Basics of Parish Accounting & Reporting

Presented by :

Thomas L. Twilling, CPAController

ttwilling@catholicaoc.org

Parish Business Manager Expectations

1) Assist the Pastor in the Administration of the Parish

2) Maintain a complete, up to date set of books3) Maintain a strong system of internal controls

to safeguard parish assets4) Communicate regularly with Parishioners,

especially those involved with Parish Council or Finance Council

5) Provide Financial Updates to the parish and the Archdiocese at least annually

Resources for Business Managers1) Document on Temporal Affairs2) Document on Temporal Affairs Summary3) USCCB Group Ruling FAQ’s4) Business Manager Reference Calendar 5) Parish Soft User Guides6) Parish Soft Pathfinder Videos7) Pastoral Center staff

Temporal Affairs Document.pdfTemporal Affairs Summary.docxUSCCB-Group-Ruling-FAQ-updated-May-2020.pdfBusiness Manager Reference Calendar 11 2 16.docxParish Soft User Guide.pdfhttps://www.parishsoft.com/training/pathfinder/

Basics of Parish Accounting & Reporting

Basis of Accounting – Modified Cash Basis

Statement of Financial Position

Statement of Activities

Parish Soft Basics

Statement of Financial Position

Also known as the Balance Sheet, the Statement of Financial Position reports the balances of parish bank accounts and other assets as well as the balances owed or the indebtedness of the parish (liabilities) at various points in time. It also reflects the accumulated earnings or losses (net assets) of the parish. This statement must balance and follows this formula:

Assets - Liabilities = Net Assets

Statement of Financial Position

Assets – items of value owned by the parish

1. 1000 series in Parish Soft chart of accounts

2. Bank accounts, pre-paid expenses (parishes typically do not list their land, buildings and/or physical assets, other than cash and investments, on their balance sheet)

3. A normal balance for assets is a DEBIT

(a credit balance in an asset would be a negative sum)

Statement of Financial Position

Liabilities – items of value belonging to someone else

1. 2000 series in Parish Soft chart of accounts

2. Items owned by or owed to others and include payroll withholdings, pre-paid tuition and/or fees, special collections and money held for others.

3. A normal balance for liabilities is a CREDIT

(debit balances in liabilities would be a negative sum)

Statement of Financial Position

Net Assets – an accumulation of all gains and losses

1. 3000 series in Parish Soft chart of accounts

2. Net assets + Liabilities = Assets. The system forces this rule in order to remain in balance.

3. Net assets are an accumulation over time of net profits and losses. When the fiscal year closes, the system zeros out all Income Statement accounts by dumping their balances into net assets.

4. Net Assets normally CREDITS. – A Surplus

(A debit balance in Net Assets is a Deficit.)

Statement of Activities

Also known as the Income Statement or P&L, the Statement of Activities records activity that happens in a particular fiscal year. Churches use a modified cash basis of accounting, so income is recorded when received and expenses are recorded when they’re paid –not necessarily when earned or incurred. Parishes do not generally accrue income and expenses with some exceptions at the end of the fiscal year.

Statement of Activities

Revenue – money earned or donated

1. 4000 series in Parish Soft chart of accounts

2. Revenue or income is money received by the parish. Generally, money received and deposited should be recorded to a revenue account.

3. Revenues are normally CREDITS.

(A debit to a revenue account is a subtraction.)

Statement of Activities

Expenses - money paid for products or services

1. 5000 through 6999 in Parish Soft chart of accounts

2. Expenses represent money paid from the assets of the parish. Generally, money paid out should be recorded to expense accounts. (Payments from liability accounts are an exception.)

3. Expenses are normally DEBITS.

(A credit to an expense account is a subtraction.)

Parish Soft Basics

Deposits – When you enter a deposit, the system records a DEBIT to the cash (Asset) account and a CREDIT to a Revenue account.

Bills & Check Writing – Paying bills generally requires a two-step process. First, you record the bill by entering the data off the invoice and choosing an expense account to which it is recorded. Second, when you print checks you select the specific bills to pay, print the checks and verify that all checks printed properly. This two-step process acts to record a CREDIT to the cash (Asset) account and a DEBIT to the respective expense accounts.

Parish Soft Basics

Journal Entries

1. YOU determine the DEBITS and CREDITS to accounts instead of the accounting software.

2. Journal entries are used to record payroll and other transactions not initiated by a deposit or an invoice. Journal entries are necessary to record adjustments found on your bank statement when reconciling and to make corrections in the accounting records.

