"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 months of September and October  2010                                FILE:  2010/0910-10                    


01 -  Do you weekly know how much money that you can righteously spend?  (01)

            Hopefully your answer is YES to the question above.  But,  if the answer is NO,  then prayerfully consider the following:

    >>      If you are authorized to spend Ministry money,  then  you must  timely know how much is available for applicable
           purposes.  As explained when you
Go Here.     I   do not  mean the amount of money that is in your Bank accounts.

    >>     The absence of such weekly information indicates that you are not likely being the fiscal steward that the Ministry
            should be.

    >>      If interested then please contact me at 
Jim@bcidot.org  so we can discuss resources that could provide you each
           Tuesday/Wednesday with a report like that displayed below which shows that ---  yes,  you have $ 4,744.48
            in your Bank Accounts ---  but more importantly, it pertains to the indicated areas of the Ministry.

                 Restricted and/or “Spoken For” Monies
                        Missionary Jones – Support                               28.53
                        Missionary Smith – Support                              405.57
                        Board Project A                                                    800.00
                        Board Emergency Fund                                  3,067.59
                                                                                                       ------------
                                    Sub Total                                                 4,301.69                              
                  Discretionary Monies that are
                            assigned by the Board below:
                        (a) For “
Fixed Operating Expenditures”            272.70
                        For Operating Depart #02                                     28.65
                        For Operating Depart #03                                     59.06
                        For Operating Depart #04                                     37.30
                        For Operating Depart #05                                     44.88
                                                                                                -------------------
                                    Sub Total                                                     442.79
                                                                                                -------------------
                        Total available balances                                   4,744.48
                                                                                                ============

      (a) “Fixed Operating Expenditures examples are:   Existing Salaries/Benefits or other such commitments;   Required Rent/Debt Servicing;  Essential Operating expenses like utilities and phones etc.  


     02 -  The prudent use of Plastic (
Credit Cards) at Christ-Centered Ministries  (02)

PERSPECTIVE

            It is our view that such 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 numerous vendor charge accounts – like at the local Christian Bookstore and elsewhere----  since they do all of their applicable buying via this single process.

           Please note below within this edition how we discuss the
“eCHECK”  “Plastic-Debit Card” activity as it functions as if your 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.   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 accounting system -- preferable QuickBooks Pro (QBs).  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.

BUYER

                  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 applicable 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 respond to the request by Vendors for BUYER’s identification, etc.

     >>  These  BUYERs  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 move the Plastic (Credit Cards) transactions from the Plastic Provider”  to the Ministry’s applicable BUYERs “Pending account within software like QuickBooks Pro (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.

MINISTRY 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, returns 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. Per the method below, some Ministries penalize the BUYER if they do not have the BUYING DOCUMENT.  

MINISTRY BOOKKEEPER OR ACCOUNTANT

     Working from the completed hard copy from the BUYER  they 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”  line item 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) .

     >>   Weekly Go Online and pay off any unpaid
Plastic-Credit Card” balance.

PREPAID PLASTIC

            Ask me at Jim@bcidot.org about the details of discounted repetitive buying done via a Scrip “Prepaid Plastic” process.

 Church Credit Card/Plastic “Five Step” Process - (aa)

      Recently I learned that a Church Credit Card  is in each Official's name, but, as mentioned above,  a particular official was NOT providing mandated Credit Card information to the Church Business Office. The Credit Cards was taken away from this person and they used their own Credit Card for approved Church purchases.   However, the mandated requirements were still NOT followed so the Church's expenses on their personal Credit Card were not reimbursed.  I believe that following the "Five Step"   process below would alleviate most of these undesirables:

     01> This official (either staff or applicable volunteer) does in fact have a separate Church Credit Card in their name

   02> This BUYER makes all approved purchases only via this Church Credit Card means. This person would NOT pay for such Church expenses personally (
via any of these means:  own cash, check or Credit Card, etc.) and seek reimbursement from the Church.

   03> The Church's Bookkeeper would  weekly go online to this buyer’s Church Credit Card account and print it out showing the transaction detail and the unpaid credit card total.

