MidAmerica RegionFinance for New Treasurers

Rae Jane Arujo, Heartland TreasurerLisa Presley, Heartland District Executive

Finance for New Treasurers The Job of Treasurer

What are the main functions of a treasurer?w Custodian of Assetsw Record Keepingw Financial Service w Reportingw Compliance with Legal Requirements

Finance for New Treasurers The Job of Treasurer

Custodian of Assetsw Risk Assessment

w What possibility is there for mismanagement?

w Risk Mitigationw What policies do you have to protect the assets?

Multiple signatories? Duties divided?w Do you do criminal background checks on those

handling funds?w Do you have insurance and bonding to protect the

congregation?

Finance for New Treasurers The Job of Treasurer

Record Keepingw Usually done today using financial softwarew Record all receipts and all expendituresw Necessary to have back-up information in the

way of receipts, approval of expenditures, and tracking the donations received

w Need to comply with employment laws – consider using a payroll service to help you out

Finance for New Treasurers The Job of Treasurer

Financial Servicew Record receipts and payments (may be done

by bookkeeper separate from treasurer)w Preparation of annual budget

w With help from various committees requesting fundsw For approval by Board and Congregation

w Ensuring donation receipts submitted for tax purposes

w Investment of surplus funds

Finance for New Treasurers The Job of Treasurer

Reportingw Monthly financial reports to Board

w Profit and Loss – how you did in terms of budgetw Balance Sheet – how are your long term obligations

and assets doingw Cash Flow – how is the cash moving (different from

profit and loss)

w Annual report to Congregationsw Ensure regular reporting to persons in charge

of money management (committee chairs, staff)

Finance for New Treasurers The Job of Treasurer

Compliance with Legal Requirementsw Pay employment taxes on timew Issue employee W2 or 1099 forms timelyw Ensure donation receipts delivered w Pay any annual license fees, building permits,

etc. w File certifications i.e. 501(c)(3) non-profit

corporation

Finance for New Treasurers Ministerial Compensation Explained

w Complex, to say the leastw Employee and not at the same time

w Employee for W2 and taxesw Self-employed for Social Security filings

w Usual parts of ministerial financial dealings:w Salary and Housing = Salary for most peoplew Benefits – Insurance and Pensionw Professional Expensesw Contributions in lieu of FICA

Finance for New Treasurers Ministerial Compensation Explained

w Salary and Housingw Not subject to mandatory withholdingw Congregations and minsiters may enter into voluntarily

w Housing allowance – way to minimize taxesw Must be set by Board motion prior to paymentw May be changed, but must be by Board motionw Is not subject to income taxes, but is subject to SECA

w Salary is “left over” after determination of housingw Subject to taxes and SECA

Finance for New Treasurers Ministerial Compensation Explained

w Benefits and Pensionw Often through UUAw Mind the guidelines as to participation – some are all or

nonew Can be pre- or post- tax benefits

w Contribution in lieu of FICAw Recommended contribution of 7.65% in lieu of employer

cost of FICAw Taxable to minister, but tax on 7.65% is less than the

7.65%

Finance for New Treasurers Basic Accounting

Basic Accounting Equation

Assets = Liabilities + Owner’s Equity

Other names for Owner’s Equity are:

net assets

shareholder’s equity

Finance for New Treasurers Basic Accounting

Basic Accounting Equation Expanded

Assets =

Liabilities + (Income – Expenses) + Owner’s Equity

Finance for New Treasurers Basic Accounting

Basic Accounting Equation Expanded to Add Funds

Assets =

Liabilities + Fund Balances + (Income – Expenses) + Owner’s Equity

Finance for New TreasurersBalance Sheet

Balance Sheet summarizes the assets of the congregation (what you have) and the liabilities (what you owe) including what you’ve saved

Assets include property at cost Liabilities include what you owe to others Owner’s equity is total of surpluses over the years of

the congregation’s existence

Finance for New Treasurers Balance Sheet

Assets

Cash on Hand $100

Checking Account $300

Total Assets $400

Liabilities

Accounts Payable $ 30

Loan from Member $ 10

Hymnal Fund $ 80

Equity (Net Assets) $280

Total Liabilities $400

Finance for New Treasurers Balance Sheet

Assets = Liabilities + (Income – Expenses) + Equity

Account Type Increase Decrease

Assets Debit Credit

Liabilities Credit Debit

Finance for New Treasurers Balance Sheet

Assets = Liabilities + (Income – Expenses) + Equity

“Wait a second,” you say. “When I ask my bank to credit my account, it results in an increase. My bank account is my asset.”

Finance for New Treasurers Balance Sheet

Assets = Liabilities + (Income – Expenses) + Equity

The reason that works is that banks maintain your account on their books as their liability.

Account Type Increase Decrease

Assets Debit Credit

Liabilities Credit Debit

Finance for New Treasurers Cash Flow

Cash flow is how much cash is flowing through your accounts as income and expenses

May have more cash than current profit and loss would think possible

Question is basically whether you have cash on hand to pay for expenses, or is it tied up in other investments

Need to track to keep from bouncing checks!

Finance for New Treasurers Budgets

Budgets are a best guess of what income and expenses you’ll have over the year

Rarely are absolutely accurate, but help ensure that you don’t overspend

Best to involve committees and staff in preparation Need to review periodically to see where there are

deviations and correct for them

Finance for New Treasurers Q&A

What are your questions?