102 GENERAL LEDGER & FINANCIAL REPORTING


The following section explains various accounting and internal control procedures as they relate to parishes and schools within the Archdiocese of Baltimore. More explanation and information on the components of internal control is available here.

If a parish or school suffers a loss and did not follow the required internal controls, the parish/school will be assessed a higher deductible and risks denial of its insurance claim.

102.1 General Ledger:

All parishes and schools shall maintain a computerized general ledger.

Procedure:

A) The general ledger should contain a complete and accurate accounting of all activity and holdings at the parish/school.

B) The general ledger should contain a detailed listing of transactions for every account classification used by the organization.

C) All transactions, activities, assets and liabilities of a parish or school must be accounted for/maintained in the general ledger.

102.2 No Netting of Income and Expenses:

Income and expenses shall never be netted against one another because netting understates both income and expenses and violates a basic accounting principle.

Note: The only exception to the principle of no-netting of income and expenses is in the case of school fundraisers. For more information, please contact the Department of Fiscal Services.

102.3 Exchange Account:

Exchange accounts are not used for parish/school revenue and expenditures. The exchange account (#1290) should be used only to record receipts and expenditures connected with actual exchanges, where funds are collected and disbursed, such as for a bus trip.

Procedure:

A) The exchange account should never be used to net or record income and expenses.

B) The account should be recorded on the general ledger and should be clearly marked or otherwise analyzed to show the offsetting receipts and expenditures.

C) The exchange account must net to zero at fiscal year-end.

D) Exchange accounts should not be sued for miscellaneous changes that are not true exchanges.

102.4 Trial Balance:

A trial balance – typically, a report found in the general ledger system providing the number, name and balance on each account in the general ledger — shall be maintained on a monthly and annual basis.

Procedure:

A) Accounts with debit balances should be listed in one column, while accounts with credit balances are listed in an adjacent column.

B) The total of the accounts with debit balance must equal the total of the accounts with credit balances.

C) All asset and liability accounts on the general ledger should be reconciled monthly and quarterly to supporting documentation (e.g., invoices, receipts, etc.)

102.5 Notes Receivable/Payable:

All notes receivable, notes payable, debenture payable, mortgage payable, etc. shall be set up in the general ledger as their own individual accounts.

Procedure:

Each asset or liability must have appropriate documentation to support its current balance.

102.6 Liabilities (Debt):

When the mortgage payable or notes payable (liability) is set up in the general ledger, payments on the mortgage or loan must be applied to reduce this payable.

102.7 Recording of Special Collections Funds:

Monies received from Special Parish Collections such as drives to defray the cost of repairing or repainting the church or rectory, decorations for holidays, or other festive occasions, school collections, fuel collections, etc., shall be recorded in account #4050 – Special Collection Funds for Operating Needs. Note, special collections to reduce a mortgage balance must receive written exemption from the Archbishop in order to be tax-exempt.

102.8 Recording of Special Approved Campaign Funds:

Proceeds from a special campaign for new construction or major renovations shall be recorded in account #4150 – Special Approved Campaign Funds. A special campaign must be limited to a definite period of time and dollar goal, and must have prior written approval of the Archbishop.

102.9 Recording of Capital Campaign Funds – Parish Share & Grants:

The parish share from Capital Campaigns and any Grants shall be recorded in account #4151 – Archdiocesan Capital Campaigns – Parish Share & Grants Received. Parishes that are self-administering the Capital Campaign should show their net parish share in this account.

102.10 Recording of Lenten Appeal Rebates & Grants:

The rebate to the parish of 25% of the Lenten Appeal funds raised as well as Lenten Appeal Grants must be recorded in account #4160 – Lenten Appeal Rebates & Grants.

102.11 Recording of Donations and Gifts:

Donations, gifts, and bequests received shall be recorded in the general ledger and posted according to the following procedures.

Procedure:

A) General donations, gifts, and bequests lacking a specific purpose or use of the funds should be posted to account #4220.

B) Donations, gifts, and bequests received that specifically state the donor’s intended use of the funds should be posted to #4720 – Specific Bequests under a Will, or #4370 Specific Gifts/Grants Restricted for Non-Operating Use.

C) Gifts in Kind (in lieu of cash) should not go unrecorded. The Donation Income and Other Expense (depending on the church expense paid) accounts should be increased. The books should reflect every church expense paid by the parish or for it, and every donation as income, whether received in actual dollars or in-kind, such as fixed assets, supplies, or repairs.

102.12 Property, Plant, and Equipment (Fixed Assets):

Fixed assets shall be posted according to the following procedures.

Procedure:

A) Fixed Assets, such as furniture, fixtures, machinery, equipment, building, and building improvements and extensions are recorded in account #5930 – Capital Expenditures in the Church, account #5500 – Capital Expenditures and New Non-Instructional Equipment in the School, or account #5080 – New Instructional Equipment in the School.

B) Supporting records should be kept for each capital expenditure category of fixed assets, such as Furniture & Fixtures, Machinery & Equipment, Building, Land, and Building Improvements. These supporting records should reflect the date of expenditure, vendor name, asset description and cost of each fixed asset item purchased