Other accouting - mis-deposited budget funds and future camp deposits

I've spent a couple of hours reading but couldn't come up with good answers to 2 questions I have about the Other accounts.

1) We have a multi ward Cub program and as the agent ward, we pay for expenses for the program from our Primary Budget (often made to payees in other wards) and request budget checks from other wards to share the costs . During our audit, we found that these checks were mistakenly deposited into the Other account. I'm directing the ward financial clerk to write a check from the Other account into our Budget account for the sum of these dollar amounts, reconciling the past error. Is that the right thing to do?

2) How do I handle AMFA events that have annual deposits required? In my example, the BSA Scout Camp requires a deposit this year for next year's camp. Well, if the camp fee is planned on being funded by AMFA funds entirely, then that means that 2012 payment for the 2013 camp is paid from funds not yet collected from families sending boys to camp in 2013. This equates to a deficit, year over year - a frowned upon practice for Other accounts. So what is the best method? A) Pay for the Next Year Deposit with Budget and then refund the Budget the following year when the family payments are collected? B) Use budget to pay the deposit and decrement the collected funds from the families by the shared burden. (But that means the families don't know how much their cost is until the total number of boys going is known). Anyway it gets pretty complicated any way you look at it.

Looking forward to your recommendations.

martyriker wrote:During our audit, we found that these checks were mistakenly deposited into the Other account. I'm directing the ward financial clerk to write a check from the Other account into our Budget account for the sum of these dollar amounts, reconciling the past error. Is that the right thing to do?

How old is this error? If it's this year, I'd suggest looking into re-categorizing the deposit. (I'm sure the financial experts will confirm or point out what's wrong that that advice.)

martyriker wrote:In my example, the BSA Scout Camp requires a deposit this year for next year's camp. Well, if the camp fee is planned on being funded by AMFA funds entirely, then that means that 2012 payment for the 2013 camp is paid from funds not yet collected from families sending boys to camp in 2013. This equates to a deficit, year over year - a frowned upon practice for Other accounts. So what is the best method?

How big a deposit? Any chance that can be funded from the budget?

RussellHltn wrote:How old is this error? If it's this year, I'd suggest looking into re-categorizing the deposit. (I'm sure the financial experts will confirm or point out what's wrong that that advice.)

I'm not sure I qualify as a financial expert, but I've gone into closed batches and it's very easy to change a category to correct a donation. This would be the same process (and, if I'm not mistaken, MLS will automatically prevent you from doing it if the deposit is too old to change it this way). Barring that, the people at the telephone help line can probably fix this on in a jiffy, as long as you give them all the information about the original deposit. But try to do it yourself first.

RussellHltn wrote:

martyriker wrote:During our audit, we found that these checks were mistakenly deposited into the Other account. I'm directing the ward financial clerk to write a check from the Other account into our Budget account for the sum of these dollar amounts, reconciling the past error. Is that the right thing to do?

How old is this error? If it's this year, I'd suggest looking into re-categorizing the deposit. (I'm sure the financial experts will confirm or point out what's wrong that that advice.)

Changing the category is the cleanest way to fix the issue (after all, it makes each original transaction look the way it should have looked from the beginning). But if there are many transactions involved, it can be tedious. There's nothing wrong with the approach of writing a check from Other and depositing in Budget. Either way, if the problem transactions extend into previous years, you'll end up with a skewed budget picture for this year, but that's okay -- you were skewed the other direction in previous years.

martyriker wrote:In my example, the BSA Scout Camp requires a deposit this year for next year's camp. Well, if the camp fee is planned on being funded by AMFA funds entirely, then that means that 2012 payment for the 2013 camp is paid from funds not yet collected from families sending boys to camp in 2013. This equates to a deficit, year over year - a frowned upon practice for Other accounts. So what is the best method?

It's definitely okay to use Budget funds to write the check in 2012; that would be my recommendation, given that you indeed don't want a deficit in Other (there's nothing magic about "year over year" -- you don't want a deficit in Other whenever it's possible to avoid it, which is almost always). Then if Other funds are needed (remember that this is only an option if Budget funds are insufficient anyway), they can be collected in 2013 and once they are all collected, a check can be written from Other and deposited into Budget.

martyriker wrote:Anyway it gets pretty complicated any way you look at it.

I don't see how it's all that complicated. We're talking about one extra check written from Other and deposited into Budget. Everything else is exactly the same as if the Other funds came in first.

Another option to consider is to collect the funds before the payment is due, even if that's several months in advance. After all, the ward is making the payment based on the supposed commitment of a particular set of boys to attend the camp. Collecting the payment up front strengthens that commitment.

martyriker wrote: 2) How do I handle AMFA events that have annual deposits required? In my example, the BSA Scout Camp requires a deposit this year for next year's camp. Well, if the camp fee is planned on being funded by AMFA funds entirely, then that means that 2012 payment for the 2013 camp is paid from funds not yet collected from families sending boys to camp in 2013. This equates to a deficit, year over year - a frowned upon practice for Other accounts. So what is the best method? A) Pay for the Next Year Deposit with Budget and then refund the Budget the following year when the family payments are collected? B) Use budget to pay the deposit and decrement the collected funds from the families by the shared burden. (But that means the families don't know how much their cost is until the total number of boys going is known). Anyway it gets pretty complicated any way you look at it.

