What are guidelines for using restricted funds?

[lincolnda]

Did versions of PowerChurch prior to verson 9 allow for use of restricted funds? If not, is it an absolute necesity to use them after we convert version 9? In earlier versions, we set up in the income range a subrange with a group heading of "Designated Income", and each different type of designation across our group of funds had it's own account number that fell within that range. Everyone understood that in the reports, whatever money showed up under that heading was not for general expenses of the church. In our expense accounts, we set up another subrange that mirrored the designated income items with a group heading of "Disbursal of dedicated income". Whenever an Income/expense report was printed, it was easy to see if the amount that came in for a specific designation went out for that designation. If a designation was for something that might not all get used within a year, a separate fund was created just for that designation, so the fund balance would carry over to the next fiscal year the amount that was still available for that designation. Since these ranges were under level 2 group headings, and these ranges fell outside of our ranges for operating income and expense, the reports generated separate subtotals for general operating income and expenses, and for designated income and disbursals, but the bottom line still showed the total money that came in and went out through the bank accounts, which is also something you need to show. If using restricted funds is to show that money donated for a certain purpose gets used for that purpose, I'm wondering if we really have to make the switchover if the way it was done before did the same thing? In other words, were we doing something wrong in earlier versions just because setting up for use of restricted funds wasn't available, or is it just another way to do the same thing?

[Matt]

There is no requirement to use the restricted accounting functionality in Version 9. I think this is a decision each church needs to make for themselves. The restricted accounting functionality was set up in version 9 so that the software would be compliant with current Generally Accepted Accounting Principles. However, that does not mean you have to use it.

Sounds like you were fine with how you were accounting for designations before version 9. If this is the way your church wants to see the accounting for designations on your reports I would just continue doing the accounting this way in version 9.

The advantage with the restricted accounting capability is that it is not necessary to set up separate funds for designations that carry forward to a new year in order to retain visibility of the unused restriction. The balance of the designation will be captured in a separate restricted equity account until it is used.