grants in australia
TRANSCRIPT
Grants in Australia:Management and accountability made easy for not-for-profit organisationsFEBRUARY 2007
not-for-profit
CpA Australia Ltdcpaaustralia.com.auT 1300 73 73 73
CPA51790 05/2007
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CPA Australia Ltd (“CPA Australia”) is the largest professional organisation in Australia with more than 112,000 members of the financial, accounting and business profession in Australia and overseas.
For information about CPA Australia, visit our website cpaaustralia.com.au
First published 2007CPA Australia LtdACN 008 392 452385 Bourke StreetMelbourne Victoria 3000Australia
ISBN 978 1 876874 391
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CPA Australia has used reasonable care and skill in compiling the content of this material. However, CPA Australia and the editors make no warranty as to the accuracy or completeness of any information in these materials. No part of these materials are intended to be advice, whether legal or professional. Further, as laws change frequently, you are advised to undertake your own research or to seek professional advice to keep abreast of any reforms and developments in the law.
To the extent permitted by applicable law, CPA Australia, its employees, agents and consultants exclude all liability for any loss or damage claims and expenses including but not limited to legal costs, indirect special or consequential loss or damage (including but not limited to, negligence) arising out of the information in the materials. Where any law prohibits the exclusion of such liability, CPA Australia limits its liability to the re-supply of the information.
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Grants in Australia:Management and accountability made easy for not-for-profit organisationsFEBRUARY 2007
not-for-profit
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Disclaimer
CPA Austral�a has used reasonable care and sk�ll �n comp�l�ng the content of th�s
mater�al. However, CPA Austral�a and the ed�tors make no warranty as to the accuracy or
completeness of any �nformat�on �n these mater�als.
Th�s mater�al �s �ntended to be a gu�de only, and no part of these mater�als �s �ntended
to be adv�ce, whether legal or profess�onal. You should act solely on the bas�s that the
�nformat�on conta�ned �n these mater�als may be general�sed and may apply d�fferently to
a w�de var�ety of people and c�rcumstances.
As laws change frequently, all pract�t�oners, readers, v�ewers and users are adv�sed to
undertake the�r own research or to seek profess�onal adv�ce to keep abreast of any reforms
and development �n the law.
To the extent perm�tted by appl�cable law, CPA Austral�a, �ts employees, agents and
consultants exclude all l�ab�l�ty for any loss or damage cla�ms and expenses �nclud�ng but
not l�m�ted to legal costs, �nd�rect spec�al or consequent�al loss or damage (�nclud�ng, but
not l�m�ted to, negl�gence) ar�s�ng out of the �nformat�on �n the mater�als.
Where any law proh�b�ts the exclus�on of such l�ab�l�ty, CPA Austral�a l�m�ts �ts l�ab�l�ty to the
resupply of the �nformat�on.
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Executive Summary
CPA Austral�a establ�shed the Publ�c Sector Centre of Excellence to prov�de the commun�ty,
government and the profess�on w�th adv�ce, gu�dance and comment on �ssues v�tal to the
sector.
The sector compr�ses the publ�c sector (�nclud�ng federal, state and local governments and
government bus�ness enterpr�ses) and the not-for-profit sector.
Areas of focus are broad rang�ng, and �nclude current concerns such as susta�nab�l�ty,
publ�c pr�vate partnersh�ps, r�sk management and corporate governance.
One of the �ssues �dent�fied by the Centre of Excellence was the lack of l�terature on grants
management �n Austral�a for not-for-profit bod�es, government agenc�es and CPA Austral�a
members work�ng �n the sector. Ind�v�dual programs had gu�del�nes, but there was no
document or publ�cat�on that prov�ded an overv�ew of the requ�rements and pr�nc�ples for
grants management �n Austral�a.
The manual Grants in Australia: Management and Accountability Made Easy for Not-for-
Profit Organisations has been wr�tten �n response to commun�ty and profess�onal calls for a
stra�ghtforward gu�de for not-for-profit bod�es to manage grants and sat�sfy accountab�l�ty
requ�rements.
The manual was developed follow�ng research of the ex�st�ng l�terature and consultat�on
w�th a w�de cross-sect�on of stakeholders, �nclud�ng not-for-profit peak bod�es,
aud�tors-general, parl�amentary account comm�ttees and members of the account�ng
profess�on.
The manual h�ghl�ghts the need to �dent�fy early �n the grants process the need to put �n
place sound adm�n�strat�ve pract�ces to ensure that grants are well managed, outcomes
ach�eved and grants are acqu�tted �n a t�mely and sat�sfactory manner.
The manual covers the key aspects of grants management, �nclud�ng apply�ng for a
grant, accept�ng a grant, financ�al management, report�ng and acqu�ttal, and aud�t and
ver�ficat�on. The manual prov�des a b�bl�ography to ass�st readers to access add�t�onal
reference mater�al, and checkl�sts to help readers eas�ly rev�ew the�r grants management
processes.
CPA Austral�a acknowledges the �nput of a w�de range of stakeholders and potent�al users
of the manual to del�ver a document that w�ll serve the not-for-profit sector, government,
and those work�ng �n the account�ng and aud�t profess�on.
�v
Acknowledgements
Grants in Australia was prepared w�th the �nput of a number of agenc�es, organ�sat�ons
and �nd�v�duals. In part�cular, the ass�stance of the follow�ng organ�sat�ons was espec�ally
valuable:
• Our Commun�ty Pty Ltd
• South Austral�an Government Treasury
• commun�tybu�lders.nsw.gov.au
• Centre for Ph�lanthropy and Nonprofit Stud�es, Queensland Un�vers�ty of
Technology.
A number of other government agenc�es and not-for-profit organ�sat�ons were also
consulted, and the�r ass�stance was very much apprec�ated.
v
About the authors
Gerard Byrne fCpA has worked �n management and profess�onal roles �n state, local
and federal government agenc�es and he �s a member of the Publ�c Sector Centre of
Excellence. He spec�al�ses �n publ�c sector and not-for-profit organ�sat�ons �n rural and
reg�onal areas. Gerard �s a member of the Townsv�lle Branch Counc�l of CPA Austral�a and
he has been �nvolved �n a number of �ndustry and commun�ty organ�sat�ons.
Merridie Martin CpA �s the Reg�onal Conservator, Murraylands, Department for
Env�ronment and Her�tage, Berr�, South Austral�a. Merr�d�e has had extens�ve exper�ence
work�ng w�th governance and financ�al requ�rements �n the publ�c sector and not-for-profit
organ�sat�ons, and �s a member of the CPA Austral�a Publ�c Sector Centre of Excellence.
CPA Australia Public Sector Centre of Excellence
Dav�d Pendleton FCPA, Cha�r
Greg Brown FCPA
Gerard Byrne FCPA
Hon Roger Hallam FCPA
Geoff H�ne FCPA
Andrew Johnson CPA
Brett Kauffman FCPA
Merr�d�e Mart�n CPA
Anna D’Alessandro CPA, Pol�cy Adv�ser – Publ�c Sector, CPA Austral�a (to Jan 2006)
Just�n Naylor CPA, D�rector – Publ�c Sector, CPA Austral�a
Chee Ng FCPA, Pol�cy Adv�ser – Publ�c Sector, CPA Austral�a
The CPA Austral�a Publ�c Sector Centre of Excellence has been establ�shed to prov�de
leadersh�p �n the cons�derat�on of �ssues affect�ng publ�c sector and not-for-profit
organ�sat�ons. Grants in Australia: Management and Accountability Made Easy for Not-
for-Profit Organisations has been prepared by the CPA Austral�a Publ�c Sector Centre of
Excellence as a reference gu�de to ass�st not-for-profit organ�sat�ons manage grants.
v�
Introduction ........................................................................................................1
1 What is a grant? .................................................................................................3
2 Issues to consider when applying for a grant ...................................................4
3 What to consider when an organisation has been offered a grant ................9
4 Financial management of grants ....................................................................11
5 Grants and tax compliance ..............................................................................25
6 Reporting and acquittal ...................................................................................26
7 Audit and verification of grants ......................................................................32
Appendix 1 Transactions unique to not-for-profit organisations .................35
Appendix 2 Taxation ........................................................................................49
References ........................................................................................................54
Glossary .............................................................................................................56
Checklists ...........................................................................................................59
Table of contents
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Grants in Australia: Management and Accountability Made Easy for Not-for-Profit
Organisations �s a manual wr�tten �n response to commun�ty and profess�onal calls for
a stra�ghtforward gu�de for not-for-profit organ�sat�ons to manage grants and sat�sfy
accountab�l�ty requ�rements �n Austral�a.
What is the aim of this manual?
The a�m of the manual �s to act as a ready reference gu�de to not-for-profit organ�sat�ons,
and those work�ng w�th not-for-profit organ�sat�ons, on how to manage and acqu�t grants
�n a t�mely and sat�sfactory manner.
The manual can also be used as the bas�s for tra�n�ng staff, volunteers and commun�ty
members �n the successful management and acqu�ttal of grants.
CPA Austral�a’s purpose �n produc�ng Grants in Australia: Management and Accountability
Made Easy for Not-for-Profit Organisations �s to ass�st not-for-profit organ�sat�ons to more
eas�ly manage grants and sat�sfy accountab�l�ty requ�rements. The manual w�ll also be an
�nvaluable reference gu�de for all �nvolved �n the not-for-profit sector �n Austral�a, �nclud�ng
CPA Austral�a members employed �n the sector, espec�ally grant organ�sat�ons, aud�tors
and adv�sers.
Who is the target audience?
The target aud�ence of the manual �s Austral�an not-for-profit organ�sat�ons that are legal
ent�t�es, and have rece�ved government grants or are �ntend�ng to apply for government
grants. Other users of the manual may �nclude grant-makers, government departments,
accountants, aud�tors, researchers and those who tra�n people �n grants management.
How broad is the scope of the manual?
The scope of the manual �s to cover grants management from the t�me the appl�cant
commences plann�ng to apply for a grant, through the successful organ�sat�on rece�v�ng
not�ficat�on of the grant, the day-to-day management of the grant, to the acqu�ttal of
the grant.
Cons�derable reference mater�al already ex�sts on apply�ng for grants, and therefore th�s
manual does not address apply�ng for grants �n deta�l. However, organ�sat�ons need
to cons�der when apply�ng for grants the l�kely �mpact of a successful grant on the
organ�sat�on, espec�ally �ts management and report�ng requ�rements.
Introduction
2
What is a not-for-profit organisation?
A not-for-profit organ�sat�on �ncludes a club, soc�ety or assoc�at�on organ�sed and operated
solely for soc�al welfare, c�v�c �mprovement, pleasure or recreat�on, or for any other
purpose except for profit. All �ncome must be d�rected to the purpose of the organ�sat�on,
and not d�str�buted by way of d�v�dend, bounty or profit to �ts controllers, members or
shareholders.
Not-for-profit organ�sat�ons ex�st �n Austral�an at federal, state and local levels.
Issues facing not-for-profit organisations
Issues fac�ng not-for-profit organ�sat�ons manag�ng and account�ng for grants �nclude:
• fa�lure to manage and acqu�t grants properly
• lack of gu�dance on the full extent of the grants process
• lack of understand�ng of report�ng requ�rements by not-for-profit organ�sat�ons
• need to have a spec�fic understand�ng of account�ng and financ�al requ�rements and
assoc�ated systems
• w�dely d�ffer�ng and often complex management and report�ng requ�rements among
grants bod�es at all levels of government
• confus�ng and �ncons�stent term�nology
• l�m�ted t�me and resources ava�lable to grants rec�p�ents to manage and report on
grants, part�cularly dur�ng a t�me of �ncreas�ng requ�rements
• lack of adequate gu�dance for aud�tors for ver�ficat�on of grants
• need for spec�fic sk�lls for sourc�ng and adm�n�strat�on of grants
• lack of spec�fic gu�del�nes and reference mater�al for not-for-profit organ�sat�ons
• lack of clar�ty on GST �mpl�cat�ons for not-for-profit organ�sat�ons.
The s�gn�ficance and �mportance of grants management and accountab�l�ty �n Austral�a
rece�ved nat�onal attent�on �n March 2005 w�th a cover story on not-for-profit
organ�sat�ons �n Australian Business Review.
The art�cle reported that Austral�a’s not-for-profit sector �s worth $70 b�ll�on, accounts for
�0 per cent of the economy, and employs more than 600,000 people. The art�cle asserted
that char�t�es, clubs and non-government organ�sat�ons play a major role �n Austral�an
soc�ety and commun�t�es.
Introduction
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A grant �s a sum of money g�ven to organ�sat�ons or �nd�v�duals for a spec�fied purpose
d�rected at ach�ev�ng goals and object�ves cons�stent w�th the a�ms and pol�c�es of the
grants body. Grants can be awarded by government and non-government bod�es. For the
purposes of th�s manual, the focus �s on grants from government bod�es.
In a str�ct legal sense, a grant �s a ‘g�ft’ that may, or may not, be subject to un�laterally
�mposed cond�t�ons. However, the term �s more generally used to �nclude any fund�ng
arrangement whereby the rec�p�ent �s selected on mer�t aga�nst a set of cr�ter�a. The term
‘grant’ does not �nclude fund�ng of act�v�t�es pr�mar�ly relat�ng to the prov�s�on of goods
and serv�ces d�rectly to a government agency.
In the case of government grants, grants and subs�d�es are made �n var�ous c�rcumstances
by government to support commun�ty act�v�t�es that ach�eve goals and object�ves
cons�stent w�th government pol�cy. Grants may be covered by leg�slat�on or regulat�on,
or be subject to cab�net, m�n�ster�al or adm�n�strat�ve d�scret�on. They range �n the�r
accountab�l�ty requ�rements from h�ghly complex arrangements to the relat�vely �nformal.
Nevertheless, all grant schemes �nvolve the use of publ�c money. Therefore, both grantors
and grant rec�p�ents are accountable for the value for money ach�eved from the allocat�on
of �nd�v�dual grants (Queensland Treasury Guidelines).
The power to g�ve a grant may be unfettered (such as the Commonwealth’s power to
grant financ�al ass�stance to the states under sect�on 96 of the federal Const�tut�on) or �t
may be governed by the spec�fic leg�slat�on or government pol�cy apply�ng to the program.
The grant-g�v�ng organ�sat�on may allocate funds d�rectly to �nd�v�dual appl�cants or to
organ�sat�ons on an �nd�v�dual project bas�s, or make bulk payments to �ntermed�ary
organ�sat�ons. In th�s latter case, arrangements can be made to allow the �ntermed�ary
organ�sat�on to make dec�s�ons regard�ng spec�fic allocat�on of fund�ng (ANAO Better
Practice Guidelines 2002).
1. What is a grant?
�
Many organ�sat�ons that apply for grants cons�der �t as an easy opt�on to obta�n fund�ng,
w�thout fully cons�der�ng the organ�sat�on’s requ�rements and opt�ons. As a result, they can
be successful �n w�nn�ng a grant, but then find �t d�fficult to manage �t.
Before apply�ng for a grant, �t �s �mportant to spend some t�me develop�ng a fundra�s�ng
strategy for the organ�sat�on. The Our Commun�ty webs�te (ourcommun�ty.com.au)
conta�ns a s�mple model for develop�ng a fundra�s�ng strategy, and the steps are deta�led
below.
Establish a fundraising strategy
A fundra�s�ng strategy �s an ongo�ng exerc�se w�th an annual rev�s�on and act�on plan. A
fundra�s�ng strategy needs to have the flex�b�l�ty to be able to react to new opportun�t�es
or to curta�l act�v�t�es that are ne�ther pract�cal nor profitable.
The first steps to be followed are:
• Establ�sh your goals. What do you hope to ach�eve?
• What are the d�fferent levels of fundra�s�ng requ�red?
• Research past fundra�s�ng act�v�t�es. What worked? Just as �mportantly,
what d�dn’t?
