From the Worldwide Faith News archives

Dramatic Changes in Budget Building Mandated

Date 04 May 1996 20:34:40


95457     Dramatic Changes in Budget Building Mandated  
                    by New Federal Regulations 
                      by Jerry L. Van Marter 
LOUISVILLE, Ky.--The way General Assembly budgets are constructed will 
change dramatically beginning this year as a result of new federal 
regulations, according to Presbyterian Church (U.S.A.) financial officials. 
     Corporate and Administrative Services (CAS) controller Nagy Tawfik 
told the CAS committee at its Dec. 7-9 meeting here that the changes in 
Financial Accounting Standards Bureau (FASB) regulations mean "a complete 
reversal of current practice." 
     According to Tawfik, the new regulations for non-profit corporations 
require that restricted funds be applied to incurred expenses before 
unrestricted income may be used to pay them.   
     Currently, all unrestricted income is applied to General Assembly 
mission budget items, and then the budgets are filled in with restricted 
funds.  "Historically we have managed restricted funds to stretch out 
support for programs over as many years as possible," Tawfik said. 
     No more.  All applicable restricted funds must be spent first, 
beginning with 1995 expenses.  The effect, said Tawfik, is that some $60 
million in accumulated income derived from restricted gifts to the General 
Assembly will have to be spent much quicker than is currently the practice. 
     CAS officials estimate that the impact of the accelerated spending 
down of restricted reserves under the new FASB regulations will begin to be 
felt in 1997, with the full financial crunch hitting in 1998.  General 
Assembly Council executive director the Rev. James D. Brown described 1998 
as "a watershed year." 
     Restricted giving to the General Assembly continues to rise, but 
unrestricted giving is on a downward trend of about a five percent decline 

For more information contact Presbyterian News Service
  Presbyterian Church (U.S.A.), Louisville, KY 40202
  phone 502-569-5504            fax 502-569-8073  
  E-mail   Web page: 


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