   04> This buyer then takes this weekly print out and determines if said charges are OK, etc and does the applicable
Chart of Accounts coding and, at the same time, attach any existing Credit Card slips.  These small slips can easily be lost so they are a preferred, but maybe they are NOT a required,   part of the process.  Since it has been within the past week, this person can normally go to their calendar and determine if the Credit Card charge appearing on the weekly statement is proper.   Reminder: such charges are not a business tax deductible issue by this tax exempt Church -- or having the Credit Card slip is not a required tax matter.

   05> After the
BUYER takes the preceding steps, this weekly print out, as approved by the BUYER, MUST then go to the Church Business Office.  The total is then paid via a weekly Online (or a “eCHECK” ) payment as the detail is posted to the applicable Church Departments.  Via this process, not only is the Church placed on the  Accrual Basis  by reporting all of the NOW expenses, but it is also not necessary for the Church Bookkeeper to enter the Credit Card purchase detail in advance into a liability account, and then go through the time consuming effort of reconciling each transaction to the periodic Church Credit Card statement itself, etc. 

       If the Church's Bookkeeper still did not know what Department (or account therein) was involved in the transaction then it was placed into a type of Suspense Account until the buyer informed them of where this approved purchase belonged, etc. 
 

Answering “Debit” to vendor’s question when you make Credit Card (Plastic) purchases. - (bb)

            When your Qualified Buyer  at your Ministry contributes to the positive aspects of our ‘cash less society' and makes purchases via your Credit Card (Plastic) process the vendor often asks this question:  “Is this “Debit” or “Credit”?”   Go Here for more information about this.  If your answer is “Credit” then this purchase is added to your unpaid Credit Card balance and then you ideally go Online each week and pay off the total unpaid balance. 
            But if you have the option to answer “
Debit”, and you provide another code, this purchase functions as if you had written this vendor a check.  This
“eCHECK” process has the following desirables:

>>  You rightfully use Credit Cards (Plastic) but you incur no debt. 
>>   Plus you do NOT have to manage/account for any unpaid Credit Card transactions per se.
>>   This process is paperless
>>   You do NOT have to write; get signatures and process any paper checks 
>>   You do NOT have to buy such checks for either the hand written option
>>   Or for the more expensive option for checks that your Computer system writes   
>>   Since this happens electronically, you do NOT have to mail or physically get the Check to the payee
>>   Plus, of course, there are no postage costs

            Possible undesirables in using this  “eCHECK” process might be:

>>   You are in essence making your Qualified Buyer and Plastic User  the Ministry’s check writer/signor/processor.
>>   You probably should limit the size of each
“eCHECK” transaction to something like $200.00 or less.
>>   You do not have a cancelled check copy for transaction documentation/record keeping or verification purposes
>>   Which might contribute to the Buyer being careless about not providing such  needed purchase supporting
        documents and distribution info.
>>   We are told that
Credit Card/Plastic  “eCHECK”  users do NOT get Credit Card incentives like free Airline miles  
>>   When you process the transaction you can not include desirable information like what/why you made the purchase
        plus the applicable acct ID, etc. 

   We are convinced that Ministries should make prudent use of this “eCHECK”  process.

03 - Internal GAAP and "Expenditures" -- Not Expenses   (05)

                As most of us know per the detail when you Go Here, GAAP is an acronym for Generally Accepted Accounting Principles that we accountants must adhere to.  Please  Go Here  and learn about unique finance matters (shall we say GAAP issues) at Christian Ministries as they manage Special Purpose Funds – SPFunds and their General Purpose Fund – GPFund. 

                Or some overall GAAP matters are unique to these Non Profit Organizations (NPOs).   We further maintain that such organizations also handle finance transactions during the year that we reference as  
Internal or Daily GAAP  matters as apposed to Year End or External GAAP  issues.   Please note how it is addressed within our WebBOOK when you Go Here

                Such Ministries should use the term
"Expenditure"  for such transactions rather than the term "Expense" per se.   As detailed below, this is done because some of their GPFund operational costs of doing their unique type of operation are different and use of the term "Expense" can be misleading.  

