Reconciliation - temporary items

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funaddict-p40
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Reconciliation - temporary items

Postby funaddict-p40 » Mon Jun 08, 2009 2:11 pm

The Temporary items screen just plain confuses me. The instructions say:

Any item on the Church Unit Financial Statement that requires Church headquarters to make an adjustment to the account should be entered as a Temporary Item. Temporary Items should be entered for deposit errors, returned checks, deposit category adjustments, and check category adjustments. All require headquarters to make an adjustment.

Doesn't the CUFS come from headquarters in the first place? Can't they just make the adjustments they need to make and then inform us what they did? It seems that they inform us of an error, then we enter a Temp. item to tell them to adjust the error, then they adjust the error, then they tell us the error has been adjusted, then we clear the temp. items. If HQ knows an adjustment needs to be made, why do they need to tell us to tell them to make the adjustment?

I'm never sure exactly which items I'm supposed to enter in the Temp items screen. Is it EVERYTHING in Misc. Disbursements and Transfers other than the Missionary payments and Distribution Ctr. payments and interest? Or are there sometimes items in Misc. that don't need to be entered anywhere? Also, where exactly do they inform us that we can go ahead and clear previous Temp. items? MLS keeps informing me that I have uncleared temp. items, but I'm not sure if it's okay to clear them.

The stumbling-around method I've been using, is to enter the Other Items stuff that I'm sure of, and then click on "Report" and see if I'm balanced. If I'm unreconciled, then I try to figure what else I need to add into the mix to make it balance. I wish the CUFS would indicate which items need to be entered into Other and which need to be entered into Temp. and which are just informational and don't need to be entered anywhere.

Any enlightenment on this subject would be much appreciated.

Alan Afualo

russellhltn
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Postby russellhltn » Mon Jun 08, 2009 2:31 pm

Check the bottom of this Wiki entry to see if it helps.

As I understand it, a Temporary Item is a entry done that temporally correct your balance to zero until the problem resolution is complete. It should only be done for known issues which are "in process" of getting fixed. That's why they are temporary. Once everything is settled out, everything will be back in balance and you'll no longer need this correction.
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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Postby aebrown » Mon Jun 08, 2009 2:50 pm

funaddict wrote:The Temporary items screen just plain confuses me.
...
Doesn't the CUFS come from headquarters in the first place? Can't they just make the adjustments they need to make and then inform us what they did? It seems that they inform us of an error, then we enter a Temp. item to tell them to adjust the error, then they adjust the error, then they tell us the error has been adjusted, then we clear the temp. items. If HQ knows an adjustment needs to be made, why do they need to tell us to tell them to make the adjustment?


It's important to realize that we are dealing with two separate sets of records: the records at CHQ, which are reported to you via the CUFS, and the local records in MLS. The purpose of reconciliation is to reconcile those two sets of records.

The purpose of temporary items is to account for transactions that are not yet reflected on the CUFS for the month you are reconciling, but will be in the future. CHQ can't make corrections to MLS, and they also can't reach back into the past to make a correction to the CHQ data. Let's walk through an example that I hope will make this clear.

Suppose a donor's check bounces. The $100 check for tithing was deposited on May 24 and bounced on May 28. By the time you got notified, it was June 1. What will the May CUFS reflect? It will show the full deposit including the donor's check for May 24. But on May 28, it will show a charge (debit) to the Other account for $100. CHQ doesn't know what donation batch, what donor, or what categories that check corresponds to, so it can't possibly make any specific adjustments yet -- it can only charge the unit for the amount of the check.

Being a diligent financial clerk, as soon as you get notified of the bounced check, you go into MLS, find the specific donation in the May 24 donation batch, and cancel that donation. You do this on June 2, but the corrections are dated May 24, since that is the date of the donation batch. MLS sends a message to CHQ that the May 24 donation batch Tithing total has been reduced by $100.

On June 4, you notice that the May CUFS has been downloaded, and you dutifully begin the reconciliation process. You check off the cleared checks, enter expenses for missionaries, etc. But as you are working through the CUFS, you see the $100 charge. What are you to do with this?

The MLS records show that you have canceled the donation, and there is no $100 charge to the Other account on the MLS side of things. So you will be out of balance if you do nothing. But you certainly don't want to create a $100 charge to Other in MLS, since that is only a temporary action taken by CHQ until they find out what batch and category the check corresponds to.

The answer is to create a temporary item for -$100 in the Other category. That way the MLS balance for the Other account will match the CUFS balance (which is $100 less than the MLS balance as of May 31).

Now fast forward to some time in early July, when you balance the June statement. Remember the MLS message I referred to that was sent to CHQ? On June 3, the Church processed that message, deducted $100 from Tithing for the May 24 batch, and added $100 back in to your Other account.

These transactions (the $100 Tithing debit and $100 Other credit) will show on the June CUFS. Because you have a $100 temporary item, from the previous month, and the June CUFS shows that it has been taken care of, you simply check off the Temporary Item. If you don't you won't balance (because the MLS Other balance will still be reduced by $100, but the CUFS reflects the higher balance since the Other account has now been credited). Checking off the Temporary Item essentially deletes it, and you will no longer be bothered by reminders that you have unresolved Temporary Items (at least until the next bounced check or similar problem).

funaddict wrote: I'm never sure exactly which items I'm supposed to enter in the Temp items screen. Is it EVERYTHING in Misc. Disbursements and Transfers other than the Missionary payments and Distribution Ctr. payments and interest? Or are there sometimes items in Misc. that don't need to be entered anywhere? Also, where exactly do they inform us that we can go ahead and clear previous Temp. items? MLS keeps informing me that I have uncleared temp. items, but I'm not sure if it's okay to clear them.


Any item which is on the CUFS, but which really should be in MLS, but has not yet been entered, should be entered into MLS as an Expense. You can enter such things as an Other Item, but I think it's clearer to enter them as expenses, and there is never any confusion as to whether it should be a positive or negative amount. So items such as missionary payments and distribution center charges are expenses. There is nothing temporary about them. Note that an Other Item is a permanent transaction -- creating one during reconciliation is the same as creating an actual expense.

Interest is entered on the opening Reconciliation screen -- you never enter a separate item for interest.

The simple answer on clearing temporary items is this: Temporary Items represent transactions that will appear on a future CUFS, but have not yet appeared on the current CUFS. As soon as they appear on a CUFS, you check them off.

funaddict-p40
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Postby funaddict-p40 » Tue Jun 09, 2009 7:04 am

Thanks Alan for that explanation.
Alan


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