Accounting for Restricted Grants When and How To Record Properly
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In this webinar, member learned how to stay in compliance with generally accepted accounting principles (GAAP) for restricted grants.
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Accounting for Restricted Grants When and How To Record Properly
- 1. ACCOUNTING FOR RESTRICTED GRANTS PROPERLY: WHEN AND HOW DO I RECORD THESE THINGS? Get Social Use Hashtag #QBME Twitter: @QBMadeEasy @GreggBossen WELCOME!!! WE WILL START AT 2:02PM ET (11:02AM PT) YOU SHOULD BE HEARING MUSIC!!!
- 2. 2 © TechSoup Global. All Rights Reserved. How to Engage During this Webinar Questions? Use the Q&A feature. Check your inbox! We’ll email you the replay, slides, and resource links within a couple days. Closed captioning is available. Turn on with the CC button located in your Zoom menu. QuickBooks Made Easy for Nonprofits – Accounting for Nonprofits
- 3. QuickBooks Made Easy for Nonprofits About Our Instructor Certified Advanced QuickBooks ProAdvisor® Specializes in Industry Specific Training Author of QuickBooks® Made Easy for Nonprofits National Trainer – seminars around the country Get Social Use Hashtag #QBME Twitter: @QBMadeEasy @GreggBossen Please Leave a Google Review!! (we appreciate it): https://g.page/r/Ca4UBrkOS1rREAg/review
- 4. What We Do ❑ Streamable Training Products ❑ Nonprofit QB Tech Support ❑ Live Seminars/Webinars across the country Train & Support Nonprofits using QuickBooks QuickBooks Made Easy for Nonprofits www.QuickBooksMadeEasy.com | 1-888-726-2333
- 5. New Nonprofit Services QuickBooks Made Easy for Nonprofits ❑ Quick Look https://quickbooksmadeeasy.com/product/quick-look/ ❑ Check Up https://quickbooksmadeeasy.com/product/check-up/ ❑ File Setup https://quickbooksmadeeasy.com/product/file-setup/ ❑ QuickBooks Migration https://quickbooksmadeeasy.com/product/quickbooks-migration-services/ ❑ Mapping to QuickBooks https://quickbooksmadeeasy.com/crm-mapping-to-quickbooks/ ❑ Donor Database Import https://quickbooksmadeeasy.com/product/donor-database-import/
- 6. 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/
- 7. 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
- 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 QuickBooks Made Easy for Nonprofits
- 9. WHO AND WHAT DECIDES ACCOUNTING RULES QuickBooks Made Easy for Nonprofits THE BASICS:
- 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 QuickBooks Made Easy for Nonprofits ➢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…. QuickBooks Made Easy for Nonprofits ➢ 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!!!!!
- 15. GRANT REPORTING GUIDANCE UNDER GAAP QuickBooks Made Easy for Nonprofits 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 QuickBooks Made Easy for Nonprofits 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 HOMELESS CONTRIBUTION
- 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
- 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” 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 Please Leave a Google Review!! (we appreciate it): https://g.page/r/Ca4UBrkOS1rREAg/review