Can we provide funds to a member before the expense is incurred?

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jasondavie
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Can we provide funds to a member before the expense is incurred?

Postby jasondavie » Mon Nov 23, 2015 4:59 am

Hi Everyone,

I've been searching the help topics and CHOI but I can't seem to find any information on if we are able to provide a cheque to a member who will be purchasing supplies or paying for services for an upcoming event, before they have actually spent any of their own money.

We have a member who will be purchasing many things for the upcoming Christmas party but he said that he is low on funds and would like to receive a cheque for the projected amount the expenses will come to (or a little less to be on the safe side) before he makes the purchases as he does not have enough of his own money to cover the expenses and then wait to be reimbursed.

Is this possible? Bishop is happy to do it but we're trying to find out if it's allowed.

Thanks.

drepouille
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Re: Can we provide funds to a member before the expense is incurred?

Postby drepouille » Mon Nov 23, 2015 6:47 am

From the Help Center at https://www.lds.org/help/support

Document Expenses and Reimbursements
Each ward should create a form to gather basic information for each expense. The format of the form is not as important as the information it requests. The person requesting the reimbursement or the advance of funds is usually the one who fills out this form.
https://www.lds.org/help/support/expenses-and-reimbursements

Donation Categories
Deposits are only made to the “Budget” category for the return of unused funds from an advance.
https://www.lds.org/help/support/donation-categories
Dana Repouille, Plattsmouth, Nebraska

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aebrown
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Re: Can we provide funds to a member before the expense is incurred?

Postby aebrown » Mon Nov 23, 2015 6:54 am

jasondavie wrote:I've been searching the help topics and CHOI but I can't seem to find any information on if we are able to provide a cheque to a member who will be purchasing supplies or paying for services for an upcoming event, before they have actually spent any of their own money.

Yes, you can do this. It is called an "Advance". As I recall, the documentation on the procedures is fairly limited, but you will find enough references to the practice that you can feel confident that it is an approved technique. Basically, you write a check to the person for the estimated cost. The person then spends the money for the intended purpose, carefully preserving receipts. They then submit the receipts which are attached to the original expense documentation.

It may be the case that not all the funds were spent; in that case, the person submits the surplus funds with a regular donation slip, writing "Budget Return" on the "Other" line; the funds are processed with a regular donation batch, and the clerk categorizes the donation in the same category as the original expense.

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Re: Can we provide funds to a member before the expense is incurred?

Postby jdlessley » Mon Nov 23, 2015 1:31 pm

aebrown wrote:Basically, you write a check to the person for the estimated cost

Checks for advances are written to the vendor/retailer/service provider rather than to the member incurring the expense. This requires the member to gather expense payment information in advance, such as the name of the vendor/retailer/service provider, their address, and the estimated amount of the expense. Any amount in excess of the expense is refunded to the unit using a Tithing and Other Offerings slip.

In addition to getting the information for the advance check the member will need to find out if the vendor/retailer/service provider will accept the check since some will not because they do not accept a third party checks or they do not accept institutional checks.

In any case the member should not be the payee on the check as this opens the disbursement to abuse or fraud. Checks written to the vendor/retailer/service provider provides more assurance that the funds will be used for their intended purpose.
JD Lessley
Have you tried finding your answer on the LDS.org Help Center page or the LDSTech wiki?

drepouille
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Re: Can we provide funds to a member before the expense is incurred?

Postby drepouille » Mon Nov 23, 2015 1:46 pm

Every year, the stake YW president asked me to print an advance check for about $2,000 to the sister who was going to buy all the food for YW camp. One year, all I received was an e-mail from a counselor in the stake presidency asking me to print a check for $2,000 to Sister X. Unfortunately, the only Sister X I knew was the mother-in-law of the woman who was supposed to receive the advance. Oops.
After YW camp, we received a large envelope containing many receipts and the unused portion of the advance in bills and coins. That cash was passed between the stake president and his counselor all summer before one of them could actually sit down and do a deposit with the clerk. So about September of that year, the stake president was asking, "What am I supposed to do with this envelope? Where did it come from?"
Communication is a wonderful thing.
Dana Repouille, Plattsmouth, Nebraska

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Re: Can we provide funds to a member before the expense is incurred?

Postby russellhltn » Mon Nov 23, 2015 2:29 pm

jdlessley wrote:In any case the member should not be the payee on the check as this opens the disbursement to abuse or fraud.

Usually in that case the check isn't an advance. And yes, it is the preferred way of doing things.

But I've never heard that you can't write the check out to the person for an advance. Can you find some documentation to support that?
Have you searched the Wiki?
Try using a Google search by adding "site:tech.lds.org/wiki" to the search criteria.

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aebrown
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Re: Can we provide funds to a member before the expense is incurred?

