Fund Balance Beginning of Year Adjustment

[NeilZ]

For the past few years, our operating fund has been carrying a negative balance from one year to the next. This is a legacy left over from past years, as we make up a current year deficit by accessing our endowments. I realize that is not a good idea, but I have no say in that.

What I do have a say in is adjusting this negative balance so that we can begin 2016 with a zero fund balance. So, what's the best way to do that, and what type of transaction is needed?

Thanks!!

[NeilZ]

Any advice ?? Matt?? Jeff??

[Zorak]

Sorry, Neil! Jeff is out of the office and may have missed this.

A balance adjustment transaction would be easy, but I'm guessing you're wanting something more complex, which is why you are calling out for the accounting experts. Hopefully, one of those comes around

[NeilZ]

Sorry, Neil! Jeff is out of the office and may have missed this.

A balance adjustment transaction would be easy, but I'm guessing you're wanting something more complex, which is why you are calling out for the accounting experts. Hopefully, one of those comes around

Perhaps. The balance adjustment is very easy, however, messing with the equity accounts is not something I do lightly, so having advice from someone with more accounting background would be welcome, which I why I'm shouting out for Jeff or Matt.

.. BTW ... I hope everyone at the Powerchurch offices had a great Christmas, and a very Happy New Year !!

[NeilZ]

I'm going to bump this in hopes that Jeff is back in the office

[Jeff]

Sorry Neil, like Zorak mentioned I have been out and have been getting caught up.

As far as adjusting the negative balance, the question is Operating Fund really negative? Has it spent more money than it has, or owes more money than it has assets to cover? If so then its fund balance will be negative. The fund balance is a mathematical equation. Assets - Liabilities = Fund Balance. To change the fund balance you will also have to change either the operating fund assets or its liabilities.

[NeilZ]

Sorry Neil, like Zorak mentioned I have been out and have been getting caught up.

As far as adjusting the negative balance, the question is Operating Fund really negative? Has it spent more money than it has, or owes more money than it has assets to cover? If so then its fund balance will be negative. The fund balance is a mathematical equation. Assets - Liabilities = Fund Balance. To change the fund balance you will also have to change either the operating fund assets or its liabilities.

Basically, yes the Operating Fund is negative. It started the year with a -14K balance, and we just added to it over the year. We basically want to wipe that negative balance from the beginning of the year, then we're going to makeup the end of 2015 negative by a transfer from our reserves.

However, this Negative balance has been built up over 2 or 3 years prior to Jan 2015, and nothing was done to fix it. There's really no liabilities to speak of in that fund, other than the standard taxes, medical, and so on. So I guess I'll be adjusting the assets.

That said, I really do not like touching assets without a good idea of what to debit or credit, or both.

Thanks,

[Jeff]

A couple of things to check.

Is the fund in balance? Run a trial balance report and look at the operating fund. At the end of the operating fund, is there a number or is it all zeros? If it is all zeros then the fund is in balance.

[NeilZ]

A couple of things to check.

Is the fund in balance? Run a trial balance report and look at the operating fund. At the end of the operating fund, is there a number or is it all zeros? If it is all zeros then the fund is in balance.

OK, here's what it shows as of Dec 2015
Grand Totals (DB - CR) Beg Bal: 9545.91 Period Actual: -397.86 Current Balance 9148.05

When run Jan - Dec :
Beg Bal: 10577.31 Period Actual: -1429.26 Current Balance 9148.05


When I run an Accounting Fund Balances report, for Jan - Dec 2015 I see:
Beginning Bal: -14475.42 Income: 100414.41 Exp: 136171.33 Ending: -50232.36

That Beginning Balance is what has been carrying over. We'd like to wipe that, and we're going to move funds from reserve to cover the year's shortfall.

[Jeff]

OK It sounds like your funds are out of balance. Assets - Liabilities != fund balance in each fund.

This can happen a couple of different ways. One is if you credit one fund and the debit is to another fund. Before version 9, you had to set manually set the fund balance during the setup. It was common for people to not set the fund balance correctly.

In this case you will need to do an out of balance entry (OOB) in each fund to correct the fund balance and bring the fund back into balance.

[NeilZ]

OK It sounds like your funds are out of balance. Assets - Liabilities != fund balance in each fund.

This can happen a couple of different ways. One is if you credit one fund and the debit is to another fund. Before version 9, you had to set manually set the fund balance during the setup. It was common for people to not set the fund balance correctly.

In this case you will need to do an out of balance entry (OOB) in each fund to correct the fund balance and bring the fund back into balance.

OK ... will that take care of that 14K beginning for the year ?? And forgive me for wanting to be precise, I've reached the end of what little accounting knowledge I can remember from HS, which account am I going to adjust, equity ??

[Jeff]

Neil, Can you send me the trial balance report for the whole 2015 year. I would like to take a look at it to double check things before making more specific recommendations.

[NeilZ]

Neil, Can you send me the trial balance report for the whole 2015 year. I would like to take a look at it to double check things before making more specific recommendations.

OK .. its on the way, thanks !!