Reconciliation - Temporary Items

Two financial clerks ago, a "temporary item" was created in order to reconcile something that happened several months earlier. The dates recorded are more than three years (plus the current year) ago, thus neither MLS nor I now have records. This temporary item is still lingering. No one ever fixed the problem. If I remove the "temporary item" then things do not reconcile. The last clerk called headquarters and asked them about this and yet they were not able to solve the problem. When headquarters was asked whether or not they were concerned, the consensus was, "no." The stake clerk does not know what the problem is either. I have tried and tried to figure out what went wrong (as well as the clerk before me), but we cannot figure it out, and now we are afraid it was too long ago so we do not have enough information to make a confident decision. What can I do to get rid of this "temporary item" and still reconcile?

applejack wrote:Two financial clerks ago, a "temporary item" was created in order to reconcile something that happened several months earlier. The dates recorded are more than three years (plus the current year) ago, thus neither MLS nor I now have records. This temporary item is still lingering. No one ever fixed the problem. If I remove the "temporary item" then things do not reconcile. The last clerk called headquarters and asked them about this and yet they were not able to solve the problem. When headquarters was asked whether or not they were concerned, the consensus was, "no." The stake clerk does not know what the problem is either. I have tried and tried to figure out what went wrong (as well as the clerk before me), but we cannot figure it out, and now we are afraid it was too long ago so we do not have enough information to make a confident decision. What can I do to get rid of this "temporary item" and still reconcile?

There are only two ways to eliminate a temporary item:

1. The item gets corrected on a subsequent Church Unit Financial Statement, and thus the temporary item is no longer needed, and you can just check it off as you reconcile that statement. This is typically what is done, for example, when a donor check bounces and so the Other category has been charged on the CUFS. When the corresponding donation has been canceled in MLS, but the credit to the Other account has not yet shown up on the statement, you make a temporary item for the Other account; in the next month when the credit shows up, you just check off the temporary item.
2. You make the temporary item permanent by creating an Other Item during reconciliation (or creating some other expense or transfer transaction). This would seem to be the best course of action now. It's a pity that the item was not corrected in a timely manner so that the real reason could be researched. Generally if a temporary item lasts more than a couple of months, something is wrong. But previous clerks were negligent, and there's not much you can do about that now.

You didn't say what the problem was, but making it permanent may necessitate additional corrections. For example, if the problem was a bounced donor check that was never corrected, the "fix" would be to make a permanent debit to the Other account. But it is not permissible to have a negative balance in the Other account, so you would have to then bring that balance to zero. The only permissible way I know of to do that is to write a check from Budget to cover the shortfall. But that example is only one possibility -- you may need to take other additional steps, or none at all, depending on the particular situation.

Alan_Brown wrote:The item gets corrected on a subsequent Church Unit Financial Statement, and thus the temporary item is no longer needed...

Yeah, unfortunately this did not fix the problem way back when.

Alan_Brown wrote:You make the temporary item permanent by creating an Other Item during reconciliation (or creating some other expense or transfer transaction).

I think I will try this and report back. Hopefully no other problems will arise.

Alan_Brown wrote:You didn't say what the problem was..."

That's just it. I don't know what the problem is. All I can determine is that church headquarters (the financial statement from them) "says" that MLS is shy $200 in the "Missionary" account (when the temporary item is removed). With the temporary item, things zero. I cannot even tell more specifically "what" under the category of "Missionary." The "reason" listed with the temporary item just gives a date, which is of course too long ago to have records of. So definitely one thing I have learned is to be more descriptive whenever I get a chance with the records I deal with.

applejack wrote:All I can determine is that church headquarters (the financial statement from them) "says" that MLS is shy $200 in the "Missionary" account (when the temporary item is removed). With the temporary item, things zero. I cannot even tell more specifically "what" under the category of "Missionary." The "reason" listed with the temporary item just gives a date, which is of course too long ago to have records of. So definitely one thing I have learned is to be more descriptive whenever I get a chance with the records I deal with.

