- - And the Lord direct your heart in the love of God as you continue to faithfully serve Him - -

         TO:  Interested Onliners                                                                                                                 FROM: Jim Bramer, Retired Auditor-CPA
                                                                                                                                                                        
   
         RE: J I Ms  J R N L for the month of October 2007                                                                           FILE:  0210-07/jrnl        
                (Click Here for "Blogger like" perspective/rationale)      

(1)  Having Donor/Constituent  Information in more than one place. (4)

        I find that too many Ministry's have Constituent/Donor's  info in more than one file within their system.  For example, you place such information into QuickBooks for donation processing and then you use some other Database for mailing and related purposes, etc.  The ideal is to have said information all in one place so that you  update this vital name/address data only once, etc. 
        In essence, it is critical for you to have a  DonaMail  product which responds to your special needs for both Mailing (both Emails and Snail Mailings), or contact, with your constituency .   Plus, of course, obtain the necessary Donations Accounting info (deposit and designated donation data) for  Fund Accounting   purposes. Learn more about such issues when you  Click Here

(2)  Pooling of Bank Accounts  (5)

     A Ministry is not the steward that they should be if they have a number of Checking/Bank Accounts .... or a Ministry should NOT have a separate Checking/Bank account for a variety of endeavors.  I am noticing all too often that a single Ministry will have one Bank Account for the General Purpose Fund  and separate Bank Accounts for a Building Fund,  for example  --- plus certain of their other   Special Purpose Funds.   Financial credibility of a specialized Ministry endeavor, or financial management/reporting thereof, should be accomplished by the appropriate Fund Accounting system (via the proper Chart of Accts infra-structure, etc.) and not via separate Bank Accounts, etc.  Please go  to  5090  for information about finances at Church Auxiliary Ministries, .
     Please  Click Here  and read about  Where  and  Why  issues related to unique management by individual Christians and Ministries of their specialized finances. For example, note the Where  and  Why   perspective of the two sides of the  $183,688  in the financial report below.  All of us, but especially Ministries, should be good money managers, or they we should pool such monies in such a way that the Ministry leaves as little as possible in non interest bearing Bank Accounts and a maximum amount in applicable Interest Bearing Bank Accounts.    Please also  Click Here for more details about this topic and also go to the following links for more details about "pooling", etc:  0063  5005  0207  0043  .  AGAIN, THE THRUST IS:    ..... Do NOT leave unnecessary balances in your non-interest bearing Checking Accounts; or be sure and pool your Bank Balances and earn the maximum amount of Interest Income that is possible.  This is very difficult when you unnecessarily have a variety of Bank or Checking Accounts, etc.!!!   

Checking/Savings @ Credit Union
101	Checking Account		$ 1
102	Money Market-rate x.xx		$ 25,395
103	CD-rate x.xx due xx/xx/xx		101,858
104	CD-rate x.xx due xx/xx/xx		$ 50,145
109	Office Petty Cash		$ 52
110	Imprest Checking		$ 1,500
140	Memo Accts re Fixed Assets  0102
	Total Checking & Savings			$ 178,951
120	Accounts Receivable			$ 4,214
170	SCRIP Store Advance			$ 523
	Total Asset Pool			$ 183,688

Liabilities:
200	Payable to Vendors		$625
220	Due on Credit Cards		$6,328
260	Other Liabilities		$779
	Total Liabilities			$7,732
Fund Balances/Net Assets:
	**Donor Restrictions**
300	Missions Designations	$ 39,588
310	Other Donor Designated	$ 5,124
334	XYZ Special Fund	$ 7,773
337	Short Term Mission Trip	$ 2,880
339	All Other such Designations	$ 1,243	$ 56,608
	**Board Discretionary**
350	Contingency Reserve	$ 60,000
355	Board SetASides	$ 12,761	$ 72,761
	Total Fund Bal/Net Assets			$129,369
Year To Date GPFund Excess				$46,587
	Total			$183,688

(3)  Non Donation Cash (Green Stuff or Coins) Receipts - (3): 

    I was recently at a Church Finance Meeting where it was mentioned  that there is still a lot of cash  (green stuff or coins) coming in and it is simply handed to the Bookkeeper with a verbal statement like  "this is for so and so" or there might be some attached "sticky notes"  involved.    This particular Church had brought in around $80,000 in Event Reimbursement receipts since the fiscal year started 3 months ago - the majority via the "sticky note" process.  We recommend that Church Staffers/Volunteers be mandated with something like the following:

>>   It is preferred that the Payor pay using checks -- or even better yet, pay Online, as such means are available.
>>   Or the Church handle as little cash  (green stuff or coins) as possible for specific non-donation purposes
>>   A Payor is to be provided with a written three part receipt when the Church handles $20.00 or more.
>>   Actually we prefer that they write a receipts for all cash transactions, but if it is for less than $20.00 (and they believe it to be impractical to provide said receipt), then they are to provide, of course, the bookkeeper with the cash and a list of who paid what and why.
>>   If someone wants to give cash and the recipient is not prepared to write a receipt,  you route them to someone who has a receipt book.
>>   The original copy of the receipt goes to the Payor, the duplicate accompanies the cash to the Bookkeeper, etc. and the triplicate is retained.
>>   Be sure that all understand that such Event Reimbursement transactions are NOT tax-deductible and will NOT be a part of the Giving Records.. 

(4)   Accounting Transaction Dates - (8)

        I have discovered that some of you can be a little confused about appropriate "Accounting Transaction Dates". 
        Please consider these timing aspects:   EOP = End of Period (either the last day of the Month or Year) and/or  EOY  the End of Year only.  As to overall usage, please do the following;  Enter the date of the transaction .... not the date that you enter it into the system -- plus it is undesirable to record anything as of the first day of a month; since it almost always pertains to the previous period, please use the EOP date.  
        As to Account Payable  transactions, please be consistent as to handling of bills incurred near EOP  and especially at the EOY.   Please DO NOT finalize the financial statements for the EOP  right on the last day of the month.  Please hold the books open for some 5-7 days into the new period awaiting EOP entry of invoices/bills incurred before the EOP.   Be consistent in posting invoices of specific vendors the same way/time each month ... especially phone and utilities.  We recommend that part of your  Month End Check list   needs to remind you about including specific vendors in the transactions of that month, etc.
        As to Payroll transactions, also please be consistent about handling Payroll Salaries/Wages and Payroll tax expenses incurred through the EOP.   Or please use the  EOP  date regardless of when you entered them into the system.

(5)  Most Important Finance Issues (MIFIs)  (6)

     More Ministries need to concentrate on what I call  Most Important Finance Issues - or MIFIs    , since they usually have limited resources.   
       My wife recently wrote me a note; the words in the note contained 'i's and 't's.  But, since I knew exactly her frame of reference, she did not worry about 'dotting' the 'i's or ' crossing'  the 't's.   My  MFTeam  analogy is that sometimes we get lost in all of our financial report numbers and statistics (dotting the ;I's and crossing the 't's)  and we do NOT concentrate on the most important 'stuff'  they are telling us.  
     How many meetings have you attended where the group seemed to have a  'micro-manage'  mindset and often did NOT view the current and anticipated "big picture.". I trust you can use some of the following material to 'jump start' your MFTeam so you can appropriately deal with your MIFIs.

     Finance Communications:   Financial information MUST be timely and be understood; MFTeamates must know appropriate Ministry Finance activity and status history in order to make rightful decisions. Much of this is accomplished by making use of efficient computer finance systems and/or tools. Please link to this Big Pix  sample as well as to these  Sample Financial Statements  MFTeam meetings MUST contribute to effective Finance Communications. Prepare in advance; insist that finance issues be forthright, and that decisions are well documented and clearly understood.   
      Mutual Expectations:   Be certain that all understand and accept their specific finance responsibilities. Be sure nothing 'falls through the cracks'.  Please link to  Tasks  for a laundry list of most of such tasks.   
      Finance Policies and/or Procedures:  The MFTeam must conclude and write down Financial Policies. By the way, I like to define a "policy" by what you 'always do' or by what you 'never do', within a certain set of circumstances. When appropriate, such matters can be preceded by some written perspective or philosophy on the issue under consideration ----- hopefully all such policies end up in the Ministry's  'Finance Policy Manual'. Please link to  Sample Financial Policies  for a means to initialize such an endeavor.  
      Operate within your Income:  You must see that Ministry Income is obtained in order to meet the necessary Ministry Expenditures. Then see that Ministry "Dollar Accountability Groups" lives within their allocation. Please link to a  Sample Actual to Budget report. Please go to  0010  for more Ministry Budget info.    
      Finance Credibility:  Keep financial promises with staff and vendors; plus have and maintain proper financial relationship with Ministry constituents. Know and honor the required IRS and other governmental requirements.  
      Provide Resource Enhancement and/or Safety:  Fiscal resources must be protected.  Establish and maintain appropriate financial internal controls; see that residual fiscal asset are prudent5ly utilized and invested; use credit advisedly; pay your debts as agreed.      Be sure and delegate as much of the 'grunt work' and 'transaction processing' as possible to the staff.  Your MFTeam Chairman especially should learn to know what is most important. Further, in my judgment, your MFTeam minutes should clearly state and rank your MIFIs.  Please go to the MFTeam meeting time allocation analysis that might assist you toward spending quality  MIFI  time at each of your meetings. Encourage your Board of Leadership to have periodic "Long Range Planning" sessions so you can address applicable finance matters.

