Grant Accounting and
Budgeting
Edward B. Peacock, CPA, CGFO
Centralizing grant financial management into the finance department
•
Designate a position in the Finance Department responsible for:
– Grant financial records management (a file for each grant) containing copies of:
• Grant award
• Grant budget
• Grant designated officials
• Quarterly expenditure reports
• Reimbursement requests
– Completing and submitting timely grant expenditure reports and reimbursement
requests
– Assigning general ledger account numbers for new grants
– Preparing budget amendments for new grants
– Adjusting grants receivable at fiscal year-end
– Distributing grant budgetary reports to departments
– Meets regularly with grant administrators
Advantages of setting up a special revenue grant fund
•
•
•
•
GAAP provide that special revenue funds may be used “to account for the
proceeds of specific revenue sources that are legally restricted to
expenditure for specified purposes.”
Legal restrictions on grant proceeds often require that they be spent only for
specified purposes.
Use of special revenue funds avoids including restricted revenues within the
general fund
Provides a separate fund for reporting information on sources and
applications of restricted resources.
– Facilitates allocation of interest earnings to grants
Integrating grant programs into the annual budgeting process
• As part of an annual adopted budget
– Designate the Special Revenue Grant Fund as part of the annual
adopted budget
– Appropriate an annual budget for each active grant program
– Works well if there are matching funds (operating transfer from the
general fund)
• Appropriate grants on a project basis
– Special Revenue Grant Fund appropriated on a project basis
– Submit appropriations to the City Council as the grants are awarded
– Requires a budget amendment for matching funds
GRANT NOTES – SPECIAL REVENUE FUNDS
Budgetary Disclosure
GAAFR, p 302
Basic Financial Statements (BFS)
• Budgetary comparisons must be presented in connection with the BFS for
the GF and any individual major special revenue funds with annual (or
biennial) appropriated budgets.
• BFS
– Functional level of detail
• CAFR
– Level of detail sufficient to demonstrate legal compliance with the legal
level of budgetary control
EXAMPLE CITY
Special Revenue Grant Fund
Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual
For the Year Ended September 30, 20XX
Actual Amounts
Budgeted Amounts
Original
Final
REVENUES
Intergovernmental
Homeland Security Grant
COPS Universal Hiring Program Grant
CJD School Resource Officer Grant
Local School District Participation
Tobacco Grant
Interest
Total revenues
EXPENDITURES
Current:
Public Safety
Salaries and benefits
Supplies
Contractual services
Capital outlay
Total expenditures
Excess (deficiency) of revenues over (under)
expenditures
OTHER FINANCING SOURCES (USES)
Transfers in (out)
Net change in fund balance
Fund balances - beginning
Fund balances - ending
$
Variance with
Final Budget Positive
(Negative)
15,000
18,000
9,000
2,000
200
44,200
6,000
15,000
18,000
9,000
2,000
200
50,200
6,000
15,000
18,000
9,000
2,000
186
50,186
14
14
43,500
6,000
2,000
2,500
54,000
48,500
9,000
2,000
2,500
62,000
48,500
9,000
400
2,500
60,400
1,600
1,600
(9,800)
(11,800)
(10,214)
(1,586)
10,000
12,000
12,000
200
200
1,786
200
$
200
$
1,786
(1,586)
$
(1,586)
GRANT NOTES – SPECIAL REVENUE FUNDS
Receivables and Liabilities
Receivables, GAAFR p 86
• Recognize receivable as soon as all eligibility requirements have been met
Liabilities, GAAFR, p 95
• Grantor
– Government should recognize liability as soon as recipient meets all eligibility
requirements
•
Grantee
– Recognize liability as soon as it is probable that the recipient has lost its claim to
the assets
Example City
Balance Sheet
Governmental Funds
September 30, 20XX
General Fund
ASSETS
Cash and cash equivalents
Investments
Receivables (net of allowance for uncollectibles)
Interest
Property taxes
Sales taxes
Other
Due from other funds
Prepaids
Total assets
$
LIABILITIES AND FUND BALANCE
Liabilities:
Accounts payable and other current liabilities
Accrued liabilities
Taxes payable
Due to other funds
Deferred revenue
Deferred revenue - court
Total liabilities
Fund balances:
Reserved for:
Public Safety Building/Street Improvements
Grant programs
Unreserved, reported in
General fund
Debt service fund
General capital projects fund
Total fund balances
Total liabilities and fund balances
1,657,287
718,117
(107,554)
41,973
274,325
389,581
384,179
616
3,358,524
Special Revenue
Grant Fund
General Capital
Projects Fund
$
$
116,117
31,158
(3)
4,145
41,973
125,538
318,929
$
1,786
12,000
13,786
250,901
3,033,127
3,284,028
Total
Governmental
Funds
General Debt
Service Fund
$
40,521
42,567
339
34,649
118,076
12,000
12,000
-
34,649
34,649
-
1,786
3,284,028
-
3,039,595
3,039,595
3,358,524
1,786
13,786
3,284,028
3,284,028
83,427
83,427
118,076
$
$
$
$
1,950,496
3,793,810
(95,554)
339
76,622
274,325
389,581
384,179
616
6,774,414
116,117
31,158
(3)
16,145
76,622
125,538
365,577
$
3,284,028
1,786
3,039,595
83,427
6,408,836
6,774,414
Multi-year grant appropriations, capital grants, etc.
•
Use capital projects funds for capital grant expenditures
– Centralizes all capital expenditures in the capital projects funds
– Grant proceeds are accounted for as a revenue source to the capital projects
fund
– Requires tracking of multi-year appropriations in the financial system
GRANT NOTES – ENTERPRISE FUNDS
Interest capitalization on capital projects
GAAFR, p 102
• Grant financed portion of a construction project –
– Externally restricted to the acquisition of specified qualifying assets - interest
capitalization prohibited
– Not externally restricted – capitalize interest on any portion of capital asset
financed with grants
Example City
Statement of Revenues, Expenditures and Changes in Fund Net Assets
Proprietary Funds
For the Year Ended September 30, 2005
Water and
Sewer Fund
OPERATING REVENUES:
Charges for sales and services:
Water sales
Sewer charges
Solid waste
Penalties
Tap fees
Miscellaneous
Total operating revenues
$
OPERATING EXPENSES:
Costs of sales and services:
Salaries and benefits
Supplies and maintenance
Contractual services
Sanitation contractual services
Depreciation
Bad debt expense
Total operating expenses
Operating income (loss)
NONOPERATING REVENUES (EXPENSES):
Intergovernmental revenues
Interest income
Interest on long term debt
Total nonoperating revenue (expenses)
Income before contributions and transfers
Capital improvement fees
Transfers out
Change in net assets
Total net assets - beginning
Total net assets - ending
1,097,052
763,238
381,984
40,231
16,145
9,680
2,308,332
361,761
273,421
117,787
394,975
222,592
22,822
1,393,357
914,974
$
133,975
2,433
(1,628)
134,779
1,049,754
57,706
(1,156,626)
(49,167)
6,484,209
6,435,043