Given that the issue is confined to the Missionary account, creating the Other Item should take care of the problem. If I understand you correctly, the Church thinks you have $200 more in Missionary than your MLS records show. So you will have get a $200 credit by fixing this problem, which is definitely nicer than the other way around!

One think you might watch out for: generally the Missionary account is not used; rather the Ward Missionary account has all transactions related to missionaries serving from your ward. I just helped someone zero out the Missionary account in another thread: Moving Beginning balance from Missionary to Ward Mission.

Alan_Brown wrote:Given that the issue is confined to the Missionary account, creating the Other Item should take care of the problem. If I understand you correctly, the Church thinks you have $200 more in Missionary than your MLS records show. So you will have get a $200 credit by fixing this problem, which is definitely nicer than the other way around!

I am wrong (sorry). To be more clear, the "Reconciliation Report" lists the "MLS Balance" under "Missionary" as $200 more than the "Church Unit Financial Statement's" "Adjusted Statement Balance." I interpret that to mean that MLS has $200 that headquarters should have taken out long ago. Transferring $200 out of "MLS Missionary" should fix it. Fortunately there is a small surplus to do this.

Alan_Brown wrote:You make the temporary item permanent by creating an Other Item during reconciliation (or creating some other expense or transfer transaction). This would seem to be the best course of action now.

I was in MLS last night and created an "Other item" on last month's reconciliation. I figured it was alright to mess with this because we just went through it Sunday and the Bishop has not yet signed it. I wanted to see what happened. Well, by entering a -$200 under "Missionary," things reconciled (zeroed). MLS states the following:

"Other items are items that appear on your Church Unit Financial Statement but have not been entered into MLS."

This seems appropriate since it "appears" that $200 was never taken out. (Maybe this correction showed up on a financial statement years ago under "Miscellaneous Disbursements and Credits" and was never entered into MLS.)

But now I have another question. There is a check box next to my newly entered "Other item" that reads:

"Check this box to automatically create transfer entries for this item."

I stopped here because I did not want to do something I could not reverse at this point. Should this box be checked. What happens then? Does the "Other item" go away? Will things still be reconciled?

applejack wrote:There is a check box next to my newly entered "Other item" that reads:

"Check this box to automatically create transfer entries for this item."

I stopped here because I did not want to do something I could not reverse at this point. Should this box be checked. What happens then? Does the "Other item" go away? Will things still be reconciled?

That check box is checked by default, because usually you want to create corresponding transfer entries (for example, if you use Other Items to create a Budget expense for Distribution Services, you still want to create the corresponding transfer item to bring your statement balance for Budget to 0). But in this case we want to create just a single entry, without the corresponding transfer entries, so it seems that you should leave it unchecked.

The Other Item will not go away in either case. If the box is not checked, it will simply become a single transfer transaction. Checking the box would cause a second transfer transaction (in the opposite direction) to be created, which would almost certainly not reconcile.

However, note that the MLS help file (topic "Other Items") says in regards to this check box:

There is a small box with a check mark on the left end of the line of fields that appears. Do not remove this check mark unless told to do so by the administration office.

So perhaps you need to consult with Clerk Support, since I am advising you to leave it unchecked.

Alan_Brown wrote:That check box is checked by default...

Hmmm...After a clicked to add the "Other item," the box was not checked. I was afraid to check it. Thanks for your information and advice though.

Alan_Brown wrote:So perhaps you need to consult with Clerk Support, since I am advising you to leave it unchecked.

Yes, I should call them again. Again, thank you for your suggestions and advice. I really appreciate it!

I'm glad I found this thread, though I'm sorry to be resurrecting it. I believe I face the same problem. We have three different temporary items that we've been carrying for more than four years. Apparently there were some bounced tithing checks way back when. The individuals in question aren't here anymore, and I'd like to get rid of the temporary items for good.

From what I read above, it seems that these members got "credit" for their tithing, even though they really didn't pay it. Am I reading that correctly? The temporary items fixed the original returned check imbalance, and successive clerks have been pushing them forward for years. I presume there is no way to go back four years and fix that particular donation batch, so can I just create a negative tithing adjustment now? Seems weird, but I really want to fix this.

