Policies on Moving Funds Between Two Major Cateogories

Before following the procedures to move funds between two major categories, such as Budget to Other or Other to Budget, do we need to notify HQ (via MLS Messaging) and ask for permission prior to moving the funds? If yes, where do I find that information?

Example:
Other YM -$XX.XX (The expenses exceeded the income for a ym camp)

Budget YM +$XX.XX (Funds to be moved to cover the shortage in Other YM)

Bom1 wrote:Before following the procedures to move funds between two major categories, such as Budget to Other or Other to Budget, do we need to notify HQ (via MLS Messaging) and ask for permission prior to moving the funds?

No, there is no requirement to notify HQ. You should certainly make sure that your move is within policy (e.g., you're not moving surplus funds from a YM fundraiser into the Relief Society budget), but as long as the proposed transfer meets policy, you can go ahead and do it.

You have to write a check to your own unit to transfer between major categories anyway, so you will leave a clear audit trail showing the authorization for the expense and the reason for it. (I haven't checked again recently, but although there have been rumors that simple MLS transfers between major categories would be allowed, I haven't seen any evidence that this is possible in the US/Canada.)

Thank you for your insight, it certainly helps me to move forward with clarity!

Moving from budget to any other category is almost never an issue, but moving funds from other major categories to budget almost always is. Moving funds from Other to Budget (as shown in your example) if the funds were member contributions collected to cover the cost of a camp is against policy. Any surplus funds are to be returned to the donors. The funds cannot be spent on anything but the purpose for which they were collected.

crislapi wrote:Moving funds from Other to Budget (as shown in your example) if the funds were member contributions collected to cover the cost of a camp is against policy. Any surplus funds are to be returned to the donors.

That's correct if the funds raised are a true surplus - but often monies aren't collected until after the event, and so budget funds are used to cover it, and then the budget funds replaced from the "other" category once they've been paid.

dannykos wrote:That's correct if the funds raised are a true surplus - but often monies aren't collected until after the event, and so budget funds are used to cover it, and then the budget funds replaced from the "other" category once they've been paid.

Why would budget funds be used to cover it before cutting the check? It isn't like the Other:AMFA category is going to bounce the check for insufficient funds. Just cut the check from the AMFA category, collect what you can, and then cut a check from the Budget for the rest. There used to be training online on "Understanding and Using the Other Category," but the link has since disappeared from the Training page (although the link from the Wiki is still valid.) In any case, the training and the wiki say this:

If there is a deficit of funds in an “Other” subcategory, and the deficit results from money owed by members, collect the money from the members, and deposit it. If the money cannot be collected, or if the deficit does not result from money owed by members, bring the subcategory to zero by transferring funds from a budget subcategory.

Although I can see why leaders might want to transfer the money from the budget before-hand, just to ensure that the budget monies aren't spent between the time when they cut the check from the AMFA category and the time when they have a final reckoning of how much they actually need to transfer, it really isn't necessary and it gives rise to the appearance of supplementing the Budget category through Other funds.

crislapi wrote:Moving funds from Other to Budget (as shown in your example) if the funds were member contributions collected to cover the cost of a camp is against policy.

I looked a little closer at the OP's example and it seems he has done this correctly. The negative is in Other, the positive is in Budget, so the transfer would be from Budget to Other to zero out Other. There is no problem with this transfer.

Bom1 wrote:Example:
Other YM -$XX.XX (The expenses exceeded the income for a ym camp)

Budget YM +$XX.XX (Funds to be moved to cover the shortage in Other YM)

crislapi wrote:Moving from budget to any other category is almost never an issue, but moving funds from other major categories to budget almost always is. Moving funds from Other to Budget (as shown in your example) if the funds were member contributions collected to cover the cost of a camp is against policy. Any surplus funds are to be returned to the donors. The funds cannot be spent on anything but the purpose for which they were collected.

I'm pretty sure the newest Handbook states that donations should not be returned to members. There is now a prescribed policy for remitting surplus funds to HQ spelled out in Book 1. I can't say for certain off the top of my head, but I believe this now applies to Other funds as well.

daveywest wrote:I'm pretty sure the newest Handbook states that donations should not be returned to members. There is now a prescribed policy for remitting surplus funds to HQ spelled out in Book 1. I can't say for certain off the top of my head, but I believe this now applies to Other funds as well.

You're right about donations; they absolutely should not be refunded, and that is the longstanding policy of the Church (see Handbook 1, section 14.4.9). But we're not talking about donations. We're talking about payments -- nondeductible payments for a specific good or service, not charitable donations. Those have always been refundable, and in the absence of someone pointing to a specific change in policy, I'm going to continue working on the assumption that they continue to be refundable.

daveywest wrote:I'm pretty sure the newest Handbook states that donations should not be returned to members. There is now a prescribed policy for remitting surplus funds to HQ spelled out in Book 1. I can't say for certain off the top of my head, but I believe this now applies to Other funds as well.

