Budget allowance accounting
Budgeting for wards and branches is done on an annual basis, yet the actual Budget Allowance amount allocated to the stake changes each quarter. Some stakes choose to tell the wards at the beginning of the year what their budget allocation will be for the entire year. In this case, wards can reliably define their budget for the entire year.
However, other stakes choose to allocate funds to wards on a quarterly basis, as the stake receives budget allocations from the Church. This article outlines a method for financial clerks in wards and branches to account for quarterly budget allocations from the stake.
- Remember that unlike other accounts, the subcategories in Budget have an allocation amount. This allocation is entered in MLS as an allocation (using the Edit Budget option), not as income. If you later need to adjust these allocations, do so by using the Edit Budget option; do not create a Transfer or Income or Expense to do this.
- Begin the budgeting process early. Estimate what your annual budget allocation will be using your allocations from the previous year. For example, your previous year's allocation from the stake may have been $11,800. You estimate that you will receive $3000 per quarter for the coming year, for an estimated annual allocation of $12,000.
- Under the direction of your bishop, work with the auxiliaries and other ward leaders who have budget responsibility to come up with the ward's annual budget. You may want to work through the next few steps for two or more review cycles as you refine your budget. The Bishop approves the final budget.
- Make sure that you have created Budget subcategories for all auxiliaries and other areas for which you want to track Budget expenses. The parent category Budget should not be used for any expenses. Create new subcategories using the Add/Update Categories option. Also, create a subcategory called Contingency; you will use this subcategory for flexibility in managing changes in the quarterly allocation from the stake.
- At the beginning of a new fiscal year, use the Edit Budget option to enter your estimated annual allocation amount (at the bottom of the screen). In our example, this is $12,000. Then assign the approved allocation amount to each Budget subcategory. Notice that the Difference value at the bottom of the screen changes as you enter budget amounts.
- Set the Contingency subcategory amount to a value that makes your budget balance. To continue our example, if the budget subcategories add up to $11,750, you would set the Contingency allocation to $250, so that all the budget subcategories will add up to your estimated annual allocation of $12,000. When you are done, the Difference value should be 0. You should manage your budget process so that the Contingency account can be of a sufficient size to absorb the differences that may occur when actual allocations are less than your estimates.
- Print a Budget Report from MLS. Make sure that the type is Summary and that all Budget subcategories are selected. Note on this report the allocation assumptions you have used. In our example, on your Budget Report the total of all the Budget subcategories would be $12,000. On this report you would write something like this:
2006 Budget Allocation Quarter Allocation Estimated/Actual Q1 $3,000 Estimated Q2 $3,000 Estimated Q3 $3,000 Estimated Q4 $3,000 Estimated Total $12,000
- As you receive new allocations throughout the year, return to the Edit Budget screen to enter your new total allocation (actual and estimated) from the stake. Also, adjust the Contingency allocation to keep your total Budget in balance. For example, you receive your Q1 allocation from the Stake and it is $3100, so you would adjust the Contingency allocation up $100, because $3100 is $100 more than your original Q1 estimate of $3000. The total of your Budget subcategories would then be $12,100. You would print out a Budget Report and make notations on it like the following:
2006 Q1 Budget Allocation Quarter Allocation Estimated/Actual Q1 $3,100 Actual Q2 $3,000 Estimated Q3 $3,000 Estimated Q4 $3,000 Estimated Total $12,100
- Repeat the process detailed in the previous step for the remaining quarters. Your final Budget Report might look like the following:
2006 Q4 Budget Allocation Quarter Allocation Estimated/Actual Q1 $3,100 Actual Q2 $2,900 Actual Q3 $3,150 Actual Q4 $3,050 Actual Sales Tax $200 Actual Total $12,400
- By following this process, you should be able to run a Budget Summary Report at any point during the year and you will have an accurate reflection of the portion of the budget you have spent. You will also be able to promptly determine if new budget allocations from the Stake will require you to tighten your belt on spending during the year. It is a good idea to present this Summary Report to your bishop each month as you review your Reconciliation Report with him.
- Throughout the year, you can help auxiliaries manage their budget spending using the Budget Detail Report. Work with your bishop to determine how frequently you provide information to the auxiliaries; many wards do this monthly or quarterly in a Ward Council meeting. Of course, you can also provide this information to an auxiliary at any time as requested. To generate this report, go to the Budget Report Screen, make sure the type is Detail and select the desired subcategories. For each subcategory, the printed reports will list the annual allocation, the details for each expense (or income or transfer), and the remaining budget.