Adjust or Write-off Cash to Pay-Cash

Amanda Downes

Hello,

We discovered that a donor made two gifts in the last fiscal year (now closed) that were not applied to his pledge but should have been. I went back and applied these which changed it from cash to pay-cash and now realize I probably did not handle that correctly. I'm thinking I should have done an adjustment. The accountant in our finance office is saying I need to write off this payment in RE because it was credited to income on their end and the only way to remove the receivable is to write off against income in this current year. I understand the need for our systems to be in sync (should note we do not integrate with FE and post gifts) but from other posts I read it seems in this case it would be more appropriate for me to make an adjustment in RE and send her an adjustment report. Is write-off really the correct step since it is NOT a situation where the donor cannot/will not pay it off...?

 Any advice would be appreciated. Thanks!

 Amanda

Denise Covington

Amanda Downes:

Hello,

We discovered that a donor made two gifts in the last fiscal year (now closed) that were not applied to his pledge but should have been. I went back and applied these which changed it from cash to pay-cash and now realize I probably did not handle that correctly. I'm thinking I should have done an adjustment. The accountant in our finance office is saying I need to write off this payment in RE because it was credited to income on their end and the only way to remove the receivable is to write off against income in this current year. I understand the need for our systems to be in sync (should note we do not integrate with FE and post gifts) but from other posts I read it seems in this case it would be more appropriate for me to make an adjustment in RE and send her an adjustment report. Is write-off really the correct step since it is NOT a situation where the donor cannot/will not pay it off...?

 Any advice would be appreciated. Thanks!

 Amanda

Adjustment for sure.  It is not a true write-off.  A write-off is when someone made a pledge and now cannot pay it.  This donor paid, it was just an entry error, so should be an adjustment.  It should be backed out, not written off.  These are technically two separate transactions / journal entries.  My two cents.

JoAnn Strommen

Amanda Downes:

Hello,

We discovered that a donor made two gifts in the last fiscal year (now closed) that were not applied to his pledge but should have been. I went back and applied these which changed it from cash to pay-cash and now realize I probably did not handle that correctly. I'm thinking I should have done an adjustment. The accountant in our finance office is saying I need to write off this payment in RE because it was credited to income on their end and the only way to remove the receivable is to write off against income in this current year. I understand the need for our systems to be in sync (should note we do not integrate with FE and post gifts) but from other posts I read it seems in this case it would be more appropriate for me to make an adjustment in RE and send her an adjustment report. Is write-off really the correct step since it is NOT a situation where the donor cannot/will not pay it off...?

 Any advice would be appreciated. Thanks!

 Amanda

Agree with Denise, it's not by definition a write off. 

If you do not post to FE or another accounting program, I'm not sure why accounting can not adjust the GL to the correct # in their software like you did in RE.  Especially as your fiscal year is closed.  I would not think it would matter to them what you had in RE - to me applying it to the pledge should have done all that you needed.  Unless they're running reports from RE to use, which without posting they will get a list of every gift I believe.

But if they insist it's an issue, yes, adjust to $0, note something on adjustment like payment not applied to existing pledge.  Gift re-entered 'date'.  Then put in new pay-cash gifts. 

Amanda Downes

JoAnn Strommen:

Agree with Denise, it's not by definition a write off. 

If you do not post to FE or another accounting program, I'm not sure why accounting can not adjust the GL to the correct # in their software like you did in RE.  Especially as your fiscal year is closed.  I would not think it would matter to them what you had in RE - to me applying it to the pledge should have done all that you needed.  Unless they're running reports from RE to use, which without posting they will get a list of every gift I believe.

But if they insist it's an issue, yes, adjust to $0, note something on adjustment like payment not applied to existing pledge.  Gift re-entered 'date'.  Then put in new pay-cash gifts. 

 I thought I had replied already but must not have gone through. My apologies if this posts twice....

 Thank you both for the feedback. I think it is because their books for last fiscal year are closed that the controller is having a problem with it. She is opposed to going back and changing anything after the fact. Her comment: >

JoAnn Strommen

Amanda Downes:

 I thought I had replied already but must not have gone through. My apologies if this posts twice....

 Thank you both for the feedback. I think it is because their books for last fiscal year are closed that the controller is having a problem with it. She is opposed to going back and changing anything after the fact. Her comment: >

I would enter it with same date as original.  But our business office would change their coding/GL #s on the payments and move them in reports for the closed fiscal year and make whatever notation/amendments were needed to their financial reports.  Am pretty sure that is what our auditors would also recommend.

Don't know why controller would want it in this fiscal year.  She still has an overage of $ income for the closed year that she has to justify.  Don't know why she can not make needed changes for that year.  If you put it in this year, how does she plan to justify it with the fact that she has no $ in deposits for the cash-payments?  Sounds like she's making a problem to be explained for this year too by doing that. 

If that's your only option, yes definitely document the original gift date - that's the date/year donor has the deduction for if it's tax-deductible. You're essentially creating inaccurate records!  Can't get double credit if you run giving statements at the end of this year, you can't include it.  

Sorry, I know we all have to work with our controllers/business/finance office, but this one just doesn't sit well with me. [:S]