Thanks!
Mike

In the U.S., MLS currently holds records back to 2006. (3 years plus current). As long as the donations are between 2006 and 2009, I think you should be able to go back and cancel the affected donation.

Note that the 2006 records will be purged automatically when you close out the year.

I'll check tomorrow how old the batch is. I had assumed you wouldn't be able to go back to a prior year. Thanks!

mcallaghan wrote:We have three different temporary items that we've been carrying for more than four years. Apparently there were some bounced tithing checks way back when. The individuals in question aren't here anymore, and I'd like to get rid of the temporary items for good.

Since you specified that it's been "more than 4 years" and you are in the US, the original donation batches are no longer in MLS. So canceling the donations would no longer be an option.

But your problem is not really in the Tithing category at this point; rather it would be in the Other category. The normal procedure is that a bounced check causes an immediate debit to the Other category. Then when you cancel the corresponding donation, the Other category is credited, and there is a debit to the category(ies) of the donation.

I don't know of anything you can do in MLS to fix this; you really need to contact Local Unit Support at this point. Your only option in MLS would be to make a permanent charge to the Other account, but then that would create a negative balance in Other, which you would have to make up from Budget. That would be an inappropriate use of Budget funds. My guess is that Support can make the adjustments to have the same effect as canceling the donations even though your MLS no longer contains those batches.

Are those folks around on Sundays, or do I have to take care of this during the week? BTW, who is "Local Unit Support?" The Stake Financial Clerk has been consulted on this issue, but nothing ever got done.

mcallaghan wrote:Are those folks around on Sundays, or do I have to take care of this during the week? BTW, who is "Local Unit Support?" The Stake Financial Clerk has been consulted on this issue, but nothing ever got done.

Local Unit Support is also known as Clerk Support or Clerk and Leader Support. They are only available during the week; ways to contact them can be found at Local Unit Support.

Support will want to know that you have worked with your stake clerk, but given the nature of this issue and the fact that you have consulted the stake financial clerk, I'm pretty sure they'll be happy to help you.

Just a follow-up. I'm sitting in the clerk's office now looking at the temporary item for a bounced check. As it turns out, the check was written (and bounced) in November 2004. It's been carried as a temporary item since then.

There are two others that I think may be easier to fix: two outstanding checks from 2007, one for $70 and one for $10. However, looking at the expenses during that time, there are no expenses that match, either by check number or by amount. Something's not adding up, pardon the pun.

I'm starting to think that the date of the temporary item may have no bearing on the expense it refers to, so I'll expand my search. As far as I can tell, neither check number exists in MLS, and the farthest back I can go in MLS is Jan 2006 (that jives with the 3 years back rule).

Mike

mcallaghan wrote:Just a follow-up. I'm sitting in the clerk's office now looking at the temporary item for a bounced check. As it turns out, the check was written (and bounced) in November 2004. It's been carried as a temporary item since then.

Thanks for keeping us posted. It sounds like you're doing the right things at this point. Clearly your first task is to clear up these long-standing issues. It's much harder to fix problems that are so that old, but kudos to you for digging in to find and correct the issues.

When you do get this cleared up, it might be good to mention the issue to someone on your stake audit committee. It's unfortunate that temporary items could be carried forward for 6 or more audits with no auditor ever finding and mentioning this. The audit process should have caught this so that the stake could have known of the issue and offered assistance in resolving it. So it sounds like the auditors need a bit of training and reminding as well.

What's an audit? Just kidding. Back when I was a stake financial clerk (many years ago, before MLS), I had an audit every six months. In the four years I've been in this branch (as a member of the branch presidency and now as a clerk), I've seen exactly one financial audit.

Not good. I don't know what the Stake is doing, but you should be getting an audit, signed by the branch president an clerk when completed, every 6 months.

It's possible that we have had the audits, but I've only seen the one.

As I type this, I'm on the phone with the Finance Dept and we're trying to clear this up. She worked some magic on her end, had me make some "other items" entries on my end, and now the temporary items are gone! Truly amazing!

Mike