MLS / How to transfer from "other" category into "budget"

Discuss questions around local unit policies for budgeting, reconciling, etc. This forum should not contain specific financial or membership information.
lajackson
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Re: MLS / How to transfer from "other" category into "budget"

Postby lajackson » Fri May 12, 2017 12:17 pm

chriswoodut wrote:I had this come up and our stake instructed me to write a check from the OTHER and deposit it in the bank into the BUDGET.

That is one way of doing it, and is the way we used to do it before we were able to recategorize the expenditure. In olden times, you had to call LUS to get a check recategorized, so you had to do the check writing/depositing.

Today, changing the category of the check and putting in a good reason will leave an audit trail that should satisfy everyone.

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Re: MLS / How to transfer from "other" category into "budget"

Postby russellhltn » Fri May 12, 2017 12:23 pm

chriswoodut wrote:I had this come up and our stake instructed me to write a check from the OTHER and deposit it in the bank into the BUDGET.

That will work, but the auditor will have to spend some time making sure that wasn't a violation of policy. (A reimbursement instead of excess being shuffled to budget.) That's why it's preferred to re-categorize the original expense - cleaner books for the auditor.

Re-categorizing avoids even the appearance of wrong-doing.
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Re: MLS / How to transfer from "other" category into "budget"

Postby chriswoodut » Fri May 12, 2017 12:29 pm

russellhltn wrote:
chriswoodut wrote:I had this come up and our stake instructed me to write a check from the OTHER and deposit it in the bank into the BUDGET.

That will work, but the auditor will have to spend some time making sure that wasn't a violation of policy. (A reimbursement instead of excess being shuffled to budget.) That's why it's preferred to re-categorize the original expense - cleaner books for the auditor.

Re-categorizing avoids even the appearance of wrong-doing.


We ran into it because we had a fundraiser for the youth camps (other category). Many of the camps were paid for in advance before the fundraiser so budget money had to be used.

So, we got to the end of the year and the budgets were negative and the fundraising (other) account was positive. When we looked at changing the categorizing on the donations, it was going to be a lot of changes. It was easier to write the check. The auditor asked about it and it was the first time he'd heard of that approach. He was fine with the explanation.

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Re: MLS / How to transfer from "other" category into "budget"

Postby eblood66 » Fri May 12, 2017 12:34 pm

chriswoodut wrote:We ran into it because we had a fundraiser for the youth camps (other category). Many of the camps were paid for in advance before the fundraiser so budget money had to be used.

So, we got to the end of the year and the budgets were negative and the fundraising (other) account was positive. When we looked at changing the categorizing on the donations, it was going to be a lot of changes.

In a situation like this generally expenses were paid out of budget and donations are placed in the Other account. The expenses should be recategorized to the Other account. The donations should not be recategorized to Budget. In my experience there are generally only a few checks written for an given camp so it isn't that hard to recategorize them.

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Re: MLS / How to transfer from "other" category into "budget"

Postby russellhltn » Fri May 12, 2017 4:51 pm

chriswoodut wrote:When we looked at changing the categorizing on the donations, it was going to be a lot of changes. It was easier to write the check. The auditor asked about it and it was the first time he'd heard of that approach. He was fine with the explanation.


I'd think that he'd have to match the amount of the check transferred to budget against the expenses from the youth camp. Unless it was all under a sub-category of budget that totaled things up, it seems like that would make his work harder.

In my mind, the whole concept of "Other" is to separate specific transactions out of the mix of the ward finances to make is very clear to both leaders and auditors that money that comes in for specific activities have been spent on that specific activity and hasn't ended up funding other things. As soon as funds go from "other" to budget, I'd think that would call for some examination to make sure that principle has been followed (camp expenses paid from budget match or exceed the funds transferred from other). But having to do that kind of defeats the whole idea behind "Other".

Now, you might have had a lax auditor, but I wouldn't guarantee it to be so easy next time.
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Re: MLS / How to transfer from "other" category into "budget"

Postby lajackson » Fri May 12, 2017 8:15 pm

tedo77 wrote:Everyone recommended editing the transfer to change the category from "budget: allocation" to "other: authorized member financed".

And that is the best way to do it. You paid for the camp out of Budget because there was not enough in Other. When the funds are available in Other, you change the category of the payment from Budget to take the funds from Other instead. The original check from Budget is now from Other. The Other funds are used up and the Budget balance is restored to what it was before the check was originally written.

The second option being discussed is to take the funds from Other, where they were collected, and move them to Budget using a check from Other and a deposit to Budget. That also works.

But the first way is easier and better, if you can do it.

Do not change the category of any of the donations. They go to Other and they stay in Other. You only need to work with the expense part of the equation.

