December Budget Bills

The question that I have is how to pay December budget bills in January and have them reflect in the prior budget year in which they occured.

blairjames wrote:The question that I have is how to pay December budget bills in January and have them reflect in the prior budget year in which they occured.

Greetings, and welcome to the forum!

Unfortunately, this is not possible. Under the current system, a check must be written and transmitted to CHQ prior to the cutoff date and time for that year (typically, noon MST, Dec 31, but this can vary) in order to come out of that year's budget. Anything after that will come out of the following year's budget.

May I ask what type of bills you are trying to pay?

What you are suggesting is called the accrual method of accounting. The Church uses the cash-basis of accounting. This means that record entries are made when funds are received for income and when paid for expenses. In accrual accounting income is recorded when earned rather than when recieved. Expenses are handled in the same manner. They are recorded when the expenses are incurred rather than when paid. This is what you are suggesting. Unfortunately the two accounting methods cannot be mixed. And since MLS is programmed to use the cash-basis method, which is the the accounting method the Church uses, you cannot do as you would like to do. Under cash-basis accounting the only way to have a bill in December be recorded in December is to pay it in December. Bills paid in January have to be recorded in January.

blairjames wrote:The question that I have is how to pay December budget bills in January and have them reflect in the prior budget year in which they occured.

If these are routine bills, then I think you're just going to have to accept that it's the way it works. If this is something special, you should probably talk to the stake clerk. The stake has some flexibility in how the budget funds carry over. It will still go against the new year's budget, but you might be able to get a increase in your allotment as a type of carry over.

As was stated, it depends what type of bill. If it is one you have to cut a check for (and it sounds like it is) then see the comments above. If it is an automated debit-type payment, you can use the "not a check" option in "Enter Expenese" and set the date to when the charge was entered.

If this is routine (same activity at the same time each year resulting in similar carry-overs), I would suggest not worrying about it. Sure, some of your expenses from last year carried over to this year, but then some of your expenses this year will carry over to next year. It comes out in the wash.

Mikerowaved wrote:Greetings, and welcome to the forum!

Unfortunately, this is not possible. Under the current system, a check must be written and transmitted to CHQ prior to the cutoff date and time for that year (typically, noon MST, Dec 31, but this can vary) in order to come out of that year's budget. Anything after that will come out of the following year's budget.

May I ask what type of bills you are trying to pay?

Sure, typical budget items to local vendors for primary, ward, relief society activities, etc. Thanks for responding.
See here is the rub, When I pay Decembers bills in January, then the next years budget is decreased by Decembers bills. OK, I guess that's no big deal if I magically increase the following years budget by the sum of decembers bills.

Not only that, but what if there is a carry over of money from the prior year because an auxillary doesn't spend every penny of prior years budget allowance for them.

So it seems you have to do all this accounting on the side. So In my small non accounting mind, why not have the budget money roll over to next year and let the Bishop decide how to re-allocate. The ward still has the same amount of money either way. Sorry, tried to keep it short.

blairjames wrote:Not only that, but what if there is a carry over of money from the prior year because an auxillary doesn't spend every penny of prior years budget allowance for them.

Whatever amount the ward has at the end of December that has not been spent is gone. If there is a need to compensate one way or the other, the ward needs to work with the stake to adjust the following year's budget allocation.

The stake has some flexibility to do this up to a certain point and time.

blairjames wrote:So In my small non accounting mind, why not have the budget money roll over to next year and let the Bishop decide how to re-allocate..

It is up to the stake to decide what to do with money leftover at the end of the year.

I think we've all been there. While it is perhaps frustrating, it's the way church finances have been set up and I doubt they are going to change anytime soon. So it's a matter of finding a way to work within the system that you can live with. For me, we push to get receipts turned in quickly, but also knowing we do the same activities every December, resulting in the same expenses rolling over each year anyway. Last year's December activities will be charged against this year's budget, but this year's December activities will get charged against next year's budget. It roughly balances out.

blairjames wrote:See here is the rub, When I pay Decembers bills in January, then the next years budget is decreased by Decembers bills.

I think the important thing here is to communicate with the rest of the ward how the church accounting system works. Talk with your bishop and just tell them that if they don't get the recipts to you by x hour, it's coming out of next year's budget. I think once properly motivated, you'll see very few December bills in January.

blairjames wrote:So In my small non accounting mind, why not have the budget money roll over to next year and let the Bishop decide how to re-allocate.

I know several people have mentioned that the stake has "some flexibility" in handling this. Actually, the stake has tremendous flexibility. See the Budget allowance wiki article for some options.

