05/01/2024

Accounting for Grant Restrictions and Grant Conditions

Here is what you need to consider

Being awarded a new grant is exciting news for any organization, but properly accounting for grant restrictions and conditions is essential to the accurate financial reporting of any organization.

Here is what you need to consider:

Determine Whether the Grant is Conditional or Unconditional

Are there performance barriers that need to be overcome prior to receiving the funds? Or if the funding is received in advance, are there return (claw-back) provisions if certain conditions are not met? If so, the grant is most likely conditional, and revenues would be recognized as the conditions are met. Any funds received in advance of meeting conditions would be recorded as refundable advances. Absent any conditions, unconditional grants are recognized as revenues when the written unconditional promise to give is received (in most cases, the letter of award).

Please select this link to read the complete article from OSAP Partner Clark Schaefer Hackett (CSH).