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Re: MLS / How to transfer from "other" category into "budget"

Postby chriswoodut » Sat Jun 03, 2017 4:46 pm

This topic came up again last week when another clerk mistakenly recorded fund raising donations/money into a BUDGET category instead of the OTHER category. I went through and changed them all so the fund raising money is now in an OTHER category.

At the beginning of the year, I setup the budget to be dollar amounts that each organization is budgeted/forecasted to spend the year. I want the expenses to come out of those BUDGET categories so that they can clearly see what they have spent year-to-date and what is left. IF I move expenses from the budget to the OTHER in order to consume that money, I lose track of that expense and it tweaks the budget numbers in a bad way. Or, even if I write reimbursement checks from the OTHER category it doesn't deduct or get allocated to the budget which can lead people do think they have more budget to spend than they really do.

For example (my made up numbers):

1. YW have $2000 for camp this year. They have a BUDGET category called YW Camp.

2. We paid $1000/50% down on the camp BEFORE the fund raiser occurred. The expense came out of the YW Camp budget category. The balance remaining in the YW Camp budget is $1000. This is good.

3. We did a fundraiser. We now have $2000 in an OTHER category.

4. If I change the expense from #2 above by editing the entry to be from the OTHER instead of the BUDGET category, the YM Camp budget will go back UP to $2000. The YW organization may then think they have $2000 remaining to spend on the camp. This is bad.

5. I can go in and change the YW Camp budget to now be $1000 to reflect the actual remaining money but that is ugly and messy. I lose my historical budget information that I want to have when I make next year's budget. It is also confusing because it changes the numbers on paper (but not in reality) that everyone agreed to at the beginning of the year. This is bad.

These bad problems push me back to just writing a check from the ward, to the ward, and allocate it to the budgets and it should show up as income and not mess up the budget numbers. (In some ways, the other clerk that incorrectly attributed the fund raising donations/money to the BUDGET avoided this problem.)

This is my first full year of doing the budget from start to finish. Am I thinking about this incorrectly?

Chris

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Re: MLS / How to transfer from "other" category into "budget"

Postby russellhltn » Sat Jun 03, 2017 5:01 pm

I don't understand the issue. At the end of step #3:

Under Budget you have $2000 budgeted, $1000 remaining balance.
Under Other you have $2000.
So total of $3000 to spend.

After #4:
Under Budget you have $2000 budgeted, $2000 remaining balance.
Under Other you have $1000.
So total of $3000 to spend.

I don't see how that's different.
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Re: MLS / How to transfer from "other" category into "budget"

Postby eblood66 » Sat Jun 03, 2017 7:17 pm

chriswoodut wrote:For example (my made up numbers):

1. YW have $2000 for camp this year. They have a BUDGET category called YW Camp.

2. We paid $1000/50% down on the camp BEFORE the fund raiser occurred. The expense came out of the YW Camp budget category. The balance remaining in the YW Camp budget is $1000. This is good.

3. We did a fundraiser. We now have $2000 in an OTHER category.

4. If I change the expense from #2 above by editing the entry to be from the OTHER instead of the BUDGET category, the YM Camp budget will go back UP to $2000. The YW organization may then think they have $2000 remaining to spend on the camp. This is bad.

5. I can go in and change the YW Camp budget to now be $1000 to reflect the actual remaining money but that is ugly and messy. I lose my historical budget information that I want to have when I make next year's budget. It is also confusing because it changes the numbers on paper (but not in reality) that everyone agreed to at the beginning of the year. This is bad.

I'm assuming here that you are expecting camp to cost $2000 total.

If you can allocate $2000 from the budget to camp and still keep the ward budget balanced then you should not have a fundraiser at all. Policy is that all expenses should be paid out of budget if possible.

If, however, you can only actually manage $1000 out of budget funds then you should set the budget to $1000 to start with. The fundraiser should then target raising the additional $1000. If the fundraiser falls short then you have to see if you can adjust the budget to take funds from elsewhere or find ways to cut costs. If it brings in more then you again adjust the budget to reallocate the additional funds as the bishop decides. The same applies if a fundraiser was held when it really didn't need to be.

To get historical expenses you just run a budget report (for the budget component) and a Income/Expense report (for the Other component) and add the two together. It's a bit more work but the advantages of re-categorizing expenses is well worth it.

Don't try to track historical budget allocations in MLS. It doesn't work well and it's not intended for that purpose. Use an external spreadsheet or just print and date the budget at the beginning of each year and put it in a file folder. Add notes as necessary.

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Re: MLS / How to transfer from "other" category into "budget"

Postby russellhltn » Sat Jun 03, 2017 7:52 pm

eblood66 wrote:Don't try to track historical budget allocations in MLS.

Nor is that the way future Budgets are to be worked out. Handbook 1:14.7.1 outlines the process. Prior expenses are to be considered, but prior budget allowances are not part of the process.
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