If you procrastinated like I did, then you will be spending your weekend thinking about taxes and tax returns. There could not be a better time to have a visit from the patron saint of accountants. This is long. And you may find it boring. Accounting, after all. In any case, it’s purely fictional and any resemblance the characters may have to persons living or dead (or both – the saint, presumably) is purely coincidental.
THE FINANCE COMMITTEE WRESTLES WITH SPENDING ON BIG TICKET ITEMS
Theology is thought to be a arcane subject by the religious and the non-religious alike. Church people think of it as “overthinking” the simple love of God and the easier and more beautiful intellectual demands of worship. The non-religious are, of course, mystified by miracles, prayer, and how church people reconcile the Trinity with the monotheism that is clearly commanded in the Decalogue.
But if theology is difficult, accounting is even more of a mystery for most United Methodists. I have been treasurer, finance chair, or volunteer amateur internal auditor for the better part of the last fifteen years in a United Methodist Church inhabited by men and women with excellent educations and careers in science, engineering and academics. I assure you most of them will explain the Trinity, reconcile evolution with the Book of Genesis, or enjoy a discussion of substitutionary atonement with you before they will tell you the functional difference between a balance sheet and an income and expense report. And while it may be fully expected that most members would not be able to go into much detail on such a thing as depreciation, you would think they would quickly grasp the meaning of the idea that income should ordinarily exceed expenses in a healthy organization. Alas, red ink is often taken only as a sign that we need to pray harder.
At our most recent meeting we spent the better part of an hour discussing whether we should pay for a $15,000 air conditioning condenser unit for the sanctuary from the operating budget or from our “rainy day fund,” which no one seemed to understand the reason for its creation and why it had been so named in the first place. Borrowing was not one of the options considered since we have been fortunate in being able to save up a little money over the last few years.
So it occurred to me after that meeting, where we agreed on a budget to propose to our church council, that maybe I could wrap some accounting ideas up in the more familiar spiritual language of theology. Red ink could be sin, for example. That would be easy enough and since we could all agree that it should be avoided, it wouldn’t need a lot of discussion. After all, this is deeply Republican country.
But what about the more difficult ideas like capitalization and depreciation of equipment? Too formidable to even consider after such a long meeting, I thought. Tomorrow. I will think about that tomorrow. After all, tomorrow is another day. For now, some welcome rest.
I FALL INTO A DREAM; I MEET THE PATRON SAINT OF ACCOUNTANTS
But, alas, as I fell off to sleep that night, a gentleman appeared to me in a dream. In my dream I was at Chapelwood’s altar all alone and praying about my difficulty getting fellow Methodists to understand basic accounting concepts. Few things have ever brought me to my knees like this problem.
As I knelt at the altar in the silence of the sanctuary, I heard a tapping on the window behind the altar. I offered a hurried ‘amen’ and looked up to see a large man, somewhat shabbily dressed, standing outside under the Chapelwood cross. I waved him over to the side of the building where, through the windowed wall, I could view his progress until we met at the main door to the sanctuary.
He was a friendly looking man, quite large in stature and with a raspy voice that sounded a lot like Burl Ives. He wore boots that appeared to have slogged through puddles of mud getting to Chapelwood. He wore his plaid shirt out at the waist and a mandolin slung over his back. He rubbed his bearded chin as if thinking deep thoughts even as he moved toward me and extended his hand and said, “Matthew’s my name and accounting’s my game. I was looking in on your meeting last night and figured you might be able to use a little help.”
“You’re an accountant?” I asked.
“Not exactly,” he replied. “A tax collector, actually, but I’m the patron saint of accountants and all the money professions.”
“I’m a Methodist,” I said. “We don’t have much truck with saints. We revere them but we don’t make new ones, or pray to them.”
“Well, you’re not praying,” he said, “just dreaming.”
“And, besides,” I challenged, “if John Wesley can’t be a saint, I don’t know that you and I have a lot to talk about.”
“Hold it! Do you like the Sermon on the Mount?”
“Of course,” I said. “It is fundamental to my faith as a Christian. Some beautiful poetry in it, too.”
“Well,” he said, “I’m THAT Matthew —the apostle who took down the notes and got it into the Book of Matthew — so you could read and learn from it. And I’ve learned a little accounting over the years in my role as patron saint of bankers, accountants, tax collectors, bookkeepers, bank tellers and those sorts.”
