When should revenue be recognized for pass-through grants?

Revenue for pass-through grants should be recognized when the resources are transmitted to the final recipient. This is because the essence of a pass-through grant involves the transfer of resources from one entity (the grantor) to another entity (the ultimate recipient). Recognizing revenue at the point when resources are transmitted ensures that the revenue acknowledged aligns with the related expenses and the actual flow of funds within the accounting period. This timing reflects the agency’s commitment to spend those resources on the intended purpose, fulfilling the criteria of recognizing revenue when it is both measurable and available for expenditure.

Recognizing revenue at the date of the grant contract or when resources are received does not accurately depict the timing of the grant's economic impact since those instances may occur before the actual distribution of funds to the end recipient, thus not reflecting the actual operational flow of funds and commitments.