The part you are remembering (14.4.9) states

Stake presidents and bishops should inform those who contribute tithes and other offerings that these contributions cannot be refunded. This policy applies also to missionary contributions that are prepaid.

"Other offerings" does not refer to payments made to the Other account. This statement applies to the accounts discussed in 14.4, which are tithing, fast offering, missionary, temple construction, perpetual education, and LDS philanthropies.

More information can be found on the Other category in the Wiki. The first recourse to clearing out a surplus in Other should be to verify that payment was issued from Other instead of Budget for the event, and then returning funds to the members. Only if these first two recourses fail should sending the funds to CHQ be considered.

The best source of information for this used to be the online training, but it is no longer listed at auditing.lds.org. I've also been searching both HB1 and HB2 online and can't find anything referring to the Other Category.

Bom1 wrote:Before following the procedures to move funds between two major categories, such as Budget to Other or Other to Budget, do we need to notify HQ (via MLS Messaging) and ask for permission prior to moving the funds? If yes, where do I find that information?

Example:
Other YM -$XX.XX (The expenses exceeded the income for a ym camp)

Budget YM +$XX.XX (Funds to be moved to cover the shortage in Other YM)

There no need to move any funds between the categories. All thats needed is to wright a check using multiple categories.

Example:

One check -$xx.xx (Total expense)

Categories to take fund from.

Other YM -$XX.XX (Money to be used for YM camp expense. In this example all thats available.)

Budget YM +$XX.XX (Funds to be used to cover the shortage)

All done using one check.

If a check is already written just go edit the check to make the corrections.

Gary_Miller wrote:There no need to move any funds between the categories. All thats needed is to wright a check using multiple categories.
...
If a check is already written just go edit the check to make the corrections.

Although the procedure you outlined is indeed possible, one needs to exercise some care on the option of "just go edit the check to make the corrections." The concern is leaving a proper audit trail for what was done.

In the example shown, the bishop would have approved the original check to be written from AMFA:YM for a camp. Later, it was found that there was insufficient money in AMFA:YM for all the expenses, so Budget funds need to be used to cover the shortfall. If the clerk simply changes the category for some portion of the expense from AMFA:YM to Budget:Young Men, then he has essentially unilaterally decided to spend Budget money without the bishop's approval. So in my opinion, this approach would create an audit exception, unless the bishop somehow gives his written approval for the category change. That could be done with some additional form that documents the category change and includes the bishop's signature, which would be attached to the documentation for the original expense.

Of course, if a separate check is written to cover the shortfall, the normal approval process and paper trail will clearly satisfy all audit requirements.

aebrown wrote:Although the procedure you outlined is indeed possible, one needs to exercise some care on the option of "just go edit the check to make the corrections." The concern is leaving a proper audit trail for what was done.

The proper audit trail would come from the reason for the change in the MLS and on a MLS generated Finance transaction report.

aebrown wrote:In the example shown, the bishop would have approved the original check to be written from AMFA:YM for a camp. Later, it was found that there was insufficient money in AMFA:YM for all the expenses, so Budget funds need to be used to cover the shortfall.

The real problem is that the original check should have never been written from the other category without sufficient funds. It only takes a second to verify the amount available in any category.

aebrown wrote: If the clerk simply changes the category for some portion of the expense from AMFA:YM to Budget:Young Men, then he has essentially unilaterally decided to spend Budget money without the bishop's approval.

The guiding principle is: "All expenses must be approved (in writing) by the bishop". The Bishop then relies on the Finance Clerk to ensure funds are coming out of the proper expense category. This include making the proper corrections when needed. It not necessary for the Bishop the determine what category/account the funds come out of.

aebrown wrote:So in my opinion, this approach would create an audit exception, unless the bishop somehow gives his written approval for the category change.

If the auditor wants to be that critical then thats a hit I will gladly take.

aebrown wrote:That could be done with some additional form that documents the category change and includes the bishop's signature, which would be attached to the documentation for the original expense.

It could be. But I don't think its necessary as the Bishop has already approve the expense. The clerk is only correcting a clerical error, and documentation for the reason is recorded in the MLS. The Bishop has enough to do without having to sign one more unnecessary form

aebrown wrote:Of course, if a separate check is written to cover the shortfall, the normal approval process and paper trail will clearly satisfy all audit requirements.

If this was to happen in my ward the only paper tail you will have is the check stub with the purpose for the check, the donation slip, with the bishops and clerks signature on MLS generated Expense Report.

Gary_Miller wrote:It not necessary for the Bishop the determine what category/account the funds come out of.

Well I can't let that one slide through without a comment.

While I understand what you're saying - the Bishop is ultimately responsible for all the finances within the ward, including the record keeping and audit. Please don't think for one minute that a bishop would be happy to have a finance clerk make decisions such as whether funds should come from an Other Account or LUBA funds. The source of those funds are completely different, and as such the justification for their use is different too.

