Adjusting Negative Budget Balances

I'm trying to correct an unexpected result of my own doing. I corrected expenses drawn from the wrong categories during the year AFTER the beginning of the new year. Some of these expenses were drawn against budget and should have been from an Other Member Financed Activity and some were drawn against Other that should have been budget. The key to my problem (I believe) is I adjusted these expenses after January 1st. I now have budget categories starting off the new year with negative balances. While this won't impact budget allocation, it does impact budget reporting for the remainder of the year. Are there any tricks to correcting this?

How did you make the corrections/adjustments? Did you make transfers or did you recategorize?

I recategorized the original expenses.

Hmmm, I'm guessing there isn't an easy "this is how you fix it" answer.

For myself, I'd be cautious about giving advice that goes badly.

If I understand the situation right, by recategorizing an expense from a different year, an adjustment was made to someone's budget subcategory that negativity impacts them. IIRC, at the end of the year, all budget funds are swept into a single parent category. While the ward gets to carry over it's budget funds as a whole, all the individual balances in the subcategories are lost - swept to the main account. So this adjustment ended up being applied to an account that had already been zeroed out.

My suggestion is to create a transfer from the main budget account to this sub account to nullify the adjustment for the affected subcategory. The Other account should be just fine because it always carries over balances from year to year, so it's balance is accurate. Since the transfer is within the budget category, the overall budget is unchanged.

russellhltn wrote: IIRC, at the end of the year, all budget funds are swept into a single parent category.

That's kind of right but not quite. At the beginning of the year all budget categories are set to 0. Any budget funds not used in the previous year will be carried over and will be part of the total available funds to be allocated to budget categories. But those funds don't show up in a parent category. Technically I think they are in the Budget Allocations category but that category is special and isn't treated like the others. It's best to think of that category just as the amount available to allocate to other categories.

russellhltn wrote:My suggestion is to create a transfer from the main budget account to this sub account to nullify the adjustment for the affected subcategory.

My suggestion is similar but slightly different since there really isn't a main budget account. I would create a new category (which I've generally called Prior Year Expenses) and then make transfers from this Prior Year category to the negative categories in order to zero them out. After doing this you'll have zero balances in all the categories except Prior Year Expenses which will be negative.

Then when you set the budgets you should allocate just enough to Prior Year Expenses to compensate for the negative balance. The remainder of your total budget allocation can then be allocated to the other categories like normal.

Thanks brethren. I like the 'Prior Year Expenses' idea. I'll give that a shot and see if I can make it work. I really appreciate the ideas/suggestions. Lesson learned... reconcile BEFORE the end of the year!

Can I ask, how are you doing transfers to the Budget Sub-Categories. When I try to do this in MLS, I am unable to select the Budget Sub-Categories, therefore, unable to transfer between budget categories. I currently have huge balances in accounts I tried to close and negatives in the parent main budget category. I would like to get everything evened out so my budget reports looks accurate.

Budget funds are allocated to the unit budget subcategories in the "View/Edit Budget" menu item. The "transfer" is made by inputting the allocation amounts into each of the subcategories. The allocations are not really transfers since each of the unit budget subcategories exist currently only in the local MLS. Church headquarters does not see these locally created subcategories. As such they only see the overall unit budget amount.