The use of QuickBooks (QBs) at a Church


                Finances  at   Christian Ministries

 
          It is best if you
eReaders  understand some fundamentals about money administration at any Christian Ministry.  You can do this by digesting the contents within 
eBOOK 01  as you click on the topics shown below: 

"Table of Contents" for eBOOK 01 - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - Page 01
Unique Matters re Christian Ministry Finances   - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 02

 
In Charge - who is responsible - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 03
 Financial Accounting Features  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
 Page 04
 Structural Matters  - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - - - - - - - - - - - - - - -
  Page 05
 Money Coming In to a Christian Ministry  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 
 Page 06
 Money Going Out of a Christian Ministry - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  Page 07
 Spending Controls  - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -- - - - - - - - - - - - - -   Page 08 
 Reporting of Christian Ministry Finances     - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 09
 Fiscal Year End Matters - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Page 10

 


I S S U E S:

          The Church might have money in the Bank, but that does NOT mean you can spend it now.  Most all endeavors have money restrictions that play an important part of your finance administration.  Be sure you know weekly why you have money in the Bank.  You fully utilize the applicable computer software and related system.  Of course, this especially includes the  "QuickBooks Pro"  (QBs) Accounting system  as you preferably use our recommended "Method One" for Fund Accounting as discussed when you "Go HERE.

                                                                                                                         BASICs:  

         We are talking about the
"QuickBooks Pro"  (QBs) version ---  The Church does NOT acquire and use the more expensive, and not needed,  Non Profit QuickBooks version.  The Church does NOT have to have the latest versions of the software;  some older versions are available via eBay for as little as $100.00.   The Church's Donation accounting system is integrated with its separate  People computerized  database system.  The Church does NOT use this QBs Pro software for this purpose.   

W H E N

          This information provided by the QB Pro system MUST be monitored regularly; or you preferably have weekly status reports.   Please note examples of such reports below which we identify as PHOTOs and VIDEOs.

W H Y

         Your written "Financial Policies and Procedures" includes the Truism  that you spend only what you have for "General Purpose Fund - GPFund" purposes;  no borrowing, or there is no GPFund deficit permitted that is enabled by internal/external borrowing to cover GPFund Expenditures.  The GPFund functions via Spending Controls  that begins with an annual approved Operational Budget.           

 



     Complete disclosure of GPFund's "Financial Facts"
 
 
        Initially, you MUST disclose all of the needed "Financial Facts"  that include such matters as "Expenditures" via Charge or Plastic/Credit Cards accounts that MUST be recorded now since you have spent money even if it has not yet gone through the Bank.  We accountants call this the "Accrual Basis" of accounting.   As for funding of "Self Funding Events" by the GPFund -----  any agreed GPFund requirement should show up as an Expenditures at the beginning of the Event --- not at its end.    Please notice the following emphasis to  what we call Expenditures --- Not Expenses per se.

                                                                          EXPENDITURES -- NOT EXPENSES

        A Church will often use the term "Expenditure" rather than the term "Expense" per se.   This is done because some costs of doing business are somewhat different and the term "Expense" can be misleading.    Examples of such   Internal GAAP    "Expenditure"   items are shown below: 

                                                                                 Debt Servicing

        Operational "Expenditures" include obligations like monthly Mortgage payments that include both Principal and Interest,  but the total obligation comes from operations income or the GPFund.   Therefore, we recommend that the budget "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  and see the discussion about a "Three Legged" accounting entry whereby the principal reduces the liability now, etc. 

                                                                 Furniture and Equipment

        Operational "Expenditures" sometimes include purchases of
Furniture and Equipment.  Sometimes such "Expenditure" will be made from monies gathered specifically for that purpose via a  SPFund But what we often find is that the usual practice is to purchase such items from 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.  The Construction information when you  Click Here  might also be of interest.  As mentioned above, please Go Here and see the discussion about a "Three Legged" accounting entry which capitalizes such transactions.

                                                                      Prepaid Expenses

        Sometimes a vendor requires you 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 a "Prepaid Asset Account" and then you allocate the cost to the respective future periods involved.   To accurately report the use of the Ministry's 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 comply with this "Prepayment"  accounting matter only at the end of the fiscal year.

                                                                             SetASides

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

                                                                      Depreciation --- not

            Depreciation   is NOT a budgeted "Expense" or "Expenditure" item at a "Christian Ministry"--   this is also "unique" since it is only reflected at the year end as part of External GAAP   that is mentioned below.

           

      PHOTO  "Two Sides" of this "Point in Time" report 
Fundamentals as of 12-22-10

     Financial management of the Operations of a Church  is like the "Photo" analogy of two sides of the same coin.  Maybe even "two sides of the same fence" as to the status of your finances at a point in time.  Please liken Side "A"  -  Liquid Assets Management  to that associated with resource management in general while Side "1" relates to Imposed Limits Management  that is ever before Churches as part of their responsibly.  To further this analogy, let me share:
 


S I D E " A" -  LIQUID  ASSETS  MANAGEMENT

    SIDE "A" shows the Operation's  pool of liquid assets (Please note that I have not included any assets and related liabilities as to "Land, Buildings and Equipment", etc)  as recapped below by Balances at a point in time of the Sample Balance Sheet - Photo, .  This responds to the "WHERE" are the assets, or money, issues --- again, at a point in time.

