Seven "Ministry Fund Accounting" Goals or Objectives

          Many Ministry Bookkeepers (especially at Smaller Churches and/or Missionary Organizations) have little formal accounting training and we as CPAs (and related professionals) MUST help them make their efforts complete and yet as simple as possible.
          Please Click Here for some Fund Accounting perspective and the distinctions between Discretionary Monies (General Purpose Funds) and Non Discretionary/Restricted/Designated Monies (Special Purpose Funds.).
          The following seven items accomplish much of this.

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          01 - Pooled Bank accounts

          A Ministry should not have separate Checking/Savings Bank Accounts for each Fund or Fund Group. All non General Fund monies must have Board approval; Church Sunday School Classes (or like Auxiliaries) are not permitted to have their own Bank accounts; The Board is always in charge - no "Pass Through" of money is allowed without Board approval as they make sure that all money is used for the Ministry's pre-approved purpose.
          When a Ministry functions from a Pooled Bank Accounts approach it requires less bookkeeping chores, plus the Ministry should earn as much "Interest Income" as any good steward.   Please Click Here and Here for more details on this topic.

02 - Readily know the complete balance in each Fund

          The system needs to be designed so you can view its periodic Balance Sheet report and see the amount in each Fund or who belongs to Net Assets (Liquid assets less operating liabilities). Please Click Here for more Info.
           Of course, this means that all known buying transactions are shown   .... or, as indicated when you Go Here, you must show expenditures that perhaps have not yet flowed through the Bank Account.
           Another issue is that you have the option of setting aside operations that have an annual emphasis, like the Land, Building and Equipment, and you do NOT include them in your every day accounting matters. Ask us at Brad@rpfin.org about Memo Accounting.

03 - A single entry does the job

          You establish your Fund Accounting system (the applicable infrastructure, often referenced as your Chart of Accounts) so that a single transaction entry provides you with what is needed. Or you make as few Journal Entries as possible to accommodate the peculiarities of the Fund Accounting process.
          After you read 0021 please ask us if you have any questions about our position about NOT integrating people's Giving Records with the Fund Accounting software.

                   04 - Ease of setup and viewing of internal Financial Reports

          Your bookkeeping software ideally should provide you with the ability to go to its "Chart of Account" listing (like that provided by QuickBooks - QBs) and you can easily gain access to all of transaction details within that account or Fund.   From there you design/produce 'easy to access" repetitive reports that meet your Fund Accounting reporting needs.

                   05 - Spending Control (yea, Budget) capabilities

           It is essential that all "Decision makers" timely have Spending Control (Budget) information.    As for each "Special Purpose Fund", conclusions are almost always arrived at from the available Fund Balance - seldom from line item info.
          However, as for the "General Purpose Fund", action is determined by individual Expenditure line item "Actual to Budget" data, etc. Click Here for information about an alternative to the usual line item Budget process.

06 - Fund Balance "Carried Forward" Issues:

           As to fiscal year end features --- the computer accounting system needs to be able to accommodate such things as the following:

      a> The "General Purpose Fund"   has a Fiscal Year only annual emphasis; Example --- -- unused authorized annual budget amounts for this year are not carried forward to the new fiscal year, etc.
      b> Each "Special Purpose Fund" , however, almost always does not have an annual (Fiscal year) emphasis as their Fund Balances are carried forward to future years.

                     07 - A One-Page Condensed overview of financial information

          The Ministry leaders (and/or decision makers) ideally should be provided monthly with a condensed (Click Here and see an Example) key item financial trends report of the entire endeavor.   Often your accounting software (like QBs) can not provide such a condensed report, so it comes via an easily updated, but manually produced Excel document.
          This should include a Ministry's fiscal year-to-date recap of all of its Income and Expenditures - including any "Actual to Budget" data,   And then a current month end status report of its condensed Assets, Liabilities and Fund Balances. Please Click Here for more information.

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Written in November 2007 by CPA Brad Pendable - Contact him at Brad@rpfin.org for more Information.
Uptd June 17, 2009

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