• Work out who your fr�ends and potent�al fr�ends are and who �s w�ll�ng to support
your organ�sat�on: bus�nesses, government departments, �nd�v�duals, fam�l�es,
ph�lanthrop�c trusts and foundat�ons.
• Conduct market research w�th members, fr�ends and other �nterested people to
d�scover the�r good �deas or those that have worked �n the�r groups to ra�se money.
• Deta�l a case to support each prospect�ve fundra�s�ng act�v�ty.
• Descr�be and dec�de on the method �n wh�ch you plan to ra�se funds.
• Set an est�mated target for each method.
• Set a t�mel�ne. Set up a year planner not�ng good t�mes for the organ�sat�on to ra�se
funds. Pay attent�on to grant deadl�nes.
• Document your progress so that, �f you are struggl�ng, the bells start r�ng�ng early
enough for you to change tack.
• Ensure you have an evaluat�on strategy �n place.
Remember: �f you are ask�ng for money, �t �s eas�er to ra�se money for a spec�fic project
or act�v�ty rather than for the organ�sat�on as a whole. Most people would rather know
exactly where the�r money �s be�ng spent.
2. Issues to consider when applying for a grant
5
For further �nformat�on on grants wr�t�ng, refer to the Our Commun�ty webs�te,
Government agency webs�tes, and the webs�tes of �nd�v�dual grants bod�es. The Our
Commun�ty webs�te (ourcommun�ty.com.au) prov�des a ser�es of fact sheets and add�t�onal
valuable �nformat�on on grants wr�t�ng.
What are the options for fundraising?
There are potent�ally numerous sources of funds, and may �nclude one or more of the
follow�ng:
• grants
• sponsorsh�p
• membersh�p fees
• bequests
• �n-k�nd support
• donat�ons
• spec�al events
• raffles, compet�t�ons
• merchand�s�ng
• sales of goods and serv�ces.
What impact will the grant have on your organisation?
Many organ�sat�ons look just for the dollars, and then are surpr�sed at the requ�rements
and obl�gat�ons that are attached. The grant rec�p�ent could get trapped w�th un�ntended
consequences once the grant �s g�ven. Therefore, before apply�ng for a grant, your
organ�sat�on needs to undertake an assessment of the l�kely �mpact of the grant on the
organ�sat�on.
Quest�ons your organ�sat�on should cons�der are:
• Does the grant al�gn w�th your m�ss�on d�rect�on – that �s, even though you rece�ve
more dollars, w�ll rece�v�ng the grant take key human and other resources away from
the core bus�ness?
• What are the l�nks and/or partnersh�ps �t w�ll prov�de?
• What �mpacts w�ll �t have on the bus�ness?
• Do you have the capac�ty and expert�se to carry out the task for wh�ch you are
rece�v�ng the grant, e�ther �n-house or �n partnersh�p w�th another organ�sat�on?
2. Issues to consider when applying for a grant
6
• Do you have the necessary processes to carry out the terms of the grant, or do
these need to be bu�lt up? Such processes and requ�rements may �nclude legal and
governance structures, management and superv�s�on requ�rements, account�ng,
aud�t�ng, record-keep�ng, performance measures, �nsurance, reg�strat�ons, taxat�on,
Austral�an Bus�ness Number and goods and serv�ces tax.
• How w�ll you manage the poss�b�l�ty that fund�ng �s not l�kely to be ongo�ng?
• W�ll you have to comprom�se the values of your organ�sat�on – for example, �f you
accept a Commonwealth grant, does th�s mean you have to accept some values or
pr�nc�ples that do not accord w�th those of your group?
• What are the r�sks and emerg�ng �ssues that may affect your ab�l�ty to fulfil your
obl�gat�ons under the grant? Are you confident that you can manage these r�sks?
Cons�derable mater�al has been wr�tten on how to apply for a grant, and extens�ve
resources are also ava�lable on the �nternet, and from grants bod�es. The follow�ng
suggest�ons are conta�ned on the Our Commun�ty webs�te (ourcommun�ty.com.au) and
apply to most grant appl�cat�ons s�tuat�ons.
Bas�cally, grant bod�es need to be conv�nced of two ma�n th�ngs: that a genu�ne need and
project ex�sts, and that the appl�cant has the capac�ty to meet the need �n a creat�ve and
fiscally respons�ble manner.
But more spec�fically, what are they after?
Before you wr�te, do your research:
• Many appl�cants don’t do the bas�c research to check whether the�r appl�cat�on fits
w�th�n somet�mes qu�te t�ght el�g�b�l�ty gu�del�nes.
• Spend the t�me to find grants whose target aud�ences and areas of �nterest match the
project for wh�ch you are seek�ng fund�ng.
Parties involved in grants
The part�es �ncluded �n grants may �nclude the follow�ng:
• grantor/grants body: the organ�sat�on mak�ng the grant
• grantee: the organ�sat�on rece�v�ng the grant
• th�rd part�es: other organ�sat�ons that partner and work w�th the grantee to fulfil the
requ�rements of the grant. These part�es may contr�bute to the requ�rements of the
grant cond�t�ons, or be formally engaged through contract arrangements to fulfil
some requ�rements d�rectly (for example, prov�de a survey or consultat�on process) or
undertake spec�al�st work (such as ed�t�ng, des�gn and publ�sh�ng of a report).
2. Issues to consider when applying for a grant
7
The proposal
Most grants bod�es seek subm�ss�ons that are structured around the follow�ng:
� A br�ef descr�pt�on of your organ�sat�on
2 A descr�pt�on of the proposed project
� A case for support
� A budget.
Appl�cants may also be requ�red to establ�sh the�r financ�al v�ab�l�ty, and any other sources
of fund�ng for the project, espec�ally from other government departments.
A brief description of the organisation
Grant evaluators want your organ�sat�on to establ�sh cred�b�l�ty and qual�ficat�ons for fund�ng,
and how your ex�st�ng programs were developed to meet �dent�fied commun�ty needs.
Include short relevant descr�pt�ons of the qual�ficat�ons and exper�ence that your organ�sat�on
and �ts key staff have �n the area for wh�ch program funds are be�ng sought.
The project proposal
The project proposal should show that the appl�cant has developed a clearly defined,
ach�evable and measurable strategy to address the �ssue or �ssues prev�ously descr�bed.
The project proposal generally should address key quest�ons such as how, what, why and
for whom the project �s be�ng developed.
The proposed project may need to �nclude the follow�ng elements:
• clearly defined a�ms and object�ves
• how the object�ves are to be ach�eved
• outputs and outcomes
• how the success of the project w�ll be measured
• the t�meframe �n wh�ch the project w�ll be completed.
Requ�rements vary from agency to agency. Other requ�rements may be spec�fied, and may
form part of the select�on cr�ter�a. For example, the grants body may requ�re deta�ls on
who w�th�n the organ�sat�on has been nom�nated to work on the project, and where the
project w�ll be conducted.
2. Issues to consider when applying for a grant
�
The case for support
It �s v�tal to establ�sh a spec�fic problem or �ssue �n a geograph�cally �dent�fiable area, w�th
the d�mens�on of the problem able to be addressed real�st�cally by your organ�sat�on.
• Produce ev�dence: use up-to-date and accurate data based on object�ve research,
wh�le a relevant and evocat�ve case study �llustrat�ng the �ssue may also dr�ve your
po�nts home.
• Commun�ty support: ev�dence of commun�ty support �s often requ�red, and make
sure that support �s spec�fic to the project for wh�ch your group �s seek�ng fund�ng,
rather than a general one for your organ�sat�on.
The budget
The project budget can vary from a s�mple one-page statement of �ncome and expenses
to a more complex set of budget papers, �nclud�ng explanatory notes and var�ous �tems
of revenue or expense. Appl�cants need to be honest, open and real�st�c about proposed
expend�ture.
Appl�cants need to be part�cularly careful to check the purposes for wh�ch funds can and
can’t be used. Some have restr�ct�ons on cap�tal expend�ture.
Fa�lure to take adequate care �n apply�ng for grants can lead to problems �n manag�ng and
acqu�tt�ng the grant.
2. Issues to consider when applying for a grant
9
Successful grant appl�cants are normally not�fied �n wr�t�ng of the�r success, and an
�nformat�on pack �s prov�ded to the appl�cant, w�th the grants agreement enclosed for the
appl�cant to s�gn and return.
It �s essent�al to read the correspondence and attachments carefully, �n order to fully
understand what the requ�rements and expectat�ons are. Exper�enced appl�cants usually
contact the grants body at th�s stage to ensure that they have a clear understand�ng of the
var�ous aspects of the grant, espec�ally report�ng requ�rements.
One of the most �mportant aspects of grants management �s to ensure that the appl�cant
pays part�cular care �n rev�ew�ng the grant agreement before s�gn�ng the agreement.
Tak�ng part�cular care at th�s stage w�ll m�n�m�se the r�sk of �ssues and problems ar�s�ng
later �n the del�very of the grants program.
Some of the adm�n�strat�ve quest�ons that need to be answered before s�gn�ng the grants
agreement �nclude:
• Are all the deta�ls (such as names, addresses and phone numbers) correct?
• Is the grant for the same amount as that appl�ed for?
• Is the grant for the same outcomes as deta�led �n the or�g�nal subm�ss�on?
• Do any spec�al cond�t�ons apply?
• Can assets be purchased? If yes, what are the cond�t�ons apply�ng to the�r
acqu�s�t�on and treatment at the end of the grant per�od?
• When and how w�ll the money be pa�d?
• What are the report�ng requ�rements?
• What are the acqu�ttal requ�rements?
• By what date does the project need to be completed?
• What are the contact deta�ls for the fund�ng agency?
• Are there requ�rements to be met �mmed�ately once the grant �s awarded?
• How can the terms of the agreement be var�ed?
• What are the d�spute resolut�on procedures?
• How �s �ntellectual property �dent�fied and dealt w�th?
• Are there clear gu�del�nes for the ownersh�p of any assets created by a grant?
• How w�ll unspent funds be treated?
• What are the requ�rements for recogn�s�ng the fund�ng body, such as the use of
logos?
3. What to consider when an organisation has been offered a grant
�0
• What are the �nsurance requ�rements?
• Wh�ch �ndemn�t�es and �nsurance pol�cy apply?
• Are there any confident�al�ty or pr�vacy requ�rements?
• What are the l�ab�l�t�es and consequences �f there �s a breach of cond�t�ons?
• What are the m�lestones?
• How w�ll you demonstrate that you have ach�eved the grant object�ves?
• Can the organ�sat�on st�ll del�ver on the project; for example, have key staff left
s�nce the appl�cat�on was lodged?
• Are there other requ�rements that have to be met before the grant can be entered
�nto?
• What aud�t arrangements are there?
Intellectual property
Intellectual property represents the property of your m�nd or �ntellect. Types of �ntellectual
property �nclude patents, trademarks, des�gns, confident�al �nformat�on or trade secrets,
and copyr�ght.
Some grants may result �n the creat�on of �ntellectual property. The ownersh�p of
�ntellectual property �s part�cularly relevant for research grants.
Signing the agreement
Organ�sat�ons need to make sure that the person s�gn�ng the agreement on behalf of the
organ�sat�on �s author�sed to do so. Also, the person w�tness�ng the agreement should
be author�sed to do so. In most c�rcumstances, the govern�ng body �s g�ven �n-pr�nc�ple
approval to apply and the act�on �s duly tabled at the next comm�ttee meet�ng, and noted
�n the organ�sat�on’s m�nutes.
The agreement should then be returned to the fund�ng body by reg�stered post. A copy of
the s�gned agreement should be reta�ned, and stored �n a secure place.
Where the organ�sat�on has a contracts reg�ster, the reg�ster should be noted w�th the
deta�ls of the agreement. If the organ�sat�on does not have a contracts reg�ster, now m�ght
be an appropr�ate t�me to create one.
3. What to consider when an organisation has been offered a grant
��
Once the grantee has accepted the terms and cond�t�ons of the grant, then the grantee
w�ll need to �mplement su�table adm�n�strat�ve systems to manage the grant on a day-to-
day bas�s, and prov�de a final report and financ�al acqu�ttal.
The actual arrangements w�ll vary from organ�sat�on to organ�sat�on, depend�ng on the
s�ze of the organ�sat�on, the organ�sat�on’s resources, fund�ng body requ�rements and the
env�ronment the organ�sat�on operates �n.
QUT Chart of Accounts
Not-for-profit organ�sat�ons can refer to a Standard Chart of Accounts, wh�ch has been
developed by Queensland Un�vers�ty of Technology, �n collaborat�on w�th Queensland
Treasury and government departments. The chart prov�des a common approach to the
capture of account�ng �nformat�on by not-for-profit organ�sat�ons. By us�ng standard
terms and categor�es, such as wages and salar�es, to refer to the same act�v�t�es, th�s
chart w�ll s�mpl�fy the work of not-for-profit organ�sat�ons when acqu�tt�ng government
grants. Government departments and not-for-profit organ�sat�ons w�ll be talk�ng the same
language. Th�s chart of accounts can be accessed on http://bus�ness.qut.edu.au.
Types of contributions
Contr�but�ons are generally non-rec�procal transfers of assets to an ent�ty, for example,
donat�ons and certa�n types of grants.
The term ‘non-rec�procal’ refers to transact�ons where an ent�ty rece�ves assets or serv�ces
or has l�ab�l�t�es ext�ngu�shed w�thout d�rectly g�v�ng approx�mately equal value �n exchange
to the other party. However, �t �s acknowledged that the donor or grantor may rece�ve an
�nd�rect benefit from the transact�on.
Not-for-profit ent�t�es frequently rece�ve contr�but�ons to acqu�re assets or prov�de spec�fic
goods and serv�ces. In add�t�on, donors or grantors may �mpose cond�t�ons �n respect of
the manner or t�m�ng �n wh�ch the assets may be used.
Contr�but�ons are often �n the form of:
Cash
An uncond�t�onal cash contr�but�on �s recogn�sed as revenue when the ent�ty obta�ns
control of the contr�but�on or the r�ght to rece�ve the contr�but�on.
4. Financial management of grants
�2
A cond�t�onal cash contr�but�on �s recogn�sed as revenue when the cond�t�ons are met.
When an ent�ty fa�ls to meet the spec�fic cond�t�ons attached to a cash contr�but�on and
the amount �s requ�red to be repa�d, the ent�ty would need to recogn�se a l�ab�l�ty.
In-kind
An �n-k�nd contr�but�on generally means a contr�but�on other than cash. Th�s generally
occurs when a comm�tment has been made by a grantee to comm�t �ts resources towards
the grant act�v�ty or project.
In-k�nd contr�but�ons may �nclude:
• labour donated by the grantee, where the project �s labour �ntens�ve, such as
project management and office support
• donated serv�ces or �nd�rect costs prov�ded by the grantee such as the prov�s�on of
accommodat�on and the use of personal computers.
Matching
Th�s may be �n the form of cash or �n-k�nd contr�but�on. A grantee may ‘match’ a grantor’s
contr�but�on to meet a grant appl�cat�on requ�rement or s�mply make �ts grant proposal
more compet�t�ve.
Where a grantee matches a contr�but�on:
• the contr�but�on should be spent or consumed w�th�n the project per�od and be
w�th�n the spec�fied terms of the agreement
• every effort should be made to measure rel�ably �nd�rect costs such as accommodat�on,
electr�c�ty, �nternet usage and other overheads.
4. Financial management of grants
��
Accounting for grants
The follow�ng �nformat�on �s offered for gu�dance only. For spec�fic adv�ce, please refer to
your accountant. The procedures relate to the processes that the grant rec�p�ent needs to
follow.
Generally Accepted Accounting Principles (GAAP)
Revenue
Revenue would be recogn�sed when the grant funds are rece�ved or rece�vable, for
example, where the control of the future econom�c benefits have been obta�ned and
agreement �s enforceable. Th�s would ar�se for:
a Non-cond�t�onal grants, when the grant funds are rece�ved or when the grant
agreement becomes enforceable; for example, the grantee �s formally adv�sed that
the grant appl�cat�on has been approved or the contract or agreement �s executed.