                                                                                  Debt Servicing

        Operational "Expenditures" include payment of such obligations as monthly Mortgage payments that include both Principal and Interest,  but the total obligation is funded from the operations income or the GPFund.   Therefore, we recommend that this budgeted  "Expenditure" line item have a generic title like "Debt Servicing" and be for the total amount of the monthly payment.  The principal portion will at least annually show up as a reduction of the liability account.   Please  Go Here  for a discussion about a "Three Legged" accounting entry whereby the principal portion could reduce the liability now, etc. 

                                                                 Furniture and Equipment

        Operational "Expenditures" sometimes include the cost of buying Furniture and Equipment.  Sometimes such transactions will be made from monies gathered specifically for that purpose via one or more of the SPFunds .  But what we often find is that the cost for such items flow through the  GPFund  as a budget Expenditure line item. 

       All  Furniture and Equipment costs should be added to the Fixed Assets at least annually. Please
 Go Here  for more information about Land, Building and Equipment and related accountability issues.  As mentioned above, please Go Here and see the discussion about a "Three Legged" accounting entry which enables you to capitalize such transactions at the time of the transaction.

                                                                                  Prepaid Expenses

        Sometimes a vendor requires the Ministry to pay for something in advance;  examples are Insurance Premiums and/or a deposit for a future event.  The usual accounting procedure is to place such transactions into what we accountants call "Prepaid Asset Accounts" and then you allocate the cost to the respective future periods involved.  But to accurately report how a Ministry uses its liquid resources during the year it is best to report this as another budgeted  "Expenditure" of the current fiscal year.   Then, if material in amount, you care for this "Prepayment Asset"  accounting matter only at the end of the fiscal year.

                                                                             SetASides

       Operational budgeted
"Expenditures" might also include internal transfers, or
SetASides,  from current  GPFund.  operations to the applicable SPFunds  for future needs.   Ask us about such funding for certain anticipated major facilities repairs and maintenance -- or even replacements. 

                                                                      Depreciation --- not

           
Depreciation 
  is NOT a budgeted "Expense" or "Expenditure"  item at a "Ministry"--   or this is NOT an  Internal GAAP  matter and is only reflected at the year end as part of the External GAAP   process.

04 - Self Funded Activities  - (04)

        A Ministry collects money to offset a portion of the costs of an event or activity.   Church example are Men's; Women's; Children's events like Vacation Bible School.   We recommend that you report only real Income and reflect such Special Purpose Fund - SPFund  activity receipts as "Defrayments",  or as expense offsets  (contra expense accountsand not income per se.  Our experience is that such  activities are best managed by them having their own  "SPFund"  that may be partially funded from the  "General Purpose Fund - GPFund"   budget.   Please Click Here   and  Here  for more information about such activities --  also  Click Here   for more info from Brad on this topic.   

         Some Ministries buy specific "General Purpose Fund" event material in advance and then seek
"Defrayment" reimbursement  ---   especially in small Church settings.   We believe the material costs should appear as an expense and the "Defrayment"appear, not as income per se, but as an expense offset.   Having both flow through the same "GPFund"  expense account and then show net expenses does  NOT  fully report what has happened.       

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

Busy Times for Ministries and their Financial Cooperatives     Tax matters at Churches    Accounting System Essentials      Churches Reeling from Declines in Donations per ECFA      ECCU Blog re Security and Essential Aspects of Online Banking
The Top Seven resources to combat Church Embezzlement      Where is your Church’s money     Church Finance Resources

  06 -  Current "Ministry Finance" Truism  (2)

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

    MORE THAN THE BANK BALANCE   - Expenditures should be booked when incurred and income should be shown when earned; otherwise the Ministry does NOT have all of the financial facts.   Please Go Here  for more specifics.

            07 -   Bible Verse and/or Prayerful Thots:    Dear Lord --  I sincerely appreciate this reminder that came to me recently:   "God is so big
                        He can cover the whole world with his Love and so small He can curl up inside my heart."  Thank you, Lord !   In Jesus' Name, Amen!! 


     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  9708  9709  and 9710


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


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Click Here and go to a list of earlier JIM's JRNLs - Contact  Jim@bcidot.org 

This document was updated last on:  July 09, 2011