This PowerPoint helps students to consider the concept of infinity.
Accounting for Restricted Grants Properly When and How Do I Record These Things?.pdf
1. ACCOUNTING FOR
RESTRICTED GRANTS PROPERLY:
WHEN AND HOW DO I
RECORD THESE THINGS?
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8. Today’s Agenda
✓ Accounting Rule Basics
✓ Latest Accounting Rules (GAAP)
✓ What you need to decide before booking
✓ Grant vs. Exchange Transaction
✓ Conditional vs. Unconditional Grant
✓ Restricted or Unrestricted Grant
✓ When to Book
✓ How to Book
✓ BONUS: Dealing with Grants Received for
Future Years
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10. A PARADE OF ACRONYMS
QuickBooks Made Easy for Nonprofits
WHAT ARE THE ACCOUNTING RULES THAT ARE ACCEPTED IN USA?
➢GAAP
➢ or GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (10)
WHO DECIDES THOSE?
➢FASB
➢ or FINANCIAL ACCOUNTING STANDARDS BOARD (7 members)
ARE THESE WRITTEN DOWN SOMEWHERE?
➢Yes… through ASC
➢ or ACCOUNTING STANDARDS CODIFICATION
➢ ASC IS THE ONLY AUTHORITATIVE SOURCE FOR US GAAP
➢ LEGAL-EEZE, WORDY, TECHNICAL
➢Explained via… ASU’s
➢ or ACCOUNTING STANDARDS UPDATES
➢ ARTICLES THAT EXPLAIN THE ASC’S
11. A PARADE OF ACRONYMS
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➢GAAP GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (10)
WHO DECIDES THOSE?
➢FASB FINANCIAL ACCOUNTING STANDARDS BOARD
THEY PUT OUT :
➢ ASC’s ACCOUNTING STANDARDS CODIFICATION
(FORMAL RULES)
➢ASU’s ACCOUNTING STANDARDS UPDATES (EXPLAINS
RULES)
12. DO I HAVE TO FOLLOW GAAP?
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➢ UNLESS YOU ARE
➢ GETTING AN ANNUAL AUDIT, REVIEW OR COMPILATION
➢ THAT IS IN ACCORDANCE WITH GAAP
➢ THE REPORT WOULD NEED TO BE IN ACCORDANCE WITH GAAP
➢ BUT EVEN THEN ……
➢ DURING THE YEAR, YOU DON’T HAVE TO DO IT
➢ YOU WOULD JUST NEED TO ADJUST TO IT AT YEAR END
NOPE
13. EXAMPLE OF NOT FOLLOWING
GAAP DURING YEAR….
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➢ TECHNICALLY, GAAP REQUIRES MANY RESTRICTED GRANTS
➢ TO BE BOOKED INTO REVENUE
➢ AS SOON AS YOU GET THE AWARD LETTER
➢ EVEN IF IT’S FOR FUTURE YEARS
MANY CHOOSE TO NOT BOOK THESE FUTURE
REVENUES UNTIL FUNDS ARE RECEIVED
….AND JUST ADJUST AT AUDIT TIME
14. THIS SESSION…..
QuickBooks Made Easy for Nonprofits
➢IS TO TEACH YOU WHAT THE GAAP
RULES ARE
➢IN CASE YOU WANT TO USE THEM
➢SO YOU ARE READY AT AUDIT TIME
➢YOU CAN SOUND SMART AT
PARTIES!!!!!
16. GAAP RULES FOR GRANTS
ASC IS 958-605
“ NOT-FOR PROFIT ENTITIES – REVENUE
RECOGNITION”
ASU IS 2018-08 (EFFECTIVE 2019)
“ CLARIFYING THE SCOPE AND THE
ACCOUNTING GUIDANCE FOR CONTRIBUTIONS
RECEIVED AND CONTRIBUTIONS GIVEN”
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
17. ASU 2018-08 ASKS YOU TO
DETERMINE IF TRANSACTION IS
CONTRIBUTION (GRANT) OR EXCHANGE
TRANSACTION (SALE)
IF EXCHANGE (SALE) – DIFFERENT RULES (ASC
606)
IF CONTRIBUTION (GRANT) …..