Postby aebrown » Mon Nov 23, 2015 2:50 pm

jdlessley wrote:In any case the member should not be the payee on the check as this opens the disbursement to abuse or fraud. Checks written to the vendor/retailer/service provider provides more assurance that the funds will be used for their intended purpose.

The policy on advances has never been as restrictive as you claim. See, for example, the financial audit form, which defines "Advance" as (emphasis added):
Advance: Cash given to a Church member for the purchase of materials or services for a Church event, as opposed to a reimbursement, which is given after the member has paid for the materials or services.

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Re: Can we provide funds to a member before the expense is incurred?

Postby jdlessley » Mon Nov 23, 2015 9:41 pm

aebrown wrote:
jdlessley wrote:In any case the member should not be the payee on the check as this opens the disbursement to abuse or fraud. Checks written to the vendor/retailer/service provider provides more assurance that the funds will be used for their intended purpose.

The policy on advances has never been as restrictive as you claim.

It was this restrictive while I was an auditor five years ago and it still is as far as I can tell. I have not reviewed the current audit checklist yet but the online training found in the Help Center "Expenses and Reimbursements" video explains it beginning at the 6 minute and 10 second point. It states:
... Sometimes a member will request an advance payment for an expense rather than using his or her own funds and then being reimbursed. In these cases the member should fill out the check request or reimbursal form discussed earlier. They fill it in for the exact amount or as close an estimate as they can make. The check should then be made out to the vendor or service provider. After spending the funds the member should attach receipts to an expense authorization form and give the documentation to a bishopric member or clerk. ...
(Bold emphasis added.)

I don't know if this restriction has been relaxed in the past few years but I find no clear evidence that it has. The use of the word "should" does leave room for exceptions. However, the words used in the audit checklist as aebrown quoted is not clear as to whether the funds are actually provided to the member or on their behalf (or through them when they tender the check to the vendor/service provider) since in the US funds are disbursed using a check rather than "cash".
JD Lessley
Have you tried finding your answer on the LDS.org Help Center page or the LDSTech wiki?

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aebrown
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Re: Can we provide funds to a member before the expense is incurred?

Postby aebrown » Mon Nov 23, 2015 11:17 pm

jdlessley wrote:
aebrown wrote:
jdlessley wrote:In any case the member should not be the payee on the check as this opens the disbursement to abuse or fraud. Checks written to the vendor/retailer/service provider provides more assurance that the funds will be used for their intended purpose.

The policy on advances has never been as restrictive as you claim.

It was this restrictive while I was an auditor five years ago and it still is as far as I can tell. I have not reviewed the current audit checklist yet but the online training found in the Help Center "Expenses and Reimbursements" video explains it beginning at the 6 minute and 10 second point. It states:
... Sometimes a member will request an advance payment for an expense rather than using his or her own funds and then being reimbursed. In these cases the member should fill out the check request or reimbursal form discussed earlier. They fill it in for the exact amount or as close an estimate as they can make. The check should then be made out to the vendor or service provider. After spending the funds the member should attach receipts to an expense authorization form and give the documentation to a bishopric member or clerk. ...
(Bold emphasis added.)

I don't know if this restriction has been relaxed in the past few years but I find no clear evidence that it has. The use of the word "should" does leave room for exceptions. However, the words used in the audit checklist as aebrown quoted is not clear as to whether the funds are actually provided to the member or on their behalf (or through them when they tender the check to the vendor/service provider) since in the US funds are disbursed using a check rather than "cash".

Apples and oranges. You are taking a statement about an advance payment, and assuming because it contains the word "advance" that it is talking about the same thing as the "Advance" definition from the audit requirements. What you quoted clearly refers only to a payment made to a vendor that is paid for in advance of receiving the goods or services. That is certainly a valid way to make a payment, and indeed I would agree that it is superior to advancing funds directly to the member. However, there is no doubt that what I quoted from the audit instructions clearly refers to funds being given directly to the member. This is often the only practical way for a member to pay for expenses when the member is short on funds but has responsibility to purchase items on behalf of the unit, often from a variety of vendors.

I was continuously involved in Church finances as an auditor, ward financial clerk, assistant stake clerk for finances, and stake clerk for over twenty years, and never have I heard or read that advances paid directly to the member were disallowed. In fact, they have always been specifically addressed in the audit instructions, as well as in other documentation. It may well be that your stake audit committee or stake presidency had a local policy that was more restrictive than the general Church policy in this regard, and that is certainly their prerogative. But local policy does not override what has clearly been allowed by Church policy.

jasondavie
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Re: Can we provide funds to a member before the expense is incurred?

Postby jasondavie » Tue Nov 24, 2015 1:14 am

Thank you everyone for your replies. I believe I will now be able to give my Bishop an educated answer :)


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