proper use of transfer accounts and restricted funds

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neac
Posts: 66
Joined: Mon Jan 28, 2019 8:26 am

proper use of transfer accounts and restricted funds

Post by neac »

I have finally figured out how to use transfer accounts to move money from unrestricted to restricted, and vice versa.

We only have one bank account, and have Fund 01-unrestricted and Fund 02-restricted.
Is it the case that every single transaction involving restricted funds must look like this? Let's say for example we're spending money from the building fund.
In most of the examples I've seen, two separate transactions are created, one to move the funds from unrestricted to restricted, then one to "spend" the money in the restricted fund on the expense.

Unrestricted Cash account 01-1110 CR $1000
Transfer to Fund 02 01-9010 DB $1000
Transfer from Fund 01 02-9510 CR $1000
Restricted Cash account 02-1110 DB $1000

Restricted Cash account 02-1110 CR $1000
Building expense 02-6200 DB $1000

Could we combine the two transactions into one?

NeilZ
Posts: 9491
Joined: Wed Oct 08, 2003 12:20 am
Location: Monett MO
Contact:

Re: proper use of transfer accounts and restricted funds

Post by NeilZ »

neac wrote:
Tue Apr 27, 2021 10:45 pm
I have finally figured out how to use transfer accounts to move money from unrestricted to restricted, and vice versa.

We only have one bank account, and have Fund 01-unrestricted and Fund 02-restricted.
Is it the case that every single transaction involving restricted funds must look like this? Let's say for example we're spending money from the building fund.
In most of the examples I've seen, two separate transactions are created, one to move the funds from unrestricted to restricted, then one to "spend" the money in the restricted fund on the expense.

Unrestricted Cash account 01-1110 CR $1000
Transfer to Fund 02 01-9010 DB $1000
Transfer from Fund 01 02-9510 CR $1000
Restricted Cash account 02-1110 DB $1000

Restricted Cash account 02-1110 CR $1000
Building expense 02-6200 DB $1000

Could we combine the two transactions into one?
OK .. one checking account. Are you actually using TEMP RESTRICTED accounts in fund 02, or are you just using the fund to separate funds for building?

If the Fund 02 is only for building, there's really no need to use TEMP RESTRICTED accounts, as all the funds are segregated from Fund 01. Therefore, what you have listed for the transfer is fine.

The second set of transactions is basically an Accounts Payable transaction as you're spending funds in fund 02 for some building expense.

So, knowing if you actually have created Donor Restricted accounts in Fund 02 will allow a better reply.
Neil Zampella

Using PC+ since 1999.

neac
Posts: 66
Joined: Mon Jan 28, 2019 8:26 am

Re: proper use of transfer accounts and restricted funds

Post by neac »

If by using temp restricted accounts, you mean we use release accounts, then no. Fund 02 has pretty much been used to keep designated funds separate from operating funds.
Fund 02 includes all of our designated funds, including building, missions, short term missions, etc.

NeilZ
Posts: 9491
Joined: Wed Oct 08, 2003 12:20 am
Location: Monett MO
Contact:

Re: proper use of transfer accounts and restricted funds

Post by NeilZ »

neac wrote:
Thu Apr 29, 2021 10:01 pm
If by using temp restricted accounts, you mean we use release accounts, then no. Fund 02 has pretty much been used to keep designated funds separate from operating funds.
Fund 02 includes all of our designated funds, including building, missions, short term missions, etc.
Then the transfer transactions need to be done to reflect the actual move of the funds. The expense should normally be entered via the Accounts Payable since you're writing a check to pay for the expense.
Neil Zampella

Using PC+ since 1999.

neac
Posts: 66
Joined: Mon Jan 28, 2019 8:26 am

Re: proper use of transfer accounts and restricted funds

Post by neac »

Come to think of it, the fact that Fund 02 exists has actually caused a lot of problems in the past because transfer accounts weren't used/setup, and transactions weren't input properly. Would it be a good idea if I were to move everything into fund 01? Would I be forced to use donor restrictions and release accounts in that case?

NeilZ
Posts: 9491
Joined: Wed Oct 08, 2003 12:20 am
Location: Monett MO
Contact:

Re: proper use of transfer accounts and restricted funds

Post by NeilZ »

neac wrote:
Thu Apr 29, 2021 10:53 pm
Come to think of it, the fact that Fund 02 exists has actually caused a lot of problems in the past because transfer accounts weren't used/setup, and transactions weren't input properly. Would it be a good idea if I were to move everything into fund 01? Would I be forced to use donor restrictions and release accounts in that case?
Yes, if you moved everything to the 01 Fund, you would need to create and use Donor Restricted Accounts, and then release funds when paying for an expense covered under the restriction.

If I remember right, you take a certain amount from Contributions then move it to the restriction. You would have to do that here. However, since you only have one checking account, there is another way to do this with the setup you have now. This does assume that all funds sent to Fund 02 are used for the restricted reasons without any sort of additional separation, IE: 50% to show as mission only, 50% to building only, etc.

If all the funds in Fund 02 are only used for your restrictions (building, mission, etc), and 10% of your normal tithes and offerings collected an entered in Contributions goes to this fund. You can setup in Contributions a special contribution fund that points to Fund 02's checking account (02-1110-000) and income account (02-4110-000), and then set it up to automatically move 10% of normal Tithes and Offerings to this special contribution fund for Fund 02. In addition, you can also have any Contribution Funds for Building, or Mission point here also.

Your normal deposit slip for the bank will remain the same since it all goes to the one account, as will your Contribution statements to your contributors. What will change is that when you post to Fund Accounting, the system will properly update the Fund 02's checking account and income account. On the Fund 02 I&E report, the Income will be reflected along with any expenses.

Then when you go to do the monthly checking account reconciliation, you'll not see anything different as it all comes out of the same 1110-000 account at the bank.

Does this help? Did I complicate things?
Neil Zampella

Using PC+ since 1999.

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