Gary_Miller wrote:The real problem is that the original check should have never been written from the other category without sufficient funds.

This is a broad statement that is inaccurate. There is no restriction preventing the "Other" category or any AMFA sub-category from ever having a negative balance. The purpose of the AMFA sub-categories is to collect funds for a specified purpose. CHQ has not, to date, specified when funds must be collected for an AMFA event. Rather it is up to the bishop to decide the best approach for the benefit of the members. We have AMFA sub-categories go negative for a period of time after the event has occurred. The members contribute as they can to meet their obligation.

The situation described by the OP does not go into the details of the situation. What I suspect may have happened is that there were insufficient funds in the AMFA sub-category to cover the check yet contributions from members after the event occurred were expected. This happens with youth summer camps. Not all families can contribute the full amount before the event but can meet their obligation some time later. It is possible that while the members had planned to contribute there may be intervening circumstances that prevented them from doing so.

Another scenario is that the actual cost of an activity was not the amount anticipated when the funds were being collected. At the time the check had to be written for the disbursement not all members who had contributed could contribute their additional share. Again circumstances may have intervened for some members who could not contribute the additional amount required.

I have described only two scenarios. There are others possible.

To say that a check should not be written when there was insufficient funds in the AMFA sub-category imposes a restriction that is not necessary and could exclude some members from participating in faith building activities. If your ward or your stake leadership imposes such a restriction that is your leadership's decision. Your opinion as to how the "Other" account or AMFA sub-accounts should be managed is not in accordance with any Church guidance I have been able to find. As far as I can tell the guidance provided by the Church for the "Other" account is being followed by the OP.

There is information in the wiki for the Other category. There is no mention of a restriction the category may never have a negative balance.

The discussion started by the OP was how to correct the deficiency in the AMFA. Others have provided acceptable solutions. Any discussion stating that writing a check for an amount greater than the balance of the AMFA sub-category is just an opinion and not Church policy. It may be good practice to try to have all members contribute to the AMFA sub-category prior to the disbursement of the funds from the category for the event. In my experience that cannot always happen and still give the opportunity to all members to participate in the event.

dannykos wrote: Well I can't let that one slide through without a comment.

While I understand what you're saying - the Bishop is ultimately responsible for all the finances within the ward, including the record keeping and audit.

However the Bishop relies on his clerks to keep accurate and up-to-date records. This includes making sure expenses come out of the proper account and expense categories, and making all corrections necessary do to clerical mistakes.

dannykos wrote: Please don't think for one minute that a bishop would be happy to have a finance clerk make decisions such as whether funds should come from an Other Account or LUBA funds. The source of those funds are completely different, and as such the justification for their use is different too.

The decision (Made by the Bishop) on what to do with the funds was made months earlier at the time when it was decided to make a subcategory in the other account. The Bishop relies on his clerk to know this and to take the expense from the proper account.

While the Bishop has over all responsibility, the finance clerk (if he is doing his job correctly) is the expert when it comes to ward finances which includes knowing what account the funds should come out of. The clerk should know what funds are being collected in the other account and what their purpose is for. So that when a request comes in to pay for the long term Camp, and money is being place in the other account for that purpose, the clerk knows where to take the money from.

JD Lessley, To allow any account to carry a deficit is not sound accounting principles, and to suggest that its OK in some instances is just plan wrong. While its possible to have a deficit in the "Other Account" does not mean its an acceptable policy, its considered a problem. And the guidelines state that problems should be resolved "quickly and correctly" before they "can become difficult" to resolve. The guidelines then tell us how to correct a deficit.

"How to deal with deficits

If there is a deficit of funds in an "Other" subcategory, and the deficit results from money owed by members, collect the money from the members, and deposit it. If the money cannot be collected, or if the deficit does not result from money owed by members, bring the subcategory to zero by transferring funds from a budget subcategory. However, please note that if the deficit results from a clerical error or a returned check, you should correct the original problem rather than covering the error with budget funds. To transfer funds from a budget subcategory to an "Other" subcategory, print a check from the appropriate budget subcategory payable to the unit. Then deposit the check into the "Other" subcategory using a Tithing and Other Offerings slip in the name of the unit. Make sure that you make the deposit in the appropriate "Other" subcategory so that it will clear to zero."

There are also guidelines on how to correct incorrect postings.

"How to deal with incorrect postings

Sometimes an activity is mistakenly paid for using budget funds even though funds were collected and designated for the activity in the "Other" category. To correct this error you can change the category of the check:

• In MLS, from the Finances screen, go to View/Update Expenses
• Find the incorrectly written check, and click on the check number link to edit it
• Change the category as needed
• Save the change
• Make sure you do a Send/Receive to transmit the corrected information to the Administrative Office.

