Writing a check to budget from Other account

I'll try to keep this as succinct as possible:

- The wards in our stake participated in a scout camp and the Stake paid for everyone.
- Our ward collected funds from parents to pay for the scout camp and placed them in the "Other: Scout camp" account.
- Rather than having each ward write a check or transfer to the Stake from our Other: Scout camp account, the Stake plans to withhold the amount due from the next quarterly allocation.
- The Stake wants us to write a check from the "Other: Scout camp" account to ourselves (?) to make up the loss to our budget allocation.

This seems to me like a backward and wrong way to accomplish this, but theoretically the money ends up where it's supposed to go. Who am I to question the way the Stake wants to handle it? Can anyone tell me whether there is any conflict with official policy to put my mind at ease?

Thanks.

I can't say that there is an conflict with any written policy since the money in the other account is ultimately going to be used for the purpose it was intended. However, the accounting is awful. It will be almost impossible for someone to track the money afterward to verify that policy was actually followed. And it's on the ward side, not the stake side, where it will look bad. I would not be happy with this situation at all.

I also question that this is easier for the stake unless the stake is already manually transferring budget amounts to the wards. Adjusting the percentages for each ward to keep the correct amount back is going to involve careful calculations once the quarterly reports are filed. And then the stake will actually have to wait until the allocation is made to actually get the extra money.

A transfer to the stake Other account is very easy and quick and the stake should be able to then make one transfer to the correct subcategory once all the ward so their transfers. All very easy, straightforward, and easy to track afterwards. The only reason I can think for the stake to really want to do this is if it has had problems getting the wards to make the transfers and wants to do this to make sure it gets the money. But to my mind, that is a very poor reason for such a bad accounting practice.

I guess if it were me I would tell the stake that I believe this will make it look like I did not follow policy and that makes me feel very uncomfortable. If they insist on doing it this way I'd say I would like a note signed by the stake president instructing me to do this (including all the specific amounts involved) so that I could include it with the check documentation for the check from Other to budget. Then maybe it will become more trouble than it's worth and they'll just do it the easier right way.

eblood66 wrote:I guess if it were me I would tell the stake that I believe this will make it look like I did not follow policy and that makes me feel very uncomfortable. If they insist on doing it this way I'd say I would like a note signed by the stake president instructing me to do this (including all the specific amounts involved) so that I could include it with the check documentation for the check from Other to budget.

That's better then anything I could come up with. If they ask why, tell them you want written documentation for the records and to show the auditor.

That sounds really convoluted and overly complicated. I think the Stake Presidency Counselor who is the Stake Audit Committee Chairman should step in. If he doesn't understand why the suggested procedure is a problem, he needs to ask the assistant area auditor.

joeydef wrote:- Rather than having each ward write a check or transfer to the Stake from our Other: Scout camp account, the Stake plans to withhold the amount due from the next quarterly allocation.

Unless the stake normally manually sends budget allocation checks to each ward, I see this going very badly. While the stake can certainly adjust the allocation percentages that will be passed through to the wards, I don't believe they can specify exact amounts without dropping the pass-through allocation to 0% and manually issuing checks. The only way they could is by reviewing each ward's numbers, calculating the amount they expect to receive as a result of that ward, and setting "close-enough" percentages so as to withhold the camp money, and later refund any extra. That would then need to be reversed for the following budget allocation. It would be an enormous mess, just so that someone in the stake office can ensure the money will be collected.

The church with good reason makes it difficult to transfer money within the ward accounts. By forcing wards to cut checks from one account to another it creates a paper trail. You can really only transfer within other accounts and the ward mission accounts.

As mmaynor pointed out, by cutting a check from the Other category to the Ward, a paper trail is created. Further, by attaching all documents pertaining to the transaction, the paper trail is reinforced. Finally, the funds that are allocated to wards from the stake technically are the stake's to control; therefore, the stake can adjust the allocations at any time, for any reason.

I just got off of the phone with Local Unit Support, who verified that this is both transparent and acceptable.

cbradford wrote:As mmaynor pointed out, by cutting a check from the Other category to the Ward, a paper trail is created. Further, by attaching all documents pertaining to the transaction, the paper trail is reinforced. Finally, the funds that are allocated to wards from the stake technically are the stake's to control; therefore, the stake can adjust the allocations at any time, for any reason.

I just got off of the phone with Local Unit Support, who verified that this is both transparent and acceptable.

The issue isn't whether the stake can control budget allocation funds. They can. The issue is whether it's an appropriate use of the Other account to compensate the ward budget for funds the stake refuses to release. The issue is also whether the documents supporting a payment to the stake out of the Other account for a specific and defined purpose will similarly support a payment to the ward budget. It won't, for the very reason you stated - the stake can adjust the allocation at any time, for any reason. There is nothing that guarantees that the amount withheld from the ward in this one period is only for the camp funds. If the allocation was decreased by $2000 from what was "expected," there's no way of telling for certain that the reason why the allocation was lower was because of the camp funds, and not for other needs of the stake, even if the amounts match.

This is the opposite of transparent.