CONDITIONAL OR UNCONDITIONAL
RESTRICTED OR UNRESTRICTED
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
BASED ON ANSWERS …. SAYS WHEN TO BOOK TO
REVENUE
18. SUMMARY OF ASU 2018-08 FLOW CHART
IS IT A
CONTRIBUTION/
GRANT?
TREAT AS EXCHANGE
TRANSACTION (SALE) –
BOOK AS EARNED
IS IT
CONDITIONAL?
HAS CONDITION
BEEN MET?
WAIT TO BOOK
TO REVENUE
YES
BOOK TO
REVENUE NOW!!!
EVEN IF YOU
HAVEN’T GOTTEN
THE MONEY
YET!!!
EVEN IF IT’S
RESTRICTED FOR
A FUTURE
PERIOD!!!
SEGREGATE
IT ON P&L
20. CONTRIBUTION VS. EXCHANGE
IN GENERAL…..
CONTRIBUTION/GRANT
GIFT
PAYER DOES NOT RECEIVE DIRECT
BENEFIT
EXCHANGE TRANSACTION
SALE
PAYER GET’S BENEFIT
SOMETHING IN RETURN OF SIMILAR VALUE
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
21. CONTRIBUTION VS. EXCHANGE
ASU 2018-08
GIVES “INDICATORS”
UP TO YOUR INTERPRETATION
INDICATORS OF CONTRIBUTION
PAYOR CONTROLS HOW MUCH IS PAID
PAYOR DOESN’T RECEIVE DIRECT BENEFIT
PAYOR IS A GOVERNMENT (UNLESS IT
RECEIVES DIRECT BENEFIT)
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
22. CONTRIBUTION VS. EXCHANGE
ASU 2018-08
GIVES “INDICATORS”
UP TO YOUR INTERPRETATION
INDICATORS OF EXCHANGE/SALE
PAYOR LOOKING TO BUY SOMETHING
PAYOR RECEIVES A PRODUCT OR SERVICE
IN EXCHANGE
https://www.cpajournal.com/2019/04/29/applying-the-new-accounting-guidance-for-
contributions/
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
23. CONTRIBUTION OR EXCHANGE?
• SELLING T-SHIRTS
• SELLING TICKETS TO A CONFERENCE
• MEMBERSHIP DUES WHERE U GET BENEFIT
• MEMBERSHIP DUES TO PBS (GLORIFIED DONATION)
• GRANT FROM FOUNDATION
• CONTRACT WITH GOV TO FEED HOMELESS
25. SUMMARY OF ASU 2018-08 FLOW CHART
IS IT A
CONTRIBUTION/
GRANT?
TREAT AS EXCHANGE
TRANSACTION (SALE) –
BOOK AS EARNED
IS IT
CONDITIONAL?
HAS CONDITION
BEEN MET?
WAIT TO BOOK
TO REVENUE
YES
BOOK TO
REVENUE NOW!!!
EVEN IF YOU
HAVEN’T GOTTEN
THE MONEY
YET!!!
EVEN IF IT’S
RESTRICTED FOR
A FUTURE
PERIOD!!!
SEGREGATE
IT ON P&L
26. CONDITIONAL VS. UNCONDITIONAL
IN GENERAL…..