Or you can write a compensating check and deposit in the ward's account:

• Print a check payable to the ward from the appropriate "Other" subcategory.
• Fill out a Tithing and Other Offerings slip in the name of the ward, cross out "Other" on the slip, and write in the name of the budget subcategory and the amount of the check.
• Record the deposit in MLS to the proper budget subcategory.
• File the white copy of the donation slip with one check stub and the expense information, and file the yellow copy and the other check stub with the donation information.
• Deposit the check at the bank using normal procedures."

Never does the guidelines state that its OK to carry a "Debt". A negative balance in an account is a "Debt" and it should be corrected "quickly and correctly".


The statement I made

Originally Posted by Gary_Miller
The real problem is that the original check should have never been written from the other category without sufficient funds.

and the procedures I gave the OP for correcting the problem, are not only within church policy and guidelines as I understand them. But they are also within sound Accounting Principles as well as Gospel Principles.

Gary_Miller wrote:The proper audit trail would come from the reason for the change in the MLS and on a MLS generated Finance transaction report.

If I were auditing a unit that followed this practice, I would not consider this to be a sufficient audit trail. As an auditor is following the instructions for the audit, he will review the documentation for the check as originally written. That will show the bishop's authorization for that expense. But if the actual final expense is charged to a different category, and there is no indication of this on the documentation covered in the audit, I would consider that to be a problem.

There needs to be something connected to the original expense that shows the change in category. An audit "trail" has to be left that enables the auditor to work from the original documentation. The two elements you mentioned are not even part of the audit (of course an auditor is free to examine any documents, but those elements are not mentioned in the audit instructions at all).

jdlessley wrote:There is no restriction preventing the "Other" category or any AMFA sub-category from ever having a negative balance.

Gary_Miller wrote:To allow any account to carry a deficit is not sound accounting principles, and to suggest that its OK in some instances is just plan wrong.

I think these two statements are not actually in disagreement, and they are talking past each other. Jdlessley is correct that there is no restriction that prevents ever having a negative balance; Gary_Miller is correct that to carry a deficit is not within sound accounting principles.

There may be minor disagreements as to how promptly a deficit must be corrected, but clearly the guidelines anticipate that deficits may occur within the normal course of events, and deficits do need to be corrected. I would hope that we can agree on those basic principles and not get hung up on absolute positions on relatively unimportant details. I'm sure there's really much more agreement than disagreement on this matter.

aebrown, in review of the audit form an auditor would never know if the category was changed unless he looked at the transaction in MLSs.

The audit worksheet only addresses if the expense was approved, has proper documentation, were unspent funds redeposited, and did the payment match the support documents. Its not concerned with what category the expense was placed against.

Categories are only there as a tool the unit uses to allocation budget dollars to organizations. With the exception that MLS requires a category to issue a check, the church is not concerned with what category an expense is place in. A unit could put everything in administration and it would not be wrong. Crazy but not wrong.

As the Finance Clerk, I have developed many subcategories under each organization in MLS do to the fact that I want to track costs based on activities for future budget purposes. Although the organizations have a list of the categories for their organization they don't always know what category to use. So its up to me to make sure that the expense is place in the proper category. For instance the RS is responsible for purchasing flowers for the chapel, so it would stand to reason that the flowers would be charge to the RS budget. However, this would be incorrect in our unit as this expense is charged to the Miscellaneous category under a subcategory of chapel flowers, not against the RS budget.

The point is it up-to the Finance Clerk to make sure the expenses are placed against the correct category in the system and often the Organization President and even the Bishop has no idea what the proper category would be. There may even be times when the expense does not fall under any of the existing subcategory, and a new subcategory may need to be created.

The Bishop is to busy to have to worry about these type of details, thats why he has clerks.

aebrown wrote:I think these two statements are not actually in disagreement, and they are talking past each other. Jdlessley is correct that there is no restriction that prevents ever having a negative balance; Gary_Miller is correct that to carry a deficit is not within sound accounting principles.

There may be minor disagreements as to how promptly a deficit must be corrected, but clearly the guidelines anticipate that deficits may occur within the normal course of events, and deficits do need to be corrected. I would hope that we can agree on those basic principles and not get hung up on absolute positions on relatively unimportant details. I'm sure there's really much more agreement than disagreement on this matter.

I know this is somewhat old, but let me say this: if the negative balance is great enough, you will receive a email from CHQ Accounting very soon after the overdraft directing you to fix the issue. Possibly more than one email.

In the past our ward has had a problem with being able to collect "after the fact". The had book says that the first choice for activities such as Scout and Girl's camps is to pay those expenses out of the Budget of the Ward. That is why those category amounts were increased. If there is not enough in the Budget, then and only then should other monies be used. We just had that happen in our Girls Camp. So, what we did was to write two checks. One out of the "Girl's Camp" account which took that account down to zero, then a second check out of the Young Women's budget account. If and when the additional funds were received from the other girls going, we would replace the funds taken out of the Budget account. That way there was no "transferring" of funds. It was very clean.

That is the way we have handled it for the past couple of years. It works for us.