The journal entry would be Cred�t Revenue and Deb�t Cash at Bank / Rece�vables.
b Cond�t�onal grants, when the grantee meets the enforceable cond�t�ons*.
Enforceable cond�t�ons generally means ‘hard’ cond�t�ons, and w�ll tr�gger a
repayment �f these cond�t�ons are not met.
Where cond�t�onal grant funds are rece�ved �n:
� advance: a l�ab�l�ty would be recogn�sed unt�l the cond�t�ons are met.* The journal
entry would be Cred�t Revenue Rece�ved �n Advance and Deb�t Cash at Bank.
�� arrears: revenue would be recogn�sed once the cond�t�ons are met. The journal
entry would be Cred�t Revenue and Deb�t Rece�vables unt�l rece�pt.
Expense
An expense would be recogn�sed when the grant funds are pa�d or payable; that �s, there
�s an obl�gat�on to pay. Th�s would ar�se for:
a non-cond�t�onal grants, when the grant �s pa�d or when the grant agreement
becomes enforceable; for example, the grantor has adv�sed the grantee that the�r
appl�cat�on has been approved or the contract or agreement has been executed.
The journal entry would be Deb�t Expense and Cred�t Cash at Bank / Payables.
* Where the not-for-profit ent�ty �s a local government ent�ty or a government department, Austral�an
Account�ng Standard 27 F�nanc�al Report�ng by Local Governments and Austral�an Account�ng Standard 29
F�nanc�al Report�ng by Government Departments create a s�tuat�on where cond�t�onal grant revenues are
effect�vely treated on a cash bas�s (that �s, the earl�er on rece�pt or when cond�t�ons are met).
4. Financial management of grants
��
b Cond�t�onal grants, when the grantee meets the enforceable cond�t�ons.
Enforceable cond�t�ons generally means ‘hard’ cond�t�ons, and w�ll tr�gger a
repayment by the grantee to the grantor �f these cond�t�ons are not met.
Where cond�t�onal grant funds are pa�d �n:
� advance: a prepayment would be recogn�sed unt�l the cond�t�ons are met.
The journal entry would be Deb�t Prepayment and Cred�t Cash at Bank.
�� arrears: an expense would be recogn�sed upon the cond�t�ons be�ng met.
The journal entry would be Deb�t Expense and Cred�t Payables.
What are conditions?
If a grant �s cond�t�onal, �t generally means the grantee needs to meet certa�n m�lestones
or cr�ter�a before rece�v�ng the grant funds, or where the grantee does not meet those
m�lestones or cr�ter�a, funds shall be repa�d to the grantor.
Grants may be subject to terms and cond�t�ons that may need to be met before the
rece�pt of the funds, determ�n�ng the way that the grant funds are used or requ�r�ng the
repayment of grant funds �f m�lestones and cr�ter�a are not met.
Examples of cond�t�ons may �nclude:
• subm�ss�ons of per�od�c progress reports
• subm�ss�ons of deta�led plans and strateg�es
• m�lestones be�ng ach�eved
• expend�ture �n accordance w�th the grant purpose.
Generally, cond�t�ons reflect tang�ble and concrete events that occur to tr�gger the
obl�gat�on to take an act�on that �s outl�ned �n the grant agreement.
What are restrictions?
Grant agreements may �mpose restr�ct�ons �n respect of the manner, purpose or t�m�ng
�n wh�ch the grant may be used. It could be argued that, wh�le the manner, purpose or
t�m�ng rema�ns und�scharged, a l�ab�l�ty ex�sts – however, the restr�ct�on does not create a
present obl�gat�on.
4. Financial management of grants
�5
A restr�ct�on �mposes a fiduc�ary respons�b�l�ty on the not-for-profit ent�ty’s management
to use the grant effic�ently and effect�vely �n pursu�ng the grant’s purpose and object�ves.
Th�s fiduc�ary respons�b�l�ty perta�ns to all of the ent�ty’s assets, and does not, of �tself,
const�tute a legal, equ�table or construct�ve obl�gat�on.
Therefore, a grant w�th restr�ct�ons would be recogn�sed as revenue or expense upon the
r�ght to rece�ve or pay or upon actual rece�pt or payment.
Generally, cond�t�ons reflect tang�ble and concrete events that occur to tr�gger the
obl�gat�on to take an act�on that �s outl�ned �n the grant agreement.
Australian equivalents to International Financial Reporting Standards
Informat�on on Account�ng Standards �s ava�lable from CPA Austral�a
(cpaaustral�a.com.au), and the Austral�an Account�ng Standards Board (aasb.com.au).
The Append�x conta�ns further d�scuss�ons on grants, donat�ons, sponsorsh�ps, membersh�p
fees and res�dent�al rent (taken from part � of QUT MYOB Training Manual, 2006.)
4. Financial management of grants
�6
Typ
es o
f fi
nan
cial
rep
ort
ing
Co
mp
aris
on
bet
wee
n e
xter
nal
an
d in
tern
al r
equ
irem
ents
Exte
rnal
rep
ort
ing
inte
rnal
rep
ort
ing
Gen
eral
pu
rpo
se fi
nan
cial
rep
ort
sG
ran
t fi
nan
cial
rep
ort
s
rep
ort
ing
re
qu
irem
ents
• Re
qu�re
d by
Aus
tral
�an
Acc
ount
�ng
Stan
dard
s fo
r ea
ch
repo
rt�n
g pe
r�od
• F�
nanc
�al r
epor
t �n
tend
ed t
o m
eet
the
�nfo
rmat
�on
need
s
com
mon
to
user
s w
ho a
re u
nabl
e to
com
man
d th
e
prep
arat
�on
of r
epor
ts t
a�lo
red
so a
s to
sat
�sfy
, spe
c�fic
ally,
all
of t
he�r
�nfo
rmat
�on
need
s
• Re
qu�re
men
ts d
�cta
ted
by t
he g
rant
agr
eem
ent
• M
ay c
onta
�n s
pec�
fic r
equ�
rem
ents
�n r
elat
�on
to f
orm
at
and
cont
ent,
as
�mpo
sed
by g
rant
or, w
ho �s
�n a
pos
�t�on
to c
omm
and
the
prep
arat
�on
of r
epor
ts t
a�lo
red
to s
at�s
fy
spec
�fica
lly �t
s �n
form
at�o
n ne
eds
freq
uen
cy
and
bas
is o
f re
po
rtin
g
• A
s�n
gle
set
of r
epor
ts e
ach
repo
rt�n
g pe
r�od
(gen
eral
ly o
nce
a ye
ar) p
repa
red
on a
n ac
crua
l bas
�s
• D
epen
ds o
n fu
nd�n
g ag
reem
ent.
May
be:
– on
e pe
r qu
arte
r or
one
eve
ry s
�x m
onth
s; o
r
– on
e ea
ch r
epor
t�ng
per�o
d; o
r
– on
e at
the
end
of
the
gran
t, a
s pa
rt o
f th
e ac
qu�tt
al
proc
ess
• G
ener
ally
pre
pare
d on
a c
ash
bas�
s
Co
nte
nt
of
rep
ort
sU
nder
GA
AP
• St
atem
ent
of F
�nan
c�al
Per
form
ance
, Sta
tem
ent
of F
�nan
c�al
Pos�
t�on,
Sta
tem
ent
of C
ash
Flow
s an
d N
otes
to
the
Acc
ount
s
• Re
qu�re
men
ts a
s sp
ec�fi
ed b
y th
e gr
ant
agre
emen
t –
may
be s
�mpl
y a
Stat
emen
t of
Rec
e�pt
s an
d Pa
ymen
ts
4. Financial management of grants
�7
Co
nte
nt
of
rep
ort
s (c
ont.
)
Und
er A
IFRS
• In
com
e St
atem
ent,
Bal
ance
She
et, S
tate
men
t of
Cha
nges
�n
Equ�
ty o
r a
Stat
emen
t of
Rec
ogn�
sed
Inco
me
and
Expe
nse,
Cas
h Fl
ow S
tate
men
t an
d N
otes
to
the
Acc
ount
s
no
tes
to t
he
acco
un
ts•
Whe
re c
ontr
�but
�ons
or
gran
ts a
re m
ater
�al b
y th
e�r
natu
re,
amou
nt a
nd/o
r re
leva
nce
to t
he n
atur
e of
the
ent
�ty, a
sepa
rate
l�ne
�tem
may
be
�ncl
uded
on
the
face
of
the
Stat
emen
t of
F�n
anc�
al P
erfo
rman
ce (k
now
n as
an
Inco
me
Stat
emen
t un
der
AIF
RS).
In a
dd�t�
on, s
uppo
rt�v
e no
te
d�sc
losu
re m
ay b
e re
qu�re
d to
exp
la�n
the
bre
akdo
wn
of
cont
r�but
�ons
or
gran
ts a
nd a
ny m
ater
�al g
rant
ter
ms
and
cond
�t�on
s
• S�
gn�fi
cant
acc
ount
�ng
pol�c
�es
• F�
nanc
�al r
ev�e
w t
hat
desc
r�bes
and
exp
la�n
s th
e m
a�n
feat
ures
of
the
ent�t
y’s
finan
c�al
per
form
ance
and
fina
nc�a
l
pos�
t�on
and
the
pr�n
c�pa
l unc
erta
�nt�e
s �t
face
s
• C
omm
enta
ry o
n an
y en
v�ro
nmen
tal o
r so
c�al
�mpa
ct o
f th
e
ent�t
y’s
act�v
�t�es
and
whe
ther
key
per
form
ance
�nd�
cato
rs
have
bee
n ac
h�ev
ed
• W
r�tte
n co
mm
enta
ry t
o re
�nfo
rce
and
expl
a�n
the
num
bers
rep
orte
d. P
rov�
des
unde
rsta
nd�n
g to
the
gran
tor
whe
ther
the
obj
ect�v
es o
f th
e gr
ant
w�ll
be
met
and
whe
ther
fun
d�ng
sho
uld
be p
a�d
(�f �n
arr
ears
) or
cont
�nue
d (�f
up
fron
t)
• C
omm
enta
ry o
n an
y en
v�ro
nmen
tal o
r so
c�al
�mpa
ct o
f
the
gran
t ac
t�v�t�
es a
nd w
heth
er t
arge
ts a
nd o
utco
mes
have
bee
n ac
h�ev
ed
4. Financial management of grants
��
Internal reporting: illustrative example only
Report�ng on the financ�al act�v�t�es of a grant may be along the follow�ng l�nes. Please
note that a grant agreement may requ�re a spec�fic format or spec�fic �nformat�on to be
c�ted; for example, expend�ture on cap�tal �tems.
Statement of Receipts and Payments
Entity
Rec�p�ent ent�ty: ..................................................................................................................
Address: .............................................................................................................................
Contact name: ....................................................Office held: ............................................
Contact phone: .......................................
Purpose of grant: ...............................................................................................................
� Nature of grant (one-off/ongo�ng)
�� Statement of Rece�pts and Payments
Grant amount (rece�pt) (a)
Grant payments (b)
Funds rema�n�ng (a – b)
(Funds rema�n�ng are to be repa�d to the grantor unless the grantor has g�ven spec�fic
approval for the funds to be reta�ned.)
We cert�fy that the grant was used for the purpose for wh�ch the grant was prov�ded.
Finance Manager / Treasurer Executive Officer / Secretary / President
S�gnature: ....................................................... S�gnature: ............................................
Name: ............................................................. Name: ..................................................
Date: .............................................................. Date: ....................................................
4. Financial management of grants
�9
Grants and the internal control environment
General control environment
Controls over grants (�nclud�ng the use of funds, project performance, �nternal report�ng
requ�rements and acqu�ttal process) w�ll vary from ent�ty to ent�ty, depend�ng on the s�ze,
nature and complex�ty of the project. All controls should reflect both the r�sk they are
des�gned to prevent and the relevant cost or benefit of the �mplementat�on of the �nternal
control.
When ass�gn�ng respons�b�l�ty and accountab�l�ty to part�cular officers for grants act�v�t�es,
these roles should be documented to ma�nta�n an adequate aud�t tra�l.
Some �nternal controls that a not-for-profit ent�ty may benefit from are:
• ass�gn�ng respons�b�l�ty and accountab�l�ty to appropr�ate officers for all grant
act�v�t�es: th�s may depend upon the exper�ence and sk�lls requ�red; the relevance
of the delegat�on to the role of the �nd�v�dual; and the ab�l�ty to �nfluence the
performance of the act�v�ty
• segregat�ng those who keep the records from those who have the respons�b�l�ty for
do�ng the work, where pract�cable, to reduce the r�sk of fraud
• segregat�ng separate but related transact�ons where pract�cable
• prepar�ng reconc�l�at�ons where necessary to ensure �ntegr�ty of data and
�nformat�on
• ensur�ng appropr�ate author�sat�on of transact�ons and act�v�t�es; that �s, approval
of grant expend�ture should be �n accordance w�th the delegat�ons of author�ty
establ�shed by an ent�ty’s board or comm�ttee, and funds should be used �n
accordance w�th the grant’s purpose. Where author�ty for grant expend�ture �s
not spec�fically prov�ded for �n the �nstrument of delegat�ons, the ent�ty’s general
expend�ture author�t�es should be followed. It �s �mportant to note that, wh�le the
author�ty to approve expend�ture may l�e w�th a part�cular officer or officers, the
officer respons�ble for adm�n�strat�on of the grant or project may be a d�fferent
officer. Th�s does not rel�eve the author�s�ng officer from h�s or her respons�b�l�ty,
but rather �t places extra emphas�s on the�r need to ver�fy the leg�t�macy of work or
expend�ture �ncurred, pr�or to approv�ng the grant payment
• prepar�ng adequate documentat�on and records of act�v�t�es undertaken on a t�mely
bas�s
• ma�nta�n�ng a well-organ�sed chart of accounts
4. Financial management of grants
20
• ma�nta�n�ng an adequate aud�t tra�l
• establ�sh�ng phys�cal controls over access to and use of assets and records
• develop�ng and preserv�ng the �ntegr�ty, accuracy and rel�ab�l�ty of �nformat�on
systems to ensure transact�ons are completely and accurately recorded �n the correct
per�od w�th correct author�sat�on and �n a manner that perm�ts development of
necessary financ�al reports
On complet�on of the grant, the grantee or rec�p�ent should prov�de an acqu�ttal to the
grantor or prov�der as assurance that the funds have been spent for the�r �ntended purpose
and �n accordance w�th the terms and cond�t�ons of the grant agreement.
Internal reporting
The object�ve of �nternal report�ng �s to prov�de relevant and appropr�ate �nformat�on to
management so as to enable �t to �dent�fy and assess performance aga�nst targets and
object�ves. It should allow a not-for-profit ent�ty to plan future grant programs, measure
and evaluate performance, control and account for grants and opt�m�se use of resources.
Internal report�ng may �nclude budget reports; mon�tor�ng reports (actual versus budget);
financ�al report�ng; act�v�ty progress and performance reports; and except�on report�ng.
Internal report�ng of grants requ�res a structured approach to ensure that adequate and
appropr�ate documentat�on of act�v�t�es and transact�ons �s captured and ma�nta�ned on a
t�mely bas�s. Th�s may �nclude:
• processes �n place to capture and report data �nternally al�gned w�th external
report�ng requ�rements deta�led �n grant agreements so that external reports can be
produced w�th m�n�mal effort and �n a t�mely manner
• financ�al and non-financ�al elements of �nput, output and other measures �n
d�ffer�ng levels of deta�l. Data should be l�nked �n order to prov�de all relevant
�nformat�on on a part�cular �ssue
• presentat�on of reports �n a graph�cal format ass�st�ng w�th analys�s compared w�th
predeterm�ned grant m�lestones
• cons�derat�on of mater�al�ty and the costs �nvolved �n obta�n�ng, prepar�ng and
d�ssem�nat�ng the �nformat�on
• evaluat�on as to the effect�veness of the grant program
The �nformat�on conta�ned �n �nternal reports prov�des a bas�s for external reports such as
statutory and acqu�ttal report�ng. The record�ng and ma�ntenance of grant act�v�t�es and
transact�ons also prov�des an adequate aud�t tra�l.
