"Close to" terminology

[Barry Digman]

I'm having trouble getting my head around fund accounting as my experience has been commercial for-profit accounting.

When the term "closes to" is used in PowerChurch, it seems that they mean what I would understand as "nets to for reporting purposes", as the two accounts being closed to a single equity account aren't actually zeroed out.

Is that the correct concept? I'm thinking of a temporarily restricted fund (account?) that you would establish such as "Mission - Key West, February".

[JohnDMeyers]

Here's a link where I attempted to explain this.

viewtopic.php?f=3&t=6870&p=23310&hilit=attempt#p23310

[Matt]

"Closes to" in PowerChurch refers to the accounting process of closing the balances in the income and expense accounts at the end of the fiscal year. In the commercial world the balances in the income and expense accounts are closed into retained earnings. PowerChurch works the same way and has a default "retained earnings" account (a/k/a Fund Balance or Equity account) called "Unrestricted Net Assets". However, you have the ability in PowerChurch to set up additional "retained earnings" accounts to keep the Fund Balances for designated income and expenses segregated from your Unrestricted Net Assets. In order for PowerChurch to know how to segregate these designated Fund Balances you need to tell the system which income and expense accounts "close to" the corresponding designated Fund Balance account when setting these accounts up.

I hope this helps.

[Barry Digman]

Thanks.

I think I see part of our problem.

1.)The system was set up with a single fund "01 - General Fund". Everything lives there.
2.)There is a single equity account "01-3001-000 - Fund Balance".
3.) There are 52 separate restricted funds which each have their own asset, income, and expense account number, e.g. "Heifer Project 01-1110-121, 01-4100-121, and 01-5100-121".

After attending the webinars on Payroll, Accounts Payable, and Fund Accounting I think we may need to restructure some things going forward.


I forgot :
4.) They have never used Accounts Payable. The checks are written by hand and then entered into Fund Accounting.
5.) Neither are they using Payroll. Everything is calculated manually, written manually, and then entered into Fund Accounting.

[NeilZ]

I forgot :
4.) They have never used Accounts Payable. The checks are written by hand and then entered into Fund Accounting.
5.) Neither are they using Payroll. Everything is calculated manually, written manually, and then entered into Fund Accounting.

Boy, I can really see issues happening here ... no one place to track invoices and payments, no one place to find out salary history, or the total amount taken out of someone's paycheck for taxes ...

However, I know what the answers going to be ... "We have always done it that way!"

[Matt]

What version of PC+ are you using? From your description it sounds like you're either using a version before 9 or the version you are currently using has records that were converted from a version earlier than 9. If you are using version 9 or later I think your situation merits considering doing a restart of accounting so you can restructure the Chart of Accounts, the Accounts Payable module, and the Payroll module the way you need so that you can use all three effectively.

[Barry Digman]

The version they're (We're) using is 11.

I went back and reviewed the donor restriction and restricted contributions topics in the manual and I think that helped clear up my confusion over those issues.

Yeah, I've heard the "We've always done it that way" but I think we'll be able to move ahead without too much resistance. I was actually an accountant in the private sector for my entire career but never did any fund accounting at all so I'm having to recall a couple of college courses from 30 some years ago.

I'll give some thought to a restart. At this point the reports are pretty difficult for the committee members to decipher so they'd probably be supportive of anything that would simplify them. We're also using volunteer help for much of the accounting and reporting functions and they're ok with changes since they won't get fired if it blows up.

I would like to get it functioning as painlessly as possible as soon as we can of course. I'm the new kid on the block as far as this responsibility goes but have been in the church a few decades. My window of opportunity is open pretty wide right now but they always seem to begin to close before conversions are complete, don't they?

[Matt]

Assuming that your church's fiscal year ends December 31 this is the best time of the year to do a restart. Whenever setting your books up fresh it is always best to do the conversion as of fiscal year end. That way you don't have to transfer in any year to date balances and it makes the conversion much simpler. You're only one month into the new year so you'd only have one month to catch up on if you did a restart. But you are right--your window of opportunity is closing quickly. If you wait too long it'll be too much work to try to catch up and you'll likely need to wait until next January.