That way we never have to worry about getting "nastygrams" from CHQ for an overdrawn "other" account

waynecooke wrote:So, what we did was to write two checks. One out of the "Girl's Camp" account which took that account down to zero, then a second check out of the Young Women's budget account.

MLS permits writing a single check from multiple categories. Doing so saves on printing multiple checks disbursed to a single payee.

waynecooke wrote:If and when the additional funds were received from the other girls going, we would replace the funds taken out of the Budget account. That way there was no "transferring" of funds. It was very clean.

This may appear clean but it is not a proper procedure for budget categories.

The first issue is that deposits from authorized member-financed activities donations are not to be made into budget categories. Even though MLS is programmed to accept deposits to budget categories it is for return of excess advance disbursements, a return of budget funds from other Church units for expenses paid on their behalf, and other similar budget transactions. Deposits from members for authorized member-financed activities are only to be deposited into an Other:AFMA category.

The second issue is if there were sufficient budget funds to fund the camps, then why are you collecting funds from members?

Both of these are practices an auditor should question if he notices it. Since they are not audit checklist items he may not notice it. But that does not mean it is an acceptable practice and in accordance with Church policies and procedures.

The Other:AMFA category is there for the very purpose of collecting funds from members for a specified activity or event. This is so budget categories are not used for this purpose. It keeps the funds separate for proper accounting.

jdlessley wrote:The second issue is if there were sufficient budget funds to fund the camps, then why are you collecting funds from members?

I agree with your discussion of the first issue, but I don't see how this second issue is necessarily a problem. For example, a camp might be held in July. There might be some budget funds available at that point, that could be used instead of AMFA funds from the YW attending the camp. But since we do annual budgeting, it's entirely possible that those budget funds are "available" at that point, but are actually designated for other planned activities later in the year. It seems clear that waynecooke understands that Budget funds are used for camps if they are sufficient, so I see no reason to assume that his ward is requesting members to pay for camp when Budget funds can cover the camp expense (and the other budgeted expenses for the year).

aebrown wrote:I agree with your discussion of the first issue, but I don't see how this second issue is necessarily a problem.

Thinking about it after some sleep, you're correct. I was looking at it from the perspective of an auditor who sees the payment from a budget category and thinks there must have been sufficient budget funds if they were used. This doesn't consider that the budget funds were borrowed from the budget category.

It is the deposits from the members into the budget category that is not procedurally correct. When trying to keep Other:AMFA categories from going negative it would be appropriate to use budget funds. Budget funds would be used anyway at a later date to correct the deficiency in the Other:AMFA category should all the funds for the activity/event not be collected. When funds are collected from members to pay for the camp, or any AMFA, they must be deposited into the appropriate Other:AMFA category. Once the funds are collected that can be collected, a check is written from the Other:AMFA category and deposited into the budget category from which funds were borrowed.

Units in our stake were advised by our regional audit trainer to use other funds, designated for camp or other authorized activity, prior to dipping into the budget for the same purpose. The reason being that too many units use budget funds first and wind up with left over other funds when the activity costs less then expected. The goal (at least for us) is not to have excess other funds carry over from year to year.

jdlessley wrote: Once the funds are collected that can be collected, a check is written from the Other:AMFA category and deposited into the budget category from which funds were borrowed.

Its much more simpler. All that is needed is to do a catagory correction to the check that was written with the funds comming out of the Other: AMFA catagory.

Bro Brown (Administrator), I see what most are saying in this thread re: it's often ok to transfer from Budget to Other. One person even quoted some instructions (but didn't give a link.) However, aren't we missing the forest for the trees? CHI is clear (and it makes sense given prior IRS rulings) that my contributions to budget are tax deductible by me. However, my contributions to Other are not and they do NOT show up on my annual offerings statement. (The reason: I receive or a member of my family can receive direct and personal benefit for my payment to Other.) Thus, I you transfer my tax deductible dollars (Budget) into and mix with non-tax deductible dollars (Other), then you have just used your accounts to funnel and allow me a tax deduction on my payments that are not tax deductible. (This was the whole point the Church negotiated with the IRS to allow missionary fundings to be deductible, ie, I no longer give dollar for dollar directly to my son.)

It seems to me the transfer from Budget to Other may not be a problem in MLS, but the IRS could have a huge problem with it. Because you are placing on my 1099 as deductible, funds that you then transfer to a non-deductible account.

Has this come up before with church HQ? Or say Church Tax Dept?

jngarr wrote:CHI is clear (and it makes sense given prior IRS rulings) that my contributions to budget are tax deductible by me.

Nope. Since donations are not allowed in budget, there is no way to get a tax deductible donation in there. It's expected that any income into budget is just a reimbursement.

If you want a tax deduction, you'll have to donate to tithing, fast offering or some of the other valid donation categories.