4. Financial management of grants
2�
Budget preparation
Grant fund�ng �mpacts on budgets at two levels: the �ncome rece�ved and the expend�ture
�ncurred.
Budgets are an �mportant tool for not-for-profit ent�t�es that rely on grant fund�ng as a
major source of revenue and would not be able to undertake many projects w�thout these
funds. Grant fund�ng and expend�ture are often �ncluded �n the not-for-profit annual
projected budgets. If th�s �s not done, budgets may requ�re adjustment when the grant
fund�ng �s confirmed.
Grant fund�ng �s often prov�ded for a spec�fic purpose and for the ach�evement of goals
and object�ves that al�gn w�th the pol�c�es or object�ves of the grant prov�der, whether a
government or pr�vate ent�ty. To ensure accountab�l�ty of the grant funds and to ensure
that object�ves of the grant program are met, �t �s �mportant that a comprehens�ve budget
be prepared.
The budget �s a plann�ng tool that reflects the financ�al and resourc�ng requ�rements
of a grant project, and should set out clearly defined target outputs and performance
�nd�cators, as well as ass�gn�ng clear accountab�l�t�es for the ach�evement of those outputs.
Although �nternal management may use a budget to assess v�ab�l�ty of projects or to
determ�ne wh�ch projects should be undertaken, �t �s l�kely that the budget w�ll form part
of a grant appl�cat�on, and w�ll need to be deta�led enough for external users to make an
assessment on the scope, v�ab�l�ty and components of the project.
A budget should �nclude a clear and deta�led breakdown of the projected rece�pts and
payments by major categor�es (for example, employee expenses, suppl�es and serv�ces)
over the l�fe of the grant. Budgets are a means of evaluat�ng performance, and should be
mon�tored on an ongo�ng bas�s to ensure any l�kely problems are �dent�fied and to ensure
the ongo�ng v�ab�l�ty of the project. Major cost var�at�ons that are not �dent�fied at an early
stage have the potent�al to erode the grant funds, leav�ng �nsuffic�ent funds to complete
the project. Potent�ally the funds spent to date may need to be returned �f poor financ�al
management �s �n breach of the contract.
Grants may be pa�d �n �nstalments based on the ach�evement of m�lestones, as defined �n
an agreed work plan, and therefore the mon�tor�ng process �s very �mportant to ensure
cash �s ava�lable when needed. The grant prov�der would assess progress and m�lestone
reports, and make payment only when sat�sfied that the m�lestone has been ach�eved.
4. Financial management of grants
22
Other financial management matters
Payment of grants
The t�m�ng of grant payments �s usually spec�fied �n grant agreements agreed by both
the grantor and grantee. Predom�nantly the grantor prescr�bes the method and t�m�ng of
payment �n the grant agreement and the grantee must agree to these terms before any
grant payment w�ll be made.
T�m�ng can take on numerous forms. Payment can be offered �n advance at set �ntervals;
for example, monthly, quarterly, sem�-annually or annually. Payments may also be offered
�n arrears at s�m�lar �ntervals. Grant payments can also be �ntr�ns�cally t�ed to the cond�t�ons
�mposed by the grant, such as payment upon complet�on of assoc�ated serv�ce del�very for
wh�ch the grant was �ntended.
If payments are t�ed to the ach�evement of performance targets, then the frequency of
payments w�ll affect the type of performance measures a not-for-profit organ�sat�on should
use. For example, �f a not-for-profit organ�sat�on has to demonstrate ach�evement aga�nst
targets every quarter �n order to rece�ve payment, �t should not choose a performance
�nd�cator that can only be measured once or tw�ce a year.
On a purchase contract bas�s, the grantee needs to demonstrate that serv�ce outputs have
been regularly ach�eved by subm�tt�ng per�od�c grant acqu�ttal reports as prescr�bed by the
relevant grant agreement before progress�ve grant �nstalments w�ll be pa�d.
Serv�ce outputs requ�red to be progress�vely del�vered (m�lestones) w�ll depend upon the
nature and cond�t�ons of the spec�fic grant, and may �nclude several d�fferent measures
on several d�fferent reports to record the quant�ty, qual�ty, t�mel�ness and cost of outputs.
It �s also l�kely that the format of these measures and reports w�ll d�ffer from one grant
agreement to another.
Grantees need to ensure that they have the necessary ava�lable funds and cash flow to
fulfil grant requ�rements and expend�ture.
Reporting using non-financial performance indicators
An �mportant element of many grant arrangements �s the record�ng and report�ng on non-
financ�al �nd�cators.
In most cases, grant appl�cat�ons and acqu�ttal procedures are focused on the outcomes of
the program for wh�ch the grant was g�ven. As a result, the �nd�cator w�ll vary enormously
depend�ng on the nature of the program for wh�ch the fund�ng relates.
4. Financial management of grants
2�
Typ�cal non-performance �nd�cators w�ll �nclude (but are not l�m�ted to):
• number of cl�ents serv�ced and the outcomes (human serv�ces programs)
• amount and quant�ty of food purchased (commun�ty nutr�t�on programs)
• number of books or mater�als purchased (l�brary or l�teracy programs)
• length of roadway or footpath constructed (�nfrastructure development programs).
It �s �mportant that the requ�rement to collect non-performance �nd�cators �s understood at
the commencement of the program. Collect�ng th�s �nformat�on �s much more effic�ently
performed over the l�fe of the project, rather than try�ng to consol�date data at the end of
the year or conclus�on of the program.
In some cases, the data collect�on can be streaml�ned w�th the collect�on of financ�al data,
for example, record�ng deta�ls from �nvo�ces, or hav�ng staff document on t�mesheets
act�v�t�es such as cl�ent contacts each day.
Report�ng of non-financ�al data �n the annual report prov�des stakeholders w�th
�nformat�on about the outcome of the serv�ces of your ent�ty. Th�s can be framed �n a
balanced scorecard or tr�ple bottom l�ne report�ng framework, wh�ch �s cons�dered best
pract�ce report�ng.
Us�ng the same performance measures over the l�fe of the project can help the not-
for-profit organ�sat�on to measure trends over t�me, part�cularly to find out whether
or not there have been any �mprovements �n performance. Be�ng able to demonstrate
�mprovements can be useful �f the not-for-profit organ�sat�on �s plann�ng to apply for
ongo�ng fund�ng or other grants �n the future.
If the not-for-profit organ�sat�on dec�des to change �ts performance �nd�cators at any
stage, �t should keep a wr�tten record of why the dec�s�on was made to change. Th�s
change should be ment�oned �n the not-for-profit organ�sat�on’s next progress report to
the grantor. The not-for-profit organ�sat�on should keep a wr�tten record of any underly�ng
assumpt�ons and calculat�ons for performance �nformat�on.
Performance report�ng �n the annual report should be al�gned to the performance
�nd�cators, object�ves and outcomes that were set out �n the grant agreement. The
annual report should descr�be the performance targets that were set and the not-for-
profit organ�sat�on’s actual performance aga�nst these targets. Where these targets were
exceeded or not met, there should be some d�scuss�on of the reasons for th�s.
Case stud�es can be useful �n the annual report to demonstrate performance and
s�gn�ficant ach�evements, part�cularly for small not-for-profit organ�sat�ons.
4. Financial management of grants
2�
Cash flow, investment of funds and use of interest income
The proper management of cash flows w�th�n a not-for-profit ent�ty �s a key strateg�c
funct�on. Th�s �nvolves manag�ng r�sks, as h�gh-return �nvestments usually equals h�gh r�sks.
When cash management �s done properly, �t w�ll ensure that any surplus funds are
�nvested �n the appropr�ate r�sk-to-return fund, such as a cash management fund or s�m�lar
account. Frequently, �nterest w�ll be earned when grants are pa�d �n advance. Government
departments and author�t�es may be restr�cted to depos�t�ng mon�es �nto a spec�al depos�t
account spec�fied by the Treasurer, and/or may be requ�red to obta�n the Treasurer’s
approval before �nvest�ng funds, and/or be requ�red to use the state’s financ�ng author�ty
for the management of large cash hold�ngs.
The ab�l�ty of an ent�ty to use �nterest �ncome w�ll depend on the grant agreement. In th�s
regard, most agreements prov�de for any �nterest to be appl�ed only for the purposes of
the grant. In other words, any �nterest �s quarant�ned from the general operat�ons of the
ent�ty.
To the extent that any funds rema�n at the end of the grant per�od, the grantor w�ll generally
requ�re these funds to be repa�d. Or, depend�ng on the c�rcumstances and the grant
agreement an appl�cat�on may be made to the grantor for approval to reta�n the funds.
When calculat�ng the amount of any unspent grant mon�es, the ent�ty should cons�der any
�nterest earned dur�ng the grant per�od.
4. Financial management of grants
25
Many not-for-profit ent�t�es are exempt from �ncome tax. The Income Tax Assessment Act
1997, D�v�s�on 50 �dent�fies those ent�t�es whose ord�nary �ncome and statutory �ncome �s
exempt.
Where a not-for-profit ent�ty �s subject to �ncome tax, grant �ncome w�ll generally be
assessable �ncome.
Fringe benefits tax (FBT)
The fr�nge benefits tax �s a tax that �s �mposed on employers �n respect of benefits prov�ded
to employees.
Generally, there w�ll be no fr�nge benefits tax �mpl�cat�ons when a not-for-profit ent�ty
rece�ves or prov�des a grant unless there �s an employer–employee relat�onsh�p. In add�t�on,
where a not-for-profit ent�ty does prov�de a grant to an employee, the arrangements under
the pay-as-you-go tax system w�ll need to be cons�dered.
Goods and services tax (GST)
Not-for-profit ent�t�es must reg�ster for goods and serv�ces tax (GST) �f the�r annual
turnover �s $�00,000 or more. For other ent�t�es, the turnover threshold �s $50,000. The
grant may have an �mpact on the goods and serv�ces tax threshold of the organ�sat�on.
Input tax cred�ts w�ll not be ava�lable on payments made to unreg�stered ent�t�es.
Append�x 2 prov�des add�t�onal �nformat�on on the goods and serv�ces tax (GST)
arrangements for not-for-profit organ�sat�ons.
Please refer to the Austral�an Taxat�on Office webs�te, ato.gov.au, for the latest �nformat�on
on relevant taxat�on requ�rements.
5. Grants and tax compliance
26
The grant agreement that the not-for-profit organ�sat�on enters �nto w�th the grants
body w�ll deta�l the report�ng and acqu�ttal requ�rements. It �s essent�al at the outset to
understand clearly what �s requ�red. Some agreements requ�re only a final report, whereas
others, espec�ally large grants, may requ�re progress reports dur�ng the l�fe of the grant.
Grant reporting
Grant report�ng requ�rements may vary form grant to grant, and may even vary between
grants rounds and years. Therefore, �t �s cr�t�cal to check the requ�rements thoroughly. Also,
d�fferent projects may requ�re alternat�ve report�ng formats and, �f so, these w�ll be agreed
w�th the grants body when the grant agreement �s negot�ated.
General requirements
Generally, grants bod�es w�ll requ�re a number of cop�es of the report, and they w�ll
spec�fy whether the report needs to be �n hard copy, electron�c form or both. The grants
requ�rement may also spec�fy what add�t�onal mater�al needs to be suppl�ed, such as
photographs and evaluat�on reports.
Formal certification
Depend�ng on the spec�fic grant, formal cert�ficat�on may be sought to confirm work
completed and/or the accuracy of the financ�al records. Formal cert�ficat�on may mean a
wr�tten report from a th�rd party that the work was done to the standard spec�fied. For
example, an organ�sat�on may rece�ve fund�ng to bu�ld a commun�ty centre. The grants
body may requ�re cert�ficat�on from the bu�lder or eng�neer that the work has been
undertaken to the appropr�ate standard.
Differences between progress and final reports
The major d�fference between progress and final reports �s usually �n the amount of deta�l
requ�red and the style of the report.
Progress reports prov�de deta�ls of the ach�evements and act�v�t�es undertaken on the project
for a fixed per�od of t�me s�nce the last report. In many cases, progress reports w�ll cover a
project per�od of, for example, three or four months. The reports may be less formal �n the�r
structure and style, as they are predom�nantly for the use of grantors to assess the progress
of the project aga�nst the object�ves and outcomes �n the project appl�cat�on.
6. Reporting and acquittal
27
F�nal reports, however, are w�dely d�str�buted through the grants body, the �nternet and
by other methods, as appropr�ate. A more formal style, profess�onal presentat�on and
add�t�onal deta�ls are therefore expected.
Some suggested head�ngs for both progress and final reports and deta�ls of the
�nformat�on to be �ncluded are prov�ded below. The use of the head�ngs �s not mandatory;
however, the �nformat�on requested must be prov�ded somewhere �n both reports.
Progress reports
In most �nstances, grant payments w�ll only be made when sat�sfactory progress reports are
rece�ved and the agreed outcomes spec�fied �n the contract have been ach�eved.
Brief description of the project
Th�s descr�pt�on should summar�se:
• the object�ves of the project
• the methodology (how the project �s be�ng conducted)
• the expected outcomes.
Progress against project work plan
Report�ng progress aga�nst the project’s work plan should form the major�ty of the report.
The work plan w�ll:
• �dent�fy the major tasks necessary for the project
• l�st the act�ons to be undertaken to complete each of these major tasks
• prov�de performance measures that demonstrate that the var�ous tasks have been
successfully completed
• prov�de a t�mel�ne show�ng when each major task w�ll be started and completed.
Act�v�t�es undertaken to ach�eve each of the project’s major tasks should be documented
and outcomes aga�nst each task’s performance measures reported.
Th�s sect�on should document any d�fficult�es relat�ng to the progress of the project aga�nst
the work plan and cons�der the �mpact of these d�fficult�es on the object�ves of the project.
It �s part�cularly �mportant that grantors are made aware of any d�fficult�es as they ar�se, so
that they can offer add�t�onal adv�ce or ass�stance to the project where poss�ble.
6. Reporting and acquittal
2�
Progress against the implementation and marketing strategy
The project appl�cat�on prov�ded deta�ls of how the project w�ll be �mplemented and
marketed. Progress w�th the act�v�t�es to be undertaken and the t�meframe must be
�ncluded.
A commun�cat�on strategy �dent�fy�ng how the progress and outcomes of the project
w�ll be commun�cated to relevant aud�ences should also have been deta�led �n the grant
appl�cat�on. Progress should be reported, �nclud�ng any emerg�ng �deas for max�m�s�ng the
commun�cat�ons strategy.
Progress against the evaluation plan
An evaluat�on plan w�th performance measures for the project was deta�led �n the grant
appl�cat�on. A rev�ew of the progress of the project aga�nst the performance measures
should be reported �n th�s sect�on. It should �nclude �nformat�on on the collect�on of data
and the progress of processes for conduct�ng the final evaluat�on of the extent to wh�ch
the a�ms and object�ves of the project have been met.
Progress reports to grantors should expla�n any changes to performance �nd�cators s�nce
the last progress report.
Expenditure statement
A financ�al statement of the expend�ture of the project aga�nst the budget �s requ�red.
Final report
The final grant payment w�ll only be made upon the recept�on of a sat�sfactory final report
that shows that the agreed outcomes and performance measures for the project have
been ach�eved, w�th an aud�ted expend�ture statement.
Executive summary
The execut�ve summary should prov�de an overv�ew of the project’s a�m and object�ves,
methodology, outcomes, find�ngs, evaluat�on outcomes and recommendat�ons.
