"JIMs JRNL" EditionABOUT US | OUR PURPOSE | TABLE OF CONTENTS | SEARCH MATTERS | HOW WE HELP SPECIFICS | FUND ACCTG VIA COMPUTERS | GLOSSARY
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TO: Interested Onliners FROM: Jim Bramer, Retired Auditor-CPA
RE: J I Ms J R N L for the months of July and August 2009 FILE: 0708-09/jrnl
01 - This NINER (09-09-09) day is special (02)
This JIMs JRNL edition is completed on September 9, 2009 and it is unique for two reasons:
Reason # 1 ----- When we convert today's calendar date to numbers it is “09-09-09”. The previous 09-09-09 was September 9, 1909 and, if the Lord tarries, the next one will be September 9, 2109; right, 09-09-09 is every 100 years. I noticed earlier today that someone has also had this "NINER" info to include 09 minutes and 09 seconds. Now why would the wife of this CPA accuse me of being a “numbers” person.
Reason # 2 ----- The plan is for future JIMs JRNL editions to go from a monthly endeavor to one every two months. This 09-09-09 date in the inaugural date for such an effort as it covers the months of July and August 2009.
02 - Financial management of a struggling "General Fund" at a Ministry. (04)
Perhaps your "General Fund" is struggling during these difficult economic times. Please note below a possible management approach beginning with these two foundations:
1st - Your weekly reports reflect unpaid bills since last week and you MUST know all of your financial facts;
2nd - The "General Fund" NEVER uses any of your designated/restricted or "Spoken For" monies. As was done causing the General Fund Deficit of $5,706, 41 from previous years as shown below.
"SPENDING AREAS" of the "General Fund:
You structure your accounting system so that you place portions of each deposit into applicable unrestricted "General Fund" prioritized "Spending Areas." Examples: The 1st money that comes in goes to the Salaries/Benefits "Spending Area"; then to Missions committed "Spending Area: then to the Fixed Expenses (like Rent/Debt Servicing/Utilities, etc.) "Spending Area"; and finally to other prioritized named Ministry "Spending Areas."
During the following week you do your spending only if your weekly report below shows that the applicable "Spending Area" has a balance.
500 Spoken For - Spending Areas
501 Missionary Jones - Support
502 Project XYZ
590 (General Fund Deficit) from previous Years
599 Board Emergency Fund
Total 500 Spoken For - Spending Areas
600 Annual General Fund Spending Areas
620 Missions Area
625 Fixed Expenses
681 Operating Depart
682 Operating Depart
Total 600 Annual General Fund Spending Areas
Total Year to Date Balances 9,744.28
If you did some buying by charging something at the local Christian Book Store (or like vendor), or by using your Credit Card, then all of such transactions must appear as charges during that week to the applicable "Spending Area."
You do NOT allow constituents to direct their donation to the General Fund prioritized "Spending Areas" above --- the Board decides such priorities, not the donors, etc.
There may be times when you reclassify among "Spending Areas", due to priority issues, etc.
RIGID RULE: BUYERs can only spend money to the extent of their weekly "Spending Area" balance' --- "no balance no spend".
2nd SET OF BOOKs
Let's suppose that you want to do something like this but you do NOT want to change your existing QBs Method and/or your Chart of Accounts.
So you establish a 2nd "Set of QBs" for such management of this "Spending Control" system pertaining to your General Fund only. After you get this established, and the BUYER does not need individual transactions info, then you have the option of placing therein only weekly QBs provided transaction totals.
Or you do not use QBs, so you set up an Excel doc and post weekly totals to such General Fund only "Spending Areas."
03 - Hopefully a Small Ministry's will answer "Yes" to the following finance related questions: (05)
As a "Christ Centered" Ministry who handles $500,000 or less per annum, you, of course, need to be a good steward of your finances. I trust you can answer "Yes" to the following questions:
Do you have a minimum amount of cash in your possession?
Is your "yet to spend" money safe and secure in insured Bank accounts?
Do you primarily buy via needed Credit/Debit Cards and "NOT" via vendor charge accounts?
Are your weekly reports complete since they include unpaid Credit Card purchases?
Do you weekly know if you have money to righteously spend in carrying out your purposes?
Do you know each week the amount of your unspent "Spoken For" monies?
Are you in complete control of the spending of your 'General Fund - Unspoken For" monies?
