Prior year transactions
Financial transactions which involve both the prior year and the current year present some accounting difficulties. However, following proper procedures carefully can help financial clerks to avoid these difficulties.
Check issued in the prior year
It is most convenient if all checks written in the prior year clear the bank before the year ends. As a practical matter, this rarely happens, so clerks should be prepared to handle issues that may arise when checks are outstanding at year end.
Check clears in the current year
If a check is written on the Budget category in the prior year, but does not clear until the current year, one may think that it would be charged to the current year's budget allowance. This may have been the case several years ago, but with MLS a Budget expense is charged to the Budget Allocation in the month and year when it is written; when the check clears does not matter. So no special accounting is required in this situation.
Check needs to be replaced
A check may have been issued in the prior year, but the payee has misplaced the check. In this case, the original check should be voided and replaced. However, the clerk may have concerns that the replacement check will be charged against the current year's Budget Allocation. There is some merit to these concerns, but any effects to the allocation can be properly adjusted.
Effects on the budget allocation
The replacement check is charged to the current year's budget. But the voiding of the prior year's check causes a credit to this year's budget as well. The Unit Financial Statement will show the credit for the voided check in the month the check was voided, and the equal debit for the replacement check in the month the replacement check is written (generally these two transactions will be in the same month).
The Budget Allocation is tracked at the stake level. The stake will also see on its stake financial summary both the check and the credit in the current year, so there is no net effect on the actual budget allocation when the replacement check is written.
Canceling a donation deposited in the prior year
Sometimes a donation made in the prior year may have to be canceled because a check is returned by the bank. When this happens, simply cancel the donation in MLS as usual.
- In the View/Update Donations screen you will need to adjust the Date Range dropdown to be Previous Year in order to see the donation batches from the previous year.
- Even if the donor issues a replacement check for the returned check, the new donation cannot be credited to the prior year's donations -- it is a donation for the new year.
- Remember that if the Tithing Declaration Report has already been transmitted and/or printed and sent to the stake president, an adjusted report will need to be transmitted and printed.
Receiving a donation dated in the prior year
Under specific circumstances, a donation may be processed for the prior year. This is acceptable only if:
- The donation was mailed to the bishop with a postmark in the prior year. In this situation, you should keep the envelope with the postmark with your records for the donation batch; or
- The donation was physically handed to a bishopric member prior to midnight on the last day of the prior year.
If a donation meets either of these conditions, then in the new year, you should create a batch dated 31 December of the prior year, and process the donation as usual. Do not attempt to change the computer date; MLS will allow you to create a batch with a date in the prior year. Prior year donations must be in a separate batch (do not mingle them with donations for the new year).
Regardless of the date on the check, if neither of the two conditions is met, the check must be processed as a donation in the new year.
One further circumstance is when a check is handed to the Bishop In the first days of the new year but the check is dated prior to December 31 and stamped by the bank as in a bank draft or certified check. Since this would be acceptable for payment of, for example, payroll taxes, then this should be acceptable to the tax department.