Modify Functional Expense Report

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The Statement of Functional Expense report presents a spreadsheet-style view of expense activities by function (programs, general management, and fundraising) in columns, with rows showing the type, or nature, of the expense (compensation, depreciation, maintenance, and so forth).

Some churches may be required to include this report along with the Statement of Financial Position and the Statement of Activity. Check with your auditor or other professional advisors to determine whether you need to include it in your monthly and annual presentations.

Note: Before configuring the report, identify your programs and support activities, then group similar programs together. Programs might include activities such as inner-city outreach, local missions, foreign missions, Adult Ministries, Youth Ministries, and Mothers' Day Out; groups might include Local Ministry, Missions/Outreach, and Daycare/School. Two additional columns are required: Marketing, General and Administrative (MG&A), and Fundraising. For natural classifications, define broad expense categories, such as Benefits, Program Expense, and Utilities/Maintenance.

Open the setup wizard

1. Start Shelby Financials and navigate to General Ledger.
2. Hover over Modify and select Functional Expense Report to start the setup wizard.

Note: The program saves your work when you click Previous, Update, or Next.

Define Natural Classifications - Expenses

The wizard includes three undefined classifications. Change the descriptions by typing over the placeholder text. Natural Classifications include categories such as Salary, Utilities/Maintenance, Depreciation, and Program Expenses.

1. Rename the existing classification.
2. If you need more than three, click the Add New Classification link.
3. Delete any Classification that is not needed by clicking the red X icon.
4. Change the order of the classifications by moving the blue icon up or down.
5. Click Next to move to Step 2.

Define Program Activities

The wizard includes three undefined activities. Change the descriptions by typing over the placeholder text. Program Activities include items similar to Local Ministry, Missions/Outreach, and Daycare/School.

1. Rename the existing activities.
2. If you need more than three, click the Add New Activity link.
3. Delete any activities that are not needed by clicking the red X icon.
4. Change the order of the activities by moving the blue icon up or down.
5. Click Next to move to Step 3.

Define Supporting Activities

The wizard includes three undefined activities, but you may need only two: MG&A and Fundraising.

1. Rename the existing activities.
2. If you need only two, click the red X icon to delete the third.
3. Click Next to move to Step 4.

Account Assignments

Your chart of accounts might be very simple or extremely complex. Either way, you may spend considerable time here, so review the filter options first:

1. Account Structure does not show unless you have multiple funds and/or multiple departments. If it shows, select an area from the drop-down box.
   • Show All shows all account codes based on the Account Structure filter.
   • Show Unassigned shows all accounts that you have not mapped.
2. Show Not = 100% shows all accounts where the percentages under each activity do not equal 100%.

3. Click Search to move to the list of accounts.

The screenshot below shows two accounts set up correctly. Notice that the 50100 payroll totals show in four columns: Local Ministry, Missions/Outreach, Daycare/School, and MG&A.

Use the following steps to allocate a percentage of each account code's activity to the proper location on the report grid:

4. Use the pull-down arrow for the Expense Code to assign the code to the Natural Classification. In this example, select 50100 Payroll and assign it to the Natural Classification of Salary.

5. Using the pull-down arrow under Activity Assignment, select Program.

   

6. Using the pull-down arrow in the next column, select Local Ministry.

   

7. Allocate 50% of Payroll to Local Ministry.

   

Important: When you move from the % column, the program drops your entry down one row, leaving the top row available for more distributions. The % assigned column shows 50% in red text, indicating that more distributions are needed for account 50100.

8. Continuing with 50100, choose Program again and use the pull-down arrow to choose Missions/Outreach. Local Ministry is no longer an option because it is already used for account 50100.

   

9. Enter 10% for this second entry.
10. On the top row, select Program and choose Daycare/School with 20%.
11. Still working with 50100, do not choose Program (all three available items are used); instead choose Support and choose MG&A. The program defaults to 20%, which is the balance.
12. Repeat the process for all of your existing expense accounts.

Footnotes

1. The Footnotes screen is a large text box. Enter any information needed to clarify entries on the report, such as how miscellaneous expenses are used or a change in net asset allocations.

Additional helpful information

1. To correct an entry, change the Natural Classification to "Not Assigned" and start that account code's distribution again.
2. You do not have to do all allocations in one sitting. Click Previous, Update, or Next to save your work.
3. If you are in Step 5 and need to return to the filter screen, click the Filters bar at the top of the screen.

Updated June 08, 2026 15:48