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 take every effort possible to make their effort complete and yet as simple as possible.  Please  Click Here  for some Fund Accounting  perspective.  The seven steps that follow 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 balance in each Fund

          The system needs to be designed so a Ministry can view its periodic Balance Sheet report and see the balance in each Fund or who belongs to pooled Bank Accounts - or Net Assets.  Please  Click Here for more Info. 

                    03 - A single entry does the job

          You establish your Fund Accounting system 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.

                    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 easily gain access to all of transaction details within that 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, in 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 features --- the computer accounting system needs to be able to accommodate such things as the following: 

      a>  The  "General Purpose Fund"   does have 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"  almost always does not have an annual (Fiscal year) emphasis as their Fund Balances are carried forward to future years.

                  07 - Condensed or One-Page overview financial reporting

          The Ministry leaders (and/or decision makers) should, at least monthly be provided with a condensed (Click Here and see an Example) key item financial report of the entire endeavor.   Usually 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 "General Purpose Fund"  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 at  Brad@rpfin.org  --- Uptd  August 15, 2008

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