5a. Fund Accounting

Fund Accounting is a method of recording financial information that groups resources into funds based on the source and use of those resources. In fund accounting, each grant and source of income is unique, has its own fund, own chart of accounts, and own specific list of eligible activities. Incurred costs are only eligible for federal reimbursement when those costs are allocated to the specific fund source, based on proper supporting documentation.

Some sub-recipients concurrently receive funds through multiple federal, state and local grants, as well as funds from private philanthropy and other sources of cash. The costs incurred by such an organization must be properly allocated to each fund/grant source. Any organization that operates programs that receive multiple grants or relies on a single federal grant along with other distinct funding sources will need to use fund accounting practices in order to meet the financial management requirements associated with the federal award.

More information on fund accounting can be found in the Fund Accounting Clinic Manual, at the HUD Exchange website. Though written for use by grantees of HUD’s homeless programs, the general principles and descriptions are equally applicable to HUD’s Multifamily Housing programs.