Fund Borrowing Is Not Revenue

The fiscal year end financial statements for the United States Chess Federation were released to their Finance Committee today. They will review them over the weekend prior to wider release. Already there is discussion over the meaning of the word "revenue".

A special fund, the Life Members Assets Fund loaned money to the General Fund during the course of the year and somewhere that is showing up as revenue. (So one of the members claim; I have not seen the financials.)

This case has some instructive points. Here's what the accounting rules are.

Within the over-all organization, transfers of money from one department to another are not revenues. Even from just the individual fund's perspective, this kind of transfer is not a revenue to that fund since the General Fund owes the money back to the LMA Fund. If it were not a loan, the transaction would be suspect. Special restricted funds cannot override their restrictions by just transfering their money to the General Fund.

When you read financials, beware of those inter-fund transfers!