We are a Society formed as a Company With Limited Liability. Over the past few years we have received a sizable legacy such that it needed to be spread over several bank accounts to provide some financial security.
The legacy had always been intended for capital projects such building refurbishment etc… However when paying for the services or materials to go with this expenditure it may be paid from any of the bank accounts.
What I would like to achieve is:
Somehow ring fence as a restricted fund the remaining balance of this legacy so that at any point in time the balance is visible in QuickFile and appears on interim Balance Sheets. I have a figure that identifies the remaining balance currently so I need to post that into something?
Any expenditure against this restricted fund automatically appears on the P&L statement, the associated bank balances are reduced and the restricted fund balance is also reduced.
The above may be entirely contradictory in accountancy practice but if we can address requirement 1 initially that is fine. The rest may require journals?
Thanks for trawling the archive for this 2014 topic.
I not at the foot of it the originator of the “Ringfenced Funds” post replied with a “still a bit confused” addendum.
The above may do what I want or even the “Charity accounts - Restricted funds” topic 13th Feb 2022 or even “Projects in Quickfile” approach however I need to be clear how to handle the fact that the funds came into our bank accounts over a 3 year period before we switched to QuickFile and therefore had been through a number of year end accounting cycles. All the money is in so how do I get started with setting up the ‘restricted funds’ account in QF.
“If not already done, create a holding/reserve account in quickfile banking section and call it something like restricted donations or so. So, when someone donates money to your charity, which is deposit into your bank account or cash account, tag it as a donation received. In the same account, create a out transaction over the same amount and tag it as a bank transfer to the holding/reserve account “restricted donations””.
In your case “All the money is in” so I assume it is currently showing in your bank, as @rhc mentions create a new holding account “Restricted Donations” and transfer the money across to ring fence it from your main bank
As pointed out by the original contributor of this query, this approach does make it difficult, or introduces an added complexity factor, when doing bank reconciliation(s). We will be wanting to ring-fence amounts from three bank accounts two of which only hold funds from the legacy but all three are now attracting monthly fees so are being depleted progressively. To me it seems the obvious logical approach technically, if not in accountancy terms, is to be able to tag a transaction multiple times where one tag ties it into the P&L side and is removed at year-end and another tag ties it into the assets side which lives with it until it is exhausted.
As we are using QF as a cash business we are not setting up and using suppliers nor processing invoices so still not sure how ‘Projects’ would help.