And then, with a bit of sneer in his voice, “At least the Catholic ones.”
I relented. “Fine, do you do cash or accrual?”
“Both,” he said. “I work with churches of all sizes. I’ve helped some that work out of cigar boxes and a few that have computerized systems that put yours to shame. What do you call it? Shepherd’s Staff? That’s cute. So don’t mess with me, kid. I know a few things you probably don’t know. Now what can I help you with?”
WE TACKLE THE PROBLEM OF EXPLAINING TO METHODISTS THE NEED TO CAPITALIZE EQUIPMENT
“O.K., help me explain some basic accounting principles to my finance committee. When I bring up the idea of capitalizing an expensive piece of equipment, there is always at least one engineer from Dow who tells me we don’t need to do that since we don’t pay taxes.” I said.
“Hold it,” said Matthew. “Did you say Dow? Would that be the Dow Chemical Company that has a headquarters in Michigan?”
“Yes, you know them?”
“Sure enough,” he said. “Napalm, Agent Orange and a few other things have attracted a good deal of attention upstairs. Not my department, though. I only help with church accounting these days.”
“Good thing,” I said. “That could be a major distraction. And that was a long time ago.”
“Let’s get on with your more immediate problem,” said the apostle.
“Let’s,” I said. “Back to explaining capitalization and depreciation and why we should bother since we have enough money in the bank to pay cash for our new condenser.”
ST. MATTHEW ILLUSTRATES ACCOUNTING PRINCIPLES BY REFERENCE TO THE HOLY TRINITY; I GASP AT THE HERESY
“Here’s the thing,” said the apostle. “You say your members do well with sticky theological conundrums. Let’s use that to help them understand some accounting principles.”
“Red ink equals sin,” I said. “We get that part, St. Matthew. That’s easy.”
“Please, call me Matt,” he said. “We are trying to modernize and reach out to the 21st century. I play bluegrass mandolin on Sundays in our contemporary service. I even sneak out once in a while on Saturday nights and play a few bars.”
“No kidding? You mean you play a few bars of music with your Christian friends, right?”
“Let’s get back to accounting,” said Matt. “I want you to think about using the Holy Trinity as your vehicle for explaining capitalization and depreciation to your finance committee.”
The suggestion left me breathless. Had it originated from anyone but one of the sainted apostles of Jesus, I would have been instantly overcome with the guilt of heresy. But I swallowed hard and placed my faith in the saint’s wisdom.
“Fine, “I said. “They fully understand the Trinity. Ask any Methodist to explain it and they will tear right into it.” He looked at me as if to check and see if there was any sarcasm intended. Detecting that it appeared to be my good faith assessment of our congregation, he rolled his eyes in a very exaggerated and purposeful way.
“Father, Son and Holy Ghost,” he said. “Do you think they can work with that?”
“Well,” I answered, “we usually talk about the Holy Spirit. But, I guess …”
“Doesn’t really matter,” said Matt, “‘ghost’ may work better, though, when we get around to depreciation. A lot of folks can’t see it as anything but spending a lot of money and not getting anything for it. So, Holy Ghost is O.K. with you?”
“Sure — Father, Son and Holy Ghost,” I said.
(I.) THE FATHER: ST. MATTHEW EXPLAINS PLEDGES AND INCOME
“First, the Father,” he said. “That would be the creator and source of all things, including our financial assets. Think of the Father as becoming manifest in pledge cards.”
Shocked, I blurted, “St. Matth…I mean, Matt, you’re really challenging my orthodoxy. Doesn’t this make you in the least uncomfortable?”
“Oh, relax,” he said. “God doesn’t mind being used as a metaphor for mankind’s worldly concerns if will help them do a better job funding their church capital needs without creating schism. He has watched too many churches sell out to shopping malls because they couldn’t keep the premises cool during the summer. Besides, you tell people every week that all that they have comes from God. So let me do my work.”
“Good enough with me, then,” I said. “God is in the pledge cards.”