Checking/Savings @ Credit Union

101

Checking

$ 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

        The contents of this "Asset Pool" needs to be prudently managed in a secure fashion so that these balances earn a yield  (Interest Income) between the time they are on deposit and when they are ultimately used to carry out the purpose of the Church.    Please Go Here for some details about all of this.  We recommend short term investments in what we call  replicating  financial institutions. Make every effort to work with a financial institution that has a SWEEP system whereby your checking account at the Bank always shows virtually zero at the end of a business day because residual balances are always in a   Daily Interest Bearing Savings (DIBS) accounts of the appropriate type. 

   TRUISM ---- Get your "Undeposited Money" on hand to the Bank ASAP; further, make sure all Bank Account Balances are earning the maximum amount of yield.

         Please remember that this SIDE "A" has a "pool" perspective .... for uncluttered management purposes, none of the short term investments are "married" to a specific Fund or obligation shown below within SIDE "1" .  Sometimes it is appropriate to distribute their allocated share of the pool's yield to applicable Fund Balances within SIDE "1" below.

    Other unique management features of SIDE "A"  include: 

  •     Utilize Sweep arrangements when possible; Comply with Internal Control issues whereby undeposited monies are deposited ASAP

  •      When automatic Sweep arrangement is not possible, each deposit ideally goes directly to a DIBS account (not to the checking account); 

  •      Then daily transfer funds to cover checks that daily clear the bank;

  •      Have a safety-net Line of Credit (LOC) in case transfers are not timely made;

  •      Make full use of Online services where you can at any time access and view your bank account status and activities.

  •      Please  Go Here  for information about a  BREC-SWEEP  system whereby you manually do the sweep process at the same time as you do your weekly Bank Reconciliation.


    S I D E "1" -  IMPOSED  LIMITS  MANAGEMENT

    SIDE "1"  emphasizes the need to manage the portion of the Photo representing Obligations, plus Fund Balances/Net Assets with Imposed Limits ( it responds to the question of  WHAT are these monies here for or WHY do you have these monies) that are assumed by the Operations of the Ministry.  Please also know about the issues set forth when you  Click Here.   Please note the following samples:

  •     Normal payables due to Vendors and to the Credit Card Company.

  •     Monies temporarily held for others for whatever purpose.

  •     Unspent Donor Preferences/Restrictions - Temporary; targeted for portions of the usual Ministry Operations or for ongoing Ministry Projects;  

  •     Plus monies SetASide  from the operating budget for specified anticipated needs.

  •     Board Discretionary - Unrestricted: or available as needed for operational budget to be determined by the governing board;

    Please see sample below:

    Liabilities:

200

Payable to Vendors

$625

220

Due on Credit Cards

$6,328

260

Others

$779

Total Liabilities

$7,732

Fund Balances/Net Assets:

**Donor Restrictions**

300

Staffer Designations

$ 39,588

310

Other Donor Designated

$ 5,124

334

Special Missions 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 Net Assets

$129,369

Year To Date General Fund Excess

$46,587

Total

$183,688

     "Features of "Imposed Limits" management re SIDE "1" include such issues as: 

  •      In order to make informed decisions, your accounting system needs to provide daily knowledge of  Obligations/Fund Balance status and activity - see above status sample.. 

  •      The Ministry should be on the expense Accrual Basis of accounting to insure full and complete reporting and in compliance with what we call  Internal GAAP

  •      The Ministry should have a Board policy as to the possibility of temporarily borrowing among the above Net Assets of $72,761 plus the Year To Date General Fund Excess   of $46,587. 

  •      Any approved Year To Date General Fund   deficit of the current year can not exceed the above Board Discretionary amount of $72,761.

       For example,  the  usual way to process a check that you write is to first record it at your check stub (or equivalent) and reduce the Bank Account in Side "A" above.  Then you simultaneously add it to the expenses in the General Fund or reduce the balances that reside in Side "1" above.  For more info along these lines, please go to the lady that we respectfully address as ALICE when you Go Here .



Special Purpose Funds - SPFunds Portion of the Photo

        This is what "FUND ACCOUNTING" at a Church is all about as it manages restricted or designated money; or it is to be used for a stated pre-approved Special Purpose.  Such money is sometimes called  "Spoken For Funds" ---  please note that you can also abbreviate this as "SPFunds. Christian Ministries handle "Imposed Limits" money.  The dictionary defines "imposed" to include such things as:  to force or thrust something on oneself or on others; to put a burden on.  This comes about via "Outsiders", or donor, directed monies plus there are "Insider",  or Board directed,  monies SetASide for a stated purpose.  Please Go Here  for some more perspective on what is called S)PECIAL P)URPOSE FUNDS - SPFunds. The information shared Here  might also be helpful.  A related issue is that SPFund money comes in that is for Activity Reimbursement (or Defrayment) purposes. Please  Click Here  for more specifics. 

