Budget tracking vs financial accounting

by Bob King
(Ocala, FL)

I am new on our church Budget/Finance Committee. The Financial Secretary produces: 1)A monthly Year-to-Date Budget Comparison and a monthly financial report which includes; Profit and Loss by Class, General Funds Monthly Report, Balance Sheet, Designated Balance Sheet, Designated Funds Report, General Fund Ledger.

We do have several Designated Funds, one being "Sound Equipment." We recently purchased some sound equipment. The pastor instructed the financial secretary to pay for the purchase out of the "sound equipment" fund and not show the purchase on the Year-to-Date Budget Comparison because the payment was made from the designated fund and not from general funds.

I contend we have two separate recordings to make: 1) The financial transaction and 2)the budget report. I contend that the budget report makes no distinction as to what fund the payment is made from. And, they both must record the transaction. Please help us. And, will your book and materials speak to this issue?

Have a great day!

Bob

Answer

I think it would depend on several things. If it was a special designated fund, as long as it was definitely recorded in the financial records, I kind of agree with your pastor, in that, it would not necessarily need to be reported in the budget comparison report. Especially if it wasn’t even in the original budget and did not come out of those projected funds.

A budget comparison report is mostly an in-house report. So if the “people in charge” wants it done a certain way...that’s the way I would do it :-)

No, my book did not address this issue…although as many budget questions as I get...it is definitely something needed...ummm...getting an idea for my next book :-)

Hope this helps.


Church Accounting Package

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