There was a time when donations to budget were tax-deductible, but that was back when units were expected to raise their own operating funds. It hasn't been that way for several years now. At least not in the US. I suppose some countries could be different, but I don't think so.

jngarr wrote:CHI is clear (and it makes sense given prior IRS rulings) that my contributions to budget are tax deductible by me. However, my contributions to Other are not and they do NOT show up on my annual offerings statement.

The Handbook does not make any statements about donations/contributions to the Other category as being tax deductible or not. Whether they are or not depends on circumstances. It is not possible for the church to know what those circumstances are and therefore they do not include those amounts on the tax valid statement. Individuals should consult their tax professional as to whether any donations made to any Other category may receive tax favored status. There are situations in which the donations may receive tax favored status (tax deductible). But for the most part, in my experience, donations to the Other category do not meet the requirements for tax favored treatment.

jdlessley wrote: CHQ has not, to date, specified when funds must be collected for an AMFA event. Rather it is up to the bishop to decide the best approach for the benefit of the members. We have AMFA sub-categories go negative for a period of time after the event has occurred. The members contribute as they can to meet their obligation.

.

This is a snipit from an email one of our units received from the financial department
"
An additional clarification: The Other category is a pass through account for short term expenses. It is a collect BEFORE expense account. Not an expense first, and then hopefully collect all the funds later;

A) This category should be a zero balance unless you are collecting funds for an upcoming expense (such as a camp registration, etc.).

B) Planning for upcoming events always necessitates planning to collect the necessary funds BEFORE the need for expenditures. If collected funds do not cover the expense when due, the balance needed should come from the Budget. Deposit additional funds collected (after the expense) into the Budget account charged for the activity.

C) None of your accounts should go into the deficit, especially with hopes to eventually collect and replenish the funds. If the deficit is the result of a long standing negative balance, which has been masked by positive balances in your sub-categories, it should be resolved ASAP.



In order to bring the deficit in the Other category to a zero balance, please write a check from your “Budget” payable to the unit. Deposit this check (with your tithing funds) to your “Other” category (be sure to include in your MLS Transmission). "

wrigjef wrote:This is a snipit from an email one of our units received from the financial department
"
An additional clarification: The Other category is a pass through account for short term expenses. It is a collect BEFORE expense account. Not an expense first, and then hopefully collect all the funds later;

A) This category should be a zero balance unless you are collecting funds for an upcoming expense (such as a camp registration, etc.).

B) Planning for upcoming events always necessitates planning to collect the necessary funds BEFORE the need for expenditures. If collected funds do not cover the expense when due, the balance needed should come from the Budget. Deposit additional funds collected (after the expense) into the Budget account charged for the activity.

C) None of your accounts should go into the deficit, especially with hopes to eventually collect and replenish the funds. If the deficit is the result of a long standing negative balance, which has been masked by positive balances in your sub-categories, it should be resolved ASAP.



In order to bring the deficit in the Other category to a zero balance, please write a check from your “Budget” payable to the unit. Deposit this check (with your tithing funds) to your “Other” category (be sure to include in your MLS Transmission). "

This information is all well and good, except that

1. It isn't in the training (which hasn't been updated in 4 years)
2. It's never been broadcast more generally via MLS messages or otherwise
3. "Lending" money to the Other account is counter-intuitive. You only get to the "participants pay for all or some of the expense" if budget funds are inadequate.
4. The training does include a bit on resolving deficits, including deficits caused by overspending the Other account, but you don't get deficits under the above method, leading to confusion as to whether short-term Other deficits are acceptable.
5. The only time deposits to Budget are described are in the context of a specific advance, where unused money is put back into the budget. This type of loan to the Other account, where the full amount is redeposited after collecting additional money, is never mentioned or described.

The only way you receive this information/guidance is if your overall Other account goes negative. Then the bishop receives an email from one or more deeply concerned persons at Accounting Services.

allenjpl wrote:The only way you receive this information/guidance is if your overall Other account goes negative. Then the bishop receives an email from one or more deeply concerned persons at Accounting Services.

Since CHQ currently can't see individual accounts, poor practices can go undetected as long as there's a positive amount for the overall. But sooner or later, the unit won't be so lucky and that's when the emails start arriving.

As MLS Financial functions start moving to the web, there's a good chance that may change.

allenjpl wrote:This information is all well and good, except that

1. It isn't in the training (which hasn't been updated in 4 years)
2. It's never been broadcast more generally via MLS messages or otherwise
3. "Lending" money to the Other account is counter-intuitive. You only get to the "participants pay for all or some of the expense" if budget funds are inadequate.
4. The training does include a bit on resolving deficits, including deficits caused by overspending the Other account, but you don't get deficits under the above method, leading to confusion as to whether short-term Other deficits are acceptable.
5. The only time deposits to Budget are described are in the context of a specific advance, where unused money is put back into the budget. This type of loan to the Other account, where the full amount is redeposited after collecting additional money, is never mentioned or described.

The only way you receive this information/guidance is if your overall Other account goes negative. Then the bishop receives an email from one or more deeply concerned persons at Accounting Services.

