Accounting software helps religious organizations and other nonprofits.

Recent changes in the accounting requirements for religious organizations and other not-for-profits have put a greater burden on their accountants. Fortunately, a variety of software packages eases that burden. Kevin W. Taylor, CPA, business manager of the Eastminster Presbyterian Church, Wichita, Kansas, examines several of the programs and how they are used.

As CPAs know, Financial Accounting Standards Board Statement no. 93, Recognition of Depreciation by Not-for-Profit Organizations, requires all not-for-profit organizations to record depreciation on long-lived tangible assets. For many not-forprofits, especially religious organizations, their property and equipment accounts simply represent accumulated purchases over many years, with little or no itemization of assets. With the adoption of Statement no. 93, these organizations have had to identify and record depreciation on those items.

Specifically, not-for-profit organizations now must disclose

* Depreciation expense for the period after May 15, 1988.

* The balance of major classes of depreciable assets, by nature or function.

* Accumulated depreciation.

* A general description of the method or methods used in computing depreciation for major classes of assets.

MANAGING TASKS

Though all not-for-profits must comply with the new rules, the problem is especially acute for religious organizations, which often own a large number of assets, such as classroom furniture, video and audio equipment, recreational items and artwork. Recent software especially written to handle fixed-asset recordkeeping requirements has made the task manageable.

Three such programs are Shelby Church System, Automated Church System and Micro Information Products' MIP Fund Accounting (for more details, see the sidebar, Software Programs for Not-for-Profits, on page 138). They are high-end accounting packages that offer well-designed fixed-asset modules.

Shelby's fixed-assets module is designed to comply with Financial Accounting Standards Board guidelines. It calculates depreciation, tracks maintenance contract information and helps prepare capital budgets. MIP Fund Accounting's fixed-assets module records information such as purchased items' serial numbers, acquisition method and valuation method; it also calculates depreciation. Automated Church System's fixed-asset module records asset description, physical location, serial numbers and maintenance history. However, it does not calculate depreciation.

Because most capital asset purchases and minor building additions are accounted for through the general operating budget, an extensive review of all likely operating accounts is necessary when compiling the original data for entry into computer records. Contribution records also must be examined for data on property that has been donated to the organization.

Many organizations own assets that have a historical value and a virtually unlimited useful life. Statement no. 93 says, "Depreciation need not be recognized on individual works of art or historical treasures whose economic benefit or service potential is used up so slowly that their estimated useful lives are extraordinarily long." However, major preservation or restoration costs should be depreciated over the useful life of the restoration work even if the asset itself is not subject to depreciation rules.

RESTRICTIVE DONATIONS

Religious organization accountants face challenges from the revenue side of the ledger as well. Not-for-profits find that many donations come with "strings attached." In 1989, restrictive grants to not-for-profit organizations reached a fiveyear high, while general operating grants dropped to a five-year low. As a result, financial officers of not-for-profits are always looking for better ways to account for the large number of restricted gifts and to ensure disbursements are being made according to donors' wishes.

This is no small task, and specialized software can make the job manageable. Religious organizations are unique in the world of not-for-profits because most of their revenue comes in weekly donations. Individual donations frequently are restricted and many times allocated to more than one fund. Identifying a donor's wishes when the donation is received is a critical component in the revenue-collection process.

An effective alternative to manually compiling and recompiling the weekly offerring while accounting for the numerous restrictions is to use a computer spreadsheet. Most any type of spreadsheet can be designed to automatically allocate individual donations to multiple funds and thus save many hours of processing time.

LISTING CONTRIBUTORS

The preparation of an offering tabulation spreadsheet begins with an alphabetical listing of contributors and their corresponding identification numbers. The different church funds are represented by columns in which distributions are listed according to donors' pledges or wishes. It might look something like the exhibit shown above. Programming the spreadsheet is easy. In columns D through F the total donation is multiplied by the respective percentage supplied by the donor. In this example, the donation entered in column C is multiplied by 50% in column D, which then results in a calculated entry in column D of $100. This procedure is repeated in columns E and F. Most churches add donations from donors who do not supply distribution instructions to the general operating fund. However, sometimes such gifts are split between several funds according to percentages established by the organization's board of directors. In this case, establishing the default allocation percentages at the beginning of the spreadsheet is helpful. The typical "if-then" spreadsheet formulas look like this: "If" the donor designates, "then" split the contribution accordingly; "otherwise," use the default percentage split. When donations from every contributor are entered into the spreadsheet, summary totals can be generated that will tie to the deposit total Although the preparation of a revenue tabulation spreadsheet requires a significant amount of setup time the result is an efficient tool for properly identifying designated gifts and creating a source document from which the accounting entry for revenue can be made.

