Financial Reports for Non-Profits

Stewarding Church/Ministry FinancesMinistryLift ConferenceOctober 4, 2013John WebberSeminar DescriptionThis seminar covers the practical issues of creating and managing a budget and helps people understand how to read and interpret their organizations (e.g. church, corporation, etc.) financial statements.

AgendaImportant ConsiderationsThe Process, Mission to Financial ReportsImportant ConsiderationsFrom Mission to Financial ReportsFaith PrayerThe Process, PracticalTimeAccountsBudgetFinancial ReportsQuestions/CommentsImportant ConsiderationsDesignated legally as a Non-Profit Organization

Over looking the financial affairs of the Non-profit is a key responsibility of the Board and every member

Board members have a fiduciary duty to act honestly and good faith in the best interests of the NPO.

Administration Internal Accounting processes and reporting

Auditor - independent assessment financial statements, professional opinion of fair presentation of financial statements and results.

4Resource

http://www.cica.ca/focus-on-practice-areas/governance-strategy-and-risk/not-for-profit-director-series/npo-briefings/item65428.pdfImportant ConsiderationsKey PlayersBoardAccountabilityAdministrationInternal ReportingTo BoardTo Members and Constituents (Donors)External ReportingCRA (T1030)Auditor

Over looking the financial affairs of the Non-profit is a key responsibility of the Board and every member

Board members have a fiduciary duty to act honestly and good faith in the best interests of the NPO.

Administration Internal Accounting processes and reporting

Auditor - independent assessment financial statements, professional opinion of fair presentation of financial statements and results.

6Important ConsiderationsLeadership Accountability

Obey your spiritual leaders and submit to them-continually recognizing their authority over you; for they are constantly keeping watch over your souls and guarding your spiritual welfare, as men who will have to render an account (of their trust).

Hebrews 13: 17 (Amplified)

7Often we look in the bible for qualifications and accountabilities of Leadership

Lets look at your accountability from a different view point.

The congregation has clear biblical orders with respect to your leadership.

Its a bit sobering to realize if this is their responsibility

What an Awesome Accountability we haveto ensure we meet the standards we have been given.From Mission to FinanceTo understand the numbers on financial statements it is necessary to understand what is behind the numbers.From Mission to FinanceMISSION

RESULTS

REPORTINGStrategiesLong-term PlanShort-term PlanBudgetFaith-based NPO Advantage and ChallengeGOD is central to our mission and planning

Discernment

The Faith ComponentA church will face a crisis of belief when God invites them to become involved in a work only He can accomplish.

Faith and action will be required

Experiencing God

11Only He can accomplish

God Sized Tasks

How do you budget?

Have you madea HEAD commitment

or have you made a HEART commitment?12PrayerFOR UNITY I want men everywhere to lift up holy hands in prayer. 1 Tim. 2: 8FOR WISDOM & DISCERNMENT But the wisdom that comes from heaven is first of all pure; then peace-loving, considerate, submissive, full of mercy and good fruit, impartial and sincere. James 3: 17FOR PROTECTION Your enemy the devil prowls around like a roaring lion looking for someone to devour. 1 Pet 5:8

13ProcessProcess Time DetailsTime FramesSome information is reported as at a point of timeSome information is accumulative. Sums over a specific period of time.Time PeriodsCalendar Year-end 12 month period ending Dec 31.Fiscal Year-end 12 month period ending as at date (month end) determined by Board and continues. Process - AccountsFinancial Reports show summarized totals for the sum of related accounts.

