CMS Fund Accounting - Reporting Dedicated and Restricted Funds

CMS Ledger and Payables is specifically designed for churches and non-profit organizations, so it records and reports dedicated and restricted funds properly, while other commercial accounting applications simply do not have this capability. CMS uses a feature called dedicated fund accounts to record those transactions.

Dedicated accounts provide monthly and year to date totals for income and expenses without affecting the general operating budget. The beginning and current balance of dedicated fund accounts are automatically recorded in the Net Assets on the Statement of Financial Position.

Dedicated fund accounts are also put into groups (programs or categories) and the Financial Position groups of Unrestricted, Temporarily Restricted, or Permanently Restricted funds to meet the reporting requirements of FASB 117, Financial Statements of Not-for-Profit Organizations.

For example, assume that contributions are collected for support of a specific mission. When the contributions are received, they are deposited in the church checking account. This is recorded as a bank deposit with the income reported to the mission support dedicated fund account. This account will have a current month income and balance equal to the contributions received.

Assume that a payment is made to that mission via a check. This is recorded as a bill and as an expense to the mission support dedicated fund account. The checking account balance will be reduced by the check when the bill is paid using the cash accounting method.

 



The mission support balance will be reduced and the Unrestricted, Temporarily Restricted, or Permanently Restricted summary on the Statement of Financial Position will also be reduced.

  • Unrestricted - ongoing fund with repeat budget needs, example family ministries, memorials and weddings
  • Temporarily Restricted - restricted until the time of its intended use, example building fund, choir robes and missions
  • Permanently Restricted - permanently restricted for an ongoing specific use, example endowments, scholarships, and foundations

    The amount of mission support received and paid out can be displayed at any time, the church budget has not been affected by these funds, and the Statement of Financial Position report is correct.

    The same procedures would be used to record transactions for contributions and payments for other specific purposes such as choir robes, building funds, youth trips, collections for others, etc..

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