Restricted funds versus unrestricted funds. Grant acquittal — the formal report to a funder on how money was actually spent against the agreement, with unspent balances sitting as a liability, not income, under AASB 1058.
This is fund accounting, a genuinely different discipline from standard commercial GL work, and NFP boards carry fiduciary and governance duties most commercial boards don’t — the board pack has sharper stakes here, not just another monthly task.
Where Xero genuinely falls short, confirmed independently: Xero has no native "fund" object — organisations simulate fund accounting through tracking categories, a manual, error-prone workaround, and Xero’s two-category limit becomes a real ceiling the moment an org needs to track fund, program, and grant simultaneously.
On the backlog: unspent-grant liability tracking, and a true fund-level balance sheet with a third tracking dimension beyond Xero’s two-category ceiling.
Connect your Xero account and see your program and fund reporting, not a sample chart of accounts.