Accounting for the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund
By Anne Adrain, Head of Sustainability and Reporting
5 November 2020
This article highlights recent ICAS guidance on the accounting treatment for grants received under the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund
ICAS has produced guidance on the accounting treatment for COVID-19-related grants received under the Small Business Grant Fund and the Retail, Hospitality and Leisure Grant Fund schemes.
The guidance sets out the eligibility criteria for these grants and the extent of relief available.
It highlights that for entities preparing their accounts in accordance with the Financial Reporting Standard applicable in the UK and the Republic of Ireland, FRS 102, Section 24, Government Grants, of that standard, is the appropriate source of reference.
The guidance emphasises that some judgement may be required when determining when these grants should be recognised in an entity’s financial statements. It highlights the requirement in paragraph 24.3A of FRS 102 that only when there is reasonable assurance that the grant will be received, or receivable, should it be recognised in income.
Some suggested steps that preparers should consider when determining at what point to recognise the grant in their accounts are set out in the guidance including:
- assessing the entity’s eligibility for the scheme; and
- determining whether the entity intends to participate in the scheme.
The guidance highlights specific issues for entities with 31 March 2020 accounting year ends in relation to the recognition of the grants reiterating that judgement will be necessary and will depend upon the individual circumstances of the entity.
Access the guidance here