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Recognition of restricted receipts by not‐for‐profit organisations: problems, standards and empirical results

Recognition of restricted receipts by not‐for‐profit organisations: problems, standards and... Not‐for‐profit organisations often have accounting problems in the recognition of donations where donors impose restrictions on how funds are spent. The specific receipts which cause most problems relate to grants made ‘in advance’, grants received for a specific purpose, and capital grants. This article investigates whether some of these restricted receipts must be recorded as income in the income statement; whether others must be recorded directly against a fund, or whether unused funds must be recorded as a liability. This article discusses these problems and the principles of accounting standards already issued specifically for not‐for‐profit organisations in some countries. This article also presents the results of an empirical study done in South Africa which has a bearing on the recognition of certain restricted receipts. Recommendations are made on the most appropriate way for not‐for‐profit organisations to record receipts in advance, receipts for specific purposes and capital grants in their accounting systems. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Meditari Accountancy Research Emerald Publishing

Recognition of restricted receipts by not‐for‐profit organisations: problems, standards and empirical results

J. Rossouw
Meditari Accountancy Research , Volume 15 (1): 19 – Apr 1, 2007
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References (6)

Publisher
Emerald Publishing
Copyright
Copyright © 2007 Emerald Group Publishing Limited. All rights reserved.
ISSN
1022-2529
DOI
10.1108/10222529200700005
Publisher site
See Article on Publisher Site

Abstract

Not‐for‐profit organisations often have accounting problems in the recognition of donations where donors impose restrictions on how funds are spent. The specific receipts which cause most problems relate to grants made ‘in advance’, grants received for a specific purpose, and capital grants. This article investigates whether some of these restricted receipts must be recorded as income in the income statement; whether others must be recorded directly against a fund, or whether unused funds must be recorded as a liability. This article discusses these problems and the principles of accounting standards already issued specifically for not‐for‐profit organisations in some countries. This article also presents the results of an empirical study done in South Africa which has a bearing on the recognition of certain restricted receipts. Recommendations are made on the most appropriate way for not‐for‐profit organisations to record receipts in advance, receipts for specific purposes and capital grants in their accounting systems.

Journal

Meditari Accountancy Research – Emerald Publishing

Published: Apr 1, 2007

Keywords: Accounting standards; Income Capital grants; Not‐for‐profit organisations; Donations; Recognition Funds; Restricted receipts; Grants received in advance; Specific purpose

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