        Of course, being good stewards of these special fiscal resources give rise to the whole "FUND ACCOUNTING" issues that Churches  must  address.  


 

General Purpose Fund - GPFund Portion of the Photo

        This, of course, has to do with accounting for unrestricted/undesignated monies available for the regular operations by department of the Christian Ministry.  This Board discretionary income is usually under some type of departmental expense "line item Budget "control";   as apposed to "control" defined as: "if a SPFund has a balance, we can spend it."  You will note that  GPFund   is singular, while SPFunds  are plural.  

        With respect to a Christian Ministry's finances and these "GPFund"  (we shalt) and their "SPFunds" (thou shalt)  money management issues,  some like the analogy that people are either "right handed"  or "left handed"  but  we learn to use them together.   Both of these "GPFund" and the "SPFunds"  accounting functions are different,  yet  (like left or right handed matters)  they are part of a Christian Ministry's single unified finance and accounting system.  Please  Click Here. and notice the "total" and yet the "separate" "GPFund" and "SPFunds"  activities as shown within the sample "Big Pix" report.


 
     PHOTO  (POINT IN TIME ) Report
 
           In addition to the PHOTO   (we accountants usually reference such reports as a "Balance Sheet , etc. but the reporting thrust is that which pertains to liquid resources, etc.)  information displayed above please note below the samples of two types of  VIDEOs;  ( PERIOD IN TIME)  reports  (we accountants usually reference such reports as "Profit or Loss Statements", or "Income Statements").  You will note these reports emphasize what types of money came in and went out of these Funds during the current fiscal year, plus what the Fund started with, if applicable.

 
       VIDEO  (PERIOD IN TIME)   Report of the  GPFund

          This is a sample of the applicable "Actual to Budget line item  non-departmental GPFund Actual to Budget report.

                                                           Church Sample
                                             GPFund  01/01/xx through 06/30/xx

Actual

Budget

Variance

Income

401 Unrestricted Donations

$ 807,679

Expenditures:

500-Salaries and Benefits

$ 425,043

$ 454,043

$ (29,000)

620-Office Expenses

$ 34,605

$ 48,400

$ (13,795)

640 Facility Expenditures

$ 93,147

$ 92,285

$ 862

660 Generic Ministry Exp

$ 110,460

$ 148,563

$ (38,103)

700-Mission Support

$ 103,020

$ 80,940

$ 22,080

800-Self Funding Activities

$ (5,382)

.$              00

$ (5,382)

Total Expenditures

$ 760,893

$ 824,231

$ (63,338)

Net Income

$ 46,786

 

 

           
            Ask us about using the
QB Class feature to enable you to provide such "Actual to Budget"  line item  GPFund Budget reports for applicable operating departments.  We often reference them as DAG  reports.


                                                            - - - -  VIDEO  (PERIOD IN TIME)  Report  of the SPFunds - - - - -

           Note below a sample report via QBs Fund Accounting Method One of what all of the  SPFunds started with 01/01/xx  and why they changed throughout the "PERIOD IN TIME" involved --- though 06/30/xx.

QB Church SPFund Class Proof      0704-07  ZZqbsam

                                                          Church Sample
         SPFunds)  Video (Income Statement) - since 01/01/xx through 06/30/xx

                        01 Beg. Bal. 1/1/xx                                                   $ 134,202
                        40 SPFunds Income
                                44-Restricted Donations        171,978
                                48 Other Income                           2,369
                                49-Interest Income                       6,960
                                Total 40 SPF Income                                            181,307

                       50 SPFunds Expenditures
                            01-Sal/Benefits                            (11,950)
                            61 Operating Exp                      . (82,912)
                            63 Travel Expense                        (9,105)
                            64 Bldg. Maint                            . (25,700)
                            65 Grounds Maint.                        (2,065)
                            66 Modular Expense                  (14,104)
                            67 Help Provided                         (15,968)
                            81 Expense Reimb/Event Fees 60,599
                            71 Grants                                       (78,341)
                            91 Internal  Transfers                   25,936
                            92 Fixed Asset Acquired           (31,350)
                            94 Debt Service                              (1,179)
                        Total 50 SPFunds  Exp                                            (186,140)
                SPFunds Ending Balances   (1)                                  $ 129,369


    (1)   This must agree with the total SPFunds balance as shown within the Church Photo report, etc.  The overall format above can be used for one or more individual SPFunds.   Ask us at Jim@bcidot.org  for an example of a columnar report showing this overall information by each SPFund.   Also ask us about QBs samples for non Church Ministries


                                                 
                                                                       B I B L I C A L   A D M O N I T I O N:

                    You say: "I can not do it" -----   The Lord says:  "You can do all things through me�     (Philippians 4:19)
 


                                                            List of  "Christian Ministry Finance" TRUISMS (Principles)  

                                                                   GLOSSARY  of "Christian Ministry Finance" Terms

                                                   Click Here and make use of the Word/Terminology  "Search"  resource:  


 
 
  Click Here and go to this eBOOK's "Table of Contents"

                                                                               
 
 ORIGINATED  December  2010                                                     UPTDApril 02, 2013

    

Foundations - Fundamentals as of 10-07-10