If the deposit is a fixed amount from year to year one option would be to

1) pay it with budget this year (to get things setup)
2) collect the money from the families as usual next year (include the amount for the deposit in this) and deposit to AMFA
3) pay for the camp from the AMFA account (this should now have enough for the next year's deposit)
4) repeat from 2

JonesRK wrote:If the deposit is a fixed amount from year to year one option would be to

1) pay it with budget this year (to get things setup)
2) collect the money from the families as usual next year (include the amount for the deposit in this) and deposit to AMFA
3) pay for the camp from the AMFA account (this should now have enough for the next year's deposit)
4) repeat from 2

Although that approach certainly has some practical appeal, it may not fit within policy. That would depend on how tightly your stake interprets the requirement that the funds in AMFA are collected for a specific purpose and spent for that specific purpose. If the purpose is "Cub Scout Camp", then funds could be collected from 2012 participants and spent on the deposit for 2013 participants -- it's all just for the same purpose of "Cub Scout Camp."

But to my thinking, the purpose is "2012 Cub Scout Camp" and so funds collected from 2012 participants would need to be spent on the 2012 Cub Scout Camp, so this proposal would not work. Nonetheless, that particular interpretation would be up to each stake's audit committee, probably with direction from the stake president and/or Assistant Area Auditor.

One-time fund raiser might help throw the timing back in sync. You might also re-consider the practice of 'collecting' funds from families. It should not be automatic that families are 'charged' for participating in church-sponsored events. And this may be the right time to suggest a Bishop or Branch President re-evaluate the distribution of funds.

It may actually work out well that the deposit comes out of the Budget funds and families pick up the rest through later AMFA.

aebrown wrote:But to my thinking, the purpose is "2012 Cub Scout Camp" and so funds collected from 2012 participants would need to be spent on the 2012 Cub Scout Camp, so this proposal would not work.

If the families pay for all the costs of the 2012 Cub Scout Camp, then the funds left over in the AMFA account would match what was used to pay for the deposit. Would it be preferable to repay the budget, or use it to pay for the deposit for the 2013 camp?

RussellHltn wrote:If the families pay for all the costs of the 2012 Cub Scout Camp, then the funds left over in the AMFA account would match what was used to pay for the deposit. Would it be preferable to repay the budget, or use it to pay for the deposit for the 2013 camp?

If you take the position (as I do) that AMFA funds that are collected for 2012 Cub Scout Camp must be spent on 2012 Cub Scout Camp, then the answer is obvious -- using such funds to pay the deposit for the 2013 camp is unacceptable. Such funds could be used for repaying budget funds expended previously for that camp. That of course presupposes that the leaders have determined that budget funds were insufficient for this camp, and so AMFA funds had to be used, in which case the earlier payment out of budget funds was only a temporary budget expenditure. According to policy, the camp should be paid out of budget funds if such funds are sufficient, in which case AMFA funds wouldn't even be in the picture.

Of course, some people have a looser interpretation of how collected AMFA funds can be used, which could lead to a different conclusion. But since your question quoted my post, I answered it in that context.

Pay the deposit out of Budget money. Once it has been deterimined that there is insufficent funds to cover the total cost of camp.

Collect the cost from the families then make a catogory adjustment in MLS on the check that was written to cover the deposit.

(note: I said the total cost as it maybe determined that there is sufficent funds to pay for part of the camp out of budget with the rest comming from the families. In which case there would be no need for adjustment.)

martyriker wrote:I've spent a couple of hours reading but couldn't come up with good answers to 2 questions I have about the Other accounts.

1) We have a multi ward Cub program and as the agent ward, we pay for expenses for the program from our Primary Budget (often made to payees in other wards) and request budget checks from other wards to share the costs . During our audit, we found that these checks were mistakenly deposited into the Other account. I'm directing the ward financial clerk to write a check from the Other account into our Budget account for the sum of these dollar amounts, reconciling the past error. Is that the right thing to do?

If it were me acting as agent, I would use an AMFA account. I would have the wards write checks from their budgets, including your own, and deposit them into an AMFA account that you set up for the specific purpose. When expenses come in, you just write them out of that AMFA account. If everything works out correctly, after the event and expenses, you will have a 0 bal in that AMFA account and can deactivate it. If you end up with more funds then were needed, you can run a report and determine which ward or wards paid too much and write checks back to them (for deposit back into their budget). This is what an AMFA account is for. Don't leave excess funds in an AMFA account unless there is a specific plan for expending those funds in a reasonable amount of time.