Grant income accounting remains confusing under the new Sorp. It will still be important - and difficult - to work out whether an income source is a contract or a gift, and whether it is restricted or unrestricted.
As before, a grant might be a gift - in accounting jargon, a non-exchange transaction - but it could be presented as earned income if it is related to delivering a service. Oddly, transactions must be accounted for according to their substance, not their legal form. This seems to allow a measure of interpretation in the way income is presented.
A new clause says that a contract that restricts how money or surpluses are used might - not should - be treated as though it was a restricted fund. Until now, restricted funds have always been donations - this would mark a fundamental and confusing change.
As with all income, grant income is now included in accounts when receiving it is 'probable', rather than virtually certain. This could affect charities for which income is related to performance.
