"JIMs  JRNL" Edition
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- - 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 December 2008                                                             FILE:  0212-08/jrnl                 


(1)  YELLOW AND RED LIGHTS as to Ministry Finances          (1)

      Maybe you can  identify with this:   our friend knew where to go to some sort of Church related off campus business meeting so we were trailing him.  We frequently tease him because he went through the last part of a  "YELLOW LIGHT"  and left us behind - not good (we were late as is)  because he had to stop and wait for us anyway.  Let's face it,  we all too frequently learn about bad things when people are careless about "YELLOW  LIGHTs"   or they do NOT stop at  "RED LIGHTs."
      Please put such matters within context of your leaders identifying and caring for "YELLOW LIGHT"  "Ministry's Finance" situations before they turn into a  "RED LIGHT" calamity.   Be sure everyone understands the issues and terms used, but we suggest that during your annual session with your
CPA-Auditor that each one in attendance independently fill out and compare their grades to that of the CPA-Auditor.  Be sure any poor grades of the  CPA-Auditor  are understood by all.

     Self-Examination matters are covered within the following links:

       Below are links to Financial Exam by type of Ministries  Information:

            Plus this Financial Exam &  Grade Reports  for Christian Family Units  http://www.bcidot.org/env/BookkeepingSelfExam.html    
            It is our prayer that these  Self-Examination  tools help you and your Ministry  timely identify and care for such identified "YELLOW LIGHTs" and maybe even  "RED LIGHTs" matters.         

(2)  A Ministry Savvy Tax Preparer shares some common Clergy Tax errors (02)

    Since I am retired, I do NOT do any Personal Income Tax returns, not only might you find these link contents of value when you  CLICK  HERE  , but I thought you would appreciate what this Ministry Savvy Tax Preparer shared 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, income and allowances ideally 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." 

(3) Committee Meetings and the use of Colored Paper (03)

        The use of colored paper hand-outs at committee meetings is very helpful.  
         For example, recently I was part of a committee meeting where we were reviewing the recommendations of a consultant.   We were looking at a lot of papers; i.e., our written policies,  copies of Email, our documents, this person's documents, suggested written methods and procedures, etc.    We found that a colored paper group on the same topic was extremely helpful as the seven of us referred to various documents, etc.  You know: "Within the yellow colored paper group, let's talk about so and so on page xx", etc.

(4)  Keeping Current with Ministry Staff and Financial Policies & Procedures:  (3)

         Having up-to-date written Staff and Financial Policy manuals are quite important for a Ministry --- as you know things change and such things need to be documented.  One way of doing this is to have them in a format like that found in the Church Sample Financial Policy manual found at  5005  and you re-affirm a section of such a document at virtually every Finance Committee meeting.  Or you would read out loud the written section and you would ask if it is currently relevant, or if the Ministry is complying with the policy,  and proceed accordingly.  It usually takes very little time and attention of the Committee as you keep things current and, of course, it reminds the group about the whole issue, etc.

(5)      Weekly Plastic Payment (7)

       Let's suppose that you are just now attempting to follow the TRUISM  that you pay no Credit Card charges (Interest Expense) since you monthly pay off the total due to your Plastic or Credit Card company.  At least in the beginning of this process, you might find that you are more comfortable doing this weekly via an Online Payment rather than monthly, etc.   Incidentally, you might find of interest more info along these lines when you  GO HERE.   Factors in doing this very fine process include at least the following:

