Finance Statement Suggestion

Discussions around using and interfacing with the Church MLS program.
AalFerrari
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Finance Statement Suggestion

Postby AalFerrari » Wed Jul 25, 2012 11:07 am

As a stake finance clerk I have spent much of my time attempting to clean up the mess that is the other account with all of the wards in my stake. I have discovered that for some reason you can overdraw a subcategory in the other account by more than $3,100 and you will never get any sort of message or indication of a problem. I would really like to see any overdrawn subcategories be listed under action items on a unit's finance statement, so that they know there is a problem. It would also help me at the Stake level if this info was included in the consolidated finance statement, so that it is easier to stay on top of it. It would also be possible to add another section/page to the finance statement that lists the balances of all subcategories.

I have cleaned up about 5 wards other accounts at this point with thousands in misplaced funds. I imagine church wide the amount of money overdrawn or misplaced in other account subcategories could very well be in the millions. There needs to be a way to make this something the clerk/bishop should see if there is an issue. Anyone know how to get this done?

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Postby russellhltn » Wed Jul 25, 2012 11:16 am

AalFerrari wrote:I have discovered that for some reason you can overdraw a subcategory in the other account by more than $3,100 and you will never get any sort of message or indication of a problem.


Just to be clear, was the "Other" category itself overdrawn, or just the subcategory? I can understand if subcategories are ignored, but I'd be surprised of that's the case for the category as a whole.
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AalFerrari
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Postby AalFerrari » Wed Jul 25, 2012 11:23 am

That's part of the problem. The other category that shows up in the finance statement is a total of all of the subcategories. So when they create a subcategory for a humanitarian service project, deposit the money into the main other account (Authorized Member Financed Activities), and then write the check out of the subcategory, the subcategory goes negative but the overall balance for the other account looks fine. I have seen multiple subcategories with negative balances dating back years, because the other account overall balance wasn't negative. So it can be cleaned up through transfers, it's just that the clerks aren't aware that there is a problem to begin with.

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aebrown
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Postby aebrown » Wed Jul 25, 2012 11:26 am

I imagine this kind of detail is not included on the Unit Financial Statement, or on the stake's Consolidated Financial Statement, because the Church considers subcategories to be something that is managed at a local level. The Church concerns itself only with the total for categories, not the individual subcategory balances.

Any financial clerk can easily print a report of the subcategory balances using an Income and Expense report. I am a financial clerk at the stake level, and I print such a report every month to be reviewed by the stake president. When I was a ward financial clerk, I printed a similar report to be reviewed regularly by the bishop. Since financial statements are not sent to the bishop anymore, he typically only sees what the financial clerk prints out and puts in front of him -- either at the bishop's request or the clerk's initiative. Any responsible clerk will make sure that the bishop sees this kind of information regularly.

I would also note that the Other account receives particular attention twice a year in the financial audit. Any negative balances for subcategories should receive attention from the auditor and then the audit committee.

If you'd like to make an official suggestion for a change, you could certainly send your request to Local Unit Support.
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AalFerrari
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Postby AalFerrari » Wed Jul 25, 2012 11:33 am

One of the reasons this problem keeps getting propagated is because when the audits are performed they simply glance at the other account as listed on the finance statement. I haven't seen or been through an audit in my stake where they checked the subcategories. And until I started trying to figure out what was going on with the other account, most clerks didn't have a clue how to check the balances of the subcategories. The reason I suggest adding it to the finance statement is because although it doesn't get sent directly to the bishop, he still has to sign and date the action items page. So that, at least in theory, he would be aware of any issues with the subcategories and make sure that the clerk clears them up.

And thanks for the suggestion, I'll contact Local Unit Support and see if they think it's worth worrying about.

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aebrown
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Postby aebrown » Wed Jul 25, 2012 11:42 am

AalFerrari wrote:One of the reasons this problem keeps getting propagated is because when the audits are performed they simply glance at the other account as listed on the finance statement. I haven't seen or been through an audit in my stake where they checked the subcategories.


I don't see how that's possible. The audit specifically requires that every subcategory of the Other account be listed, along with its balance, and then be reconciled against the financial statement. An auditor can't skip over that step -- he must reconcile the Other category.

