Users of the previous version of Church360° Ledger may have imported or created smaller assets as restricted funds to track money designated for specific purposes. While some users have found success with restricted funds, others have experienced frustration with navigating an asset account and their related offset accounts.
When migrating to the new Ledger software, these accounts will be accurately converted into asset sub-accounts housed under a parent account.
Users can then choose to continue using the previous restricted fund system by using these sub-accounts as they have been or they can move those funds over to a new conceptual account type, called a Fund.
If a church administration would like to move to the new concept of equity-backed Funds, this article highlights the main tasks needed to do so.
1. Take note of current balances of all of your accounts.
To avoid confusion in reporting and future auditing, it's recommended to make major changes to your chart of accounts after finishing the current fiscal year. This will also allow all existing income and expense accounts to zero out before the change.
Continue to use your accounts as normal for the ending fiscal year until all transactions have been entered and all year-end related reports have been run. Do not create transactions for the current fiscal year. Print a Chart of Accounts report from under Financial Reports for the fiscal year that has concluded. This will be used as a double-check once changes have been made.
To print the Chart of Accounts report,
- Go to the Financial Reports tab.
- Find the Chart of Accounts report and click the arrow button under Actions to view the report.
- If the report does not show the previous fiscal year (the one that has just concluded), be sure to change the fiscal year appropriately. This particular report is not affected by the selected month.
- Click to "Print" or "Export" the report and keep it handy for subsequent steps.
2. Consolidate all previously restricted funds into a singular asset.
Create a journal entry of all restricted and unrestricted funds, crediting all restricted funds of their total amounts and debiting the related unrestricted account.
To create this journal entry,
- Click "Transaction" in the upper right corner of the page and choose "Journal Entry".
- Add the transaction's date as 12/31.
- Enter in the line items for every restricted fund and credit them according to their ending balance on the Chart of Accounts report. This will bring the balance of each of these accounts to zero.
- Debit the total credit amount (found in the top right corner of the transaction window) to the unrestricted fund.
- Add in a memo explaining the change.
- Click "Save" to save the journal entry.
3. Create new (equity-backed) Funds in the new Ledger system.
Create a respective Fund from the Chart of Accounts view for each restricted fund. This will also create an attached equity, income, and expense account automatically for tracking Fund activity.
To add a new Fund,
- Go to the Chart of Accounts tab.
- Click "Add to chart" to open an account entry window.
- Enter the Account name (can be the same as the restricted fund) and number (optional).
- Under "Create account under", use the drop-down menu to select "Funds".
- If you'd like to budget this account's income and expense account, check to box to allow entering a budget.
- Click "Save" to save the new account.
- Do this for each restricted fund replacement.
4. Transfer Restricted Fund totals from Book equity into their respective Fund equity account.
Create a journal entry for the new Funds and the Book Equity, crediting the Funds and debiting the Book Equity account. This transfers the amounts for each purpose into the new accounts.
To create this journal entry,
- Click "Transaction" in the upper right corner of the page and choose "Journal Entry".
- Add the transaction's date as 12/31.
- Enter in the line items for every newly created Fund's Equity account and credit them according to their respective account's ending balance on the Chart of Accounts report. This will bring the balance of each back to its appropriate total.
- Debit the total credit amount (found in the top right corner of the transaction window) to the Book Equity account. This keeps the accounting equation in balance.
- Add in a memo explaining the change.
- Click "Save" to save the journal entry.
5. Archive or delete any asset, income, and expense accounts that will no longer be in use.
By now, the sub-accounts (that were previously restricted funds) and any income and expense accounts related to them (that were most likely manually created) should be reduced to a zero balance and are no longer needed. To archive an account, there must not be any transactions for the current fiscal year.
To maintain historical records, the new Ledger system only archives accounts that have previous transactions attached to them. If an account has no transactions attached to it, it can be deleted.
To clean up your chart of accounts, you'll want to archive any accounts related to the previous restricted fund system. Archived accounts are automatically hidden in the Chart of Accounts view but can be shown by clicking "Show Archived".
To archive/delete accounts in the Chart of Account view,
- Go to the Chart of Accounts tab.
- Find an account that has no balance and click the leftmost icon under Actions. If the account has transactions, the box icon will archive them. If it has no transactions, the trash can icon will delete it entirely.
- Do this for each account that is not needed for the new fiscal year.
6. Compare amounts in the previous Chart of Accounts to the new Chart of Accounts to ensure all looks accurate.
Print a Chart of Accounts report from under Financial Reports for the fiscal year that has just started. Use this to compare the beginning balances of the new Funds to the ending balances of the restricted sub-accounts under Assets the previous year.
If there are any discrepancies, you can reopen the journal entries to tweak as needed.
If you have any questions or concerns on moving over your restricted funds to equity-backed Funds, please feel free to reach out to CTS support.