   a>      You make use of only the weekly Buffer - Float Factor described when you CLICK HERE
   b>      You do not have to establish a Credit Card account within your COMPASS (Internet and QBs accounting system) and weekly post each purchase thereto since -
   c>      You go Online each week and print out a hard copy of your unpaid Credit Card transactions and the unpaid total.
   d>      Hopefully you have retained all of your Credit Card purchase slips and you attach them to this hard copy.  If such slips are lost (as we all know, they are so small and they are so easily mis-placed, etc.) and since it has only been a week, you likely can verify the purchase even though you can not locate the signed copy etc.
   e>      Each Wednesday of the week, you process a weekly Online payment (check equivalent) to the Credit Card Company as you pay off what is due to them.  See below as to what happens on each Thursday.
   f>       You distribute the amount of each purchase by Credit Card into the applicable BuxBox (per your Chart of Accounts as shown by QBs (QuickBooks) Equity Account) and possibly to QBs Class Account process for tax deductible items. 
   g>      This includes posting the purchase date and vendor name in the Memo area of the QBs Bill Payment system for future buying reference and information.
   h>      The
Online Payment System shows this transaction as the equivalent to a distributed weekly check within your Online Bank Statement - probably on that Wednesday or no later than the next day, or Thursday.
   i>       Each Thursday you go to your
Online Bank Statement and make sure that this distributed weekly payment is there.
   j>       So both the above
Online Check and other checks that show up within your Online Bank Statement get into your COMPASS (Internet and QBs accounting system)
   k>      And you render the applicable CHART (Financial Status and Activity reports) so you know how much you can spend by pre-approved category (BuxBox) for the upcoming week.
   m>     Some
Online Bank Statement systems (See www.eccu.org, for example) allow you to electronically transfer these transactions to your COMPASS (Internet and QBs accounting system).  Then you simply reclassify the activity to the applicable categories, etc.
   n>      You might also find of value the Expenditure Category ID System etc found within the www.eccu.org
Online Bank Statement system.

(6) Alternative Scenarios to a Purchase Order (P.O.) Method (6)

        Which of the following Scenarios do you think best accomplishes a Church's objective of NOT having the burden (quite awkward in a non business setting like Ministries) of a Purchase Order (P.O.)  process and yet control its spending?

SCENARIO #1

         The Authorized Buyer gets a weekly “Actual to Budget” report from the Ministry Bookkeeper so that this person knows if there is money budgeted for said purpose. Let's say that there is money in the budget, so the Authorized Buyer goes to the Bible/Book Store (or other applicable vendor) and charges their purchase to the Church’s “pay monthly charge account” at that store. Then the Authorized Buyer provides appropriate documentation to the bookkeeper so this purchase is included in the next “Actual to Budget” report. Authorized Buyer does this throughout the month at some 4 retail stores that allow authorized church charges during the month.  Bookkeeper timely pays each of the four retail stores via their reconciled monthly statement

SCENARIO #2

         The party is a volunteer who gets verbal approval from the Authorized Buyer to make a purchase from their own resources (cash or credit card) up to $80.00. PLEASE NOTE --- this is Authorized Buyer’s decision,  not the volunteer's decision. This is the amount for such transactions per the Church’s Finance Policy.   See sample at 5005.  This transaction is approved by the Authorized Buyer who processes a check request (with related documentation) so that the bookkeeper routinely reimburses the volunteer. Of course, this transaction is reflected in the next “Actual to Budget” report.  Approved petty cash transactions also flow through this means. Usually a petty cash purchase is for some $10.00 or less.

SCENARIO #3

          The preferred process is that a volunteer needs to buy something --- so this person goes to the Authorized Buyer who determines from the Actual to Budget" report that this is OK.   Authorized Buyers have a Corporate Credit Card (like VISA or Master Card) that includes their name. The Authorized Buyer fills out and signs the appropriate "Credit Card identity Form" that the volunteer can provide the vendor as it includes the statement that it is OK to use my corporate Credit Card to make this purchase, etc. The volunteer takes the Form and the Credit Card to the Vendor and makes the purchase. The volunteer returns the Plastic and the purchase docs to the Authorized Buyer who codes and OKs it and processes it on to the bookkeeper for applicable “Actual to Budget” reporting..  Like in the above Scenario, this happens at 4 different retail stores.  The bookkeeper reconciles and timely pays the one  Credit Card monthly statements -- please note the need to write only one check for all of these purchases from the 4 different vendors.

(7)  Christian Believer (BLVR) and Personal Finance  Philosophies/Policies   (07)           

       The objective here is to help the BLVR conclude and write down their "Righteous Personal Finance - RPFin"  philosophy and related policies.  We recommend that the husband and wife do this exercise separately and later compare.    Please go HERE  for more RPFin resources.   By the way, I like to define a "philosophy" as 'what you believe'; and "policy" by what you 'always do',  or by what you 'never do',  within a certain set of circumstances.
       The ideal is for you to analyze your understanding of Scripture and conclude the matters that follow. By following this format, you can document your "Righteous Personal Finance"
 philosophies/policies  by the indicated answers.