In our stake, we have chosen to always have wards carry forward their surplus (up to a fairly generous cap amount). Back when I was a ward financial clerk, we had a default policy of no carryforward, so I dealt with the issues described in this thread. It was a pain to submit special requests, and I don't think the stake liked dealing with it. We also had a some "use it or lose it" spending going on at the end of each year.

Now that our stake allows ward to carry forward their surpluses (and deficits ), life is so much simpler. Wards don't go on spending sprees at the end of the year, because they know they'll have the money next year. They don't have to agonize over the check they weren't able to write before the December 31 cutoff. They don't have to make special requests for exceptions. If they overspend, they know they'll have that much less to work with next year.

Of course, how each stake chooses to handle surpluses or deficits is up to the stake president. But I think some stakes look at the way MLS starts each year with a 0 budget and somehow assume that that means that there can be no carryforward. That is not true. You may want to consult with your stake clerk and make the suggestion that the stake allow wards to carry forward its budget balance for all the benefits I mentioned above.

blairjames wrote:See here is the rub, When I pay Decembers bills in January, then the next years budget is decreased by Decembers bills. OK, I guess that's no big deal if I magically increase the following years budget by the sum of decembers bills.

Call me dense, but I don't quite understand the problem. I've been a ward finance clerk for almost 5 years and our stake has also chosen to NOT carry over any budget money from year to year, but I don't see that as a problem. I usually pay any 'bills' (reimbursements and/or fast offering expenses) the same week I get them, so first off, they never get a full month behind.

At the end of the year, if an auxiliary leader can get me a receipt for expenses during the last week of Dec, then I make every effort to cut a check in Dec. If I don't get it in time, I simply cut the check in Jan. I let them all know ahead of time MY deadline for year-end receipts and also let them know the consequences of missing it.

As long as I can remember there has always been a concerted effort by both stake and ward leaders to let members know that the budget has a cutoff date and any reimbursements or bills must be paid by that date. Failure to meet the deadline results in the funds coming out of the next year's budget. When there have been circumstances beyond a member's control that required bills for December to be paid in January they have always been taken to the stake president for consideration so as to not jeopardize the next year's budget. Fortunately this seldom happens.

Mikerowaved wrote:. . . our stake has also chosen to NOT carry over any budget money from year to year, . . .

I think as long as everyone is working faithfully to stay within their budget allocation, there will not be a problem whether or not the stake decides to carry over any differences at the end of the accounting year.

And the stake does have everything it needs to take care of any differences that arise.

Dear mikerowaved,

No No No I'm not implying anyone is dense. All you folks have been great to help the new guy understand. You see in this small town we still have open charge accounts with all vendors, and they bill us once a month after the first (unheard of in today's world) so we don't have to write a dozen checks to the same place each month.
But I get the Idea, and I'll be sure to collect all receipts early and pay before the end of December.
Thank's again to all for your help!!! :):)

blairjames wrote:You see in this small town we still have open charge accounts with all vendors, and they bill us once a month after the first (unheard of in today's world) so we don't have to write a dozen checks to the same place each month.

While I'm sure that's nice, it seems like it could easily undermine the bishop's responsibility to approve all expenditures. I know I'd be wary of any such arrangement.

RussellHltn wrote:

blairjames wrote:You see in this small town we still have open charge accounts with all vendors, and they bill us once a month after the first (unheard of in today's world) so we don't have to write a dozen checks to the same place each month.

While I'm sure that's nice, it seems like it could easily undermine the bishop's responsibility to approve all expenditures. I know I'd be wary of any such arrangement.

I would have to agree with Russell. How does each charge at each of those vendors get approved before the bill is sent to the ward? How does the bishop disapprove a charge with a vendor if is not appropriate? How does each charge become associated with an individual and not just the ward for the purpose of allocating against an auxiliary budget category, ward budget category, or Other account? How do you create the audit trail necessary for auditing purposes?

Alan_Brown wrote:In our stake, we have chosen to always have wards carry forward their surplus (up to a fairly generous cap amount).

I'm curious. How do you manage the surpluses at the stake level? Am I assuming correctly that the stake budget is decreased for the following year when ward surpluses are carried-over?

Greggo wrote:I'm curious. How do you manage the surpluses at the stake level? Am I assuming correctly that the stake budget is decreased for the following year when ward surpluses are carried-over?

The stake is allowed to carry forward the net of all its surpluses. So the stake may have an overall surplus, but that doesn't necessarily decrease the stake budget itself, since the stake budget should reflect what the stake needs to spend, not the total.

