Responses to queries: PPN Financial Reporting Workshop

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Please find responses below to some queries raised by Members following the workshop facilitated by RBK in June 2020:


Does County Council grants come under the definition of Government grants as per module 5 in SORP?

You should seek clarification from the funder but the term ‘government grants’ is defined in the Glossary to FRS 102 as: “Assistance by government in the form of a transfer of resources to an entity in return for past or future compliance with specified conditions relating to the operating activities of the entity. Government refers to government, government agencies and similar bodies whether local, national or international.” In line with the definition yes I would see county council grants falling under Government Grants.


Money from camps/activities – whether restricted or unrestricted?

Assuming there is no contract in place for the supply of this service I would say unrestricted as no contract in place to say income received should be spent on this particular purpose and it is self-generated income where an entity runs and advertises a camp or other activity and people sign up and pay a fee to participate.


If incurred expenses and then reimbursed with a grant in different year ends- accounting for it?

 There is a few things to consider here and there is assumptions to be made, any choices made should be clearly outlined in your accounting policy in your notes to your financial statements.


CR Bank

DR Restricted expenses

Being expenses incurred which are restricted which would mean restricted fund will be in negative, then the following year

DR Bank

CR Restricted Income

Being grant received for expenses incurred in the prior year, will clear the negative restricted fund B/F



CR Bank

DR Fixed Asset

Being purchase of capital asset

CR Capital Grant balance sheet **

DR Debtor

Being accounting for the capital grant to be received


** There could be an argument to be made that the purchase of the asset was only made on the basis that it was grant funded and if that was the case you could recognise the income in the same year, i.e. it could be income (rule for income recognition- probable/entitled and measured).  This would only work if the funding was absolutely certain. In addition under SORP there is the peculiar difference from normal FRS in that unless there are performance related conditions attaching to the capital grant, there is no amortisation in line with depreciation and the whole grant is released to income in the year of receipt.  So in that case it would come in as restricted income and generate a surplus and when the asset is bought it is transferred to unrestricted income via the transfer between reserves line on the SOFA.



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