“Let’s be straight,” said Matt, sensing my unease, “God is not the money. We both understand about Mammon. Jesus talked about him in the Sermon on the Mount. I can prove it; I have contemporaneous notes. But as far as keeping the AC running in Texas in August, it is essential to keeping the temple open and people showing up for worship. So God is not going to object. And if it gives Mammon a little thrill, so be it. Where he is there isn’t any AC.”
I was getting anxious to move on and the saint could see that I was getting fidgety.
(II.) THE SON: ST. MATTHEW EXPLAINS OUR MISSION SPENDING AND GOD’S WORK IN THE WORLD
“I think you would like to talk about part 2 now, am I right?”
“Yes,” I said, “How does the Son fit into this scheme?”
“Easy enough,” said Matt. “God has given you the cash, so now you can use it to support the Great Commission, feed the sheep, etc. That’s the work of the Son and since your kind stood by and watched him killed, it’s up to you now to do his work on Earth.”
“Ouch. Point taken.” I said. “So things like our support for the food pantry, raising a generation in faith . . . “
“Well, your list should be much longer than that, but yes. Those are a couple of the things Jesus wants you to work on.”
“You interrupted me,” I said. “My list was going to be much longer. But, go on, I want to talk about the Holy Ghost and see how you are going to fit him into Generally Accepted Accounting Principles.”
The saint frowned; he seemed a little bothered by something I had said.
“What’s the problem?” I said, “Don’t you know about GAAP?” But, really, I was thinking, “Gotcha!”
“Of course I do. The only thing that bothers me about what you said is that you attributed gender to the Holy Ghost. There is no evidence for that. Not even a tradition. But I know your language is short on useful pronouns. We can refer to the Holy Ghost as Her, It, or Him so long as you understand how it may be taken by the women on your finance committee.”
“Got it. Let’s just call It Her and move on. Fair enough?” I suggested.
“That was awkward,” chuckled Matt. “But, yes, let’s move on.”
(III.) THE HOLY GHOST: ST. MATTHEW EXPLAINS CAPITALIZATION AND DEPRECIATION OF EQUIPMENT
“So we have income and expense taken care of. What else is there?” I asked. “Mind you, I’m giving you the questions I would expect from the committee.”
“Well, do they do a capital budget?” asked Matt.
“They try. But that’s why I think you invaded my dream life. We aren’t doing such a good job of it and I’m not able to help them understand how to do it. Besides, there is a group called the Board of Trustees that takes care of the property, big equipment needs and repairs.”
“Have you thought much about why I wanted to call on the Holy Ghost rather than the Holy Spirit?” Matt asked.
“Not really. I see them about the same,” I said, certain that I was pleading theological ignorance.
Matt suppressed a smile. “Not to your finance committee,” he said. “The Holy Spirit is associated with wind and even silence – that still, small voice. It’s a really spiritual idea that they are comfortable with in the pews. But a ghost sneaks up behind you and says ‘Boo!’ to get your attention. It’s kind of the same feeling you get when you find out that $50,000 worth of AC equipment has died and needs to be replaced after no one thought about it for 15 years. So think of the Holy Ghost as your Board of Trustees. They sneak up behind you and tell you the bad news they just got from the repair people that say they can’t prop up your system any more.”
“O.K. — Father, Son and Holy Ghost. Got it. And I like your ghost idea. That should communicate. But what does the Holy Ghost do in this scheme besides scare the congregants?”
Matt looked me straight in the eye. “Do they make a budget of their own? Do they keep a schedule of depreciation? Maybe they should give that a try. Those are the basic ideas behind capitalization and if you let that be the primary focus of your trustees, you are on the road to some superb planning.”
“Wait, wait,” I said. A trustees’ budget? How would that work? We already have a church council budget and they get to put big numbers in every year.”
“Put the trustees in charge of the non-cash balance sheet asset accounts,” said Matt. “Easy-peasey.”
“Whoa. Slow down, Matt. The only asset accounts we show on the balance sheet are our cash accounts and the value of our land and buildings which we aren’t even sure where those numbers came from.”
“Don’t fret about history,” said the saint. “It’s pointless. Nothing we can do about it. Think repentance. Start now by entering your new AC equipment on your balance sheet as an asset. And pay for it by using your reserve cash account. You will move the amount of $50K from cash to a new air conditioning equipment account on your balance sheet. Say you pay for it from your reserve savings account with Texas Methodist Foundation; you will credit the TMF account just as if you were spending from the annual budget. That will decrease the cash on hand by $50K. Now, instead of offsetting it with a debit to an equipment expense account, you will debit your new AC equipment asset account $50K.