6. Reporting and acquittal
29
Background
Th�s sect�on should summar�se background �nformat�on relevant to the project, �nclud�ng
how the need for the project was �dent�fied and the development of the methodology.
Where appropr�ate (for example �n pr�mary research) a l�terature rev�ew may be �ncluded.
Methodology
Th�s sect�on should descr�be the methodology employed �n the project and d�scuss act�v�t�es
and progress of the project aga�nst the work plan. Act�v�t�es undertaken to ach�eve each
of the project’s major tasks should be documented, and outcomes aga�nst each task’s
performance measures reported.
Explanat�ons for dev�at�ons from the work plan should be prov�ded, �n part�cular, where
they reflect problems w�th any parts of the methodology used for the project. Other
problems encountered (such as w�th the external env�ronment) should also be reported,
�n order to help avo�d s�m�lar problems for future projects.
Outcomes and findings
Th�s sect�on should prov�de deta�l on the project outcomes measured aga�nst each task’s
performance measures, and how these relate to pract�cal use �n the workplace and
contr�bute to long-term change.
Variations and any action taken
It �s not uncommon for organ�sat�ons to have to vary the cond�t�ons of the grant to allow for
unexpected delays, or add�t�onal expend�tures. Where such changes occur, the report should
outl�ne the changes made and the act�on taken to address any �ssues that may ar�se.
Evaluation
Th�s sect�on should report and prov�de d�scuss�on on the evaluat�on of the project �nclud�ng
assessment of:
• the extent to wh�ch the stated a�ms and object�ves of the project have been met
• the qual�ty of project management
• the ach�evement of project performance measures
6. Reporting and acquittal
�0
• the qual�ty of outcomes
• the �mpact of the project
• var�at�ons and any act�ons to be taken.
Communication
Th�s sect�on should outl�ne how the outcomes and results of the project have been
commun�cated to key stakeholders or other relevant groups, and any feedback rece�ved.
Extension of results
Th�s sect�on should outl�ne how the find�ngs of the project and any resources developed
w�ll cont�nue to be ma�nta�ned and used �n the future.
Recommendations
Th�s sect�on should deta�l recommendat�ons ar�s�ng from the project.
Audited expenditure statement
Under the grants contract, an aud�ted expend�ture statement must accompany the final
report. The statement should show expend�ture aga�nst the budget prov�ded �n the grant
appl�cat�on, and should be prepared by a reg�stered company aud�tor or CPA (hold�ng a
Publ�c Pract�ce Cert�ficate). Th�s �s not requ�red for consultancy agreements.
Grant acquittal
The grants body w�ll spec�fy how the grant w�ll be acqu�tted. The process normally �nvolves
two stages:
• financ�al acqu�ttal; and
• performance report.
6. Reporting and acquittal
��
Financial acquittal
The financ�al acqu�ttal date �s normally spec�fied �n the grants agreement. A set of financ�al
statements �s normally requ�red, and these may be �ndependently aud�ted.
Part�cular �ssues that may have to be addressed dur�ng the acqu�ttal are the treatment of
excess funds (usually cannot be reta�ned), ownersh�p of any assets ar�s�ng, and records
reta�ned.
Performance report
The performance report deta�ls the extent to wh�ch the not-for-profit organ�sat�on has met
the outcomes spec�fied �n the grants agreement. There are many ways to evaluate your
event, program or act�v�ty, and how well �t meets the outcomes spec�fied �n the grants
agreement.
One method �s to use evaluat�on forms for part�c�pants:
• stat�st�cs: how many part�c�pants? wh�ch organ�sat�ons? how many flyers were
handed out?
• quest�onna�res, wh�ch could be g�ven out beforehand to determ�ne the �mpact of
your event, program or act�v�ty
• one-to-one or group �nterv�ews of part�c�pants or volunteers
• a suggest�on box
• a cost–benefit analys�s of the promot�on and advert�s�ng: how much coverage d�d
you rece�ve? what was the cost of promot�on and advert�s�ng?
Another way to do th�s �s to make sure that the act�v�ty’s performance measures closely
reflect the outcome of the fund�ng agreement – �f there �s a log�cal flow from the broad
outcome to the lower-level performance �nd�cators, then �t �s eas�er to demonstrate that
the act�v�ty has met the outcomes.
The performance report should d�st�ngu�sh between outputs and outcomes.
6. Reporting and acquittal
�2
The aud�t and ver�ficat�on of grants �s becom�ng more commonplace, as accountab�l�ty and
governance cons�derat�ons for grants bod�es �ncrease.
An aud�t �s an �ndependent rev�ew and exam�nat�on of records and act�v�t�es to assess the
adequacy of system controls, ensure compl�ance w�th establ�shed pol�c�es and operat�onal
procedures, and enable the recommendat�on of necessary changes �n controls, pol�c�es or
procedures.
Types of audit
There are potent�ally five types of aud�ts that a not-for-profit organ�sat�on may face relat�ng
to �ts grants:
• not-for-profit organ�sat�on external aud�t
• not-for-profit organ�sat�on �nternal aud�t
• grants body aud�t
• aud�tor-general’s aud�t
• spec�al aud�t
• performance aud�t.
Not-for-profit organisation external audit
An external aud�t �s the most common form of aud�t. The aud�t �s conducted by
an �ndependent, su�tably qual�fied person. The aud�tor typ�cally would belong to a
profess�onal account�ng body.
Not-for-profit organisation internal audit
Larger not-for-profit organ�sat�ons may have the�r own �nternal aud�t funct�on to undertake
aud�ts of the organ�sat�on’s grants.
Grants body audit
The grants body undertakes an aud�t of the grants records, and the aud�t may be
performed by a su�tably qual�fied staff member from the grants organ�sat�on.
7. Audit and verification of grants
��
Auditor-general’s audit
For large grants, the grant may be �ncluded �n the annual work program for the relevant
state or federal aud�tor-general.
Special audit
In some c�rcumstances, a spec�al aud�t may be conducted, and the aud�t may be performed
by the grants body or an aud�tor-general.
Performance audit
More and more, grants bod�es are seek�ng confirmat�on that the grant has del�vered the
outcomes expected. Performance aud�ts are undertaken by grants bod�es to measure the
extent to wh�ch grants outcomes are ach�eved. For example, surveys may be conducted of
the project’s cl�ents to determ�ne the extent to wh�ch outcomes have been ach�eved.
What the grantee can expect
Any aud�t, no matter what type �t �s, w�ll assess what �s spec�fied �n the fund�ng agreement
aga�nst what has occurred. Aud�tors w�ll always look at the terms of the fund�ng
agreement when conduct�ng an aud�t. Therefore, not-for-profit organs�at�ons should
structure the�r controls and report�ng mechan�sms around the terms of the fund�ng
agreement. It �s the fund�ng agreement that w�ll determ�ne what the grantee can expect to
be exam�ned dur�ng an aud�t.
The performance of aud�ts follows an establ�shed set of steps: the scope of the aud�t
outl�ned; the start and complet�on date of the aud�t; records requ�red for �nspect�on; and
the report�ng arrangements. You also need to determ�ne the fees for the aud�t and �f these
can be pa�d out of the grants funds.
The poss�ble outcomes of an aud�t �nclude confirmat�on of the procedures and financ�al
reports; recommendat�ons for changes �n procedures or adjustments to reports; and
adv�s�ng of return of funds where the grant cond�t�ons have not been properly fulfilled.
Where fraud or other �llegal�ty has occurred, adv�ce should be g�ven to the relevant
author�t�es for �n�t�at�on of appropr�ate act�on, �nclud�ng poss�ble cr�m�nal proceed�ngs.
7. Audit and verification of grants
��
What the auditor needs to do
The aud�tor’s dut�es are covered by the relevant account�ng and aud�t�ng standards. In
perform�ng an aud�t, the aud�tor w�ll probably need to cons�der the follow�ng:
• aud�t engagement terms
• qual�ficat�ons requ�red to conduct the aud�t
• confl�ct of �nterest
• requ�rements of the grant and grant�ng body
• work�ng papers
• grants documents: dec�s�on-mak�ng processes, agreement, assets, l�ab�l�t�es
• compl�ance
• management representat�ons
• s�gn-off: standards of assert�ons; ‘true and fa�r’
• general recommendat�ons to the organ�sat�on.
Aud�t engagement terms are the cond�t�ons set out at the commencement of the aud�t to
�nform the grantee what the scope of the aud�t w�ll cover, what the aud�tor w�ll exam�ne,
and the adm�n�strat�ve arrangements for the aud�t. The aud�t engagement terms w�ll
usually al�gn to the fund�ng agreement.
7. Audit and verification of grants
�5
Th�s sect�on prov�des corroborat�ng deta�l to back up the more general po�nts made �n
the earl�er sect�ons of the manual. Much of the follow�ng mater�al �s based on the the
Queensland Un�vers�ty of Technology MYOB Training Manual, by Stephen Marsden.
Account numbers used �n th�s append�x are from the Standard Chart of Accounts for small
nonprofit organ�sat�ons ava�lable at qut.edu.au.
What is a grant?
A grant �s typ�cally prov�ded from one party (referred to as ‘the grantor’) to another party
(referred to as ‘the grantee’), whereby the supply of a serv�ce �s prov�ded under the grant
agreement. The grant agreement usually spec�fies the var�ous r�ghts and obl�gat�ons
between the part�es and the cond�t�ons attached to the serv�ce agreement. Often the grant
agreement w�ll prov�de that the grantee prov�de certa�n serv�ces to th�rd part�es, rather
than the grantor.
In the case of the Queensland Department of Commun�t�es, grants are usually prov�ded
to commun�ty organ�sat�ons throughout Queensland to fund a range of serv�ce �n�t�at�ves
and programs that a�m to strengthen fam�ly or commun�ty l�fe, promote the d�gn�ty and
�ndependence of �nd�v�duals or ass�st people �n need.
A serv�ce agreement entered �nto between the department and the not-for-profit
organ�sat�on typ�cally outl�nes the roles and respons�b�l�t�es of each party and what
serv�ces w�ll be del�vered by the not-for-profit organ�sat�on. In return, the not-for-profit
organ�sat�on w�ll usually be requ�red under the serv�ce agreement to prov�de appropr�ate
account�ng records and per�od�c returns d�sclos�ng how the grant has been acqu�tted.
Aud�ted financ�al statements are usually also requ�red to be prov�ded to the department at
the end of the financ�al year.
The Queensland Department of Commun�t�es has publ�shed a standard fund�ng agreement
on �ts webs�te at commun�t�es.qld.gov.au.
Is a grant subject to GST?
If a not-for-profit organ�sat�on rece�ves a grant, �t �s usually cons�dered a taxable supply
for goods and serv�ces taxt (GST) purposes. Hence, one-eleventh of the amount of the
grant needs to be rem�tted to the Austral�an Taxat�on Office on the bus�ness act�v�ty
statement (BAS).
In l�m�ted c�rcumstances, a grant from a char�table foundat�on w�ll not be subject to GST.
A copy of the grant format that the Austral�an Taxat�on Office w�ll accept as not be�ng
subject to GST can be found at the Ph�lanthropy Austral�a webs�te at ph�lanthropy.org.au.
Appendix 1: Transactions unique to not-for-profit organisations
�6
In the case of grants rece�ved from government departments, they w�ll usually be subject
to GST. In some cases, the government department prov�des a tax �nvo�ce to the not-for-
profit organ�sat�on. Th�s �s referred to as a ‘rec�p�ent-created tax �nvo�ce’. Th�s means that
the not-for-profit organ�sat�on does not need to send the government department a tax
�nvo�ce. If the government department does not �ssue the non-profit organ�sat�on w�th a
rec�p�ent created tax �nvo�ce, then the not-for-profit organ�sat�on w�ll be requ�red to ra�se
and send the government department a tax �nvo�ce for the GST �nclus�ve value of the grant
rece�ved.
The ATO has released a fact sheet ent�tled ‘Grants and GST: Rec�p�ent-created Tax Invo�ces’,
wh�ch d�scusses the cr�ter�a for rec�p�ent-created tax �nvo�ces. Th�s fact sheet can be
downloaded from the ATO webs�te ato.gov.au.
A grant �s not a ‘g�ft’ for taxat�on purposes. A grant conta�ns spec�fic cond�t�ons as to how
that grantee �s to spend the money. As such, �t w�ll not const�tute a g�ft. Th�s �s confirmed
�n Sect�on 9–�0(2)(d) of the Goods and Services Tax Act 1999, as amended, wh�ch states
that a taxable supply �ncludes ‘a grant, ass�gnment or surrender of real property’.
The ATO has �ssued a GST rul�ng deal�ng w�th grants ent�tled GSTR 2000/�� Grants of
Financial Assistance. Th�s document can be downloaded at ato.gov.au. The ATO has also
�ssued a booklet ent�tled GST and Grants, wh�ch outl�nes the GST treatment of grants. Th�s
booklet can be also downloaded from the ATO webs�te.
Accounting for grants
As far as the not-for-profit organ�sat�on �s concerned, the ma�n �ssue w�th account�ng for
grants �s determ�n�ng the po�nt at wh�ch these grants are recogn�sed as revenue �n the
profit and loss statement. Generally, �f a grant �s rece�ved that relates exclus�vely to the
current per�od, the grant �s recorded as revenue �n the profit and loss statement.
However, a part�cular problem ar�ses where grants are rece�ved �n advance of the per�od �n
wh�ch they are expected to be used – where the per�od of the grant spans more than one
financ�al year.
The �ssue �s whether the total amount of the grant should be treated as revenue upon
rece�pt or recogn�sed progress�vely as revenue �n the per�od �n wh�ch the grant �s expected
to be used. If the latter �s chosen, a subsequent �ssue �s whether the grant should be
class�fied as a l�ab�l�ty.
The answer to th�s quest�on depends on whether the grant �s rec�procal or non-rec�procal,
and whether the grant has been rece�ved by a for-profit or a not-for-profit organ�sat�on.
Appendix 1: Transactions unique to not-for-profit organisations
�7
Reciprocal transfer
A rec�procal transfer �s a transfer �n wh�ch the ent�ty rece�ves assets (that �s, money) or
serv�ces and d�rectly g�ves approx�mately equal value �n exchange to the prov�der of the
money. In other words, a rec�procal transfer �s one �n wh�ch the rec�p�ent �s obl�ged to
prov�de goods or serv�ces of approx�mately the same value back to the contr�butor.
In the case of not-for-profit organ�sat�ons, such transact�ons are often descr�bed as
membersh�p fees, t�ckets to fundra�s�ng events, or sales of fundra�s�ng goods such as
chocolates or loll�es.
Non-reciprocal transfer
A non-rec�procal transfer (or contr�but�on) �s a transfer �n wh�ch the ent�ty rece�ves assets
(that �s, money) or serv�ces w�thout d�rectly g�v�ng approx�mately equal value back to the
contr�butor.
In other words, a non-rec�procal transfer �s one �n wh�ch the rec�p�ent �s not obl�ged to
prov�de goods or serv�ces of approx�mately the same value back to the contr�butor. In
the case of not-for-profit organ�sat�ons, such contr�but�ons are often descr�bed as g�fts
or donat�ons. The not-for-profit organ�sat�on �s not requ�red to g�ve back to the donor
approx�mately the same value prov�ded.
Hav�ng confirmed that a grant �s, from an account�ng v�ewpo�nt, regarded as a non-
rec�procal transfer, the next cons�derat�on �s whether the grant should be accounted for
as revenue upon rece�pt or �n�t�ally recogn�sed as a l�ab�l�ty and transferred to revenue over
the per�od of the grant. The answer to th�s quest�on depends on whether the ent�ty �s a
for-profit or not-for-profit ent�ty.