I may have had the very first email from the team about the Other Account being negative, it was extremely critical and overly harsh in my opinion for something to have come out of the blue like that It was FULL of bold and underlined text, stated things the handbook didn't state, etc... I begged their forgiveness and asked if in the future that Headquarters might pre-fund the activities of a Temple Open house rather than relying on a stake to go negative in their Other account... We discussed some of my own personal thoughts on the matter. While I think there are never many good reasons for an Other account to go negative, the solution of using the Budget to write a check if the expense is well in advance of the collection (like a deposit for a camp) is an adjustment for many wards/branches that has traditionally been done with no thought that it was wrong procedure. Many wards have traditional fund raising, or are used to doing the fund raising nearer the time of the event rather than the time of the needed pre-camp funds, that is a matter of adjustment for a ward or branch. I spoke to a team lead, and then when our Other account still had not gone positive another message was sent directly to the Stake President from their Manager... again, we wondered about the Open house idea not sinking in, but whatever, we collected a bunch of money for a stake YW camp, camped it in the other account until we were reimbursed for our open house expenses... made the problem go away for now:

After having the conversation with SLC, I reviewed the training again on the other account and it was explicit in the training that you collect funds into other and then write a check out of other. Frankly, I hadn't caught it before because of the nuance'd nature, it was never listed boldly as a bullet point or put into a thou shalt, it was just casually said specifically about 3 times as I recall. So I do sympathize with them. I am, however, afraid of what using the budget in a way to 'cover' a negative amount will do... see my comments below.

Here are the items I mentioned to at least a member of the team and that team's manager:

1. This has come as a shock to many, it is obvious, because you have felt the need to take this drastic action, why not warn everyone through a communication. an MLS message, the wiki, the tech board are all avenues you could've used to communicate that this would be coming. They acknowledged it being a good idea and I thought that would be a direction they headed down.
2. For a stake to not go negative would probably be an issue, we often fund multi-stake regional events or share in that task among different stakes. To pre-fund an activity to stay positive and then send refunds out after or request more funds later seems a great deal of effort that seems to be a busy-work related.
3. The temptation will be (and what the accounting team directed me to do) is to use the Budget in all cases, and continue in the old-style practice of collecting after the fact, or doing a fund raiser after the fact. The reason I feel this is a slippery slope is that how long before that becomes a yearly fund raiser that just gets put in the budget. If the expense was written to the budget, then the fund raiser money will be deposited into the Budget.... then it becomes a fund raiser for Budget money... This, of course, leads us back down the path that the equalized budget was meant to lead us away from originally.

I realize that the majority will never do #3, but the problem is that we are all volunteers, as thoughtful as a bishop may be, as well meaning as clerks may be, there will be a problem from this type of encouragement. Doesn't this smack of the original CUBS rollout where all accounting was done in the Income/Expense report? It almost seems now that I look back on it with this latest push, that might have been the start of eliminating the other account.

Another scenario occurs frequently at the stake level. We collect funds from the wards in our stake for various purposes, and also from other stakes for our agent stake responsibilities. In some cases, we might be temporarily negative, and following those instructions for using Budget funds would create an accounting mess.

Specifically, we collect funds from the wards for a YW camp for Beehives. The wards have told us how many YW will be attending, and they are to send the stake $100 per girl. We have a deadline from the camp where we must send them a check, or we will not be able to participate. This year, we got checks from all but one ward on time, and we deposited those checks into the appropriate AMFA subcategory. But then the deadline arrived, and we had to send the check in. We were short $400 because the one ward was sending 4 girls, but hadn't sent a check. The bishop assured us that he would give us the check on Sunday (and he is not surprisingly an honest man, who did indeed deliver the check on Sunday). But the check had to be sent on Wednesday, so we wrote the check and we were temporarily $400 in the hole for that subcategory.

If we were to strictly follow the rules in that email message referenced earlier, we would have written $400 from Budget and then deposited the $400 check into Budget. But that would create some activity in a subcategory of Budget that causes that part of the YW camp spending to be in a totally different category from all the rest. And since we hadn't planned to spend any Budget funds for this pass-through expense, we had no Budget subcategory set up for such an expense. Then there's no way to run a report that accurately shows what was spent on that camp; you'd have to run an Income&Expense Report for the bulk of it, and a Budget report for the one deposit and the one expense. That's a mess.

I certainly understand the principles behind that message, and I support them. But collecting funds from a ward doesn't fit the characterization from that message of "hopefully collect all the funds later"; we knew we would collect the funds very soon. I think there needs to be some room for judging that a very temporary deficit in an AMFA subcategory can be appropriate at times.

RussellHltn wrote:Nope. Since donations are not allowed in budget, there is no way to get a tax deductible donation in there. It's expected that any income into budget is just a reimbursement.

If you want a tax deduction, you'll have to donate to tithing, fast offering or some of the other valid donation categories.

