Accounting for Restricted Grants When and How To Record Properly

In this webinar, member learned how to stay in compliance with generally accepted accounting principles (GAAP) for restricted grants.

1. ACCOUNTING FOR
RESTRICTED GRANTS PROPERLY:
WHEN AND HOW DO I
RECORD THESE THINGS?
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Deep Dive Into Tracking Restricted Grants
$149 with $30 off coupon code: TS30 (reg. $179)
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Tuesday, July 16
2:00 – 4:00pm ET
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tracking-restricted-grants-in-quickbooks-for-online-users/
FOR QUICKBOOKS DESKTOP USERS
Wednesday, July 17
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tracking-restricted-grants-in-quickbooks-for-desktop-users-2/

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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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9. WHO AND WHAT
DECIDES
ACCOUNTING RULES
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THE BASICS:

10. A PARADE OF ACRONYMS
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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?
QuickBooks Made Easy for Nonprofits
➢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…..
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➢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!!!!!

15. GRANT REPORTING
GUIDANCE UNDER
GAAP
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THE BASICS:

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

19. CONTRIBUTION/GRANT
VS.
EXCHANGE TRANSACTION
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THE RULES:

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
EXCHANGE
CONTRIBUTION
EXCHANGE
CONTRIBUTION
EXCHANGE
•CONTRACT WITH GOV TO FEED HOMELESSCONTRIBUTION

24. CONTRIBUTION OR EXCHANGE?
POLL

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
CONDITIONAL
CONDITIONAL
CONDITIONAL
UNCONDITONAL
UNCONDITIONAL
•CAN’T GET FINAL FUNDS UNTIL REPORT UNCONDITIONAL
•CAN’T GET FINAL FUNDS SHOW MATCH CONDITIONAL

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
CONDITIONAL
CONDITIONAL
CONDITIONAL
•CAN’T GET FINAL FUNDS SHOW MATCH CONDITIONAL

31. CONDITIONAL OR UNCONDITONAL?
POLL

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

34. BOOKING THE GRANT
DEMO

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”
YES
YES
YES
YES
NO

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 Webinars
Deep Dive Into Tracking Restricted Grants
$149 with $30 off coupon code: TS30 (reg. $179)
Expires 6/22/24 @ 11:59PM PT
FOR QUICKBOOKS ONLINE USERS
Tuesday, July 16
2:00 – 4:00pm ET
https://quickbooksmadeeasy.com/event/deep-dive-into-
tracking-restricted-grants-in-quickbooks-for-online-users/
FOR QUICKBOOKS DESKTOP USERS
Wednesday, July 17
2:00 – 4:00pm ET
https://quickbooksmadeeasy.com/event/deep-dive-into-
tracking-restricted-grants-in-quickbooks-for-desktop-users-2/

39. QuickBooks Made Easy for Nonprofits
➢QuickBooks Made Easy
for Nonprofits: The Bundle
Streaming Training
Only $298 (regularly $399.95)
Code: TS298
•Includes The Essentials & Beyond the Essentials Training!
•Expires 6/22/24 @ 11:59PM PT
➢Tech Support: 1 Year for
Only $299 (regularly $499)
Code: TSTS299
•Get Your Questions Answered by a US-based team
of QB ProAdvisor certified CPAs and accountants
•Expires 6/22/24 @ 11:59PM PT
Webinar Promotions

40. THANK YOU!!!!
Presenter: Gregg S. Bossen, CPA
Get Social Use Hashtag #QBME
Twitter: @QBMadeEasy
@GreggBossen
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(we appreciate it):
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