Which statement best describes the effect of accepting federal grant money on airport accounting?

Which statement best describes the effect of accepting federal grant money on airport accounting?

• A. The airport becomes a closed fiscal system
• B. The airport gains unrestricted funds for any project
• C. The airport’s funds are no longer subject to audit
• D. The airport can divert grant funds to private ventures

Answer: (A)

Accepting federal grant money changes how the airport accounts for those funds by imposing restrictions and requiring dedicated project accounting. Grant funds aren’t treated as general, unrestricted money. They’re set up in a separate grant or project fund, with eligible uses defined by the grant agreement, and they must be tracked, reported, and reconciled to those terms. This creates a controlled, “closed” accounting environment for the grant: you allocate and expend only on approved purposes, monitor compliance, and complete a formal closeout once the grant is finished. The other options contradict how grants work—unrestricted funds, exemption from audits, or diverting funds to private ventures aren’t allowed under federal grant terms.

Accepting federal grant money changes how the airport accounts for those funds by imposing restrictions and requiring dedicated project accounting. Grant funds aren’t treated as general, unrestricted money. They’re set up in a separate grant or project fund, with eligible uses defined by the grant agreement, and they must be tracked, reported, and reconciled to those terms. This creates a controlled, “closed” accounting environment for the grant: you allocate and expend only on approved purposes, monitor compliance, and complete a formal closeout once the grant is finished. The other options contradict how grants work—unrestricted funds, exemption from audits, or diverting funds to private ventures aren’t allowed under federal grant terms.