INFREQUENT GIFTS

The programming for automatic donation distributions should allow for overriding entries in case of special, infrequent gifts. The tabulation spreadsheet also can be used to provide a written reminder of special instructions from donors, such as a member's desire to place his or her third contribution of each month in a memorial fund. Another solution for help in identifying restricted contributions is to use commercial software designed specifically for this task. There are over 100 programs designed specifically for religious organizations. Most perform the normal contribution recordkeeping functions. Shelby's software accounts for automatic distribution of gifts to multiple funds according to each member's pledge percentages while posting to the individual contribution records. Although the Shelby software eliminates the need for a tabulation spreadsheet, it comes with a high price tag--$3,000. Specialized software applications are becoming essential for not-forprofits as their financial environment becomes more complex. The public demand for greater accountability and personalized service and the need to keep operating costs in check are making such software necessary.

EXECUTIVE SUMMARY

* NOT-FOR-PROFIT organizations' CPAs increasingly rely on computer software to handle their accounting--especially now that they must record depreciation on long-lived tangible assets.

* THREE PROGRAMS-- Shelby Church System, Automated Church System and MIP Fund Accounting--are especially designed for not-for-profits.

* SINCE MANY not-for-profits find that donations often come with "strings attached," they must be able to track a large number of restricted gifts and ensure disbursements are being made according to donors' wishes.

SOFTWARE PROGRAMS FOR NOT-FOR-PROFITS

SHELBY CHURCH SYSTEM Shelby Systems, Inc. 65 Germantown Court Suite 303 Cordova, Tennessee 38018 [phone] Price: Total package, $3,000; fixed-assets module only, $750; contributions module only, $1,500 Requirements: 640 kilobytes RAM, 20 megabytes hard disk, DOS 3.1 or higher Comments: Shelby is one of the oldest church software companies. Its fixed-assets module is specifically designed to comply with Financial Accounting Standards Board guidelines. It calculates depreciation, tracks maintenance contract information, helps prepare capital budget requirements and integrates with the Shelby General Ledger module.

MIP FUNI) ACCOUNTING Micro Information Products, Inc. 505 East Huntland Drive Suite 340 Austin, Texas 78752 [phone] Price: Total accounting package, $4,500; fixed-assets module only, $800 Requirements: 640 kilobytes RAM, 40 megabytes hard disk, DOS 3.1 or higher Comments: MIP is designed for all not-for-profit organizations, not just churches. The fixedassets module records information such as purchased items' serial numbers, acquisition method and valuation method, in addition to calculating depreciation.

AUTOMATED) CHURCII SYSTEM (ACS) Computer Dimensions, Inc. P.O. Box 3990 Florence, South Carolina 29502 [phone] Price: Total accounting package, $3,000; fixed-assets module only, $100; contributions module only, $1,100 Requirements: 256 kilobytes RAM, 20 megabytes hard disk, I)OS 2.0 or higher Comments: ACS offers an economical software solution for organizations with relatively few fixed assets to track. The fixedassets module records asset description, physical location, serial numbers and maintenance history. It does not calculate depreciation.

ACCOUNTING ON A TIGHT BUDGET

Not-for-profit organizations too small to afford the specialized software mentioned in the accompanying article but big enough to need some computerized assistance may want to look at QuickBooks.

While the program cannot track a large number of property assets (other than historical costs) or calculate depreciation, it can handle many of the accounting functions needed by a small organization. However, it does not address the requirements of fund accounting and would not meet the needs of users with multiple funds. (For more on lowcost accounting software packages, see "Accounting Software Now Available for the Nonaccountant,'' JofA, Aug. 92, page 46.)

For users of Quicken, a popular accounting program published by the same company as QuickBooks, the price is $49.95; the price of QuickBooks alone is $139.95.

QuickBooks was designed especially for people not trained in double-entry accounting. Users enter data as single-entry functions, and the program automatically translates them into double-entry records. It can track vendor history for 1,000 invoices, search for duplicate invoices and perform bank reconciliations. It also prints trial balances and a user-defined financial statement. It even exports reports into spreadsheets for further analysis.

The program requires 1.9 megabytes of hard disk space, 640 kilobytes of memory and a DOS of 2.1 or higher.

For more details, write to Intuit, Inc., 155 Linfield Avenue, Menlo Park, California 94026, or call [phone].