Perhaps a concrete hypothetical example will illustrate. I'll use a system of annual ward allocations to simplify the example, although quarterly allocations would require a few adjustments to the procedure.

Suppose our stake began 2008 with $22,000 in surplus. We have three wards. Ward1 ended 2007 with a $1000 deficit, Ward2 had a $500 surplus, and Ward3 had a $2500 surplus. We have a policy of capping big surpluses, so we'll let Ward3 carry forward $1500, and the remainder goes back into the general stake surplus. So of the $22,000 total surplus, we allocate $1000 (-$1000 + $500 + $1500) to the wards, leaving $21,000 surplus for the stake.

For each ward budget, we use whatever formula we would normally use to determine their budget allocation, independent of any surplus or deficit. Suppose that is $11,000 for Ward1, $12,000 for Ward2, and $13,000 for Ward3. Then we add in any surplus or deficit, resulting in a net annual allocation for the wards of $10,000, $12,500, and $14,500, respectively.

For the stake, we simply determine the budget (based on our anticipated spending needs and our estimate of the budget allowance). That becomes the budget. Suppose we expect to allocate $25,000 of the total budget allowance to the stake budget. We expect expenses this year to be $27,000. So we are essentially allocating $2,000 of that net surplus to the stake, leaving $19,000 extra surplus.

We simply hold the $19,000 in reserve, to help us manage differences in the quarterly allocations from our estimates, unanticipated extra spending this year, or saving for the big stake youth conference expenditure we know is coming next year.

So that was a long answer, but I hope it explains how it may well be the case that allowing wards to carry forward their surpluses might not really affect the stake budget. But if a stake chooses not to let wards carry forward their surpluses, then the stake is essentially getting a windfall at the beginning of each year, which distorts their budget in a different direction.

There are a lot of ways to handle this -- I simply gave one example that is fairly close to how our stake has chosen to do it. It may sound complicated, but really it's just a matter of plugging a few values in a spreadsheet we already have, so it's pretty easy.

jdlessley wrote:I would have to agree with Russell. How does each charge at each of those vendors get approved before the bill is sent to the ward? How does the bishop disapprove a charge with a vendor if is not appropriate? How does each charge become associated with an individual and not just the ward for the purpose of allocating against an auxiliary budget category, ward budget category, or Other account? How do you create the audit trail necessary for auditing purposes?

Wow, I had no Idea I would start such an interesting (and long) thread by just asking how to keep December bills in December. I think everyone including me agrees that they just need to be paid in December even though we normally pay (some) after being billed after the first.
For the above concerns, let me be clear that nothing is paid without first being presented to the Bishop on an Expense authorization form that the church prescribes, with requestors name and signature, space for who is to be paid including address, description of expense purpose, box to check whether it is budget, fast offering, other account (Scouting), name of auxilary with presidents signature and receipt, then lastly the Bishop signs. Further, Each receipt must be signed by the purchasing individual.

Info from this form, is all thats necessary to enter the expense from each expense form into computer.
All the above is kept in a simple weekly dated binder with the check stub attached. After the check is cut, I review each check and all the above attached info with Bishop. He signs every check (no exceptions). He then signs the form the computer spits out after each batch.

OK-yes members make decisions on their own as what to buy for their organization. I think Joseph Smith had counsel on this matter. Teach members correct principles and let them guide themselves. Inappropriate purchases as you ask; never seen it happen. If it did, the Bishop can deal with it and not approve it and I won't pay that invoice. That's why he is Bishop.
Stake audit 2 weeks ago showed no exceptions.
Thanks for asking me to justify. Hopefully you will continue to help me and others learn how to take best care of the Lord's Funds.
Blair James

The reason for the flurry of questions was because of the appearance that anyone could go to a vendor with just the knowledge of the open account, make a purchase after identifying themselves as authorized to do so, and the vendor complete the transaction and then send in the monthly bill.

If the vendor is merely congregating the purchases into one monthly bill for payment then that is a convenience that has gone out of practice several decades ago with other point of purchase forms of payment becoming more common practice (debit cards and such). Sorry for the misunderstanding.

Perhaps you could work with the vendors to send the December bill to meet your deadline for payment in December rather than waiting for them to send it as usual. You could even call them and ask if there was a balance and send the payment to cover that. Then when the bill arrives it would merely be a statement to verify the payment you sent them.

jdlessley wrote:
Perhaps you could work with the vendors to send the December bill to meet your deadline for payment in December rather than waiting for them to send it as usual. You could even call them and ask if there was a balance and send the payment to cover that. Then when the bill arrives it would merely be a statement to verify the payment you sent them.

Great Ideas that I will try. Thanks
Blair James