Appendix 1: Transactions unique to not-for-profit organisations
��
a Accounting for grants in the books of for-profit organisations
Where a for-profit ent�ty rece�ves a government grant, AASB �20 Accounting
for Government Grants and Disclosure of Government Assistance appl�es. Th�s
account�ng standard requ�res that grants should be recogn�sed as revenue �n the
profit and loss statement over the period during which the grant relates.
In other words, the �n�t�al amount of the grant should be shown as a current l�ab�l�ty
ent�tled Grants Rece�ved �n Advance �n the balance sheet, and transferred to the profit
and loss statement on a progress�ve bas�s as revenue over the per�od of the grant. On th�s
bas�s, the standard regards the government grant as a rec�procal transfer.
b Accounting for grants in the books of not-for-profit organisations
The defin�t�on of a ‘not-for-profit’ ent�ty �s conta�ned �n paragraph Aus. 6.2 of AASB ��6
Impairment of Assets: ‘A not-for-profit ent�ty �s an ent�ty whose pr�nc�pal object�ve �s not
the generat�on of profit.’
Where a not-for-profit ent�ty rece�ves a government grant, AASB �00� Contributions
appl�es, not AASB �20. AASB �00� requ�res that the ent�re amount of the grant be
recogn�sed as revenue �n the �ncome statement �n the year of rece�pt, regardless of the
per�od of the grant.
Divergent treatment
As can be seen, the current way that for-profit organ�sat�ons account for the�r grants �s
d�fferent from the way that not-for-profit organ�sat�ons are requ�red to account for grants.
Several not-for-profit organ�sat�ons have compla�ned about th�s d�vergent treatment to the
Austral�an Account�ng Standards Board (AASB). The AASB �s the government body that
sets account�ng standards �n Austral�a.
Based on these concerns, �n February 2006, the AASB released a document ent�tled ED ��7
Revenue from Non-Exchange Transactions. Th�s document proposes to amend AASB �00�
Contributions to allow not-for-profit organ�sat�ons to record grants rece�ved �n advance as
a l�ab�l�ty s�m�lar to for-profit organ�sat�ons. The grant would be progress�vely brought to
account as revenue �n the profit and loss statement over the per�od of the grant.
Th�s amendment would br�ng the account�ng treatment for grants for both for-profit
organ�sat�ons and not-for-profit organ�sat�ons �nto l�ne.
Appendix 1: Transactions unique to not-for-profit organisations
�9
Example
Assume that on � January 2006 a not-for-profit organ�sat�on rece�ves a recurr�ng
grant from the Department of Commun�t�es of $55,000 �nclud�ng GST. Th�s grant �s
for a twelve-month per�od. The not-for-profit organ�sat�on w�ll be requ�red to rem�t
one-eleventh of th�s amount to the ATO (that �s, $5000). Th�s w�ll be coded to the
l�ab�l�ty ‘Account�ng 2��50 GST Payable’.
Assume that the financ�al year-end of the not-for-profit organ�sat�on �s �� March.
Desp�te the fact that only three months have passed from the date of the rece�pt of
the grant to the end of the financ�al year, under AASB �00� Contributions the not-
for-profit organ�sat�on w�ll record the ent�re $50,000 as revenue upon rece�pt of the
grant (Account �-�0�0 State Grants – Recurring).
Th�s �s desp�te the fact that n�ne-twelfths of the grant relates to the subsequent
financ�al year.
However, once AASB �00� Contr�but�ons �s amended, not-for-profit organ�sat�ons
w�ll recogn�se $�2,500 as grant revenue (�/�2 × $50,000) �n the profit and loss
statement and $�7,500 (represent�ng 9/�2 × $50,000 relat�ng to the next financ�al
year) as Grants Rece�ved �n Advance �n the balance sheet.
tip
For not-for-profit organ�sat�ons, grants are recorded as revenue at the t�me the
grant �s rece�ved, regardless of the per�od to wh�ch the grant relates. Grants are
subject to GST, hence the not-for-profit organ�sat�on must rem�t one-eleventh of the
gross amount of the grant to the ATO.
In many cases, the government department w�ll prov�de the not-for-profit
organ�sat�on w�th a rec�p�ent-created tax �nvo�ce. Th�s means that the not-for-profit
organ�sat�on does not need to send the government department a tax �nvo�ce.
Appendix 1: Transactions unique to not-for-profit organisations
�0
Accounting for donations and donated assets
In some �nstances, a person may make a donat�on of cash, trad�ng stock or property to a
not-for-profit organ�sat�on. To be a bona fide g�ft or donat�on, �t must have the follow�ng
character�st�cs:
• there �s a transfer of the benefic�al �nterest �n property
• the transfer �s made voluntar�ly
• the transfer ar�ses by way of benefact�on
• no mater�al benefit or advantage �s rece�ved by the g�ver by way of return.
Generally, for a payment to be cons�dered a g�ft, �t must be unfettered, that �s, there must
be no obl�gat�on to do anyth�ng mater�al �n recogn�t�on of the g�ft and no expectat�on on
the part of the donor to rece�ve anyth�ng mater�al �n return for the donat�on; that �s, no
str�ngs attached.
Hence, the follow�ng are not usually cons�dered g�fts:
• purchase of raffle or art un�on t�ckets
• cl�ent contr�but�ons towards serv�ces or act�v�t�es; for example, contr�but�on towards
a bus tr�p
• purchase of an �tem such as a mug, key r�ng or pen that �s not merely a token that
promotes the commun�ty organ�sat�on or �ts act�v�t�es. Such tokens commonly g�ven
dur�ng fundra�s�ng dr�ves �nclude lapel badges, bumper st�ckers, red noses, Legacy
p�ns and daffod�ls on Daffod�l Day
• the cost of attend�ng a fundra�s�ng d�nner, even �f the cost exceeds the value of the
d�nner
• sponsorsh�ps or advert�s�ng prov�ded to the donor �n exchange for the donat�on
• membersh�ps and reg�strat�on fees
• payments where the person has an understand�ng w�th the rec�p�ent that the
payment w�ll be used to prov�de a benefit to the donor.
On 20 July 2005, the Austral�an Taxat�on Office released Taxat�on Rul�ng TR 2005/�� Tax
Deductible Gifts: What is a Gift? Th�s taxat�on rul�ng supersedes several other taxat�on
rul�ngs and taxat�on determ�nat�ons, and represents the most comprehens�ve taxat�on
rul�ng �ssued by the Austral�an Taxat�on Office on the subject of tax-deduct�ble g�fts. TR
2005/�� conta�ns 2�0 paragraphs, �� worked examples and spans �7 pages. It can be
found at ato.gov.au.
Appendix 1: Transactions unique to not-for-profit organisations
��
The donor w�ll be able to cla�m a tax deduct�on for the g�ft made, prov�ded �t was made
to a tax-deduct�ble g�ft rec�p�ent (DGR) that has been endorsed by the comm�ss�oner of
taxat�on.
The complete l�st of deduct�ble g�ft rec�p�ents can be found by search�ng the name or ABN
of the organ�sat�on at abr.bus�ness.gov.au.
There are two ways a person can make a donat�on to a not-for-profit organ�sat�on:
• monetary donat�ons; and/or
• non-monetary donat�ons.
The respect�ve account�ng treatment of each of these transact�ons �s d�scussed below.
Monetary donations
A person may make a monetary (that �s, cash) donat�on to a not-for-profit organ�sat�on.
In th�s case, �f the donat�on meets the cr�ter�a for a tax-deduct�ble g�ft and the not-for-
profit organ�sat�on �s a DGR, the relevant cash at bank account �s deb�ted, and the revenue
‘Account �-20�0 Donat�ons Rece�ved’ cred�ted. If the donat�on does not meet the cr�ter�a
for a tax-deduct�ble g�ft, then the ‘Account �-20�0 Non-Tax Deduct�ble G�fts’ �s cred�ted.
All g�fts should be depos�ted �nto a separate g�ft account.
For more �nformat�on on the requ�rements of a g�ft fund, refer to the ATO Fact Sheet
ent�tled Gift Fund Requirements for Deductible Gift Recipients at the ATO webs�te.
Reference should also be made to TR 2000/�2 Deductible Gift Recipients: The Gift Fund
Requirements. Th�s tax rul�ng can be downloaded at: law.ato.gov.au.
Regardless of whether the donat�on �s a tax-deduct�ble g�ft or not for �ncome tax purposes,
a g�ft (or donat�on) �s not cons�dered a taxable supply for the purposes of the Goods and
Services Tax Act 1999 as amended.
As �t �s not cons�dered a GST-free supply or �nput-taxed supply, �t falls outs�de the scope of
the GST Act. Hence, �t should be coded to ‘N-T’ or no-tax �n both MYOB and Qu�ckBooks.
G�fts or donat�ons are not reported on the bus�ness act�v�ty statement.
Appendix 1: Transactions unique to not-for-profit organisations
�2
Non-monetary donations
In some �nstances, a person may donate non-monetary �tems, for example, electr�cal
equ�pment. Desp�te the fact that the donated �tem �s non-monetary �n nature, �t must
st�ll be recorded �n the account�ng system. The account�ng treatment of non-monetary
donat�ons depends on whether the fa�r value of the donated �tem �s greater or less than
$5000. Th�s amount �s the threshold adopted �n the QUT Model Chart of Accounts to
determ�ne whether an �tem should be recorded as an asset or expense.
a Donated asset valued at less than $5000
If a not-for-profit organ�sat�on rece�ves a donated asset that �s valued by the not-for-profit
organ�sat�on at less than $5000, the donated asset should be expensed to the profit and
loss statement for the est�mated fa�r market value of the donated asset.
There �s no need for the not-for-profit organ�sat�on to obta�n a formal valuat�on of the
�tem �n quest�on �f �t �s less than $5000. However, the �tem must be valued on a reasonable
bas�s.
For example, �f a person donates a new Sony 5� cm telev�s�on set to a not-for-profit
organ�sat�on, then a comparable pr�ce for th�s telev�s�on set can be obta�ned by check�ng
the pr�ce at a reta�l store, such as B�g W, Target, Myer or JB H� F�. Many stores have
webpages where �t �s poss�ble to electron�cally search for the �tem.
The d�fficulty l�es where the �tem be�ng donated �s not new; that �s, secondhand. In th�s
case, an est�mate needs to be made of the value of a secondhand �tem that �s donated. For
example, a person may donate a secondhand Sony 5� cm telev�s�on set to a not-for-profit
organ�sat�on. In th�s case, cons�derat�on may be g�ven to search�ng the �tem on E-bay (ebay.
com.au) and typ�ng �n the name of the relevant �tem.
It �s not essent�al that the donated �tem be valued prec�sely. As long as there has been a
reasonable attempt to value the donated asset, the aud�tor should be sat�sfied.
It �s �mportant that you keep a record of where you found the comparable �tem and pr�ce.
For example, you should pr�nt out the webpage show�ng the comparable �tem and the
pr�ce, and keep th�s pr�ntout w�th your asset �nformat�on.
Let us assume that the secondhand Sony 5� cm telev�s�on set has been valued at $�00.
In th�s case, the expense ‘Account 6-00�0 Asset Purchases < $5000’ w�ll be deb�ted and
the revenue account ent�tled ‘�-20�0 Donat�ons Rece�ved’ cred�ted (�f �t �s a tax-deduct�ble
g�ft). If the �tem donated �s not a tax-deduct�ble g�ft, then the ‘Account �-20�0 Non-Tax
Deduct�ble G�fts’ should be cred�ted.
Appendix 1: Transactions unique to not-for-profit organisations
��
In the case of donated non-monetary �tems, no �nput tax cred�t can be cla�med, as no
money was actually spent to acqu�re the �tem. S�m�larly, no GST �s payable, as there was no
sale. Hence, the tax code to be used �n both MYOB and Qu�ckBooks �s N-T (No Tax).
b Donated asset valued at more than $5000
If a not-for-profit organ�sat�on rece�ves a donated asset that �s valued at more than $5000,
the donated asset should be recorded �n the appropr�ate asset account �n the balance
sheet. Th�s asset should also be added to the asset reg�ster.
If the property �s valued by the Austral�an Valuat�on Office, the donor w�ll be not�fied of
the value of the donated �tem by way of a valuat�on cert�ficate. In some cases, the donor
w�ll prov�de the not-for-profit organ�sat�on w�th a copy of the valuat�on cert�ficate. Th�s w�ll
prov�de the value of the asset to be recorded �n the accounts.
Th�s t�me, let us assume that a person has donated to a not-for-profit organ�sat�on a
w�descreen plasma telev�s�on that has been valued by the comm�ss�oner at $7500. In th�s
case, the asset ‘Account �-7�20 Plant and Equ�pment’ w�ll be deb�ted, and the revenue
‘Account �-20�0 Donat�ons Rece�ved’ should be cred�ted �f �t �s a tax-deduct�ble g�ft. If the
�tem donated �s not a tax-deduct�ble g�ft, then the ‘Account �-20�0 Non-Tax Deduct�ble
G�fts’ should be cred�ted.
Once aga�n, no �nput tax cred�t can be cla�med by the not-for-profit organ�sat�on on the
$7500, as no money was actually spent to acqu�re the plasma telev�s�on. S�m�larly, no GST
�s payable, as there was no sale. Hence, the tax code to be used �n both MYOB and Qu�ck
Books �s N-T (No Tax).
Accounting for sponsorships and fundraising events
Many not-for-profit organ�sat�ons undertake a range of fundra�s�ng act�v�t�es �nclud�ng
fetes, auct�ons, char�ty balls, lunches and d�nners. In add�t�on, a not-for-profit organ�sat�on
may also approach a corporate partner to be �nvolved �n sponsor�ng certa�n events or
funct�ons.
In terms of the account�ng treatment for fundra�s�ng events, the relevant cash at bank
account �s deb�ted w�th the appropr�ate revenue account cred�ted (�-2000 or �-�000).
S�m�larly, where sponsorsh�ps are obta�ned, the relevant cash at bank account �s deb�ted,
w�th the revenue ‘Account �-�050 Sponsorsh�ps & L�cens�ng Fees’ cred�ted.
The GST treatment of sponsorsh�ps �s relat�vely clear. Sponsorsh�ps are normally subject to
GST, as they are prov�ded �n return for advert�s�ng serv�ces. Hence, ensure that the tax code
�s GST.
Appendix 1: Transactions unique to not-for-profit organisations
��
When rece�v�ng mon�es from sponsorsh�ps, the not-for-profit organ�sat�on must rem�t
one-eleventh of the gross amount rece�ved to the Austral�an Taxat�on Office on the next
bus�ness act�v�ty statement.
Most fundra�s�ng events are subject to GST. Although genu�ne g�fts or donat�ons w�th no
str�ngs attached are not subject to GST, most other fundra�s�ng events const�tute taxable
suppl�es for GST purposes. Hence, they are subject to GST.
In other words, a not-for-profit organ�sat�on that charges $��0 to attend a black t�e char�ty
fundra�s�ng d�nner w�ll be requ�red to rem�t one-eleventh of th�s amount to the ATO. Of
course, the not-for-profit organ�sat�on �s ent�tled to cla�m back one-eleventh of all costs
assoc�ated w�th th�s event as an �nput tax cred�t.
However, there �s a spec�al �nput taxed concess�on prov�ded to char�table �nst�tut�ons �n
D�v�s�on �0-F of the Goods and Services Tax Act 1999 as amended. Accord�ng to Sect�on
�0-�60, a char�table �nst�tut�on may elect for a fundra�s�ng event to be �nput taxed rather
than be regarded as a taxable supply. Th�s elect�on �s opt�onal under the act, and appl�es to
each fundra�s�ng event.
The ma�n advantage of nom�nat�ng that the fundra�s�ng event be �nput taxed �s that,
although no �nput tax cred�ts are allowed �n respect of outgo�ngs assoc�ated w�th the
fundra�s�ng event, no GST �s requ�red to be rem�tted on the proceeds rece�ved.
