' needs.
Approved Budget items expire at the end of each fiscal year
and any unused portions are NOT carried over to next year.
Ministry department managers often want to know, toward the
end of the year, if there is unspent money left in their
Annual Budget. Or they have the mind-set/philosophy of:
"I better spend any unused portion since it is
approved - even though it is not that badly needed"; or
" Whewwww, I don't want to lose it so I better find some
way to spend it". Incurring such expenses are NOT
good resource stewardship.
Ministry
department managers sometimes "pad" their Annual
Budget and get approval for more than they really need.
This should be addressed each year. Again, the
best approach is to carefully plan what you want to
accomplish during that period, and then convert your plans
to dollars.
But the decision
makers should always be taking a fresh look at the Ministry
so when, or if, plans change (requiring either less money
or more money) then the Ministry should be able
to appropriately and timely change the Annual Budget,
etc.
The Ministry
must have a strategic plan if the General Fund is
not getting enough money to pay for the authorized Annual
Budget.
Click here for more details about a method
whereby money is assigned to Spending Priority
Groups when it comes in. If a Spending
Priority Group has a balance, then expenses are
authorized and paid therefrom as you weekly know the
available balance for that
Spending
Priority Group, etc.
In a
Church setting, it is important for the Leadership to keep
the congregation regularly informed of the General Fund
status - preferably via the weekly Church Bulletin.
Some links to other of our Budget online documents
are:
At Churches: Process 5013
Reporting via Big Pix
5012
General
5009
5008
Goals 0011
PlanJecting 0053
Budget reporting samples via QBooks
0799
05 - xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
06 - xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xx -
Click below for potentially helpful
Online Links for JIMs JRNL readers:
07 -
Monthly Editorial - "For What It is Worth" as
rendered in xxxxxxxxxxxxxxxxxx--
08 - Current "Ministry Finance" Truism
(2)
Below is one of my Ministry Finance
precepts/beliefs/principles, or "rules of thumb". Please
go to
0069 for
a complete TRUISMS list.
09 - Prayerful
Thots : Oh Lord, please the desire and ability to reveal You
in my home, among my friends, in my community, and around the world.
Jesus, be glorified, and reveal Yourself through me.
This "Blogger" like monthly endeavor (99) allows me to share some personal comments/thoughts
as to Ministry Finance issues plus matters concerning Righteous
Personal Finance for Christian people. Please go to
0200
for further explanation and links to earlier JIM's JRNLs.
The four digit links
xxxx
and some "Click Here" herein come from www.bcidot.org
sources.
If you would like to receive the next 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 herein do NOT
necessarily imply
my endorsement. Further, if any of these links do not
work, let us know which one at
Jim@bcidot.org. Lists of our
www.bcidot.org
articles (or Web Docs), can be found at 9707
and 9708
Below is probable
"Ministry Finance Lingo", or "Frequently Used Vocational Terms"
used herein.
BLVR =
Someone who has accepted Jesus Christ as Lord and Savior,
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 QBs =
Quickbooks; RPFin =
Righteous Personal Finance ,
SPFunds or SPFs = Special Purpose Funds
HOME
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Click Here for an alphabetical list of topics within
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This
document was updated last on:
November 09, 2008
