This process allows me to share some rather personal comments/thoughts (and sometimes written Prayers)  about Ministry Finance issues during this month.  Please go to  0200  for further explanation and links to earlier JIM's JRNLs.  The four digit links  xxxx  below come from www.bcidot.org .  If you would like to receive the next JIM's JRNL  during the first week of the next subsequent month,  please join the following Yahoo Group:   ---- http://groups.yahoo.com/group/JIMsJRNL/.  Further, if any of the links below do not work, let us know which one at JimRetCPA@bcidot.org. 

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 Ministry Finance Team tasks.  But, in a nutshell, it seems that is at least  the following fiscal stewardship responsibilities are involved in a Church Treasurer 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 who 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 account.
E -- Timely know and report if the general operating costs are within the authorized Budget
F -- Appropriately handle the financial 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  0041-01  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.

From: Lee

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

From: 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 yet 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 Donations/Contributions
        Net Sales -- like book sales which are net of their costs
        Defrayment Receipts -- or expense reimbursements
        Any other Receipts that benefits the Ministry: an example is earnings from investing
            money that is not needed right now;
Expenditures -- Examples include:
        Costs related to having Staff
        Payments for approved goods and services
        Debt Retirement and/or  payments upon acquiring 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 ---  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 we handle 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 Board Discretionary line item type of expense budget control  >> Plus, when applicable, finances related to a special major endeavor such as a  "Construction/Building"  project.
    This is helpful ..... 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 info to wherever it is needed to accomplish our financial reporting structure and objectives.
    I have seen that most computer 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 greatly helps you do transaction processing and reporting.  They are a real blessing, in my mind.  Of course, we need to maximize their use in a Church setting.
    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 = Cross Funds 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, 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?

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This document was updated last on:  December 08, 2006