5.
Challenges with the current restricted fund method
Under the current restricted fund method:
- Unrestricted contributions are recognized as revenues of the general fund.
- Restricted contributions are recognized as revenues of the restricted fund if a corresponding restricted fund exists, or in the general fund in accordance with the deferral method when no corresponding restricted fund exists.
- Endowment contributions are recognized as revenues of the endowment fund.
- Capital asset contributions may either be recognized as revenue when received in a capital asset fund. Alternatively, some organizations without a designated fund for capital asset contributions account for them under the deferral method (i.e. deferred and amortized over the asset’s useful life).
What issues or challenges do you see with the existing restricted fund method, including any issues with the accounting requirements and how they are applied in practice?