Do you monthly (or before) pay off your credit card debt?
Are you making good use of the tools of an inexpensive computer system as you do your bookkeeping?
Are you using Internet resources so you do "NOT" have to do any Bank or Credit Card reconciliation?
Are you using internet resources to move money from a donor's bank directly to your bank?
Are you using Internet resources to move money from your bank to a payee's bank?
Are you using Internet resources so you can earn as much "Interest Income" as possible as you keep the maximum amount of money in your daily interest bearing Savings account and the minimum in your Checking account.?
If your answer is "No" to any of these questions, please contact me and discuss how most of these objectives can be met via various features of the eFINFAX system. Below are samples of such reports from this source..
Click Here for the weekly "Point in Time" "Spending Area (BuxBox) Balance" report
Click Here for the periodic "Point in Time" Photo report
Click Here for the periodic "Period of Time" Video - "Spending Area (BuxBox) Activity" report
04 - Online Accounting Tools or Features (06)
Ideally you should make full use of your Computer system that has a fast connection to the Internet as you go Online in order for you to:
· >> Access the equivalent of your Bank Statement at anytime
>> Access the equivalent of your Plastic Statement at anytime
>> Electronically move the above transactions directly to your accounting software
>> Better manage your Bank Balances so that you earn more Interest Income
>> Pay your repetitive bills without manually processing a check
>> See that your employee’s net pay goes directly from your bank to their bank.
>> Receive money directly from the Payer’s bank to your bank.
>> Improve the management of your Plastic transactions
>> You can view and/or make a hardcopy of transactions that go
>> To Staffers who authorize plus attach slips to the hardcopy
>> As they code purchases for their Budget area
>> You can make non monthly payments Online
When you electronically move transactions to your accounting software you:
>> Reduce volume of manual data entries
>> Post more accurate and complete transaction data
>> Perhaps produce fewer computer checks; Some of you save money by hand writing your checks.
>> Make as many Online Payments as possible
>> See that the electronic Bank transaction agree with your supporting document
As explained further when you GO HERE, your Bank Reconciliation effort is greatly enhanced when you go Online and do it weekly; or you better manage uncleared transactions. Since you manually do the "Sweep" equivalent you not only earn more "Interest Income" but you also eliminate any Bank Sweep fees.
05 - Plastic (Credit and Debit Cards) buying Management (03)
It is our view that a Ministry should do the bulk of their authorized buying via a controlled and safe “Plastic” process. By doing so the Ministry does NOT have charge accounts at a number of vendors – like the local Christian Bookstore ---- since they do all of their applicable buying via this “Plastic” process.
Such an appropriate use of “Plastic” further reduces the need to have Petty Cash or Checking accounts as referenced HERE --- or the buyer does not need to handle green stuff/cash since they can efficiently use “Plastic” and do the appropriate buying, etc.
One part of this is the “Plastic-Debit Card” activity and it functions as if an agent was writing a Ministry’s authorized check. If the vendor allows either the “Plastic-Debit Card” or the usual “Plastic-Credit Card” buying process, then you want it to be subject to as much “Financial Internal Controls” as needed. Of course, the “Plastic-Credit Card” balance is timely paid off - preferable weekly..
The “Plastic” processes at the Ministry should be as “Internet Friendly” as possible. This is demonstrated by the Bookkeeper going Online and the Plastic transactions are moved electronically from the “Plastic Provider” to your Computer (preferable QuickBooks Pro (QBs) accounting system. Obviously this reduces the manual data entries into QBs and, since these Plastic transactions are mirrored therein, it concurrently reduces the need to do any reconciliation of manual QBs entries to what the “Plastic Provider” has.
The preferred overall “Plastic Management” process further involves the following internal steps:
>> Each authorized Ministry representative is provided with their own Plastic BUYER’s card, etc. This would apply to both staff and Ministry volunteers. Do not have too many cards out there – make full use of the BUYERS agent process below.
>> The BUYER makes authorized Online or in-person purchases
>> The BUYER’s agent makes authorized in-person purchases; this involves temporarily giving this agent the BUYER’s plastic card with a clear written document indicating that this agent has the authority to buy this one time as if this agent was the BUYER, etc. The intent is to counter the request by Vendors for BUYER’s identification, etc.