(6) Alternative to the usual Bank or Plastic Accounting Process (9)

    Let's suppose that the Bookkeeper for a Ministry  (or for your Personal finances)  wants your accounting records to be up-to-date so you can function with complete information.  So they do something like the following: 

  1> You make deposits and post to accounts (Bank/Inc/Exp, etc.) within your finance record keeping system
  2> You write checks (sometimes via your accounting system resources - like QuickBooks - QBs) and make postings to applicable accounts (Bank/Inc/Exp, etc.) within your Chart of Accounts.
  3> You or your people buy almost everything possible using   Plastic/Credit Cards and provide the Bookkeeper with supporting info and you enter into your accounting system as charges to your "yet to pay" payables account.
  4> You or your people buy everything possible using   Plastic/Debit Cards.   These people provide you with needed supporting info and you post this data into the accounting system as if they were checks.

    Obviously, they MUST,  for assurance as well as for internal control purposes, reconcile such posted internal data to the external Bank and/or Plastic/Credit-Debit Card statements at least monthly. We all know that such reconciliation processes, while essential, can be very labor intensive.

An Alterative  Bank and/or Plastic Accounting Process

    When you use this weekly alternative process, as set forth below, you always have a current record of any unknown Bank transactions plus you DO NOT go through the normal laborious reconciliation process.   Please  Click Here  for more what we call  FinFax  information along these lines.
    Here are the steps that we recommend:  01>  Since you have Online access to the equivalent of your Bank Statements plus your Credit Card statement data, 02> you go there and 03>  weekly print out hard copies of these Online Statements. As most of you know, there is little delay in a Credit (Debit) Card transactions from the time it originates until it appears on your Online Statements. 04>  Since your Bank deposit and check information may already reside within your accounting system, 05>  you take the Online information and see what has cleared the bank. 06>  For anything that has not yet cleared, you simply change the inputted date to one beyond the date shown by the Online Bank Statement 07>  The end result is that the Bank balance per your records and that on the Online Statement must always be the same. Often it is desirable to place the original entry date into the applicable record (for example, in QBs you place within the Memo area)  08>  Also included in this process is the need to input to the Bank Account the Debit Card transactions ... remember, they are handled like checks.   09>  Finally, you handle your Plastic/Credit Card transactions as follows:

  a)  You, of course, attach all supporting docs for all of these transactions to the Hard copy of the Credit (Debit) Card Statements
  b)  Via your Credit Card liability account you then code and post all of this information to the applicable accounts so that your ending liability account balance agrees with the hard copy total.
  c)  The next day or so you then pay off the total Credit Card balance via the usual check means or via the Credit Card Company payment option. Some of you prefer to not go through the Liability account as you process such info to applicable accounts as a part of the weekly check process

    The above weekly   After the Fact - ATF   process enables the user, since you pay off the Credit Card balance weekly, to not "go into debt", and to efficiently have weekly  up-to-date information  as to where you are financially.  This process is also helpful at a Ministry when you have allowed some of your "Staffers" to have their own Ministry Credit Cards.  Click Here  for more info along these lines.
 

 (7)  ECFA and their New "Affiliated"  type of  Membership  (10)

     I now recommend that all Ministries become ECFA ( Evangelical Council for Financial Accountability )  members as they provide Evangelical Christian Ministries (including Churches) with financial credibility beyond the audit process.    
     Within the context of data when you   Click Here   and   Here,   I am so very very encouraged to learn that ECFA now have what they call Affiliated Memberships.  Or Ministries that handles $1,500,000 or less annually can have a CPA firm provide less expensive year end Review and Compilation year end assignments ---- that we address when you   Click Here .   For more information about this, please access their  ECFA Web Site  and read the section called:  "Featured Articles - ECFA 's new affiliated Membership category." 

Click below for Potentially Helpful Online Links for JIMs JRNL Readers: (1)  

Article about revised Form 990      Churches should join ECFA    See Article therein re "Donor Software Systems"  
Sample Church form for Automatic Withdrawal or making a Donation

This Month's Editorial - "For What It is Worth" originally rendered in September 2000:    Task Follow-up Management

Current "Ministry Finance" Truism (2)

    Below is one of my Ministry Finance precepts/beliefs/principles, or  "rules of thumb". Please go to  0069  for complete TRUISMS list

"FLOAT MANAGEMENT"  It is poor stewardship to leave too much money in Checking Accounts that do not earn interest income"