Expense from previous year should be in Other, not Budget

In our stake, one of our units started in the summer of last year.

One expense from July of 2013 for about $900 was incorrectly categorized to "Budget" when it was really supposed to be in an "Other" account. So, when we started 2014, the budget carried forward balance was $900 too low and its separate Other account was overstated by the same amount. The stake auditor did not suspect anything was wrong at the time of the last audit, and the Other account had a balance of positive $400. It should have been negative $500 ($400 less $900) and then the branch would have written a check from budget to Other to cover the deficit of $500.

We were looking at this today, and MLS still allowed us to change the category of the expense from July of 2013 to "Other", so we did. in MLS, it brought the expense into account in 2014 and so we had a negative balance of $500 that we wrote a check out of budget to cover.

The issue is that the carried forward balance of budget did not change when reclassified the expense. I am not sure if it will change, or if maybe an additional $900 of budget will come in the next quarter allocation in July 2014 for Q3? If the expense is now showing up in Other, shouldn't I get my budget funds back?

I didn't want to just keep the misclassification, as I wanted to see all the right expenses in my Other detail. We took steps to get us back to the way it was supposed to be, but got a little worried when we didn't see the budget increase yet.

If any of this is unclear, please let me know. Appreciate your thoughts.

dheilner wrote:In our stake, one of our units started in the summer of last year.

One expense from July of 2013 for about $900 was incorrectly categorized to "Budget" when it was really supposed to be in an "Other" account. So, when we started 2014, the budget carried forward balance was $900 too low and its separate Other account was overstated by the same amount. The stake auditor did not suspect anything was wrong at the time of the last audit, and the Other account had a balance of positive $400. It should have been negative $500 ($400 less $900) and then the branch would have written a check from budget to Other to cover the deficit of $500.

We were looking at this today, and MLS still allowed us to change the category of the expense from July of 2013 to "Other", so we did. in MLS, it brought the expense into account in 2014 and so we had a negative balance of $500 that we wrote a check out of budget to cover.

The issue is that the carried forward balance of budget did not change when reclassified the expense. I am not sure if it will change, or if maybe an additional $900 of budget will come in the next quarter allocation in July 2014 for Q3? If the expense is now showing up in Other, shouldn't I get my budget funds back?

I didn't want to just keep the misclassification, as I wanted to see all the right expenses in my Other detail. We took steps to get us back to the way it was supposed to be, but got a little worried when we didn't see the budget increase yet.

If any of this is unclear, please let me know. Appreciate your thoughts.

The carry forward balance will not change and you won't get this as part of a future allocation. What you will have is a credit in the budget category where it was incorrectly categorized. This will make it look like the amount spent in that category is less than it really was. There isn't really a way to fix that. But you can reduce the budget allocation for that category by a corresponding amount and allocate it to other categories.

Basically, when you make a category correction it doesn't change the original transaction but instead effectively creates a transfer effective the date when you made the correction. So basically you created a transfer from the Other account into the budget category.

To add a little more detail, the expense was incorrectly charged to Budget Activities last year. To see if I understand, would I then see an increase/Income in 2014 in Budget Activities? I was looking at the Budget Report for 2014 after we did the reclassification and it appeared to show the same total amount of budget available to allocate as the total before the correction. I don't think I saw the credit in 2014 for $900. Could it take time to show up? Or maybe I am just not seeing it in the right place. Thank you for your response.

dheilner wrote:To add a little more detail, the expense was incorrectly charged to Budget Activities last year. To see if I understand, would I then see an increase/Income in 2014 in Budget Activities? I was looking at the Budget Report for 2014 after we did the reclassification and it appeared to show the same total amount of budget available to allocate as the total before the correction. I don't think I saw the credit in 2014 for $900. Could it take time to show up? Or maybe I am just not seeing it in the right place. Thank you for your response.

No, you won't see an increase in the amount available to allocate when looking at the Edit Budget screen. You will see a credit (or income) in the Budget Activities category. This will make it look like you have spent less in that category than you really have (at when you look at the budget summary report rather than the detail report).

Appreciate the reply. The unit received its next quarter's budget (July 10) and I eagerly looked in MLS to see if there was an additional credit or income in the Budget Activities. It does not appear that this is the case. I don't see us receiving the budget funds anywhere. Does it take two quarters? Is there something else that needs to be done or another place I need to look for it?

Thank you

dheilner wrote:Appreciate the reply. The unit received its next quarter's budget (July 10) and I eagerly looked in MLS to see if there was an additional credit or income in the Budget Activities. It does not appear that this is the case. I don't see us receiving the budget funds anywhere. Does it take two quarters? Is there something else that needs to be done or another place I need to look for it?

Thank you

There is no delay. If done properly the credit shows up immediately after the recategorization is done. You don't even have to do a send/receive. If you run a detailed budget report for Budget Activities should should see an entry for the credit on the day when the recategorization was done.

dheilner wrote:The unit received its next quarter's budget (July 10) and I eagerly looked in MLS to see if there was an additional credit or income in the Budget Activities. It does not appear that this is the case. I don't see us receiving the budget funds anywhere. Does it take two quarters? Is there something else that needs to be done or another place I need to look for it?

Nothing you have done will have any impact on your quarterly allocation, so don't look for it there, now or in any future quarter. The impact of the changes you made in May was essentially immediate -- you just need to look in the right place.

In May 2014 you recategorized your July 2013 check for $900 from Budget:Activities to Other:AMFA:<subcategory>. The result of that was a transfer dated in May that was a credit to Budget:Activities for $900 and a debit to Other:AMFA for $900. You should be able to look at the details of your May 2014 Unit Financial Statement and see those transactions.

In MLS, you will see that transfer credit when you look at your Budget:Activities category in a Budget Report (either Detail or Summary), as long as you are looking at an appropriate date range that includes May (the default is to run a Year-to-Date report, so it would be included). That credit will not affect your quarterly budget allocation, nor will it affect the budget assigned to Budget:Activities (which you set in View/Edit Budget). It will simply adjust the remaining budget balance by $900.

Suppose you set your Budget:Activities budget to $2000 for the year 2014, and that you have spent $1200 so far. Without the transaction we're discussing, your Budget Report would show that you have $800 of remaining budget to spend in that subcategory. But because of this recategorization, you will have a $900 credit, which means that your remaining Budget:Activities balance should be $1700 ($800 + $900). The $2000 allocated budget is unaffected; it just looks like you've only spent a net $300 in this year, when you've actually spent $1200.