Consolidation Project & Year-End Process

SEE ALSO: Finance Intro | Role and Values | Contact Info | Consolidation and Year-End
Finance News |  Financial Statements | “Money & Mission”

Consolidated Financial Statements – Background & Discussion Papers:

On July 12, 2006, the Territorial Finance Council (TFC) approved the implementation of consolidated financial statements, which will incorporate the financial position and results of all ministry units in the Territory.  This would provide audited financial statements that clearly and accurately reflect the full extent of the Army’s work throughout the Territory.  Until now, the territorial audited financial statements report the operations of THQ and DHQ only (as well as ancillary operations of THQ, such as the Jackson’s Point Conference Centre, Supplies & Purchasing, Training College, National Recycling Operations and Grace Communities Corporation).  While a number of individual ministry units are externally audited, the majority are not.

But why is the consolidation of financial data for all ministry units so important?  Answers can be found in two discussion papers on consolidation published by the Finance Department.  Click here to read the first Discussion Paper and Invitation to Comment issued in September 2005.  It provides background on the project and sets out tentative conclusions on how such a project might proceed.  Feedback from stakeholders as well as further work by the Finance Department formed the basis for recommendations that were approved in principle by the TFC on April 5, 2006.

The second Discussion Paper and Invitation to Comment was issued by the Finance Department on behalf of the TFC in September 2006.  The purpose of this second paper was to update stakeholders on the project and solicit input on the implementation phase.  Click here to see the second discussion paper.

The second discussion paper produced responses from across the Territory.  The paper was well received, and the responses helped in the development of the implementation plan.  To clarify the meaning of consolidation and its impact on accounting staff at ministry units, the Finance Department provided a summary of responses and its replies to these.  Click here to see the Finance Department’s reply to the feedback received from the second discussion paper.  For easy reference, the issues are presented in a generic Q&A format.

Consolidated Financial Statements:

The Territorial Finance Department has issued two Preparation Guides to assist ministry units with the accounting issue and concepts related to the consolidation project.  The guides outline the accounting policies that must be adopted by all ministry units in order for consolidation to be successful.  Some of these policies will be new to units that, in the past, may not have been following GAAP.  Two additional documents have been released, which provide further explanations on the required accounting for consolidation.  The first document, New Departments – Consolidation, describes the new departments to be utilized for restricted funds.  The second document, Year End Review and Preparation, provides guidance on the treatment of capital assets, reviews common errors made in accounting and provides a checklist for regular reconciliations that should be performed.

Click here to view Ministry Unit Preparation Guide – Part I which covers the basic concepts and policies to be adopted.

Click here to view Ministry Unit Preparation Guide – Part II which covers more complex issues and policies, required for a successful and accurate consolidation.

Click here to view New Departments – Consolidation which explains the new General Ledger departments.

Click here to view Year End Review and Preparation (issued in February 2010) which describes the treatment of capital assets, reviews common errors in accounting treatment and provides a reconciliation checklist which should be followed by every ministry unit.

Year End Process – 2011

 
Click here to view Territorial Consolidation Year End Process – March 31, 2011 (issued in February 2011) which will: a) describe the tasks and the timelines we must meet to issue consolidated financial statements, b) highlight some common consolidation and accounting issues, and c) provide guidance and recommendations for the year end process.

The attachments are available here:

• Year End Timeline – Click here
• Territorial Finance Manual (Section 2 – Chart of Accounts) – Click here
• Intercompany Accounts – Reconciliation Process – Click here
• Year End Checklist – March 31, 2011 – Click here

To assist ministry units in preparing for year end, two webinars were held on March 31, 2011; one for units that are audited and one for other ministry units.  Both webinars were recorded and are being made available here for those who wish to listen to the webinar.  The slides used for the presentations are available as well.

Audited Ministry Units

• Webinar slides - Click here
• Webinar recording -  

Non-Audited Ministry Units

• Webinar slides - Click here
• Webinar recording -  

Consolidation Team and Contact Information:

Territorial Headquarters has created a team which is dedicated to the successful completion of the consolidation project.  This team is under the direction of David Dunstan – Director of Financial Reporting.  David has held a number of positions within the Territorial Finance Department.  With his many years of experience, David has acquired considerable knowledge of The Salvation Army at all levels.

The consolidation team is responsible for:

• establishing accounting policy and treatment to meet generally accepted accounting principles for not-for-profit organizations;
• standardizing report format and presentation to achieve consolidation;
• providing support to ministry units on reporting requirements, chart of account maintenance and structure, accounting related issues and policy and disclosure requirements;
• compliling financial statements of all ministry units across the territory;
• assessing the quality and consistency of presented financial statements;
• assessing the accuracy and completeness of financial statements;
• developing systems to facilitate the consolidation process;
• managing the consolidation process, ensuring that all information is compiled for examination by external auditors.

The consolidation team can be consulted at any time on accounting treatment, disclosure issues or any other matter relating to the consolidation process.  The team can be contacted by email at THQ_Consolidation@can.salvationarmy.org and will be pleased to work together with ministry units to achieve consolidated financial statements.