Should funding a repair fund be included as a line item in the budget?

by Mary Bartlein
(Sarasota, FL)

Should funding a Major Repair Fund be included as an expense line item in the budget? In other words, we have a separate savings account for major building repairs that we fund monthly by transferring money from the regular operating checking account to the fund. If we have a major repair (new A/C unit, new roof, etc) we pay for it out of the fund, which is an MMI.

We have an ongoing debate whether or not the monthly funding should be a line item on the budget P&L. All we're doing is "sweeping" money into the fund for future use. If we do have a major repair it should be considered a Capital Improvement. So, it seems that it doesn't make sense to make it an expense line item in the budget.

Thanks for any light you can shed on this.

3Comments

Transfers show on the Balance Sheet, not the Profit and Loss Statement

AAnonymous

Sweeping or transferring money (whether monthly, annually, etc.) from one bank account to another does not constitute an expense and therefore should not be on a Profit and Loss statement.

It will show up on your Balance Sheet as a Current Asset > Checking/Savings). It simply a relocation of cash assets and it’s not uncommon for organizations to have multiple bank, checking or savings accounts.

The expense happens when the money is spent, i.e. on a major repair (expensed), or as a Fixed Asset subject to a depreciation expense. It certainly is prudent to set aside a monthly amount to save money in order to deal with these type of expenses or purchases when they need to happen.

Yes, Budget for Funds

JJImw

This worked well in our church. If accumulating funds for the new lawnmower or HVAC repair is not done, then each one results in a crisis appeal to the congregation. If it's not budgeted, the only hope you have is sweeping any surplus into a fund at the end of the year. Assuming there is a surplus. And assuming your Council doesn't decide to buy new computers or redecorate the office with the surplus instead of saving it.

Budget change?

LLewis in NC

My comment on this is: If it isn't broken; don't fix it!
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