The original Bookkeeping Centre site did not advertise “grant theory”. Clients — including health networks and clinics — wrote that grant acquittals arrived without theatre. Theatre is a treasurer at 11pm, a funder portal that closed yesterday, and a general ledger that dumped every dollar of government money into “Other income”.
This is the file that prevents that night. It is written for an Australian incorporated association, a company limited by guarantee, or a small charity that has to acquit to a department, a council, a health network or a philanthropic trust. It is not a substitute for the funding agreement you signed, or for ACNC and ATO rules as they stand on the day you lodge. Confirm those. Then keep a ledger the agreement can be laid on top of.
Restricted does not mean “be careful later”
A grant is restricted when the money may only be used for the purpose, period, region or cohort in the agreement. That restriction does not care that your operating account is thin. It does not care that the board liked the surplus slide.
In the books, restriction is a labelling problem before it is an accounting-standard problem. You must be able to answer, on any Tuesday: how much cash came in for grant A; how much eligible spend has been coded to grant A; how much is unspent; which invoices and payroll lines prove it. If you cannot, you do not have control. You have a bank balance.
Some grants are GST-free, some are taxable supplies, some are not consideration at all. Do not guess from a hallway conversation. Read the agreement, then confirm the current ATO treatment for grants and government payments with your tax agent. GST is 10% on taxable supplies. Putting 10% on a GST-free grant because “everything has GST” is how a BAS and an acquittal disagree.
One ledger per grant, not a vibe in “project tags”
Software project tags are fine if someone actually uses them. They are not fine if half the bills are tagged “admin” and the wages are not tagged at all.
Set up, for each live grant:
- an income account or tracking category that cannot be used for anything else
- cost accounts or the same tracking on wages, super, contractors, materials and the specific overheads the agreement allows
- a balance-sheet view of unspent funds — a liability or equity restriction your accountant has agreed — so the surplus on the statutory P&L is not treated as spendable
- a folder (digital is fine) that holds the agreement, variations, the application budget, acquittal templates, and every invoice you will point to
Name the grant the way the funder names it, including the year. “DoH mental health 2026” is a name. “Govt grant” is how two programs become one puddle.
If you run more than three grants, you need a register: funder, amount, start, end, acquittal date, GST treatment, unspent, status. The register is a page. The ledger is the proof. A part-time controller should own the register. A bookkeeper should own the coding. A board should see the dates. See the pack a board will read.
Eligible spend is a narrower idea than “we spent money”
Funders do not fund your ordinary mess. They fund the budget in the schedule. A coffee for a staff meeting may be ineligible. A portion of rent may be allowed if the agreement says so and you have a reasonable allocation. A practitioner’s time may be eligible only if timesheets exist. A related-party invoice will be stared at.
Write a one-page rule for each grant before the first invoice is coded: what is in, what is out, what needs a timesheet, what needs a quote, who approves a variation. The person who codes the bank should not invent the rule at 4pm.
Payroll is where acquittals usually break. Wages, Super Guarantee (12% from 1 July 2025 — confirm the ATO), workers compensation and leave must be allocatable. If two people work across a grant and a clinic’s private rooms, you need a timesheet or a standing split you can defend. From 1 July 2026, payday super will follow the pay run. The grant ledger must still show the super that belongs to the grant, not a quarterly lump dumped into “program costs” in June.
Do not charge the grant a “management fee” you invented in week 40 unless the agreement allows it and the calculation is boring. Auditors can smell a balancing figure.
Unspent funds are a fact, not a prize
At any month-end, unspent = cash received for the grant (and receivables the funder has committed, if you recognise them) minus eligible spend minus amounts already returned. If the agreement requires return of unspent money, it is not a surplus. If the agreement allows a rollover with written approval, the approval is a document, not a minute that says “we’ll ask later”.
Put unspent on the board pack every month, with the acquittal date. A committee that discovers unspent money in the week of the portal deadline will spend it badly. That spend will look like a fraud even when it is only panic.
If cash was received up front and the work is not done, think carefully before calling it income in the management pack. Your accountant will tell you how the statutory accounts must look under the standard you use. The management view should still show “we have their money and we have not finished”. The original firm’s “validated numbers” meant those two views were labelled, not mixed.
The acquittal pack, assembled as you go
An acquittal that starts in the last week is an excavation. Build the pack as the year happens.
- Agreement and any variation, signed.
- Approved budget versus actual, on the funder’s headings — not your chart’s headings. Map once, in writing.
- General-ledger extract for that grant only, from the tracking or the dedicated accounts.
- Payroll extract with names, hours or percentages, wages and super.
- Invoices over the funder’s materiality, PDFs complete, dated, in the entity’s name.
- Bank proof of receipts from the funder and of any return.
- A one-page narrative: what the money did, what changed, what was underspent and why.
- The statutory accounts or management P&L only as a cross-check, not as a substitute.
If a line in the ledger cannot be found in the folder, it will not survive a funder who is in a bad mood. Books a tax agent can use is the same test with a different audience.
Keep the pack for as long as the agreement and Australian record-keeping rules require. The working habit on this desk is five years from lodgement, longer if the agreement says so. Confirm the ATO and the funder. A feed is not a record.
Common ways the file goes wrong
Coding the receipt to sales. That lies to the board about trading and lies to the funder about the program.
Splitting a supplier invoice “about 30% to the grant” because the unspent look large in May. Allocations need a basis you would say out loud.
Paying a related party — a board member’s company, a CEO’s spouse — from grant money without the conflict process your constitution and the funder expect. This journal is not your lawyer. The ledger should make the relatedness obvious.
Treating volunteer labour as a cash expense. In-kind can belong in a narrative. It does not belong in a bank-reconciliation.
Forgetting GST. Either you have claimed credits you should not, or you have not claimed credits you could, or you have charged GST to a funder who expected a GST-exclusive figure. Reconcile the grant’s GST story to the BAS before you upload anything.
Missing the difference between your not-for-profit bookkeeping and this acquittal. The charity can be tidy and still fail a single program because nobody owned the register.
What the original desk was being paid for
The Rosebery and Perth files that “needed little oversight” were not magic. Someone mapped the funder’s headings to the chart, stopped the bank rules from eating grant receipts, and produced the pack while the invoices were still findable. Boards of health networks will forgive a late printer. They will not forgive an unspent figure that moves every time you open the file.
If you have no controller, give the treasurer a monthly hour and a lock date. If you have a bookkeeper, put grant coding in the close, not in a side spreadsheet. If you are still dumping grants into sales, stop this week and read the chart of accounts before you touch last year.
Restricted money is a trust. The acquittal is the receipt. Keep both boring. The financial control hub is the rest of that boredom.