>> These BUYER's make their purchases and they retain the “Buying Document” as the BUYER awaits information from the Bookkeeper – see below.
MINISTRY BOOKKEEPER OR ACCOUNTANT
As indicated above, this person could weekly go Online and electronically moves the Credit Card Plastic transactions from the “Plastic Provider” to the Ministry’s applicable BUYERs “Pending” account” within QBs.
The Debit Card transactions are captured weekly as part of their electronic BREC-SWEEP effort and the transactions are placed within the applicable QBs BUYER’s “Pending” account.
Throughout the month (like weekly) the Bookkeeper makes a hard copy of the applicable QBs BUYER’s “Pending” account showing the transaction details and gets it to this BUYER.
Working from the above hard copy of the QBs BUYER’s “Pending” account, the applicable BUYER approves each purchase – made either via the BUYER alone or via their agent.
The “Buying Document” (usually a very small piece of paper) has been placed into their wallet or purse and they ultimately get attached to this hard copy. See below as to process when “Buying Documents” are NOT retained, etc.
Assigns their applicable Departmental “Chart of Accounts” number to each purchase appearing within the above hard copy of the BUYER’s Pending account . See below about the “Ministry Plastic Supplies & Expenses” account where all such purchases are charged to this one account, etc.
Perhaps make a hardcopy of BUYER’s “Pending” account for their own department files and
Finally, return the properly completed original BUYER’s “Pending” account hard copy to the Bookkeeper
MISSING BUYING DOCUMENT
BUYER goes ahead and authorizes – remember this is a weekly process so the BUYER surely would remember incurring such an expense etc.
Some Ministries penalize the BUYER if they do not have the BUYING DOCUMENT. Please discuss with us some of the penalizing options.
MINISTRY BOOKKEEPER OR ACCOUNTANT
Working from the completed hard copy from the BUYER the Bookkeeper can now:
>> Clear out the applicable BUYER’s Pending account as each Plastic transaction is re-assigned to the indicated BUYER’s accounts per the Ministry Departmental Chart of Accounts structure.
OBSERVATION: Some Ministry’s have a common Departmental “Chart of Account” that says something like: “Ministry Plastic Supplies & Expenses”. This way the BUYER does not have to assign an account number, etc and there might not be a need for the above BUYER’s Pending accounts per se. Or the Plastic transaction can originally go to that Department’s “Ministry Plastic Supplies & Expense” account. The BUYER may want to charge the purchase to some accounts other than this “Ministry Plastic Supplies & Expense” account. If so, the BUYER clearly indicates that on the approved hard copy that goes back to the Bookkeeper,
>> Make the applicable charges to the BUYER for any missing BUYING DOCUMENT. Some Ministries charge $1,00 for each missing BUYING DOCUMENT and they take it out of the BUYER’s pay and credits their Department with this expense offset.
>> Ultimately prepare the applicable “Department Spending Control” report that includes the “Plastic Purchase” transaction details (Date; Vendor; description of items purchased: dollar amount) .
>> Goes Online and pays off any unpaid “Plastic-Credit Card” balance at least monthly, if not weekly.
Ask us about the details of discounted repetitive buying done via a Scrip “Prepaid Plastic” process.
06 - Information about an "Unconventional Investment" (08)
---- Below is a dialog with Executive Pat of a Non-Church Ministry ---
From: Pat -
Hi, Jim. In addition to my recent phone call to you, I want to to dialog with you in this manner as to the "Unconventional Investments" that we are involved with here at our Non-Church Ministry -- I appreciate your help?
Sure .... please state in this format what you mean when you say "Unconventional" ?
From: Pat --
OK, as we discussed on the phone, here is the story. Via the auspices of a governmental agency (I can be more specific here if you prefer), we have purchased a unique piece of property; we are fixing it up and then we plan to sell it for a good return on the investment of our money and time. Some of the issues we talked about include:
>> The possible need to change our corporate by-laws to meet the governmental agency's requests -- this agency prefers to make such investment opportunities available to Tax Exempt Organizations like ours.
>> The possible implications of what you CPAs and the IRS call "Unrelated Business Income" that is subject to Federal and State Income taxation.
>> The prospect of this investment endeavor being incorrectly viewed as a Fund Raising endeavor. Or have such costs be included within the GAAP required annual Fund Raising functional costs, etc.