3. Journal entries require that your debits and credits are equal.

Parish Soft Basics

Parish Soft Basics

Parish Soft Basics

Bank Reconciliations

Using the accounting system to reconcile your bank accounts allows you to quickly make sure you have made necessary entries and adjustments and provides a review of the activity in the parish accounts since the last reconciliation. Generally, the month can be closed after all accounts have been reconciled and reports produced.

Parish Soft Basics

Parish Soft Basics

Budgets & Reports

• At a minimum, Parish Finance Councils should receive a Balance Sheet and Income Statement for the time elapsed since the last meeting.

• It is expected that the accounting reports also provide a benchmark by which to measure the performance of the parish financial activities. A budget is one type of benchmark.

• Large variances from budget should be explained to the Finance Council. Finance Councils should not get “stuck in the weeds” (micro-managing every $100 expense), but should be interested in trends.

• Provide multiple years of data, in a summary format, so that advisors can see the trajectory of the parish finances over time, enabling them to make better recommendations.

• A summarized report should be provided to the parish showing results of the last fiscal year compared to budget.

Parish Soft Basics - Reporting

Examples

Actual Budget Variance Actual Budget Variance Actual Variance

CHURCH REVENUES

Weekly Offerings - Sundays & Holy Days 55,754 58,750 (2,996) 100,177 107,750 (7,573) 106,913 (6,736)

One Faith, One Hope, One Love Campaign Rebate 0 0 0 15,285 20,000 (4,715) 22,530 (7,246)

Festival 0 0 0 0 0 0 0 0

Debt Reduction Donations 1,190 1,000 190 2,450 2,000 450 2,197 254

Other Revenues 3,972 3,650 322 7,469 5,450 2,019 8,617 (1,147)

Gifts and Bequests 0 0 0 0 0 0 0 0

TOTAL CHURCH REVENUES 60,916 63,400 (2,484) 125,381 135,200 (9,819) 140,256 (14,875)

CHURCH EXPENSES

Salaries and Wages 27,579 29,512 1,933 54,129 59,024 4,895 48,668 5,461

Benefits 12,097 8,807 (3,289) 17,561 17,615 53 15,403 2,158

Rectory 377 483 107 456 867 410 1,327 (871)

Church Maintenance & Repairs 654 1,121 467 654 1,742 1,088 1,232 (578)

Parish Center Maintenance & Repairs 3,988 1,682 (2,306) 6,445 3,363 (3,082) 2,807 3,638

Administrative Expenses 4,420 5,210 790 8,735 9,929 1,194 8,430 305

Parish Activities 32 242 210 623 383 (240) 242 381

Liturgical/Music 640 423 (217) 808 1,095 287 1,287 (479)

Religious Education/PREP 455 1,250 795 4,622 4,450 (172) 1,442 3,180

Utilities 2,450 4,225 1,775 5,199 8,450 3,251 6,471 (1,272)

Archdiocesan Assessments 0 0 0 0 0 0 0 0

Capital Expenditures 0 0 0 0 0 0 0 0

TOTAL CHURCH EXPENSES 52,692 52,955 (263) 99,232 106,918 (7,686) 87,309 11,923

NET CHURCH 8,224 10,445 (2,221) 26,149 28,282 (2,133) 52,947 (26,798)

SCHOOL REVENUES

Tuition & Fees 100,360 67,700 32,660 106,428 68,200 38,228 134,094 (27,666)

Admin Cost Reimbursement 0 0 0 0 0 0 0 0

Gifts and Donations 80 26,500 (26,420) 80 28,000 (27,920) 3,727 (3,647)

TOTAL SCHOOL REVENUES 100,440 94,200 6,240 106,508 96,200 10,308 137,821 (31,313)

SCHOOL EXPENSES

Salaries and Wages 44,533 48,674 4,141 88,019 97,348 9,329 92,114 (4,095)

Benefits 30,246 18,808 (11,438) 43,883 37,617 (6,266) 33,316 10,567

Administrative Expenses 1,870 4,479 2,609 4,440 7,958 3,519 6,655 (2,215)

Instructional Expenses 4,040 4,100 60 4,181 4,100 (81) 5,030 (849)

Utilities 3,413 4,917 1,504 6,553 9,833 3,280 7,985 (1,432)

Maintenance & Repairs 1,643 1,633 (9) 1,810 2,967 1,157 8,703 (6,893)