CONDITIONAL IF (2 THINGS)
BARRIER (major) TO OVERCOME
-AND-
DONOR HAS A “RIGHT OF RETURN”
TAKE FUNDS BACK
NOT GIVE FUNDS
UNCONDITIONAL
NO MAJOR BARRIER
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
27. CONDITIONAL VS. UNCONDITIONAL
ASU 2018-08
GIVES “INDICATORS”
UP TO YOUR INTERPRETATION
INDICATORS OF CONDITIONAL = MAJOR BARRIER
MEASURABLE OUTCOMES
DONOR CONTROLS PROGRAM ACTIVITY
ONLY ELIGIBLE PARTICIPANTS CAN QUALIFY
REIMBURSEMENT BASED
MATCHING GRANT
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
28. CONDITIONAL VS. UNCONDITIONAL
ASU 2018-08
GIVES “INDICATORS”
UP TO YOUR INTERPRETATION
INDICATORS OF UNCONDITIONAL
NO MAJOR BARRIERS
REPORTING REQUIREMENT NOT MAJOR
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
https://www.cpajournal.com/2019/04/29/applying-the-new-
accounting-guidance-for-contributions/
29. CONDITIONAL VS. UNCONDITIONAL
• PROVIDE MEALS TO 350 ELIGIBLE
CHILDREN IN 4 MONTH PERIOD
• SUPPORT YOUR SOUP KITCHEN
• TRAIN 400 STATE WELFARE RECEIPIENTS ON
WORK SKILLS
• SUPPORT JOB TRAINING PROGRAM
• SUPPORT JOB TRAINING – REIM. BASED
• CAN’T GET FINAL FUNDS UNTIL REPORT
• CAN’T GET FINAL FUNDS SHOW MATCH
30. CONDITIONAL VS. UNCONDITIONAL
• PROVIDE MEALS TO 350 ELIGIBLE
CHILDREN IN 4 MONTH PERIOD
• TRAIN 400 STATE WELFARE RECEIPIENTS ON
WORK SKILLS
• SUPPORT JOB TRAINING – REIM. BASED
• CAN’T GET FINAL FUNDS SHOW MATCH
32. SUMMARY OF ASU 2018-08 FLOW CHART
IS IT A
CONTRIBUTION/
GRANT?
TREAT AS EXCHANGE
TRANSACTION (SALE) –
BOOK AS EARNED
IS IT
CONDITIONAL?
HAS CONDITION
BEEN MET?
WAIT TO BOOK
TO REVENUE
YES
BOOK TO
REVENUE NOW!!!
EVEN IF YOU
HAVEN’T GOTTEN
THE MONEY
YET!!!
EVEN IF IT’S
RESTRICTED FOR
A FUTURE
PERIOD!!!
SEGREGATE
IT ON P&L
33. BOOKING THE GRANT
STEP 1: CREATE INVOICE/PLEDGE IN
BOOKS
FULL AMOUNT OF AWARD
POINT TO REVENUE ACCOUNT
STEP 2: RECORD PAYMENT AGAINST
INVOICE
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
35. RESTRICTED VS. UNRESTRICTED
A CONTRIBUTION/GRANT IS RESTRICTED IF:
QuickBooks Made Easy for Nonprofits - Tracking Restricted Grants
Use Restrictions – must be
spent for a specific purpose
More than the mission
Time Restrictions – must be
spent over a specific period
of time
36. IS IT RESTRICTED?
• “TO PAY FOR 50% OF PROGRAM EDUCATOR ”
• “IN SUPPORT OF YOUR ORGANIZATION”
• “FOR YOUR GO-GREEN GUIDANCE CENTER”
• “FOR THE 2023 YEAR”
• “TO PAY FOR TRAVEL FOR CONFERENCE”
37. Restricted Grants for Future
QuickBooks Made Easy for Nonprofits
• Can skew P & L reporting
- Showing a HUGE profit
- When part of that is for next year
- Or a BIG loss
- When you are just spending P/Y funds
• Correct by segregating future amounts
• Put future Grant $ in “Grants Restricted for Future”
Other Income type
38. QuickBooks Made Easy for Nonprofits
More Webinars to be Announced!!
Upcoming 3 Day Webinar Series
QuickBooks Made Easy for Nonprofits
A Comprehensive Training for Nonprofits Using QuickBooks
$259 with $40 off coupon code: TS40OFF(reg. $299)
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39. QuickBooks Made Easy for Nonprofits
Special Offer!
Ends 5/13/2023 at 11:59PM PDT
➢ The QuickBooks Online Essentials or Beyond
the Essentials for only $149
Code: TS149
➢ QuickBooks Made Easy – The Bundle for only $298
Code: TS298
➢ Tech Support for 1 Year $299
Code: TSTS299
Normally: $499.00
Get The Essentials or Beyond the
Essentials Training!
Normally: $229.95 Each
Includes The Essentials & Beyond the Essentials Training!
Normally: $399.95
40. THANK YOU!!!!
Presenter: Gregg S. Bossen, CPA
Get Social Use Hashtag #QBME
Twitter: @QBMadeEasy
@GreggBossen
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