The $1,000 Question

[lajackson]

This is a true story. The amounts have been changed to protect the confused.

The Sunday deposit was prepared and entered into MLS in the amount of $3,900 and then transmitted.

The bank deposit slip was written for $3,800 ($100 less) because the total was not correctly added or copied from the MLS printouts. The deposit slip, checks, currency, and cash were deposited in the bank.

Hq recorded the deposit on the Church Unit Financial Statement at $3,900, the amount transmitted by MLS.

The bank accepted the deposit at $3,800 and then corrected it. When it was proofed, the deposit only contained $3,200. The bank charged the $600 back to Church Hq.

When the bank charged back the $600 shortage, Hq charged $600 to the Other account on the CUFS and asked the unit to investigate.

Upon further review, it was determined that one of the checks in the deposit was written for a numerical amount of $1,700 and for a written amount of One Thousand Dollars. The clerks recorded the check as $1,700 in MLS and the bank processed the check as $1,000.

Based on the review, the clerks made an adjustment to the batch, changing the check in the contribution from $1,700 to $1,000 which caused a $700 adjustment to the Tithing category.

Nothing happened to the Other account on the CUFS, so one of the clerks called Hq. Following the phone call, Hq recorded a $700 credit in the Other account on the CUFS.

Several audits later, the auditor wrote up the unit for listing a "deposit adjustment" in the amount of $100 in the Other account.

End of story. My assignment is to deal with the $100.

Having been assigned to wrap my brain around this matter, I have come to the following conclusions. Since my brain does not do this well, I am presenting this situation here to ask if my thinking is correct.

1. The bank credited Hq with what was declared to be a $3,800 deposit, added it up at $3,200 because of the poorly written check, and charged back $600 for the deposit. The bank is happy and the bank account is correct. No further action with the bank is required.

2. In MLS, a deposit of $3,900 was recorded and changed to $3,200 because of the poorly written check, causing a $700 adjustment to the Tithing category. MLS is happy and the deposit is now correctly recorded in MLS. No further action with the batch is required.

3. On the CUFS, Hq charged $600 to the Other account because of the bank charge back. After the unit investigated and corrected the batch by reducing the Tithing contribution by $700, Hq credited $700 to the Other account on the CUFS.

I think that the unit got an extra $100 and owes it to the Church.

Do you agree? If so, does the unit write a $100 check on the Other account and mail it in, or will a call to Hq allow them to charge $100 to the Other account on the CUFS and resolve the matter?

Other than that I think the clerks are certifiable (different thread, sorry), what do you suggest?

Would your answer change if I added that this all happened two years ago and that the $100 in the Other account is just now being identified? (I don't think the answer changes.)

Thanks for helping me wrap my brain around this one. It has been a long time since I worked on the financial side of things. I appreciate the help.

[mkmurray]

....And the 1,000 post! Congrats!

[aebrown]

A. Hq recorded the deposit on the Church Unit Financial Statement at $3,900, the amount transmitted by MLS.
...
B. When it was proofed, the deposit only contained $3,200.
...
C. Hq charged $600 to the Other account on the CUFS and asked the unit to investigate.
...
D. Following the phone call, Hq recorded a $700 credit in the Other account on the CUFS.
...
E. I think that the unit got an extra $100 and owes it to the Church.
...
F. Would your answer change if I added that this all happened two years ago and that the $100 in the Other account is just now being identified?

Regarding the $100, I have identified the essential elements above, providing letters to avoid confusion with the numbered steps in your original post.

There are multiple errors along the way, but most of them have been corrected. In your clear analysis at the end of the post, you are indeed correct that the bank is happy, and that MLS is happy. The only problem is identified in your summary statement #3. CHQ is not happy, meaning an item on the CUFS is as yet unresolved.

As I see it, the Church made an error on step C above. Yes, the bank reported a $600 shortage, and the Church had to deal with that. But the essential issue is that the ward transmitted a deposit of $3900 and the bank received $3200. That is a $700 shortage between the transmission and the bank the deposit. So it was a mistake on CHQ's part to record a $600 deficit -- the true deficit was $700.

So the correction must be made at CHQ. The ward only "owes the Church $100" in the sense that the CHQ accounting of the ward's account does have $100 too much in the Other category. It would be an additional error that would only compound the problem for the ward to contemplate writing any checks or making any other adjustment to MLS. All CHQ has to do is to realize that their $600 charge should have been $700, make an additional $100 charge to the Other category, and all will be well.

On the MLS side, if the ward has been reconciling properly, they have carried forward a temporary item of $100 all this time. The only thing they will have to do is to check that Temporary Item off as they reconcile the month in which the CUFS finally shows the $100 charge.

[lajackson]

It would be an additional error that would only compound the problem for the ward to contemplate writing any checks or making any other adjustment to MLS. All CHQ has to do is to realize that their $600 charge should have been $700, make an additional $100 charge to the Other category, and all will be well.

I will write Hq a letter of explanation to help them "realize" that.

In order to avoid posting a novel, I left out all of the attempts the unit made in MLS and in check writing to make the $100 go away. I took me about four hours to sort through it all. They were a creative bunch, but the bottom line is still the bottom line. All of it was reversed and none of it worked. [grin]

On the MLS side, if the ward has been reconciling properly, they have carried forward a temporary item of $100 all this time. The only thing they will have to do is to check that Temporary Item off as they reconcile the month in which the CUFS finally shows the $100 charge.

The temporary item was added last month by the new clerk at the time he recognized the problem and tried to resolve the issue. Before that, the unit had not successfully reconciled in over two years. Working through it was not as bad as it could have been, since they had not used their Other account very much.

....And the 1,000 post! Congrats!

Aw, shucks! Thanks. I tried to make it a good one. [hehehe]

And thank you, Alan, for helping me sort through it all. We can get there from here, thanks to your help.