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!


Vickey's Reply

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 :-)

Comments for Budget tracking vs financial accounting

Click here to add your own comments

Budget Comparison Report
by: Vickey

Ummm...maybe :-)

Okay....with your additional facts...you've convinced me.

If the sound equipment (fund) is an item in the budget projections, any expenses/income should be included in the budget comparison report.

Additional Facts
by: Bob

Would these additional facts change your answer?
1) The Designated fund was set up in 2007 to install a new sound system. There is balance in the fund after the initial system was installed.
2) In December 2009, under a different pastor, it was decided to add to the existing sound system and a certain amount of money was approved in the 2010 budget to do the additional work, knowing that the additional work would cost more than the balance in the fund but no one knew how much more at the time the budget was prepared. Again, I contend that the budget comparison report and the financial report are two separate and stand-alone reports - both recording ALL of the income and expenses of a defined time period. The budget report starts at zero, but the financial report starts with balances.

Click here to add your own comments

Join in and write your own page! It's easy to do. How? Simply click here to return to Budgets.