You are right, Pat ..... this is not the conventional investment in such things as insured Savings accounts or even direct investments in Stock/Bonds or indirectly via Mutual Funds, etc. Click here for some more Investments thoughts. It is even a little different than most investments in property. As I understand it, your effort is to obtain such an asset, fix it up (often by a volunteer) so that you can dispose of it ASAP at a good price. Sometimes there are economic reasons for you to even pay off the original mortgage.
From: Pat --
That is correct. These investments are being made now in the current real estate market, so it is could be worth the use of our resources to be involved like this. But what about the above issues?
From my perspective, based on what you have indicated, it is imperative that this effort have an "Investment" flavor, thrust, or emphasis. The only reason for you to get involved is because the Ministry's resources must be prudently invested so that the result in a good yield for the benefit of your tax exempt Ministry. This includes not only available money, but applicable staffer time and energy, plus other Ministry overhead.
From: Pat --
__ I say amen to your statement, Jim, but we need to cope with these named issues.
Based on this Investment premise, Let me share .......
>> As to the possible change to your corporate by-laws: No way do you change your major "reason for Ministry purpose declarations" to accommodate this effort. But you may need to fine tune the "Investment" portion of your by-laws to be a little more specific as to this type, etc. For example, your by-laws might include some reference to it being OK to have a relationship with this government agency for this investment purpose and other stated criteria, etc. You will want to limit the Ministry's liability; no tangible property of the Ministry is to be collateral for any of these endeavors, etc. Plus, you will want to have adequate insurance coverage to handle any potential claims related to any of this, etc.
>> "Unrelated Business Income" should not be an issue because, again, you are appropriately involved in making an investment and not engaging in some type of business that is contrary to your exempt purpose. Of course, like any investment endeavor, if it consumes all of your overhead resources and virtually replaces your reason for existence, then you have a problem. But I see none of this from any of our discussions.
>> The costs of making an investment has nothing to do with operating costs ...... one of which is to righteously incur "Fund Raising" functional operating costs as you solicit donations. Let's suppose the following fact pattern: You go out and make such a investment; you spend $4,450 for down payment and related costs plus $4,987 on property improvements and related mortgage payment interest. Then you sell this investment and you end up with $11,344 after all of the closing costs, etc.. The gain of $1,907 ($11,344, less $4,450 and $4.987) appears within your annual report as "Gain on Sale of Investments" within the other Income Area, etc. It is in no way connected to reflecting "Functional Operational" costs as required by GAAP. Let's further suppose that the above fact pattern changes in that you pay off the original mortgage of $45,333 so you do not have to make any mortgage payments during the time of this project. This means that instead of the above $4,987 costs, you had only $3,187; or your net gain would be increased by $1,800 (the difference between $4,987 and $3,187). Seemingly, another good investment decision.
From: Pat --
OK, Jim, I believe I see where you are coming from on all of this and what you have shared should help us a great deal as we proceed with this. Thank you.
07 Ten Steps to avoid "Affinity Fraud" and protect your Ministry as provided by ECCU.
08 - "For What it is Worth" editorials by Jim Bramer
Please Click Here for some thoughts about "Kids and their Money""
09 - Ministry Finance TRUISMS - or precepts/beliefs/principles. Please go to 0069 for complete TRUISMS list.
STATEMENTS of RELEVANT FINANCIAL FACTS - be sure these are defined by the money Decision Makers and are timely received. See content of 0086 for more specifics, etc.
10 - Prayerful Thots (3): Dear Lord .... there are Christ Centered Ministries out there who are struggling financially. My prayer is that they are using the available financial management tools so that they can control their spending. Thank you Lord, for your many mercies .... in Jesus' name, Amen.
- This "Blogger" like endeavor (99) allows me to share some personal comments/thoughts as to Ministry Finance issues. For topic alphabetical lists in earlier JIM's JRNLs. editions, please Go Here.
If you would like to receive the next JIM's JRNL edition, 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 9708 and 9709
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 QBs = Quickbooks; SPFunds or SPFs = Special Purpose Funds
ABOUT US | OUR PURPOSE | TABLE OF CONTENTS | SEARCH MATTERS | HOW WE HELP SPECIFICS | FUND ACCTG VIA COMPUTERS | GLOSSARY
Click Here for information about earlier JIM's JRNLs - or contact me via Jim@bcidot.org
This document was updated last on: April 20, 2011