TOTAL SCHOOL EXPENSEES 85,745 82,611 (3,133) 148,886 159,823 10,938 153,803 (4,917)

NET SCHOOL 14,695 11,589 3,106 (42,378) (63,623) 21,245 (15,982) (26,396)

NET CHURCH & SCHOOL 22,919 22,034 885 (16,229) (35,341) 19,112 36,965 (53,194)

FYTD August 2017Month of August 2017 FYTD August 2016

Total Fiscal Year FYTD (April)FY 12/13 FY 13/14 FY14/15 FY 15/16 FY14/15 FY15/16 FY 16/17

Actual Actual Actual Budget Actual Actual Budget

Income:

Sunday Collections 1,976,752 2,083,443 2,011,400 2,020,000 1,703,222 1,702,801 2,020,000

Christmas Collection 70,174 66,377 54,140 60,000 54,140 56,568 60,000

Easter Collection 49,384 45,178 43,766 45,000 43,686 41,126 45,000

Designated Collections - - - - - - -

Bequests & Gifts 18,907 5,565 2,573 47,500 2,033 450 46,000

Festival 257,124 245,092 269,459 200,000 42,624 38,719 200,000

Religious Education & Vacation Bible 42,665 39,055 41,490 43,000 26,195 28,228 41,500

Interest & Dividends 75,286 60,805 68,604 90,000 64,718 86,348 90,000

All Other (Votive, Kroger, etc) 79,768 88,540 77,863 97,000 73,190 81,194 97,000

Total Income 2,570,059 2,634,055 2,569,296 2,602,500 2,009,808 2,035,434 2,599,500

Expenses:

Wages & Salary 570,631 605,346 629,602 670,992 533,185 570,639 729,404

Benefits & Payroll Taxes 144,747 169,365 168,827 172,863 147,734 150,811 186,682

Utilities & Building 367,294 185,184 181,934 227,350 198,030 157,288 196,700

Archdiocese Assessment 221,827 232,607 264,218 233,000 134,077 300,890 263,500

Festival 165,032 172,575 187,183 120,000 26,214 24,980 115,000

Donations & Outreach - - - - - - -

Religious Formation 51,988 52,718 48,419 60,280 61,292 74,294 60,400

Parish Fund Drive Interest etc 216,331 203,498 199,750 178,000 145,656 136,326 105,000

Other (Office, Rectory, Equipment, etc) 272,311 279,180 275,756 292,100 210,494 186,033 251,950

Total Expenses 2,010,161 1,900,473 1,955,689 1,954,585 1,456,682 1,601,260 1,908,636

Church Net Income 559,898 733,582 613,607 647,915 553,126 434,173 690,864

Enrollment: FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17

Pre-K 11 - - - - - -

K 43 36 32 38 28 48 25

1st 33 49 34 30 39 30 51

2nd 44 32 43 32 32 41 36

3rd 46 49 30 48 27 29 38

4th 40 49 46 27 46 28 30

5th 52 42 45 47 25 53 29

6th 44 50 39 44 37 26 51

7th 44 41 50 35 44 41 25

8th 32 38 43 46 39 45 41

Total 389 386 362 347 317 341 326

Tuition Rates: FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17

Parish Rate: 1- Student 3,525 3,650 3,750 3,750 3,800 3,850 3,925

Increase $ 225 125 100 - 50 50 75

Increase % 7% 4% 3% 0% 1% 1% 2%

Non Parish Rate: 1- Student 5,500 5,600 5,700 5,750 5,800 5,850 5,925

Increase $ 200 100 100 50 50 50 75

Increase % 4% 2% 2% 1% 1% 1% 1%

Tuition Summary: FY 10/11 FY 11/12 FY 12/13 FY 13/14 FY 14/15 FY 15/16 FY 16/17

Full Tuition at List Price (Calculation) 1,371,225 1,408,900 1,357,500 1,301,250 1,204,600 1,312,850 1,279,550

Less: Fam Disc, Tuition Asst, K Diff vs List Price (231,479) (254,052) (247,070) (182,904) (150,204) (234,381) (268,000)

Net Tuition Receipts (Calculation) 1,139,746 1,154,848 1,110,430 1,118,346 1,054,396 1,078,469 1,011,550

Fees (4505.00SCH) 41,735 40,530 36,000 34,700 31,700 34,100 32,600

Net Tuition & Fees (4500.103SCH) 1,181,481 1,195,378 1,146,430 1,153,046 1,086,096 1,112,569 1,112,569

Questions?