Pass thru accounts

[deb]

Should guest speakers, evangelists, and visiting ministries be set up with pass thru accounts? You are taking up a special offering for them, so therefore, the money is going straight to them. And are pass thru accounts a liability and therefore they don't show up as income on the reports? I'm a little confused about this.
Thanks in advance,
Deb

[HWessling]

Yes, the pass thru account is a liability; therefore, you are correct it does not show up on your income statement. We just had a revival and I used the pass through account for the designated offering for the evangelist, music leader and musicians. For our guest speakers we have a budgeted amount so that is expensed from that budgeted account. We usually do not take up an offering for them. I use the pass through for any special offerings that are straight into our church and straight out.

You are welcome!
Heather

[Randy B]

As an accountant, I would show the money coming in for special speakers as a revenue and the money going out as an expense. You could set up accounts for special speakers. That way you maintain flexibility if in the future the chuch would like to contribute something to the speaker and add it to any contributions you collect.

[HWessling]

I actually showed the special offering as designated offering and then I dr the income account and cr the pass thru creating the liability. When we cut a check I dr the pass thru account and cr cash.

[SBCTrustee]

Hello Everyone,

I don't wish to pass judgement on others, but I just don't like the pass-thru feature of PC+ v.9. (Yes, we do have it set up in our accounts. We just don't use them). Let me be clear, It is not that this feature does not work or something. My issue is an accounting one.

One of the things that I insist upon is that my church deposits all funds intact into the bank & to dispense all funds by check, if possible. (We do have a petty cash of $350, which almost never gets used except to make change for members & guests).

It seems to me that the pass thru feature would by-pass the balance sheet & the income statements, thus not provide full disclosure as to what funds were raised or expended.

For example, when we have a "Revival", most of the funds goes to the Evangelist. ( He is issued a 1099). We will issue him a check. If we raised $1000 & gave hime $900, would not my financial statements look terrible in terms of full disclosure if we used the pass thru feature?

There seams to be so much room for error.

Tom

[HWessling]

I understand what you are saying about the pass thru account (I had reservations myself at first). Our church deposits all money first. After it is recorded in the contribution side, I make a journal entry taking it out of the designated offering and putting it into the pass thru. I make sure on the line description to list what it is for so that I can keep track easier. When I cut the check I also describe on the line desription what it was for. If you go into account activity then you can follow and see it going in and out of the pass thru and that can be printed if need be. Our church also issues a 1099 for our Revival evangelist. I have only used this account though when all the money collected will be sent back out. So far for us it is working. We have not had a business meeting since I have taken over so who knows. I may have to change the way I have done several things...as we have implemented alot of changes since I have taken over.

[SBCTrustee]

Hello,

I like the way that you handle pass thru internally, but I still have concerns. It is true that your method of handling pass thru gives you a good audit trail but what about the membership or boards. What kind of disclosure do they receive on reports that you provide? Do you include footnotes?

Although you document what you do very, very well, if I understand pass thru accounts correctly, your income statements & balance sheets will not show what happened say if the Evanglist, for example, receives the same amount as what was rasied.

We take up an offerring when we have a guest preacher. We give him the total amount raised for guest preachers. If he is a pastor & we will augment that amount if it is not above a set threshold that the board has set.

I don't think that my membership would be as informed as they should be, if I switched to your method. As good as your method is, I am not real comfortable with it.
Thanks for sharing.

We want to make sure that readers of our financial statements have full disclosure.
Tom

[HWessling]

Our church has bi-monthly business meetings and our next one is in April. Therefore, I haven't presented anything to the church yet. I am going to have available for them the BS, IS, budget report, check register and Selected Transactions Report. The Selected Transactions Report will allow me to disclose the notes that I have recorded and I can have it only show the activity for the pass through account. Our previous Treasurer condensed information onto a spreadsheet and passed those out at the meetings. I will probably use some kind of summary spreadsheet and then they can refer to the actual statements. I would like for our members to get used to the actual statements because it will be very informative and should be pretty self explanatory. Our individual designated funds were never reflected on the balance sheet (they were presented only on the spreadsheet). I am hoping once the members get more familiar with the actual statements then they will see the amounts of each fund there in black and white.