“Here is what you were used to doing in the past:
- Cash account: Credit to decrease $50K
- Expense account: Debit to increase $50K
“But here is what I want you to try,” he continued:
- Cash account: Credit to decrease $50K
- Equipment asset account: Debit to increase $50K
“There you have your balanced transactions. The second one, the one I recommend, just transfers an asset from cash to equipment.”
“All right, Matt,” I said. “I don’t see how that helps. It doesn’t show that we spent anything on my income and expense report.”
“Now here is the heavenly part,” he said. “You are going to set up a schedule of depreciation and it will tell you every year how much to apply to an expense account line called Depreciation of Equipment.”
“This Holy Ghost work is getting really spooky,” I said. “I don’t think our financial secretary is going to put up with it. She gets spooked any time I mention the word accrual.”
“It’s really no big deal if one of those engineers on your Board of Trustees will keep a spreadsheet listing all the depreciating equipment and keep track of when each item becomes fully depreciated. Your financial secretary can relax. I am not calling for moving to an accrual system,” said the saint. “We call it a modified accrual system that lets you accrue things like big pieces of equipment but you don’t have to worry with inventory, prepaid expenses and that sort of thing. Unless you want to, of course. You can accrue anything you want to if it is helpful to your management process.”
“Dang,’ I said, suppressing other expletives that I frequently call on for accounting work. “You missed your calling. You should have been a church treasurer or something.”
“I enjoy playing mandolin too much to give it up for full time debits and credits,” he said. “Besides, isn’t patron saint of accountants already risking an eternity of boredom? I make it as exciting as I can with theological metaphors.”
BORING, INDEED. I AGREE WITH THE SAINT. I BECOME EXCEEDINGLY SLEEPY.
“Speaking of boring, Matt, all this talk of debits and credits is making me sleepy. I don’t think there is any way I can get my committee to listen,” I confided. “Is there any way we can spice this up a little?”
“Well, let’s talk about depreciation schedules,” he offered.
“Attaboy! Depreciation. That’s a real spine-tingler.”
“Attaboy?” he repeated with a disapproving roll of his saintly eyes. “I am accustomed to more respect than that even from those God hears from most often after finance committee meetings. He thinks of your kind as a pretty sorry lot. He assures me, though, that he nevertheless extends his grace in hopes that you will learn some humility before the judgment day.”
“Got it. I will try to do better, Your Worshipfulness.”
“You may be hopeless,” he said. “Let’s move on.”
I yawned and rubbed my eyes. “Would you mind if I took a little power nap first? Even two or three little minutes with my eyes shut?”
“Be careful,” he suggested. “Going to sleep in an accounting class would only cost you a letter on your grade. But going to sleep in a dream could have unpredictable results. I have encountered several folks on the other side of the pearly that took a nap in their dream and only woke up once. I suppose if you were ready to go, that would be fine. But, frankly, you don’t really seem ready.”
Once again, he had a way of focusing my attention.
“O.K., please tell me how I can explain to my committee how depreciation can work as a useful tool for planning,” I said. “Because I can tell you they can doze off as soon as we start talking about accruals.”
Another saintly eye-roll. “Did you just answer your own question?” he asked. “That’s the whole point of depreciation: planning. It’s not a corporate tax dodge. That really only works with accelerated depreciation but we don’t have to go there if we just want to plan ahead for the next generation’s problems with the AC.”
“Fine. Details? How does it work?”
“Easy. You spent some cash and increased an asset account for equipment by the same amounts. That all took place in your current year but it didn’t get expensed in your income and expense reporting period. Depreciation is how you do that,” he said.
I was a little confused. “So the Holy Ghost has a way to spend the same money twice?” I asked.
“No, you spent your money in the first transaction. What you are going to do next is move the value of the new equipment into your expenses each year during the predicted life of the new condenser unit. How long do you think it will be in service?”
“I don’t know. Maybe ten years. Maybe fifteen,” I mumbled.
“I’m the conservative saint,” he said. “Let’s go with ten years. Can you divide $50K by ten?”
