Too Many Funds

by Patricia
(Dallas, Texas)

Question regarding fund accounting:


When I first set up the chart of accounts in the software my church uses, Power Church Plus, I created fund numbers for each ministry ie. General Fund 01, Women's Ministry 02, Men's Ministry 03, Youth Ministry 04, Media Ministry 05, Benevolent Fund 06, and Building Fund 07.

The problem is, the only true restricted fund we have right now is the Building Fund/Loan Repayment Campaign. I am thinking as we go into the new year just to create revenue and expense accounts for the various ministries within the General Fund and no longer code any transactions to the fund numbers I set up.

The only two fund numbers I will continue to use are 01 General Fund and 07 Building Fund. Do you foresee any issues with FASB standards with making this accounting change from the fiscal/calendar year of 2009 to 2010? If we ever have a restricted purpose in either of the other funds, then I will use that fund number in my journal entries, contribution entries, and writing of checks.

Thanks for your guidance and input here.



Answer

I believe it will be fine to set your fund accounting up as you have proposed.

The rule of thumb to remember in setting up funds is a fund is “an accounting entity that needs to be kept separate, having its own source(s) of income and its own expenses.”

So if those fund accounts you set up in the beginning do not have their own income coming in and expenses going out; then I would make them inactive.

Hope this helps.



Church Accounting Package


www.freechurchaccounting.com


Comments for Too Many Funds

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Jan 26, 2016
Question Re: Too Many Funds
by: Anonymous

Although I have 25+ years of experience as a auditor / Controller / CFO, I am a newbie to fund accounting.

Ok, I have been asked to help with our church's books and noticed that it appears they have set up their various restricted funds as liabilities on the General Fund's Balance Sheet.

There must be about 20 restricted funds with fairly small amounts coming in and out throughout the year.

So, is this ok just to keep things simple? I assume they debit some sort of Restricted Cash account when the monies come in and credit the "restricted" liability accounts. They would then debit the restricted liability account and credit restricted cash when money is paid out. I think this is what they do.

Anyway, it doesn't seem right but maybe it works for them.

Any comments?

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