Overview
Section 24 (IFRS for SMEs) provides two methods, electable by entity policy: the performance model (recognise income when performance conditions are met or when no conditions exist) and the accrual model (deferred income released to P&L as related expenses are incurred or assets are depreciated).
IAS 20 (full IFRS) follows the accrual model and a related-asset / related-income split, with the option of presenting grants related to assets gross (as deferred income) or net (deducted from the asset).
Both standards distinguish:
- Unconditional grants (recognised when receivable).
- Conditional grants (recognised when conditions are met).
- Repayable assistance (treated as liability until repayment terms are met).
Required first reads
doctrine/accounting-finance-doctrine.mddoctrine/references/ifrs-for-smes-default.md(Section 24)doctrine/references/full-ifrs-overlay.md(IAS 20)doctrine/references/chart-of-accounts.mdmanagement-accounting-dimensionsSKILL (donor restrictions)
Donor (NGO) specifics
NGOs typically operate with restricted funds:
- Unrestricted: general operating funds; recognise as income when receivable.
- Restricted (temporary): purpose- or time-restricted; release to unrestricted when restriction is satisfied.
- Restricted (permanent): endowment-like; income earned recognised as restricted unless terms permit reclassification.
The Chwezi NGO model uses dimensions (grant / donor-restriction) and a fund-balance model alongside the IFRS reporting:
- Donor reporting (utilisation per grant, eligible costs per donor budget).
- IFRS reporting (Section 24 / IAS 20 P&L and balance-sheet effect).
CoA implications
| Code | Name |
|---|---|
| 4400 Other Operating Income — Government Grants (or Donor Income) | P&L (gross presentation). |
| 2200 Deferred Income — Grants | Liability (accrual model). |
| 2210 Repayable Government Assistance | Liability. |
| Fund-balance accounts | Per restriction (in equity or in a restricted-fund equity section). |
Build implications
- Grant register: donor, agreement, grant amount, period, conditions, currency, restrictions, eligibility rules.
- Grant draw / receipt workflow.
- Performance / accrual model selection per entity.
- Conditions checklist per grant.
- Eligible-cost categorisation against grant budget.
- Utilisation report per donor per period.
- Restriction-release rules and journals.
- Repayment workflow where conditions are not met.
Forbidden patterns
- Conditional grant recognised before conditions are met (blocker).
- Donor restrictions ignored in journal flows (blocker).
- Repayable assistance recognised as income (blocker).
- Cross-grant funding (using donor A's funds for donor B's eligible costs) without explicit agreement and disclosure (blocker for NGOs).
- Grant netted against an asset without disclosure of the alternative gross presentation (major where material).
Files
SKILL.md.references/grant-register-schema.md.references/donor-restriction-pattern.md.examples/ngo-restricted-grant-cycle.md.
Last reviewed: 2026-05-12. Next review due: 2026-11-12.