There was a time when donations to budget were tax-deductible, but that was back when units were expected to raise their own operating funds. It hasn't been that way for several years now. At least not in the US. I suppose some countries could be different, but I don't think so.

RussellHltn, yes, I did not say that correctly. I said "contributions to budget" but I meant general contributions (as in tithing). Tithing is deductible whereas contributions to Other generally would not be (if the ward is using Other as restricted as CHI states), because my contribution is, for example, for my son's YM group to go camping -- a direct benefit. That said, those facts I offer are from the wrong perspective.

The perspective that is important here is Budget vs Other. I think the answer lies in the fact that the nature of Budget funds from HQ is mixed and unknown -- it made be comprised of tithing funds, investment income earned by the church, etc, etc. Thus, Budget funds' a ward gets from HQ do not have as their sole source tithing. Therefore, from a tax perspective I no longer see a problem with a transfer of funds from Budget to Other.

Thanks for the sounding board!

What about fixing the issue by moving expenses from Other:YM to Budget YM, by changing the category of the original expenses? It is easier than writing and depositing a check. It splits up the expenses for the activity, but as long as you keep track, is this also an acceptable practice to get rid of the deficit in other?

dheilner wrote:What about fixing the issue by moving expenses from Other:YM to Budget YM, by changing the category of the original expenses? It is easier than writing and depositing a check. It splits up the expenses for the activity, but as long as you keep track, is this also an acceptable practice to get rid of the deficit in other?

This is a long, rambling thread, so it's easy to miss it, but that suggestion was made a couple of times earlier in the thread, most recently here. As long as the correction is approved by the bishop and a proper notation is made on the original documentation for the expense to leave an audit trail, I agree that this can be a reasonable practice.

I want to transfer funds from a budget account to an Authorized...etc. account. I know that you used to be able to do it through the "Adjustments" page, but now the only accounts that come up are Authorized...etc. accounts. Could someone tell me how to do it, if it is possible. Thank you in advance.

waynecooke wrote:I want to transfer funds from a budget account to an Authorized...etc. account. I know that you used to be able to do it through the "Adjustments" page, but now the only accounts that come up are Authorized...etc. accounts. Could someone tell me how to do it, if it is possible. Thank you in advance.

I think you mean the "Transfers" page (there is no page I know of titled "Adjustments"). But except for a very temporary bug that seemed to allow transfers between major categories (see MLS 3.0: Transfer Policy Change?), that has never been possible. So once you pick a subcategory in a particular major category as the source of a transfer, your only options for the subcategory of the destination are in the same major category.

waynecooke wrote:I want to transfer funds from a budget account to an Authorized...etc. account.

To move funds from a budget category to an Other:AMFA category requires a check to be written from the budget category and then deposited into the Other:AMFA category. See the How to deal with deficits section of the wiki article Other category.

Thank you both for your responses. Yes, Transfers is correct. I was afraid that the "check" method was the way to do it, but I was hoping there was an easier way. Thanks again.

waynecooke wrote:Thank you both for your responses. Yes, Transfers is correct. I was afraid that the "check" method was the way to do it, but I was hoping there was an easier way. Thanks again.

The is another way in which I feel is better than writing a check and depositing it into the other to cover a negative balance. Just make a category correction on the check that was written that caused the negative balance.

I am EXTREMELY disappointed that much of the financial training has been removed and not updated, indeed much that remains has been diluted. Managing the "Other or Authorized Member Financed Activities" accounts is one specific example. I am a Stake Auditor and have to explain policy to new ward finance clerks. I used to be able to direct them to the training. I have one who is asking for the 'source' of my recommendations concerning the "Authorized Member Financed Activity" sub-categories. When is the Church going to update the training?

charlesbruderer wrote:I am EXTREMELY disappointed that much of the financial training has been removed and not updated, indeed much that remains has been diluted. Managing the "Other or Authorized Member Financed Activities" accounts is one specific example. I am a Stake Auditor and have to explain policy to new ward finance clerks. I used to be able to direct them to the training. I have one who is asking for the 'source' of my recommendations concerning the "Authorized Member Financed Activity" sub-categories. When is the Church going to update the training?

Which important points about AMFA do you think are missing in the RKATS article The "Other" Category?

I apologize, I used to get more on the "Other" accounts from the Auditor Training. I had looked in the section on processing expenses and did not look in the "Donations" section of the discussion. You appeared to have covered the information for the most part. I should "Fall on my Sword now." Thanks again for your support

charlesbruderer wrote:I should "Fall on my Sword now." Thanks again for your support

No sword required. Consider yourself blessed for having helped others with a reminder of where the information may be found.

And every now and then something is missing or needs clarifying.

I have an Other category for Missionary iPads with a balance, and we have the official Missionary Mobile Device category. How can I move the balance from the informal iPad category to the correct one? Should I write a check to it? If so, do I enter "Other: Missionary Mobile Device" as the payee?

It would probably be best to re-categorize the original donations.