Of course, the auditor could dutifully write down a negative balance for one or more subcategories and not think about what that means. But that would require him to gloss over the question "Are funds in the "Other" category spent for their intended purpose within a reasonable time period?" Any auditor who sees a large negative balance in a subcategory and yet doesn't consider how that relates to that specific question needs some additional training, to put it mildly.
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AalFerrari
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Postby AalFerrari » Wed Jul 25, 2012 11:48 am

I can't agree more. But to give you an example, in one of my audits as a ward finance clerk in this Stake they asked about whether or not a member of the bishopric was present while counting tithing. I informed the auditor that there was not, that the counsellor tended to leave and come back when we were almost finished. My ward has two finance clerks, which when the auditor learned that he said, "Oh, that's okay if the other clerk is here instead." Half of the stuff I am trying to clean up is because no-one wants to get anyone in trouble during audits. It's been fun.

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Postby johnshaw » Wed Jul 25, 2012 12:13 pm

AalFerrari,

I was in a similar situation as you when I was called as a Stake Clerk, my previous experience with the Auditing process in our Stake led me to spend time in each Auditor's training specifically training on the correct Other account usage.... Scout Fund is not a proper fund whether it has positive funds or not, etc... It took a couple of years to really get there, but I can say we're getting better. We even follow-up on action items on the audits now :) It's a great time to get in front of the mid-year audits right now!

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Postby jdlessley » Wed Jul 25, 2012 12:57 pm

I like the suggestion to have more detail reporting in the UFS for the Other category and specifically the Other:AMFA category and subcategories. But my reasons are to put all the information I give to the bishop in one document rather than having to create several. They are not to address local procedural issues.

AalFerrari wrote:The other category that shows up in the finance statement is a total of all of the subcategories.
MLS does not send any information about Other:AMFA subcategories to headquarters. The data for the Other category is, as noted, only the total for the subcategories. There may be multiple reasons for this. One of them may be as mentioned by aebrown; the Church may consider it to be a local management issue. Whatever the reasons, the subcategory data is just not transmitted to headquarters.

AalFerrari wrote:...it's just that the clerks aren't aware that there is a problem to begin with.
This would mean to me that they may not be properly trained or are not magnifying their calling or both. In my opinion, a unit finance clerk should be intimately familiar with the unit finances and regularly review the status of every category. Not knowing all Other:AMFA subcategories' purposes and the plans involved with each subcategory means there is something lacking in carrying out the calling duties and responsibilities. The Handbook specifically places the responsibility on the stake clerk and assistant clerks to ensure each unit clerk and assistant is properly trained. Properly trained clerks will then have the tools to magnify their calling. Whether or not they magnify their calling is up to them and and can be influenced their priesthood leaders.

AalFerrari wrote:One of the reasons this problem keeps getting propagated is because when the audits are performed they simply glance at the other account as listed on the finance statement.
How a financial audit is conducted can be, and should be, directed by the audit committee. Because your stake has issues with unit Other:AMFA subcategories, the auditors can be given specific training and instruction to identify finance issues beyond those listed in the audit checklist. Since there is an ongoing issue with Other:AMFA category and subcategories you can, in council with your stake clerk, provide input to the audit committee chairman for items to watch for that are not included in the audit checklist. The purpose of a financial audit is:
Audits evaluate how funds are gathered, spent, and recorded. Audits provide opportunities to identify and correct problems early.
If expected problem areas are not adequately and regularly examined they will not get the attention they deserve.
JD Lessley
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Postby jpjones~ogr » Sun Aug 19, 2012 10:25 am

I hope the following opinions will be helpful.

While I agree that unit finances need to be well managed and we have solemn responsibilities to be good stewards of Church funds, I struggle with adjusting policies or controls that suddenly or eventually add significant time and complication to our lives as volunteers.

During thirty plus years of association with managing Church funds as stake auditor, ward clerk, or finance clerk I've yet to know, or know of, one person who intentionally misappropriated monies, or even caused a significant concern. We have financial policies and procedures because some have erred. Policies and such will continue be adjusted as needed by those in authority. However, my professional activities taught me that some organizations persistently overreact to little problems that only need training and encouragement to correct. Professional trust seems to be severely lacking, which tends to increase operational costs.

My perspective of auditing is to support and facilitate local unit efforts by counseling and encouraging. All findings need to be documented and reported, as well as tempered with an auditors understanding and recommendations. I remain attentive and prepared to act should a significant violation be found, but prefer to notify and teach. Professionally and privately, I am more successful when I foster cooperative relations.

I guess what I'm getting at is that people make mistrakes, and they are expected to, and that patience and tolerance are quite useful tools for gaining compliance. Our stake auditors tend to be mature certified public accountants as well as rather gracious while encouraging adherence.


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