LCMS Convention Workbook St. Louis, Missouri — 1983, Page 131

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ADMINISTRATION AND PROGRAM IMPLEMENTATION 131

NCTES TO FINANCIAL STATEMENTS
THE LUTHERAN CHURCH - MISSOURI SYNOD

June 3C, 1982

NOTE A-~ORGANIZATION

The Lutheran Church - Missouri Synod ("Synod") was Organized in the Stare
of Missouri in 1847 for the conservation and promotion of the unity of
the true faith, and was incorporated as a not~for-profit corporation in
1894. The present name was officially adopted in 1947,

The Synod has Organized into thirty-eight districts to achieve its
objectives and carry on its activities in the United States and Canada.
It has also formed, as separate not~for~profit corporations, sixteen
colleges and seminaries, a publishing house, a foundation, a chur t
extension program, and its archives.

The accompanying financial statements represent the Operations of the
Synod's headquarters offices, and do not include the operations of the
districts, colleges and seminaries, or other Synod-related entities
except as explained in Note B-~Surmary of Significant Accounting
Policies.

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The financial statements of the Synod have been prepared on the accrua:
basis. The significant accounting policies followed are described belov
fo enhance the usefulness of the financial statenents to the reader.

Fund Account ing

To ensure observance of limitations and restrictions placed on the use of
the resources available to the Synod, the accounts of the Synod are
maintained in accordance with the principles of fund accounting. This is
the procedure by which resources for various purposes are classified for
accounting and Teporting purposes into funds established according to
their nature and Purposes. Separate accounts are maintained for each
fund, however, in the accompanying financial statements, funds that have
similar characteristics have been combined into fund groups. Accord-
ingly, all financial transactions have been recorded and reported ky fund
group.

The assets, liabilities and fund balances of the Synod are reported in
the following fund groups:

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NOTES TO FINANCIAL STATEMENTS--Cont inued

THE LUTHERAN CHURCH - MISSOURI SYNOD

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES~~Cont inued

Operating funds which include unrestricted (undesignated and
designated) and restricted funds, represent the portion of expendable
funds that is available for the support of Synodical Operations,

Plant funds represent funds expended for Plane acquisition and
Tesources restricted by the donor for plant acquisitions.

Investment in educational Properties and other entities fund re-
presents the Synod's net investment in its controlled organizations
and college and seminary properties,

Custodial funds represent funds received and held by the Synod as the
fiscal agent for others.

Expendable Restricted Resources

Operating and plant funds restricted by the donor, grantor, or other
outside party for particular operating purposes or for plant acquisition

amounts received, but not yet expended, are reported as restricted
deferred amounts.

Designated Operating Funds

Designated operating funds principally Tepresent funds received by the
Synod which were restricted for purposes included in the budgeted
Operations of the Synod, funds derived from the Proceeds of property
sales which the Board of Directors have designated to be used for
property acquisition, funds designated by the Board of Directors to cover
the deductible portion of fire and casualty losses and various special
gifts received which the Board has designated for Specific purposes.

Plant Assets and Depreciation

Use of operating funds for plant acquisitions and betterments are
accounted for as transfers to plant funds. Proceeds from the sale of
Plant assets, if Testricted, are transferred to deferred amounts
Testricted for plant acquisitions and betterments,

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NOTES TO FINANCIAL STATEMENTS--Continued
THE LUTHERAN CHURCH - MISSOURI SYNOD
NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICLES--Continued

In prior years, the cost of normal furniture, fixtures, and equipment
replacement was charged to expense rather than capitalizing such items,
as this accounting treatment did not have a significant effect on the
financial statements. Effective July 1, 1981, the Synod adopted the
Practice of capitalizing such Property on the basis of cost and

capitalized,

Investments in college and seminary properties are shown at the amounts
recorded on the books of the various colleges or seminaries (net of
telated debt), as such Properties are principally citled in the name of
Synod or in the name of the college or seminary with reversionary clauses,
The colleges or seminaries do not record depreciation on such Properties,

Investments in other related entities are recorded at the underlying net
asset values as of December 31, 1981 for Concordia Publishing House and
June 30, 1982 for Concordia Historical Institute and Radio Stations KFUO.

Other Matters
eS

All gains and losses arising from the sale or other disposition of
investments and other non-cash assets are accounted for in the fund that
owned the assets. Ordinary income from investments ts accounted for in
the fund owning the assets.

The costs of Providing the various Programs and support services have
been summarized on a functional basis in the Statement of Support and
Revenue and Expenses. Accordingly, certain costs have been allocated
among the programs and Support services benefited.

Investments in marketable Securities are stated at cost. Bond premiums
and discounts are not amortized unless the effect is significant,

Assets and liabilities denominated in foreign currency have been
converted to U.S. dollars at the exchange rate in effect at June 30,
1982, and resulting gains or losses have been recognized.

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NGTES TO FINANCIAL STATEMENTS=-Cont inued
THE LUTHERAN CHURCH - MISSOURI SYNOD
NOTE C--REPORTING CHANGES AND RECLASSIFICATIONS

As a result of a resolution of its 198] convention, the Synod's endownent
funds and certain trust funds previously reported with the custodial
funds were transferred effective July 1, 1981, to The Lutheran Church =
Missouri Synod Foundation (Foundation). The Primary purpose of the
Foundation is to serve as the trust department of the Synod. At June 3c,
1981 the fund balance in the endowment funds ($4,455,519) and net trust
assets ($4,078,645) were transferred to the Foundation and are not
included in these financia? statements. Comparative 198] financial
statement totals have been reclassified to reflect these changes.
Certain other reclassifications were made to comparative 1981 financial
Statement totals to conform to Classifications used in 1982,

NOTE D-~INVESTYENTS

The cost and market value of investzents at June 30, 1982 by fund type
are as follows:

Unrealized

Cost Market Gain (Loss)

Operating funds:
Undesignated $12,393,571] $11,741,42) § (655,15¢)
Designated 2,568,013 1,578,507 (989,506)
Restricted 158,472 155,288 (3,184)
Plant funds 84,530 87,575 3,045
Custodial funds 2,582,277 2,643,236 60,959

$17,784,863 $16,206,027 $C), 578,836)
— ee =e =_ st es

Investments are conposed of the following:

Unrealized

— Cost Market Gain (Loss)

—aet Sn hess)

Short-term investments
U.S. Government and

$12,418,436 $10,418,436 5

corporate bonds 5,610,627 4,722,168 (888,459)
Corporate stock 1,646,243 955,866 (692,377)
Other 109,557 109,557

$17,786,863 $16,206,627 §(1,578, 836)

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