What is the recommended best practice in setting up an asset account that contains money with several designations? Is this a case where sub-account codes should be used? I'm not seeing any good examples in the Powerchurch documentation.
For example - a savings account (or a CD) containing funds that are allocated to
Music Fund
Youth Pilgrimage
Outreach
We track the total value of the categories via Net Assets, but leadership also likes to know when looking at a Balance Sheet how the total amount in the Savings/CD is allocated.
Additionally, if the money for the Youth Pilgrimage is spread across a CD and a Savings Account, Net Assets shows the total, but not where the dollars actually reside.
What is the recommended best practice in setting up an asset account that contains money with several designations? Is this a case where sub-account codes should be used? I'm not seeing any good examples in the Powerchurch documentation.
For example - a savings account (or a CD) containing funds that are allocated to
Music Fund
Youth Pilgrimage
Outreach
We track the total value of the categories via Net Assets, but leadership also likes to know when looking at a Balance Sheet how the total amount in the Savings/CD is allocated.
Additionally, if the money for the Youth Pilgrimage is spread across a CD and a Savings Account, Net Assets shows the total, but not where the dollars actually reside.
This is actually what I've done when setting up Powerchurch for a few congregations.
I used the same Checking account for all, just created individual Donor Designated accounts using the {b]Maintain List of Donor Restrictions[/b] function. You would create separate Net Asset Accounts for each designation, separate income accounts, but all would use the same asset account. When you need to 'release funds' you would do that as you would normally pay a bill, the funds would move out of checking, but at the same time you would click on the 'release restricted funds' button, select which designated account to release from, and the funds would move from the restricted net assets account to the unrestricted net assets account used by the checking or savings account.
You get all the visibility you need in the Balance Sheet, as well as the I&E Report.
Thanks for the reply! I think I understand the process setting up the donor restrictions and releases, but the documentation is very short of coherent examples using consistent accounts. Additionally, most PC+ documents don't reflect the changes from FASB ASU 2016-14. I know it only applies to "external reporting" but still...
So, to clarify, you would set up sub account numbers something like this?
1110 -- Checking
1110-010 -- Music Fund
1110-020 -- Youth Fund
1110-030 -- Outreach
4200 - Donor Restricted Income
4200-010 -- Music Fund
4200-020 -- Youth Fund
4200-030 -- Outreach
4800 -- Release from restrictions
4810 -- Temp Restrictions Release
4820-010 -- Music Fund
4820-020 -- Youth Fund
4820-030 -- Outreach
6400 - Program Expenses
6400-010 -- Music Fund
6400-020 -- Youth Fund
6400-030 -- Outreach
Thanks for the reply! I think I understand the process setting up the donor restrictions and releases, but the documentation is very short of coherent examples using consistent accounts. Additionally, most PC+ documents don't reflect the changes from FASB ASU 2016-14. I know it only applies to "external reporting" but still...
So, to clarify, you would set up sub account numbers something like this?
1110 -- Checking
1110-010 -- Music Fund
1110-020 -- Youth Fund
1110-030 -- Outreach
4200 - Donor Restricted Income
4200-010 -- Music Fund
4200-020 -- Youth Fund
4200-030 -- Outreach
4800 -- Release from restrictions
4810 -- Temp Restrictions Release
4820-010 -- Music Fund
4820-020 -- Youth Fund
4820-030 -- Outreach
6400 - Program Expenses
6400-010 -- Music Fund
6400-020 -- Youth Fund
6400-030 -- Outreach
--Eric
I would not ... if you want to you can. I only use one release account, and do not break down the checking as the system maintains the fund totals in the 3000 level, equity/net asset accounts, you only have to setup Contributions to point to the checking as the asset, and the restricted income account, the system does the rest. If you need that level of granularity for the release accounts, create them, but I would not for the asset accounts.
As far as expenses, there is no need to be that granular, as you may have youth expenses fall under building maintenance, and it would fall under an expense account there.
FWIW ... most churches really have no need to follow FASB procedures. Even when applying for a mortgage, it does not take much to produce the correct information from what Powerchurch offers.
Thanks for the reply, and what you say makes good sense. Unfortunately I think I led us too deeply into the weeds and in the wrong direction and we've missed the point of the original question so I'll restate it a bit differently.
The Net Assets portion of the Balance Sheet tells you how much is in each fund (Music, Youth, Maintenance) but not how the money is split across various asset accounts.
The original question centered on best practices for Asset Accounts and the best approach to track Fund Balances
For example we might have:
A bank checking account (1110) which holds money from several different restricted funds - Music, Youth, and Building Maintenance.
A CD (1200) which also holds other money from those same funds, held for longer term use.
The Board asks "how much cash is available in 1110 for a Building Maintenance effort without breaking the CD"
How would you answer the question quickly using PC+ reporting?
One solution is to have separate CDs for each restricted fund, but there might be other reasons (e.g., a higher interest rate) for putting everything into one CD so this example is still valid.
Thanks for the reply, and what you say makes good sense. Unfortunately I think I led us too deeply into the weeds and in the wrong direction and we've missed the point of the original question so I'll restate it a bit differently.
The Net Assets portion of the Balance Sheet tells you how much is in each fund (Music, Youth, Maintenance) but not how the money is split across various asset accounts.
The original question centered on best practices for Asset Accounts and the best approach to track Fund Balances
For example we might have:
A bank checking account (1110) which holds money from several different restricted funds - Music, Youth, and Building Maintenance.
A CD (1200) which also holds other money from those same funds, held for longer term use.
The Board asks "how much cash is available in 1110 for a Building Maintenance effort without breaking the CD"
How would you answer the question quickly using PC+ reporting?
One solution is to have separate CDs for each restricted fund, but there might be other reasons (e.g., a higher interest rate) for putting everything into one CD so this example is still valid.
Eric
What I suggested is the best use for liquid funds .... the Temp Restricted Equity accounts will show what is in each area. However, when you talk CDs, you're talking non-liquid assets. CDs are usually setup for a fixed time. You can't access them without incurring a penalty. These should be kept under a separate Equity account for tracking. If you do have to 'break' them, the funds would then be 'transferred' from the non-liquid restricted equity account, to the temp restricted, LIQUID, equity account in the main checking. The system would then track it under that Temp Restricted 3000 level account, which you would then release to spend.