Do you Agree: 

        T O P I C S/ I S S U ES

YES

NO

or ???

>

STEWARDSHIP:

  I believe that the Lord owns

everything ... I am simply temporarily

in charge of certain resources like

money and of what money can buy.

_____

_____

_____

>

LIFE STYLE:

  Much of my money involvement

is based on my life style. I want

my life style to honor Him; and I

will keep my financial promises.

_____

_____

_____

>

EARNINGS:

  My earnings are a provision

of the Lord and, as part of my

worship and thanksgiving, I want

to preferentially remit to my local

church in one of the following

three ways:

1> A tenth (tithe) of my income

before any withheld taxes.

_____

_____

_____

2> A tithe of my income after

taxes have been withheld.

_____

_____

_____

3> I believe a tithe is only

a benchmark... And not the

11th commandment. I give

generously as unto the Lord.

_____

_____

_____

>

DEBT:

I borrow money and pay

interest expense to buy investments

or acquire assets like real estate

and equipment.

_____

_____

_____

I prudently use Plastic or

Credit Cards to make purchases;

_____

_____

_____

if so......

1> I pay for these purchases

regularly so I do NOT pay PLASTIC

interest expense.

_____

_____

_____

2> I sometimes pay Plastic

interest expense when I buy

equipment or other long

standing assets.

_____

_____

_____

>

SAVINGS and/or INVESTMENTS:

I believe financial resources

should be prudently set aside

for a 'rainy day' and/or for an

appropriate purpose or event.

I have a specific strategy for

doing this.

_____

_____

_____

>

BUDGET: (Righteous Financial Plan)

As a manager/steward of

money, I need to prayerfully

plan ahead and determine what

money will be required; or I

need to have a formal budget.

Then as money comes in, I

need to use it within that context.

If you agree, then ....

_____

_____

_____

1> I measure actual to

budget regularly

_____

_____

_____

2> I measure actual to

budget sometimes.

_____

_____

_____

3> I do not have a budget,

or a actual to budget plan, but

I will within the month.

_____

_____

_____

>

INSURANCE:

I believe that I should

judiciously have insurance for

such things as health and

tangible holdings. I am

adequately doing that.

_____

_____

_____

>

GAMBLING:

Using the financial resources

that belong to the Lord to gamble,

or get something for nothing,

is not good.

_____

_____

_____

>

SECURITY:

It is my responsibility to

see that my known assets (What

I own as a steward) are as safe as

possible. One security example

is that I use bank accounts and

handle as little cash as possible.

_____

_____

_____

>

TAXES:

As I understand God's Word,

I am to pay my just taxes to the

applicable government authority and

comply with their regulations.

_____

_____

_____

>

TEAM   EFFORT:

I am married and our

stewardship of money, and what

assets money can buy, is to what

degree a Husband and Wife team

effort. Please give your team an

"A to F" grade.

_____

Click below for Potentially Helpful Online Links for JIMs JRNL Readers:       

 01   2009 Charitable Contributions Bulletin Inserts Tax, Donations, Giving, Deduction  02 Feeling the Financial Pinch -- What to Say to Supporters  03 Sommerville Non Profit Articles  04  IRS - Independent Contractor (Self-Employed) or Employee 05 Sommerville Sample Policies  06 Church Metrics 

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

        The IRS allows a donor to "Tax Deduct"  charged donations on the date the credit card is charged.  In all other situations the Ministry must have the Donation in their possession (regardless of the date on the check, etc.) in order for it to be a "Tax Deduction."

          Bible Verse and/or Prayerful Thot :

        Lord, I am reminded that not too long ago we had a very special newborn in our family.  It really rocks my socks to think of what Mary must have thought as she breast fed the very God and Savior of mankind.  Wow !!!!   Thank you, Lord Jesus, for the Christmas season time of the year and what you have done for me personally !!!!!


     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
    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


 Probable "Ministry Finance Lingo", or "Frequently Used Vocational Terms" used herein, appear below:

            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 QB = Quickbooks; RPFin 
= Righteous Personal Finance , SPFunds or SPFs = Special Purpose Funds


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This document was updated last on:  November 15, 2010