Chart of Accounts all accounts used by administration to record transactions.Financial Statements - AccountsAssetsCash and Cash EquivalentsAccounts ReceivablePrepaid ExpensesInvestmentsCapital Assets, Property and Equipment Liabilities and Fund BalancesBank IndebtednessAccounts PayableMortgage PayableOtherFund BalancesInvested in Capital AssetsExternally RestrictedSpecial FundInternally RestrictedUnrestrictedRevenuesOfferings General Contributions in kind MissionsInterest and Other IncomeInvestment IncomeExpensesSalary and RelatedFacilitiesMinistries Nursery Children Youth Adult Missions and OutreachAdministrationAmortization of Capital AssetsInterest and Bank ChargesChart of AccountsExample - Salaries and Related

Chart of AccountsExample Donations (Contributions)

Accounting for ContributionsDeferral MethodRestricted Fund MethodFrom Mission to Finance - BudgetMISSION

RESULTS

REPORTINGStrategiesLong-term PlanShort-term PlanBudgetBudgetingBudgetPrevious years resultsInput from leaders in category areasFinance Officer/BoardMISSION

STRATEGIESPRAYER AND DISCERNMENTNon profits are $0 budget. Not profit oriented or should be.

22Balancing the BudgetRevenuesExpensesWhat can be expected based on historical giving?What special circumstances may impact revenue in this year?Based on our estimated plan for the year, what in faith do we believe God will do?

What are the total expected expenses that will be required to be paid?What expenses are fixed?What can be eliminated or decreased?What needs to be increased?Board and Congregational ApprovalFinancial ReportingPrevious Years ResultsPeriodicReports