However the stake chooses to do it, take good notes and keep them with your financial records. When the stake comes to audit with their stake auditors, you will have a clear explanation of what happened, why, and who told you to do it, and will be able to give it to the chairman of the audit committee (a counselor in the stake presidency) if anyone decides to make an issue of it.

The other option is to go to the audit committee chairman before the fact and see if the stake will consider changing the process.

allenjpl wrote:

cbradford wrote:As mmaynor pointed out, by cutting a check from the Other category to the Ward, a paper trail is created. Further, by attaching all documents pertaining to the transaction, the paper trail is reinforced. Finally, the funds that are allocated to wards from the stake technically are the stake's to control; therefore, the stake can adjust the allocations at any time, for any reason.

I just got off of the phone with Local Unit Support, who verified that this is both transparent and acceptable.

The issue isn't whether the stake can control budget allocation funds. They can. The issue is whether it's an appropriate use of the Other account to compensate the ward budget for funds the stake refuses to release. The issue is also whether the documents supporting a payment to the stake out of the Other account for a specific and defined purpose will similarly support a payment to the ward budget. It won't, for the very reason you stated - the stake can adjust the allocation at any time, for any reason. There is nothing that guarantees that the amount withheld from the ward in this one period is only for the camp funds. If the allocation was decreased by $2000 from what was "expected," there's no way of telling for certain that the reason why the allocation was lower was because of the camp funds, and not for other needs of the stake, even if the amounts match.

This is the opposite of transparent.

According to your logic, then no matter what the stake does there will be no transparency ever. The stake doesn't have to justify to the wards how much money is allocated (though our stake does). In this case, the stake has provided an invoice to each ward that shows how much money is going to be withheld. It is a very simple matter to determine how much money they would have received otherwise, if they truly believed the Stake was withholding additional funds.

I think your statement about this being the opposite of transparent is completely unfounded.

cbradford wrote: According to your logic, then no matter what the stake does there will be no transparency ever. The stake doesn't have to justify to the wards how much money is allocated (though our stake does). In this case, the stake has provided an invoice to each ward that shows how much money is going to be withheld. It is a very simple matter to determine how much money they would have received otherwise, if they truly believed the Stake was withholding additional funds.

I think your statement about this being the opposite of transparent is completely unfounded.

Well, no. The ward has an invoice from the stake. The ward then cuts a check to the stake for the amount of the invoice, or simply transfers the funds. Clear, simple, and done in less than 10 minutes. That's transparent. Like every other expense the ward handles.

For whatever reason the stake doesn't want to do it that way. The stake has the ability to change the allocation, for its own reasons. But the amount the ward generally receives every quarter is malleable, depending on the past attendance numbers and the needs of the stake. It is this very flexibility that eliminates the connection between the payment to the stake vs. the payment to the budget. And here's the kicker - there's no need to turn a simple, everyday transaction into this headache.

cbradford wrote:In this case, the stake has provided an invoice to each ward that shows how much money is going to be withheld.

Assuming the statement is itemized, I'd include a copy of that in any documentation in transferring the "other" to "budget".

But it still seems really messy. It seems like someone is spending 3 times the amount of work just to avoid a little work.

cbradford wrote:I think your statement about this being the opposite of transparent is completely unfounded.

The problem is moving funds from Other to Budget. The Help Center article on the "Other" category says that the "other" category should not be used to supplement the budget.

Here is my summary of what I understand so far:

• There is money in the "Other" account for an activity that ultimately needs to be transferred to the stake since the stake incurred the expenses for the activity.
• The stake has proposed that it will recover the funds by reducing each ward's budget allocation, after which ...
• The ward should take the funds in the Other account (which were earmarked for the activity) and transfer them into the budget to offset the budget amount that was held back by the stake.

Although the end financial result is the same, every ward in the stake is going to show a transfer from other to budget that requires justification. Instead of taking funds that were set aside for a particular activity and creating a clean paper trail from the funds to the expenses, there is a convoluted path that requires justification and explanation whenever someone tries to understand it.

It would be much cleaner to transfer the "other" funds to the stake to cover the stake's expense for that activity and then provide the normal budget allocation to the wards.

scgallafent wrote:Although the end financial result is the same, every ward in the stake is going to show a transfer from other to budget that requires justification. Instead of taking funds that were set aside for a particular activity and creating a clean paper trail from the funds to the expenses, there is a convoluted path that requires justification and explanation whenever someone tries to understand it.

I think there's something to be said for avoiding even the appearance of wrong-doing.

I agree with the concerns you have all raised, which is why I have been reticent to follow this procedure. The withholding of funds does not create a transparent transaction of a defined amount with a defined purpose.

The auditor must assume that the Stake withheld the appropriate amount and used it for the appropriate purpose, because the only expense report that will be created will be a check written from the Other account with no direct connection to its intended purpose. In other words, no expense report is created when the Stake withholds a nebulous amount from the allocation. It is too much hassle (and probably impossible) for the auditor to recalculate the Stake's allocation pre- and post- adjustment to see if it matches the invoice amount. Even if he does, there is no proof that the money went toward scout camp, which is what the policy requires.