“You are also the fresh saint. Of course, that would be $5,000,” I said.
“Careful,” he said. “I think I see you trying to nod off again.
“But yes. You create a depreciation schedule with entries for all your long-term purchases that will show how much you should expense each year. In this case, the AC equipment will amount to $5,000. So, you need to make the following entry each year for ten years:
- Credit your equipment asset account $5K to reduce the value of your assets by that amount.
- Debit your depreciation expense line by $5K to increase your expense amount.”
“But I’m not really spending any money. That is going to tell me I’m spending money that I have already spent from my reserve account and it is going to make me go in the hole for the current year.”
“Not if you are planning for it,” he said. “That’s the whole point. You are making yourself save for future equipment needs.”
“But, what if I spend the money for something else.”
“DON’T!” he said with more volume and authority than I imagined could ever come from a character in one of my dreams. “The effect could be that you actually spend less cash than you bring in from pledges during the year. It’s O.K. Put it in a tin can. A shoe box. Another bank account. Do whatever you have to do to SAVE it. Call it the rainy day fund if you want to. Call it Peaches. I don’t think it matters what you call it. Just keep your hands off because you know you are going to need it in ten to fifteen years.”
“Why should we do that? We haven’t done that before,” I said, “and we have money in the bank.”
“You were lucky,” said the saint. “You had some growth years, a bequest from a saintly member, good luck with your equipment, and an occasional bank loan. You won’t always have a bank VP as your finance chair, though.”
He took a breath to continue. Old men have to stop and breathe sometimes. Even the saints when they are roaming the earth to give advice. “Your deceased member knew that you wouldn’t have the discipline to manage a half million dollars, so she spread it out over ten years so that you got $50K each year for ten years. Aren’t you glad she did that? Think how you could have squandered half a million if you had gotten it all of a sudden.”
I thought back over those years. That gift kept us out of the hole a few times and made it possible to pay apportionments and keep the lights on several summers when cash was short.
ST. MATTHEW RECEIVES ANOTHER CALL FOR HELP
Matt’s Apple watch dinged. He looked at it for a few seconds and glanced up at me with a puzzled look on his face.
“Weisselberg,” he said. “Do you know anyone named Weisselberg? He says he’s Jewish but they don’t have saints, so would I be his for a little while?”
“I’m hardly one to advise a saint,” I said, “but I think I would plead this one on worldly legal grounds and keep a distance. It’s not him so much but his boss. Everyone around him seems to get indicted.”
“Well, I appreciate your advice but that actually sounds like a job that falls right in the saintly wheelhouse. And we can’t play favorites, in case you think God only loves Methodists. I had better check in with him and see what he needs. Anything else I can help you with?” asked Matt. “I need to scoot and see what I can do for this guy. Sounded like he is in some pretty deep weeds.”
“Nope, I’m good,” I said. “I think the committee will agree with your plan and I even think I can sell it to the financial secretary.”
I walked Matt to the door of the church and I thanked him for his help. He took off the plaid shirt, exposing a set of small feathery wings that appeared far too little to ever get his mass airborne. He held the shirt out to me and said, “Do you have a clothing resale shop?”
“You should. Makes economic sense for the church and recycles some usable duds for people to use to get jobs. Anyhow, do you think you could get this over to Goodwill so someone else could use it?” He re-attached the strap to his mandolin and slung it over his back. Then he started flapping those tiny little wings and the weight on his feet seemed to lighten, but just a tiny bit at first. Then he flapped harder and faster. And he prayed, loudly. At last he was airborne.
My eyes popped open. I remembered that I had been asleep and dreaming. But it had seemed so real. And there was that noise outside, something like a giant insect. Away to the window I flew like a flash, tore open the shutters and threw up the sash. Looking up into the night sky, there he was. I watched him as he rose in the night over Lake Jackson heading toward the northeast. He looked and sounded like a 240-pound bumblebee as he gained altitude in frightening fits and starts by laboring those tiny wings. I knew in a moment it must be St. Matt.
It didn’t matter if they believed my story or not, the accounting was immaculate and it would change the way we did our business and planning at Chapelwood.
Somehow I wasn’t as confident that I could apply the accounting principles in reverse to help with their understanding of the Holy Trinity.