Actual results vs. BudgetYear endFinancialReportsYear end Financial ReportingStatement of Financial Position (at point of time)Statement of Operations (over a period of time)Statement of Changes in Net Assets (over a period of time)Statement of Changes in Cash Flows (over a period of time)Notes to Financial StatementsStatement of Financial PositionChurch NameStatement of Financial PositionAs at December 31, Current YearCurrent YearPrevious Year Operating FundCapital Asset FundSpecial FundsTOTALAssetsCurrent AssetsCash and Cash Equivalents $ 102,951 $ 2,000 $ - $ 104,951 $ 153,547 Accounts Receivable 2,341 2,341 2,648 Prepaid Expenses 170 170 376 105,462 2,000 - 107,462 156,571 Investments 33,000 17,000 50,000 20,300 Capital Assets, Property and Equipment (Note 2) 1,128,000 1,128,000 1,150,000 33,000 1,128,000 17,000 1,178,000 1,170,300 138,462 1,130,000 17,000 1,285,462 1,326,871 Liabilities and Fund BalancesCurrent LiabilitiesBank Indebtedness $ 850 $ 850 $ 750 Accounts Payable 1,870 1,870 1,555 Mortgage Payable 75,000 75,000 75,000 2,720 75,000 - 77,720 77,305 Mortgage Payable (Note 2) 825,000 825,000 900,000 Other 650 650 400 650 825,000 - 825,650 900,400 Fund BalancesInvested in Capital Assets - 228,000 228,000 175,000 Externally Restricted - 2,000 2,000 - Special Fund - 17,000 17,000 15,000 Internally Restricted 33,000 33,000 3,150 Unrestricted 102,092 102,092 156,016 135,092 230,000 17,000 382,092 349,166 $ 138,462 $ 1,130,000 $ 17,000 $ 1,285,462 $ 1,326,871 Statement of Financial Position - AssetsChurch NameStatement of Financial PositionAs at December 31, Current YearCurrent YearPrevious Year Operating FundCapital Asset FundSpecial FundsTOTALAssetsCurrent AssetsCash and Cash Equivalents $ 102,951 $ 2,000 $ - $ 104,951 $ 153,547 Accounts Receivable 2,341 2,341 2,648 Prepaid Expenses 170 170 376 105,462 2,000 - 107,462 156,571 Investments 33,000 17,000 50,000 20,300 Capital Assets, Property and Equipment (Note 2) 1,128,000 1,128,000 1,150,000 33,000 1,128,000 17,000 1,178,000 1,170,300 138,462 1,130,000 17,000 1,285,462 1,326,871 Statement of Financial Position Liabilities and EquityCurrent YearPrevious Year Operating FundCapital Asset FundSpecial FundsTOTALLiabilities and Fund BalancesCurrent LiabilitiesBank Indebtedness $ 850 $ 850 $ 750 Accounts Payable 1,870 1,870 1,555 Mortgage Payable 75,000 75,000 75,000 2,720 75,000 - 77,720 77,305 Mortgage Payable (Note 2) 825,000 825,000 900,000 Other 650 650 400 650 825,000 - 825,650 900,400 Fund BalancesInvested in Capital Assets - 228,000 228,000 175,000 Externally Restricted - 2,000 2,000 - Special Fund - 17,000 17,000 15,000 Internally Restricted 33,000 33,000 3,150 Unrestricted 102,092 102,092 156,016 135,092 230,000 17,000 382,092 349,166 $ 138,462 $ 1,130,000 $ 17,000 $ 1,285,462 $ 1,326,871 Statement of OperationsChurch NameStatement of Operations and Changes in Fund BalancesFor the Current Year ended December 31, Current YearCurrent YearPrevious YearOperating FundCapital Asset FundSpecial FundsTOTALRevenuesOfferingsGeneral $ 91,682 $ 2,000 $ 2,000 $ 95,682 $ 85,364 Contributions in kind (Note 3) 7,500 7,500 - Missions 10,870 10,870 10,560 Self-Supporting Ministries (Note 4) 5,600 5,600 4,800 Interest and Other Income 1,000 1,000 950 Investment Income 3,500 3,500 3,325 120,152 2,000 2,000 124,152 104,999 ExpensesSalary and Related $ 68,500 $ 68,500 $ 64,000 Facilities 12,060 12,060 6,248 Ministries Nursery 1,300 1,300 1,250 Children 4,500 4,500 4,439 Youth 5,600 5,600 4,720 Adult 3,465 3,465 3,496 Missions and Outreach 2,549 2,549 2,649 Self-Supporting Ministries 5,600 5,600 4,800 Administration 6,100 6,100 5,891 Amortization of Capital Assets 24,000 24,000 3,015 Interest and Bank Charges 5,125 5,125 498 114,799 24,000 - 138,799 101,006 Excess of Revenues over Expenditures5,353 -22,000 2,000 -14,647 3,993 Fund Balances, January 1 $ 206,739 $ 175,000 $ 15,000 $ 396,739 $ 392,746 Interfund Transfers-77,000 77,000 0 Fund Balances, December 31 $ 135,092 $ 230,000 $ 17,000 $ 382,092 $ 396,739 Statement of Operations - RevenuesChurch NameStatement of Operations and Changes in Fund BalancesFor the Current Year ended December 31, Current YearCurrent YearPrevious YearOperating FundCapital Asset FundSpecial FundsTOTALRevenuesOfferingsGeneral $ 91,682 $ 2,000 $ 2,000 $ 95,682 $ 85,364 Contributions in kind (Note 3) 7,500 7,500 - Missions 10,870 10,870 10,560 Self-Supporting Ministries (Note 4) 5,600 5,600 4,800 Interest and Other Income 1,000 1,000 950 Investment Income 3,500 3,500 3,325 120,152 2,000 2,000 124,152 104,999 Statement of Operations - ExpensesCurrent YearPrevious YearOperating FundCapital Asset FundSpecial FundsTOTALExpensesSalary and Related $ 68,500 $ 68,500 $ 64,000 Facilities 12,060 12,060 6,248 Ministries Nursery 1,300 1,300 1,250 Children 4,500 4,500 4,439 Youth 5,600 5,600 4,720 Adult 3,465 3,465 3,496 Missions and Outreach 2,549 2,549 2,649 Self-Supporting Ministries 5,600 5,600 4,800 Administration 6,100 6,100 5,891 Amortization of Capital Assets 24,000 24,000 3,015 Interest and Bank Charges 5,125 5,125 498 114,799 24,000 - 138,799 101,006 Excess of Revenues over Expenditures5,353 -22,000 2,000 -14,647 3,993 Fund Balances, January 1 $ 206,739 $ 175,000 $ 15,000 $ 396,739 $ 392,746 Interfund Transfers-77,000 77,000 0 Fund Balances, December 31 $ 135,092 $ 230,000 $ 17,000 $ 382,092 $ 396,739 QUESTIONS & COMMENTS