Budgetary Accounting W/ Restricted Funds

[SBCTrustee]

Hello Everyone,
I am an accountant so I should already know the answer to my three questions, but I don't. We have been using PC+ V9 since Aug 04.

My church uses three accounting funds, General, Building, & Rental Property funds. We prepare & vote on an annual budget for each accounting fund. THE BUDGET SYSTEM IS VERY IMPORTANT TO US. We have two restricted contribution funds called Scholarsip Fund & a Memorial Fund in the General Fund & a restricted contribution fund called "Together We Build" in the Building Fund".

QUESTION # 1

Often one group say the Sr. Choir will raise funds & will want to use them to fund something for say the youth department's trip. (This would be some kind of transaction with in the General Fund).
I am not sure what thisthe proper accounting transaction, if any, should be made. How should this properly reflected on the Income & expense report in terms of the budget?

QUESTION # 2

What would be the accounting transaction if the Sr. Choir (general fund) wanted to donate to the Scholarship fund (general fund)?

QUESTION # 3

What would be the accounting transaction if the Sr. Choir(general fund) wanted to donate to the "Together we build" (General Fund)?

Any input / insight would surely be appreciated!!!

Tom

[SBCTrustee]

Hello,

My question #3 was not stated properly. It should read:

What should be the accounting transaction if the Sr. Choir (generald fund) wanted to donate to the "Together we Build "restricted fund in the Building Fund.

Tom

[Randy B]

Good questions. There is probably a reason why a group is contributing and not individuals of the group but with that said, why not create an envelope number for the choir and enter it in as a contribution for that envelope?

[Jeff]

I might be going off on a tangent so let me restate your question to make sure I understand what you want to do before I post an answer.

There is realy two issues here. First a sub-group in the church that controls how a specific funds they raised are spent. (ie the senior choir, I have also seen this with the women's or men's group too)

The second issue is tracking for budget purposes the amounts spent where people are contributing money that shouldn't count toward their budgeted total. (ie the youth trip that cost $2,000 where they raised 1,200 and only 800 is supposed to come from the youth budget.)

Am I understanding what you are looking for?

[SBCTrustee]

Hello Everyone,

Both Randy & Jeff seem to understand certain elements of my problems, but not enough.

Typically, various groups in the church like the Sr. Choir in my example will have a program (fund rasier like a concert). Each member of the group & the congreation makes out an envelope with the membership number on it. We trustees give them credit for their contribution as a donation to the church. The interesting thing about this is that some groups like the Sr. Choir might want to donate part of the funds that they raise towards other functions of the church like the Youth Department or the Mission. My three questions has to do with the three major concerns that I have about how to handle this without resorting to some kind of Chinese Accounting.

At the end of the day I must grapple with the reporting in terms of their budgets. I am called to task to explain budget variences.

After all I must deal with:

• 1 Unrestricted general fund account (Sr. Choir Expense) to general fund unrestricted account (Youth Department Income) & the budgets envolved in them.
  
  2. Unrestricted general fund account ( Sr. Choir Expense) to say restricted general fund income ( Scholarship Income).
  
  3. Unrestricted general fund (Expense ( Sr. Choir expense) to Building Fund restricted income ("Together We Build Program).
  
  • Really, the more I write about this the more certain that I am that there must be a way to simplify this problem. I may be too close to it to see the solution!!!
    
    Tom

[Jeff]

Lets try to deal with one at a time. They will be similar and maybe we can use concepts from one to answer the other. From how I undertand it the senior choir raised the money and controls how the money can be spent, so you are handling it as a donor restriction. This sounds reasonable because the money can not be readily used to cover day to day bills.

Lets say the Senior Choir raises 1,200 from its fundraiser, income is credited and the bank is debited. The income account closes to their restricted equity so the balance is reflected in the Senior Choir restricted equity account. With me so far? The account balances would be:

Bank 1,200
Senior Choir Restricted Equity 1,200
Senior Choir Income 1,200

They decide to 'give' 300 to the youth for a trip. The youth trip total is 900 and the other 600 is being covered from their budget.

For the youth you need 2 expense accounts. One for budgeted amounts and the other for non-budgeted amounts. Your chart might look something like this:

5600 Group Youth Department
5610 Detail Youth Budgeted
5620 Detail Youth Non-Budgeted

When you write the check your transactions would look like this:
Bank CR 900
Youth Budgeted Expense DB 600
Youth Non-Budgeted Expense DB 300
Sr. Choir Release from restrictions DB 300
Release from Restrictions CR 300

The release part reduces the Sr Choir equity account by 300.

Your account balances should now look like this:

Sr Choir Restricted Equity 900
Sr Choir Income 1,200
Sr Choir Release -300
Release from Restrictions 300

Youth Budgeted Expense 600
Youth Non-budgeted expense 300

To get a comparison to budget you can add the budget & non-budget subtotals so you can see for each group how you are doing compared to the budget for that group. This scenario is exactly why we added those subtotals to the income & expense report in version 9.

Is this in the right direction of what you are looking for? Randy, if you have any better ideas, please jump in.

[jeffkoke]

QUESTION # 1
Often one group say the Sr. Choir will raise funds & will want to use them to fund something for say the youth department's trip. (This would be some kind of transaction with in the General Fund).
I am not sure what this the proper accounting transaction, if any, should be made. How should this properly reflected on the Income & expense report in terms of the budget?

QUESTION # 2
What would be the accounting transaction if the Sr. Choir (general fund) wanted to donate to the Scholarship fund (general fund)?

QUESTION # 3
What would be the accounting transaction if the Sr. Choir(general fund) wanted to donate to the "Together we build" (General Fund)?

Any input / insight would surely be appreciated!!!

Tom

Tom,

I'm going to try and take the simple approach and explain what we do in a similar situation. I've had one year of college accounting, so please take that into account.

Example - The church budgets $X per month to support a ministry (i.e. world missions or youth). In this example, we write a check back to the church once per month and take it in as a contribution (just like from a person). The check is drawn from the general operating fund and specifies the appropriate expense fund in the chart of accounts.

I think you could use the above example in answer to questions two and three.

Do you have contribution funds established for each of these ministries? If so, you can let the individual givers designate how much of each contribution goes to what fund/ministry.

What we have done is set up contributional and non-contributional funds for many of the ministries. So, if a choir member pays for a dinner s/he does receive credit for a non-contributional donation, but the donation is allocated properly (as far as income to that ministry goes).

Hope my rambling makes some sense.

Jeff