Inconsistencies between balance sheet and bank balances

RebeccaHarris · Post by **RebeccaHarris** » Fri Feb 06, 2009 8:09 am

This is the second year that this problem has occurred. When the final (December) bank statements came for FY2008 they reconciled with the corresponding cash accounts in PC+ with no hiccups. However, the balance sheet does not reflect the same balance. The report parameters were marked for period ending 12/31/08 but the balance shown for that account includes transactions that were not part of that time frame.

Shouldn't PC+ disregard transactions beyond the date specified when setting up the report? Perhaps I've repeatedly missed a setting, but it has taken three weeks of sleep loss and hair pulling to get to this point.

JohnDMeyers · Post by **JohnDMeyers** » Fri Feb 06, 2009 10:48 am

When you reconciled the bank account through 12/31/2008, was your current month January 2009?

It's possible that some of your transactions were dated 2009 and posted in Dec 08, or vice versa, you dated your transaction in 2008 and posted them in 2009.

One way to check is to run your reports through Jan 2009 and see if that picks up any transactions not listed when you run your reports through Dec 2008.

Let me know.

RebeccaHarris · Post by **RebeccaHarris** » Fri Feb 06, 2009 11:04 am

I've already been down that road. I re-examined each and every transaction affecting the account from Jan 1, 2008 thru Dec 31, 2008. Then when I looked at the transactions that had been posted for Jan 2009 I was amazed to find the total was the same amount my fund balance was overstated.

BTW, our CPA has been over everything (trust me, everything).

RebeccaHarris · Post by **RebeccaHarris** » Fri Feb 06, 2009 11:16 am

Current working month is Dec 2008. Payroll and Accts Payable transactions still have to be executed and are being posted to the proper month.

It appears that the posting date is used as the transaction date (?) when PC compiles the report. A correct balance sheet (as of a specified date) may never be possible at this rate.

NeilZ · Post by **NeilZ** » Fri Feb 06, 2009 12:57 pm

RebeccaHarris wrote:Current working month is Dec 2008. Payroll and Accts Payable transactions still have to be executed and are being posted to the proper month.

It appears that the posting date is used as the transaction date (?) when PC compiles the report. A correct balance sheet (as of a specified date) may never be possible at this rate.

You may find this discussion helpful.

http://www.powerchurch.com/forum/viewtopic.php?t=3348

Powerchurch is setup to use CASH accounting, which counts income when it comes in, and expenses when the check is written.

Post by **Jeff** » Fri Feb 06, 2009 4:25 pm

Have you posted any transactions yet for 2009?

ggibbar · Post by **ggibbar** » Sat Feb 21, 2009 6:43 pm

I'm a reasonably new PC user - however I am a CPA and have had YEARS of experience with various accounting systems. I am helping our church clean up their accounting and have already tackled their OOB issues. My next issue to resolve is the fact that when you use the Bank Reconciliation function in PC, the Balance shown as the adjusted bank balance and account ####(cash account) do equal each other and show a difference of zero. HOWEVER, the balance the report shows for the cash account IS NOT the balance of the cash account in the general ledger. The balance in the general ledger is the same amount as reported on the Balance Sheet for any given month. Sooooooooooooo, even though the bank reconciliation report looks like it balances, it really doesn't. I've tracked the differences back 6 months and the amount that it is different by changes every month, with no pattern.
What I do know is that they enter items with a date in a future month and post back into a prior month. I thought this could be the case, but those dollars don't make up the difference either. I haven't checked every month, but a couple of months do not show this pattern.
If someone could shed some light on where or how PC calculates the cash account balance that shows up on the bank reconciliation I would be most grateful. I have many other issues to clean up for them, and my time is running short.
Thanks,
ggibbar

JohnDMeyers · Post by **JohnDMeyers** » Sat Feb 21, 2009 9:05 pm

I can't reproduce your scenario. My cash balance is always equal to the balance sheet amount.

The fact that it differs month-to-month suggests that it based on entries made during the month, not a legacy problem.

You say there is no pattern, but does it differ in magnitude? Like is it 10 cents one month and 10 dollars the next month, and a hundred dollars the next month?

Or is it always about the same magnitude?

What I am thinking is that there is an entry or entries being made incorrectly on a consistent basis.

And one last thought - is the balance sheet in balance?

Post by **Jeff** » Sun Feb 22, 2009 5:47 pm

When you reconcile the bank account PowerChurch treats all accounts with the same middle 4 numbers as 1 physical account. So the accounts 01-1110-000, 01-1110-100, 01-1110-999, 02-1110-000, AA-1110-987 will all be included together on bank reconciliation.

The cash balance is the sum of all the transactions posted to the XX-1110- accounts regardless of the accounting month they have been posted to. So if you are trying to balance January bank statement and have already posted entries into February, the February transaction are included in the cash total shown on the reconciliation screen.

JohnDMeyers · Post by **JohnDMeyers** » Sun May 24, 2009 7:22 am

Speaking for myself, I know about PowerChurch software, and the experiences I've encountered over many years working with our church. I'm not an expert on bonding situations.

That being said, you did give a couple of interesting clues. You've had one year in business, and you're getting "re-bonded".

Therefore, I will assume you started out with a loan, and your retained earnings were negative for the first year.

In any given year, a non-profit is "supposed" to come out close to zero on retained earnings (donor restrictions notwithstanding). We're not in the business of making money, rather, using it.

The only way any non-profit can have a negative retained earnings and still be in existence is to have a savings account of some sort. On negative years, you simply pull money from that account. We've had a few of those years, albeit, we showed relatively small losses.

You apparently had a loan that carried you through, even though your retained earnings were negative.

I imagine your bonding company will look at the size of the losses in relation to the size of the income generated, or some other measure. Being current on your debt repayment would be a good thing, too.

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