Statement of Activities Issue

[JLamale]

Hello,

I took over the Treasurer's position at my Church this year (2018) and I'm new to Power Church. I can tell you that the initial set up of the books was completely wrong. I have since started over. I think everything is working really well except for the following situation.

We have restricted cash donations like most Churches. We have an invoice to be paid in part from a restricted designation. I credited the checking account and the appropriate expense accounts. I then hit the "Release Restricted Funds" button and picked the appropriate restriction. After printing the check and posting to both the AP module and FA module, I ran the Statement of Activities report. It looks like the money was correctly released in the Income portion of the statement. That is to say that there is the appropriate deduction from Temporarily Restricted Assets to Unrestricted assets. I see $500 from Temporarily Restricted moved into the unrestricted column. The problem comes with the expenses. The expense account has the $500 deducted from the restricted column not the unrestricted column. This makes the balance of my restricted funds $500 less than it should be while the $500 transferred to unrestricted is not used. It is my understanding that the restricted funds are released to unrestricted and then the expenses are taken from that. Also, there is a column for permanently restricted assets. It is my understanding that under new FASB guidelines issued in 2016 there should only be two columns. One for Unrestricted and the other would simply be restricted. I also realize that I do not have the latest version of PowerChurch.

If anyone could advise me on this it would be greatly appreciated.

I am using PowerChurch 11.55 if this helps

Thanks,
Josh

[NeilZ]

Hello,

I took over the Treasurer's position at my Church this year (2018) and I'm new to Power Church. I can tell you that the initial set up of the books was completely wrong. I have since started over. I think everything is working really well except for the following situation.

We have restricted cash donations like most Churches. We have an invoice to be paid in part from a restricted designation. I credited the checking account and the appropriate expense accounts. I then hit the "Release Restricted Funds" button and picked the appropriate restriction. After printing the check and posting to both the AP module and FA module, I ran the Statement of Activities report. It looks like the money was correctly released in the Income portion of the statement. That is to say that there is the appropriate deduction from Temporarily Restricted Assets to Unrestricted assets. I see $500 from Temporarily Restricted moved into the unrestricted column. The problem comes with the expenses. The expense account has the $500 deducted from the restricted column not the unrestricted column. This makes the balance of my restricted funds $500 less than it should be while the $500 transferred to unrestricted is not used. It is my understanding that the restricted funds are released to unrestricted and then the expenses are taken from that. Also, there is a column for permanently restricted assets. It is my understanding that under new FASB guidelines issued in 2016 there should only be two columns. One for Unrestricted and the other would simply be restricted. I also realize that I do not have the latest version of PowerChurch.

If anyone could advise me on this it would be greatly appreciated.

I am using PowerChurch 11.55 if this helps

Thanks,
Josh

Josh ..

Apparently, the expense account was setup to close to the Restricted Funds Balance account. This is usually done if the expense is only to be used with the restricted fund. However, many expenses can cover purchases using funds from anywhere which is why you would not close to the restricted fund balance.

How to fix this:

1. Do a Powerchurch backup of the accounting files so you can back out if necessary.
2. VOID the check from AR, post it in AR, then post in Funds Accounting to bring the system back to before that posting.
3. Change the expense account to point to the unrestricted net assets fund balance account usually 01-3110-000.
4. Reenter the original transaction in AP using Manual Check and the original check number, and release the funds as you did before. This will properly move the funds to unrestricted, and properly adjust the unrestricted net assets.

As far as FASB ... here's something that may alleviate some questions about FASB & GAAP for churches:

https://www.churchcpa.net/to-gaap-or-not-to-gaap/

[JLamale]

Thanks for the help! Everything looks good.

Thanks for the article as well.

Josh