NESFA® Treasury Procedures – Table of Contents Obsolete as of 08-Oct-2012

NESFA® Treasury Procedures: Annual Accounting of Life Memberships

This entire procedure is now obsolete.  Life membership accounting was abolished by the NESFA Business Meeting on 7 Oct 2012.

This is typically done in April as part of the FY closeout.

Compute the effective interest rate

At the end of each year, interest (see SR 2.5(9)) is credited to the Boskone and NESFA Life membership accounts.  Compute the average interest rate earned by NESFA money market account. (Use the total interest received divided by the average money market account balance.  We normally use the closing balance as close enough to the average annual balance.  It isn't necessary to agonize over it) and use that as the effective interest rate when computing the interest for the year due on the NESFA and Boskone Life Membership accounts.

Pay interest to the Life accounts

Debit the IN-Interest account and credit the appropriate life account (LI-NESFALife or LI-BoskoneLife) for the interest earned.  Compute the interest earned by a life account by multiplying the ending balance on the life account by the effective interest rate.  (Because the life liability accounts are prepaid income, interest earned on those accounts is not NESFA interest for tax form purposes.)

Transfer the appropriate amount to Boskone and Dues

The rules (see SR 1.9(5) and 2.1(8)) specify that payments to Boskone and the Dues account is capped by the interest earned on the life accounts and that cap — barring a bout of high inflation — always determines the payment (be sure to check the rules if the effective interest rate tops 5%).  Transfer the interest earned on the Boskone Life account to the Boskone which ran in the current fiscal year (e.g., Boskone 42 in FY 38, 2004-2005) and the interest earned on the NESFA Life account to the dues income account.  I.e., debit LI-BoskoneLife and credit AS-Bnn, debit LI-NESFALife and credit IN-Dues.)

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