A fundra�s�ng event �s defined as one that �s conducted for the purpose of fundra�s�ng and
does not form any part of a ser�es or regular run of s�m�lar events. Sect�on �0-�65 (�) (a)
class�fies a fundra�s�ng event as a fete, ball, gala, d�nner performance or s�m�lar event.
The comm�ss�oner of taxat�on made a determ�nat�on on �0 August 200�, c�ted as
Frequency of Fundraising Events Determination (No 1) 2001, that the frequency w�th
wh�ch fundra�s�ng events may be held w�thout form�ng part of a ser�es or regular run of
l�ke or s�m�lar events �s �5 �n any �ncome year.
Therefore, �n any �ncome year, a char�ty may hold up to:
• �5 fetes, �5 balls, �5 gala shows, �5 d�nners, �5 performances, �5 char�ty auct�ons,
�5 w�ne tast�ngs and �5 fash�on parades
• �5 nat�onal flower days; and
• �5 golf days, �5 nat�onal health promot�on days.
Where a char�table �nst�tut�on elects to have �ts fundra�s�ng event �nput taxed, �t �s requ�red
to treat all suppl�es made �n connect�on w�th �t as �nput taxed. Th�s appl�es to the t�cket
char�ty auct�on that may be held on the n�ght as well as raffles, wh�ch would ord�nar�ly be
cons�dered GST-free.
Appendix 1: Transactions unique to not-for-profit organisations
�5
By elect�ng to treat the fundra�s�ng event as �nput taxed, the not-for-profit organ�sat�on
�s not requ�red to �ssue a tax �nvo�ce to each guest when the t�cket �s sent. Furthermore,
there �s no need to rem�t one-eleventh of the proceeds from the auct�on or other act�v�ty
conducted on the n�ght. However, the not-for-profit organ�sat�on �s unable to cla�m back
any �nput tax cred�ts �n respect of the event.
Accord�ng to the Austral�an Taxat�on Office, �f a char�table �nst�tut�on elects to treat �ts
fundra�s�ng events as �nput taxed, then the revenue and expenses for each event must
be separately accounted for �n the account�ng system. In other words, �f the �nput-taxed
elect�on �s made for a part�cular event, the ATO requ�res that all proceeds and costs
assoc�ated w�th that part�cular event be separately accounted for.
In order to sat�sfy these requ�rements, �f the organ�sat�on elects to treat the fundra�s�ng
event as �nput taxed, then the bookkeeper should set up a cost centre w�th�n e�ther MYOB
or Qu�ckBooks and job cost all revenues and expenses assoc�ated w�th fundra�s�ng event to
INP (�nput taxed).
The dec�s�on to elect that a fundra�s�ng event be treated as �nput taxed should be made �n
d�scuss�on w�th the board, CEO and external accountant.
Accounting for membership fees
Many not-for-profit organ�sat�ons are membersh�p-based. Hence, they charge fees to those
persons who jo�n the organ�sat�on as members.
Typ�cally, membersh�p fees w�ll be rece�ved by the not-for-profit organ�sat�on on an
annual bas�s. The member (or prospect�ve member) typ�cally completes a membersh�p or
reg�strat�on form and subm�ts th�s form w�th the nom�nated fee e�ther v�a cheque, cash or
EFT, or by prov�d�ng cred�t card deta�ls.
Usually, the not-for-profit organ�sat�on w�ll send out the membersh�p appl�cat�on form
requ�r�ng the appl�cant to complete a var�ety of deta�ls. The appl�cat�on �tself may be
accompan�ed by a tax �nvo�ce, prov�ded the document conta�ns all of the requ�rements for
a tax �nvo�ce.
Membersh�p fees are regarded as a rec�procal transfer, because the not-for-profit
organ�sat�on �s prov�d�ng the member w�th benefits of approx�mately equal value �n
exchange for the money rece�ved.
Appendix 1: Transactions unique to not-for-profit organisations
�6
Accord�ng to paragraph �2 of AASB �00� Contributions:
Where clubs and profess�onal assoc�at�ons charge fees �n return for contr�butors
be�ng able to enjoy the use of fac�l�t�es, rece�ve publ�cat�ons or pract�se �n a part�cular
vocat�on for a defined per�od, an exchange transact�on can be presumed and the
fees would not be treated as contr�but�ons.
Although the member’s benefit may exceed the current financ�al year, most not-for-profit
organ�sat�ons record the ent�re amount of membersh�p fees rece�ved as revenue. Hence,
when a member pays h�s or her membersh�p fees, the relevant cash at bank account
�s deb�ted for the amount of the membersh�p fee, w�th the revenue ‘Account �-�0�0
Contr�but�ons (Members)’cred�ted.
Some not-for-profit organ�sat�ons may elect to record the membersh�p fees by
apport�on�ng the fees between the current per�od and future per�ods. For example, �f
the membersh�p fees relate to one or more financ�al years, the port�on that relates to
the current financ�al year �s regarded as revenue, w�th the amount relat�ng to the future
financ�al year regarded as a l�ab�l�ty.
For example, �f on � January 2006, a member pays the�r membersh�p fees of $�20 for
twelve months, by �� March (three months later), the not-for-profit organ�sat�on may elect
to show only $�0 as revenue (three months), w�th the rema�n�ng n�ne months (or $90)
shown as a current l�ab�l�ty (‘Account # 2-�2�0 Revenue Rece�ved �n Advance’).
Regardless of wh�ch method the not-for-profit organ�sat�on adopts, membersh�p fees are
subject to GST. Hence, the tax code �s GST.
Residential rent
In some cases, organ�sat�ons funded by Department of Commun�t�es under the Supported
Accommodat�on Ass�stance Program (SAAP) rent the�r propert�es from the Department of
Hous�ng under the Cr�s�s Ass�stance Program (CAP). Propert�es can also be rented from the
pr�vate market and �n some cases also from the Department of Commun�t�es (�n the latter
case a peppercorn rent �s charged).
Accord�ng to sect�on �0-�5 of the Goods and Services Tax Act 1999, as amended, the
supply of res�dent�al rent �s �nput taxed. Th�s means that the landlord �s unable to charge
the GST to the tenant. Hence, the revenue account ‘�-50�0 Rental Income’ should be
coded to INP (�nput taxed). However, be�ng an �nput-taxed supply, th�s means that all
expenses assoc�ated w�th the rental property should also be coded to INP. Hence, the
follow�ng accounts have been ass�gned the GST tax code INP:
Appendix 1: Transactions unique to not-for-profit organisations
�7
• Account 6-0��0 Insurance: Rental Propert�es
• Account 6-0560 Rates: Rental Propert�es
• Account 6-05�0 Rent: Rental Propert�es
• Account 6-0590 Repa�rs and Ma�ntenance: Rental Propert�es
The landlord �s unable to cla�m back the GST on these �tems. In th�s case, the rental
�ncome would be coded to Item G� Input Taxed Sales �n the GST calculat�on worksheet for
the bus�ness act�v�ty statement. The assoc�ated rental expenses would be coded to G��
Purchases for Mak�ng Input Taxed Sales.
However, there �s a spec�al GST-free concess�on prov�ded to char�table �nst�tut�ons,
char�table funds and g�ft-deduct�ble ent�t�es conta�ned �n Sect�on ��-250 of the GST
Act. Th�s sect�on prov�des that, where these ent�t�es charge a pr�ce for accommodat�on
that �s less than 75 per cent of the GST-�nclus�ve market value of a comparable un�t of
accommodat�on, the supply �s regarded as GST-free, not �nput taxed.
Cod�ng the rental �ncome as GST-free �nstead of �nput taxed does not mean that the
landlord can charge the GST. There �s st�ll no GST on the rent. However, the benefit l�es
�n the expenses assoc�ated w�th the rental property. Instead of be�ng coded as INP, they
can be coded as GST, mean�ng that the landlord can cla�m back the GST on all of these
expenses.
Bookkeepers should consult w�th the�r accountant or aud�tor to see �f they are el�g�ble to
take advantage of the GST concess�on conta�ned �n Sect�on ��-250 of the GST Act. If the
concess�on appl�es, the bookkeeper should change the revenue account ‘�-50�0 Rental
Income’ from INP to GST. Furthermore, the GST tax codes for all of the follow�ng expenses
should be changed from INP to GST.
• Account 6-0��0 Insurance: Rental Propert�es
• Account 6-05�0 Rent: Rental Propert�es
• Account 6-0590 Repa�rs and Ma�ntenance: Rental Propert�es.
The expense ‘Account 6-0560 Rates: Rental Propert�es’ can only ever be ass�gned the GST
tax code N-T (never INP nor GST).
In th�s case, the rental �ncome would be coded to Item G� GST-Free Sales �n the GST
calculat�on worksheet for the bus�ness act�v�ty statement. The assoc�ated rental expenses
would be coded to ��� Non-Cap�tal Purchases.
For more �nformat�on on the rules relat�ng to the non-commerc�al act�v�t�es of char�t�es,
cost of supply and market value tests, refer to sect�on ��–250 of the Charities Consultative
Appendix 1: Transactions unique to not-for-profit organisations
��
Committee Resolved Issues Document at ato.gov.au
The Resolved Issues document conta�ns a ser�es of tables outl�n�ng the benchmark market
values for accommodat�on that �t w�ll accept for c�t�es and reg�onal centres around
Austral�a. The benchmark values are effect�ve from � January 2006, and apply to suppl�es
made from that date. The benchmark market values were updated to operate from
� January 2007.
Th�s document prov�des benchmark market values for the follow�ng types of suppl�es:
• short-term accommodat�on (table �)
• meals (table �)
• board and quarters (table 5)
• long-term accommodat�on (table 5)
• employment serv�ces (table 6).
Example
Assume that a char�table �nst�tut�on prov�des cr�s�s accommodat�on to fam�l�es �n
need. Rent of $60 per week �s rece�ved by the char�table �nst�tut�on. As res�dent�al
rent �s �nput taxed, no GST �s charged on the $60. The char�table �nst�tut�on �s
unable to cla�m back the GST on expenses assoc�ated w�th the rental property.
The market value of comparable accommodat�on �s $�00 a week. As the char�table
�nst�tut�on’s rent of $60 per week �s less than 75 per cent of $�00 (that �s, $75),
the GST-free concess�on conta�ned �n sect�on ��-250 of the GST Act appl�es. In th�s
case, the bookkeeper should change GST tax code from INP to GST-free.
More �mportantly, as the rent rece�ved �s now GST free, the char�table �nst�tut�on
can cla�m back all the �nput tax cred�ts �n respect of the expenses assoc�ated w�th
the rental property. These expense codes should be changed to GST.
Appendix 1: Transactions unique to not-for-profit organisations
�9
Income tax
Many not-for-profit ent�t�es are exempt from �ncome tax. The Income Tax Assessment Act
1997, D�v�s�on 50 �dent�fies those ent�t�es whose ord�nary �ncome and statutory �ncome �s
exempt.
Where a not-for-profit ent�ty �s subject to �ncome tax, grant �ncome w�ll generally be
assessable �ncome.
Fringe benefits tax (FBT)
The fr�nge benefits tax �s a tax that �s �mposed on employers �n respect of benefits prov�ded
to employees.
Generally, there w�ll be no fr�nge benefits tax �mpl�cat�ons when a not-for-profit ent�ty
rece�ves or prov�des a grant unless there �s an employer–employee relat�onsh�p. In add�t�on,
where a not-for-profit ent�ty does prov�de a grant to an employee, the arrangements under
the pay-as-you-go tax system w�ll need to be cons�dered.
Goods and services tax (GST)
Not-for-profit ent�t�es must reg�ster for goods and serv�ces tax (GST) �f the�r annual
turnover �s $�00,000 or more. For other ent�t�es, the turnover threshold �s $50,000. The
grant may have an �mpact on the goods and serv�ces tax threshold of the organ�sat�on.
Input tax cred�ts w�ll not be ava�lable on payments made to unreg�stered ent�t�es.
It should be noted that some grants bod�es may requ�re goods and serv�ces tax reg�strat�on
even when the goods and serv�ces tax threshold �sn’t reached:
• Ident�fy whether or not the grantee �s carry�ng on an enterpr�se, and whether
someth�ng �s suppl�ed to the grantor �n return for the payment. If so, then the
grantor w�ll need to obta�n the ABN of the grantee, otherw�se ��.5 per cent
no-Austral�an Bus�ness Number Pay As You Go w�thhold�ng could apply. Th�s w�ll
const�tute a ‘supply’ whereby the grantee has entered �nto b�nd�ng obl�gat�ons �n
connect�on w�th the payment (see GSTR2000/�� Grants of Financial Assistance).
• The grantor should �dent�fy �f the grantee �s reg�stered for goods and serv�ces tax.
Th�s can be done by check�ng the Austral�an Bus�ness Reg�ster webs�te:
abr.bus�ness.gov.au
• If the grantee �s reg�stered for goods and serv�ces tax, cons�der whether or not the
goods and serv�ces tax �s appl�ed to the grant.
Appendix 2: Taxation
50
• If the grantee �s not reg�stered for goods and serv�ces tax, cons�der whether the
amount of the grant w�ll cause the grantee to exceed the goods and serv�ces tax
reg�strat�on threshold.
• If the goods and serv�ces tax appl�es, the grantor may need to ‘gross up’ the grant
by an add�t�onal �0 per cent. A tax �nvo�ce should be requested from the grantee
pr�or to payment, to ensure that the grantor can cla�m �nput tax cred�ts.
GSTR 2000/�� Grants of Financial Assistance expla�ns that where a grantor rece�ves a
supply �n return for payment of money to the grantee, the payment w�ll be subject to
goods and serv�ces tax.
In most fund�ng s�tuat�ons, the ma�n supply often can be the grantee’s obl�gat�on to use
the funds �n a part�cular manner; other per�pheral or �nc�dental suppl�es, such as the
prov�s�on of report�ng, may also ex�st.
Goods and serv�ces tax w�ll apply �f the obl�gat�on const�tutes the substance of the grant,
and a b�nd�ng comm�tment ex�sts; for example, a contract, repayment prov�s�ons �n certa�n
c�rcumstances, guarantee or l�en over property of the grantee or an enforceable deed
(GSTR 2000/�� Grants of Financial Assistance, para. ��).
In most cases, grants to non-government ent�t�es that are reg�stered for goods and serv�ces
tax w�ll be subject to goods and serv�ces tax.
Is grant funding subject to goods and services tax?
The rul�ng GSTR 2000/�� Grants of Financial Assistance deals w�th the appl�cat�on of
goods and serv�ces tax to grants of financ�al ass�stance and fund�ng. GSTR 2000/�� appl�es
to grants made by governments and the pr�vate sector. It a�ms to ass�st grantees and
grantors �n determ�n�ng whether goods and serv�ces tax appl�es to a grant.
The grant w�ll be subject to Goods and Serv�ces Tax where �t sat�sfies all of the follow�ng
tests:
• the grant represents cons�derat�on for a supply
• the supply �s made �n the course of furtherance of an enterpr�se that �s carr�ed on
by the suppl�er
• the supply for wh�ch the grant �s cons�derat�on for �s connected w�th Austral�a
• the ent�ty mak�ng the supply that the grant relates to, �s reg�stered or requ�red to be
reg�stered, for goods and serv�ces tax.
Appendix 2: Taxation
5�
What is a consideration for a supply?
The defin�t�on of a supply �s very w�de, and �ncludes suppl�es of:
• goods and serv�ces
• r�ghts
• obl�gat�ons
• �nformat�on.
The defin�t�on excludes most suppl�es of money.
For a supply to be a taxable supply, �t must be made for cons�derat�on. A payment w�ll be
cons�derat�on for a supply �f the payment �s ‘�n connect�on w�th’, ‘�n response to’ or ‘for
the �nducement’ of a supply. In determ�n�ng whether a payment �s �n connect�on w�th the
supply of an obl�gat�on, the test �s whether there �s a l�nk or nexus between the substance
of the obl�gat�on and the grant.
