ARP Accounting and Financial Reporting in North Carolina

Accounting and financial reporting guidance for American Rescue Plan monies seems to be a never-ending soap opera with constant twists and turns.  While there is extensive GAAP-guidance for government mandated nonexchange transactions related to asset, liability, revenue, and expense/expenditure recognition, it has proven more challenging to readily fit all the square evolving ARP guidelines and options into the GAAP round holes.  This blogpost focuses on asset, liability, revenue and expense/expenditure recognition guidelines for the various ways that ARP funds may be received, managed, and expended. Initial Receipt of ARP Funds The North Carolina General Statutes (G.S. 159-13.2) allow local governments to adopt a multi-year grant project ordinance (classified as a special revenue fund) for a variety of operating and/or capital projects that are primarily funded with federal and state grant monies.  The budgetary authority lasts for the duration of the projects or activities and does not have to be renewed year to year.  Both for budgetary purposes and audit trail necessity, it is highly recommended that a special revenue fund be the “point of entry” for all ARP receipts (i.e., the first and second tranches).  From that point, the recipient government will decide for what allowable purposes the funds will