Again, I understand where you are coming from with the disclosure. Also, I thank you for your comments. I may have to make alot of changes just depending on how receptive our members are to these new financial statements and the format of things. It will be interesting at my first business meeting.

[SBCTrustee]

Hello Again,

This is probably my last "debs" on pass thru accounts, but let my say the following in love. (You have actually help me quite a bit regarding pass thru accounts).

I am a retired state auditor. In that capacity, I audited the records of numerious businesses that did business with the state. It was my job to find suspious accounting data that would result in the state being over charged in terms of cost for work done by outside vendors.

One thing that I learned was that if a transaction did not infulence either the balance sheet or the income statement than it probably should not have been done.

Many of these vendors tended to call these accounts something like "Exchange accounts". These were very simlar tho PC+ pass thru accounts. This is why I don't like pass thru accounts.

Also in making presentation to lay people, you will ultimately find out that keeping everthing simple works best. Too many reports & schedules can make them to feel inept & cause them to resist your presentation. I learned that the hard way!!

Churh people are very intellengent people, but their needs are very basic. Most church people just want to know how much we raise, how much do we have in the bank, & how much did we spend.

That must stay in your mind, always.

Tom

[Matt]

I agree with Tom. I think there should be full disclosure of income and expense on the financial reports. When posting to the pass through accounts, you bypass posting both revenue and expense. As a result, the cash inflows and outflows represented by these transactions do not show up on the Income and Expense Statement at all.

I agree--the congregation and board want to see what came in, and what went out. So I do not use the pass through accounts for my church. Rather, I set up income and expense subaccounts for these types of designations so that they will show up on the Income and Expense Statement. I can then run the subaccount report and quickly see what has come in, what has been paid out, and what remains to be paid (or was overpaid, for that matter)

[NeilZ]

I seem to remember when these were originally discussed during the beta of Version 9. Some churches did not want to see pass-thru income in the expense reports. They just wanted to be able to account for them in contributions, then have the treasurer issue a check based on what was credited to the pass-thru account for that collection.

A compromise would be to add an option to include these pass-thru accounts in a report, and flag them as monies that were given to a particular charity or mission, and that they do not come out of normal church income.

[SBCTrustee]

Hello Everyone,

I know that I said that I was done with this subject, but I can not resit offerring a comment to Neil's remarks.

I kind of like Neil's idea. I would invision that the pass thru would show on the income statement something like the transfer accounts are positioned, so that one could see that these funds were not part of normal operations. If this feature could be turned on & off by the user would really be great.

I would then gladly use pass thru accounts.

Tom

[deb]

I appreciate everyone's comments. I set up the pass thru accounts and it scared me when I ran an Inc/exp report and the money wasn't there. But you can run the selected transactions or the account activity and it shows what came in as contributions and what went out with the check. So, like HWessling stated, I'll just include that statement with my reports unless PC comes up with a way for it to show up separately on the regular reports as discussed.
At the seminar I went to, we were told that pass thru accounts were for monies that were just passing through our church to someone else. It isn't really ours to begin with, so I like the idea of and "in and out", and don't think it should affect our actual income/expense.
Thanks again,
Debbie

[Kristi]

I only pass thru accounts only for activites like trips, conferences that groups are going to attend and I have to write a check to the organization. *Plus, I only do the pass thrus for these activities if we are collecting money this year and the event is not held until next year. This keeps my totals on the books without them rolling into a Fund, like happened to me in the past when I created sub-accounts in our Trip Fund...then I had to keep track the next year with written notes.


Trips that are held this year go through the sub-accounts in the Trip Fund.