As an example (from GSTR 2000/��): A government agency makes a grant to a not-for-
profit ent�ty for the purpose of undertak�ng spec�fic research that w�ll be made publ�c.
The object of the grant �s to �mprove the �nternat�onal compet�t�veness of ent�t�es �n the
transport �ndustry, and the agency �s obl�ged to undertake the relevant research and
publ�sh the find�ngs. Wh�le the agency does not der�ve a d�rect benefit from the mak�ng of
the grant, the prov�s�on of the �nformat�on �n the report goes to the purpose for wh�ch the
money �s granted, and the grant �s cons�derat�on for the obl�gat�on to supply �nformat�on
to the publ�c. Refer to GSTR 2000/�� for other examples.
Suppl�es that form part of the grant agreement, but are merely �nc�dental to the
object�ve or purpose of the grant, w�ll not be cons�derat�on for a supply; for example, the
requ�rement to prov�de financ�al reports to the grantor. The grantor uses th�s �nformat�on
to ma�nta�n accountab�l�ty over the funds d�sbursed and to ass�st �n evaluat�ng the
effect�veness of the program meet�ng �ts object�ves.
Rights
For example, does a r�ght to repayment ex�st when cond�t�ons are not met? A grant
agreement may spec�fy that the grant �s to be repa�d �f the grantee fa�ls to meet the
cond�t�ons attached to the grant. The r�ght to a repayment establ�shes that there �s a
supply for wh�ch the grant �s cons�derat�on.
Appendix 2: Taxation
52
Obligations: does the grant agreement create an obligation?
Cond�t�onal grants requ�re the grantee to enter �nto an obl�gat�on, or make an undertak�ng
to do someth�ng, for the grantor. The grant �s then made ‘�n connect�on w�th’ such
an obl�gat�on or supply. The obl�gat�on may be to use the grant money for a spec�fied
purpose, or to prov�de part�cular serv�ces to the commun�ty. Many government grants are
prov�ded to not-for profit ent�t�es �n return for the prov�s�on of serv�ces or �nfrastructure to
the commun�ty.
It �s �mportant to note that the supply �s the enter�ng �nto the obl�gat�on to fulfil the
cond�t�ons attached to the grant, not the actual fulfilment of the cond�t�ons themselves.
It �s common for financ�al ass�stance grants to be documented �n an agreement that
establ�shes r�ghts and obl�gat�ons between the part�es. If the r�ghts or obl�gat�ons are
b�nd�ng, that would be a supply, and goods and serv�ces tax would apply. Where there �s
only an expectat�on and not a b�nd�ng comm�tment between the part�es, there would be
no supply and no goods and serv�ces tax.
Care needs to be taken to ensure there �s no confus�on between an obl�gat�on and a
legally b�nd�ng obl�gat�on. An obl�gat�on does not need to be legally b�nd�ng for there to
be a supply. The Austral�an Taxat�on Office cons�ders that, where grants cons�st of large
sums of money, normal ‘government accountab�l�ty’ would d�ctate formal obl�gat�ons
be�ng entered �nto, w�th the var�ous part�es expect�ng those obl�gat�ons to be fulfilled. Th�s
w�ll, �n the absence of anyth�ng else, create ‘b�nd�ng’ obl�gat�ons.
Grants that are ‘gifts’ to not-for-profit entities
A g�ft to a not-for-profit ent�ty �s not cons�derat�on for a supply. In order for a payment to
an ent�ty to be cons�dered a ‘g�ft’, �t must pass both of the follow�ng tests:
• the payment must be transferred voluntar�ly and not be the result of a pr�or
contractual obl�gat�on
• the maker of the payment must rece�ve no mater�al benefit �n return.
Even �f a g�ft has cond�t�ons attached to �t that flow from the payer’s r�ght to regulate the
d�sposal of the donat�on, �t may st�ll be a ‘g�ft’. Such cond�t�ons reflect the terms on wh�ch
the payer �ntends to make the g�ft, and the ent�ty’s understand�ng of the terms on wh�ch
the g�ft w�ll be made.
Appendix 2: Taxation
5�
Unspent grant funds that are repaid
Often grant agreements requ�re funds not spent by the grantee to be repa�d to the
grantor. The grant repayment �s an adjustment to the or�g�nal cons�derat�on prov�ded to
enter �nto the grant obl�gat�on.
Upon repayment, the not-for-profit ent�ty w�ll have a ‘decreas�ng adjustment’ on �ts
bus�ness act�v�ty statement (BAS). Th�s means �t w�ll be seek�ng to reduce the amount of
goods and serv�ces tax �t pays to the Austral�an Taxat�on Office as a result of hav�ng to pay
some of the grant back.
GSTR 2000/� Adjustment Notes states that adjustment notes are to be held for decreas�ng
adjustments where the goods and serv�ces tax exclus�ve value of the taxable supply �s
greater than $50. Th�s respons�b�l�ty rests w�th the not-for-profit ent�ty, unless �t has �ssued
a rec�p�ent created tax �nvo�ce.
The grantor, on the other hand, w�ll have an ‘�ncreas�ng adjustment’ on �ts bus�ness act�v�ty
statement as a result of gett�ng some of the grant back. Th�s means that the goods and
serv�ces tax �nput tax cred�t or�g�nally cla�med back would need to be reduced.
Appendix 2: Taxation
5�
CPA Australia
CPA Austral�a (200�). Sample Audit Program: the Audit of SIP Grants. Melbourne:
CPA Austral�a.
CPA Austral�a (200�). Incorporated Associations: Reporting and Auditing
Obligations. Melbourne: CPA Austral�a.
Flynne, S., Leo, K. and Add�son, P. (2000). Financial Reporting by Not-For-Profit
Entities. Melbourne: CPA Austral�a External Report�ng Centre of Excellence.
General
Aud�tor-General of South Austral�a (200�). Report of the Auditor-General on the
Basketball Association of South Australia Incorporated. Adela�de: Aud�tor-General of
South Austral�a.
Aud�tor-General of V�ctor�a (2000). Grants to Non-government Organsiations:
Improving Accountability. Melbourne: Aud�tor-General of V�ctor�a.
Aud�tor-General of Western Austral�a (2000). A Means to an End: Contracting Not-for-
profit Organisations for the Delivery of Community Services. Performance Evaluat�on
Report �. Perth: Aud�tor-General of Western Austral�a.
Austral�an Account�ng Standards Board (2000). Revenue Recognition: Conditional
Grants. Urgent Issues Group Issue Proposal 00-�0. Melbourne: Austral�an Account�ng
Standards Board.
Austral�an Nat�onal Aud�t Office (200�). Better Practice Guide: Contract Management.
Canberra: Austral�an Nat�onal Aud�t Office.
Austral�an Nat�onal Aud�t Office (2002). Better Practice Guide: Administration of
Grants. Canberra: Austral�an Nat�onal Aud�t Office.
Austral�an Taxat�on Office (2000). Income Tax Ruling 2000/12: Deductible Gift
Recipients. Canberra: Austral�an Taxat�on Office.
Austral�an Taxat�on Office (200�). Gift Pack for Deductible Gift Recipients and Donors.
Canberra: Austral�an Taxat�on Office.
Centre of Ph�lanthropy and Not-for-profit Stud�es (2005). Chart of Accounts for Not-for-
profit Organisations. Br�sbane: Queensland Un�vers�ty of Technology.
Creat�ve Volunteer�ng (200�). Develop Funds and Resources. Port Adela�de: Reg�onal
Arts Austral�a.
References
55
Department of Treasury and F�nance (2005). Best Practice Guide for the Administration
of Grants. Hobart: Department of Treasury and F�nance.
Galbally, R. (200�). Guide for Community Treasurers. Adela�de: Westpac.
McGregor-Lowndes, M. (200�). The Secretary’s Handbook for Queensland
Incorporated Associations. Br�sbane: QUT.
Our Commun�ty (2005). Winning Grants Funding in Australia: The Step by Step
Guide. Melbourne: Our Commun�ty.
Queensland Treasury (�997). Guidelines for Grant Administration. Br�sbane:
Queensland Treasury.
Renton, N. (2005). Clubs and Non-Profits: Keeping the Books. Le�chhardt: Federat�on
Press.
Roberts, J. (200�). Managing Governance in Nonprofit Organisations in Australia.
Melbourne: Roberts Management Concepts.
Roberts, J. (2005). Successful Submission Writing for Business and Not-for-profit
Organisations. Melbourne: Enterpr�se Care Consult�ng.
Tonge, R. (2002). How to Prepare Effective Applications for Grants Funding. Coolum:
Gull Publ�sh�ng.
Websites
Webs�tes and the�r addresses change from t�me to t�me. Therefore, the follow�ng s�tes are
suggest�ons only, and the s�tes were act�ve at the t�me of the preparat�on of the manual.
CPA Austral�a does not endorse any of the s�tes l�sted.
anao.gov.au
ato.gov.au
commun�tybu�lders.nsw.gov.au
grantsl�nk.gov.au
grants.ord.sa.gov.au
ourcommun�ty.com.au
For those who don’t have �nternet access, cop�es of gu�des and references can be obta�ned
by contact�ng the relevant agency d�rectly.
References
56
Appraisal criteria
The tests appl�ed to a grant appl�cat�on to ensure that �t meets the program’s a�ms and
object�ves.
Audit trail
The documentat�on of deta�led transact�ons support�ng summary ledger entr�es. Th�s
documentat�on may be on paper or �n electron�c records.
Conflict of interest
A confl�ct of �nterest ar�ses when a person makes a dec�s�on or exerc�ses a power �n a way
that may be, or may be perce�ved to be, �nfluenced by e�ther mater�al personal �nterests
(financ�al or non-financ�al) or mater�al personal assoc�at�ons.
Evaluation
The process of rev�ew�ng the overall effic�ency, effect�veness and economy, as well as
the appropr�ateness, of a grant program. Th�s can take place e�ther dur�ng rout�ne
management rev�ew or as the subject of a spec�fic program evaluat�on.
funding agreement
A legally enforceable agreement sett�ng out the terms and cond�t�ons govern�ng fund�ng
determ�ned by the grant-g�v�ng organ�sat�on. The form of the agreement w�ll depend
on the �ntent of the grant and the degree of control requ�red. The forms of enforceable
fund�ng agreements �nclude:
• deed
• contract
• exchange of letters.
In the case of grants to state governments or �n networked grant programs, Memoranda
of Understand�ng (MOUs) or a comb�nat�on of MOUs and legally enforceable agreements
may be necessary.
Glossary
57
Grant
A grant �s a sum of money g�ven to organ�sat�ons or �nd�v�duals for a spec�fied purpose
d�rected at ach�ev�ng goals and object�ves cons�stent w�th government pol�cy. In a str�ct
legal sense, a grant �s a ‘g�ft’ from the Crown, wh�ch may or may not be subject to
un�laterally �mposed cond�t�ons. However, the term �s more generally used to �nclude any
fund�ng agreements where the rec�p�ent �s selected on mer�t aga�nst a set of cr�ter�a. The
term ‘grant’ does not �nclude fund�ng or act�v�t�es relat�ng pr�mar�ly to the prov�s�on of
goods and serv�ces d�rectly to a government agency.
Grantslink
A whole-of-government webs�te offer�ng d�rect l�nks to ex�st�ng �nformat�on on
Commonwealth Government grant programs. It �s access�ble at grantsl�nk.gov.au.
Monitoring
The process by wh�ch the grant-g�v�ng organ�sat�on establ�shes whether �nd�v�dual grants
made to a program have been expended as �ntended.
our Community
Our Commun�ty �s a Melbourne-based organ�sat�on that prov�des adv�ce and ass�stance to
not-for-profit organ�sat�ons through web-based serv�ces. The webs�te �s:
ourcommun�ty.com.au.
procedural fairness
A pr�nc�ple of adm�n�strat�ve law requ�r�ng that dec�s�on-makers act fa�rly; that �s:
• the person affected by the dec�s�on has a r�ght to be heard
• the dec�s�on should be made w�thout b�as or the appearance of b�as
• the dec�s�on must be l�nked to the ava�lable ev�dence.
Glossary
5�
risk management
R�sk management can be descr�bed as the culture, processes and organ�sat�on that help
a bus�ness to evaluate r�sk, assess �ts potent�al �mpact and plan the appropr�ate act�on
to take �n order to avo�d or control r�sk by the most econom�cal means. It �s not poss�ble
or des�rable to el�m�nate all r�sks; the object�ve �s to �mplement cost-effect�ve processes
that reduce r�sks to an acceptable level, reject unacceptable r�sks, and transfer other r�sks
through �nsurance and other means.
Selection criteria
The tests appl�ed to a grant appl�cat�on to ensure that �t meets the program’s a�ms and
object�ves.
Strategic objective
A statement of the outcomes, at the strateg�c level, that the grant-g�v�ng organ�sat�on
seeks to ach�eve �n the short or long term.
Note
Readers should refer to the spec�fic terms for a part�cular grant, or seek profess�onal adv�ce
to ensure that they understand the term�nology �n use for any spec�fic grant.
Source: Austral�an Nat�onal Aud�t Office (2002). Better Practice Guide: Administration of
Grants. Canberra: Austral�an Nat�onal Aud�t Office.
Glossary
59
1 What you should look for when you are accepting a grant
item Yes no CommentAre the cond�t�ons the same as
�n the or�g�nal appl�cat�on?
Are all organ�sat�onal deta�ls
correct and up to date?
Are contact deta�ls prov�ded for
the grants body clear?
What are the payment
cond�t�ons?
What are the report�ng
arrangements?
Are account�ng systems to
handle the grant �n place?
Is �t clear what funds can or
can’t be used for?
Has a person been nom�nated to
manage the grant?
Are staff tra�ned to handle the
grant?
How w�ll the grant be reported
on �nternally?
How w�ll d�sputes or
amendments be handled?
What aud�t�ng requ�rements
ex�st?
What are the requ�rements for
med�a coverage?
What are the acqu�ttal
arrangements?
Are there other requ�rements
to be met before the grant can
start?
Are there clear gu�del�nes for
ownersh�p of any assets created
by the grant?
Checklists
60
2 What you should consider when you are reporting on a grant
item Yes no CommentAre the cond�t�ons the same as
�n the or�g�nal appl�cat�on?
Are all organ�sat�onal deta�ls
correct and up to date?
Are contact deta�ls prov�ded for
the grants body clear?
What are the report�ng
arrangements?
How are reports handled by the
comm�ttee?
Who has been appo�nted
respons�ble for report�ng on the
grant?
When do reports have to be
made?
How �s the end of financ�al year
to be treated?
How w�ll the grant be reported
on �nternally?
How w�ll d�sputes / amendments
be handled?
What aud�t�ng requ�rements
ex�st?
What are the requ�rements for
med�a coverage?
What are the acqu�ttal
arrangements?
Are press cl�pp�ng and
photograph�c records be�ng kept
for report�ng purposes?
Is �nternal report�ng al�gned to
external report�ng?
Are all reports s�gned off by the
correct respons�ble officer?
Are s�gned cop�es of all reports
kept?
Checklists
6�
3 What you should bear in mind when working with auditors
item Yes no CommentCopy of the agreement?
Procedures to manage the
grant?
Endorsement of the
management comm�ttee?
Personnel appo�nted to manage
the grant?
Account�ng system to manage
the grant?
Records of grant progress
reflected �n comm�ttee m�nutes?
Payments only �n accordance
w�th the grant prov�s�ons?
Proper author�sat�on for all
payments?
Notes to the account as
requ�red?
Source document up to date and
complete?
Comm�ttee m�nutes up to date
and complete?
Checklists
62
Notes
Grants in Australia:Management and accountability made easy for not-for-profit organisationsFEBRUARY 2007
not-for-profit
CpA Australia Ltdcpaaustralia.com.auT 1300 73 73 73
CPA51790 05/2007
CPA Slate Blue5405(CMYK)
A4P RIM