Accounting considerations for PPP loans and Employee Retention Credit

By |2021-04-12T16:43:25-04:00March 18th, 2021|RSM, A&A|

FINANCIAL REPORTING INSIGHTS  | 

Authored by RSM US LLP

We have updated our white papers, Coronavirus: Financial reporting considerations and Borrower’s accounting for Paycheck Protection Program loans, to expand the discussion on the loss contingency accounting and disclosure considerations related to PPP loans. As discussed in both white papers, whether a borrower truly qualified for a PPP loan and met the conditions necessary for forgiveness of the loan could be audited by the Small Business Administration (SBA) up to six years after it forgives the loan (depending on the amount of the loan and the requirements being audited). As such, even after a PPP loan has been forgiven by the SBA, consideration should be given to the loss contingency guidance in Topic 450, “Contingencies,” of the Financial Accounting Standards Board’s Accounting Standards Codification, both from a recognition and disclosure perspective, during the period of time the PPP loan is still subject to audit by the SBA.

In addition, we have updated our white paper, Coronavirus: Financial reporting considerations, to provide an overview of the Employee Retention Credit (ERC), which was introduced by the Coronavirus Aid, Relief, and Economic Security Act in March 2020 and revised and expanded by the Consolidated Appropriations Act, 2021 in December 2020. We also discuss the financial reporting implications when an entity expects to benefit from the ERC.

Do you have questions or want to talk?

Call us at (800) 232-9547 or fill out the form below and we’ll contact you to discuss your specific situation.

  • Topic Name:
  • Should be Empty:

This article was written by RSM US LLP and originally appeared on 2021-03-18.
2020 RSM US LLP. All rights reserved.
https://rsmus.com/our-insights/newsletters/financial-reporting-insights/accounting-considerations-for-ppp-loans-and-employee-retention-credit.html

RSM US Alliance provides its members with access to resources of RSM US LLP. RSM US Alliance member firms are separate and independent businesses and legal entities that are responsible for their own acts and omissions, and each are separate and independent from RSM US LLP. RSM US LLP is the U.S. member firm of RSM International, a global network of independent audit, tax, and consulting firms. Members of RSM US Alliance have access to RSM International resources through RSM US LLP but are not member firms of RSM International. Visit rsmus.com/aboutus for more information regarding RSM US LLP and RSM International. The RSM(tm) brandmark is used under license by RSM US LLP. RSM US Alliance products and services are proprietary to RSM US LLP.

RSM

Insero & Co. CPAs, LLP is a proud member of RSM US Alliance, a premier affiliation of independent accounting and consulting firms in the United States. RSM US Alliance provides our firm with access to resources of RSM US LLP, the leading provider of audit, tax and consulting services focused on the middle market. RSM US LLP is a licensed CPA firm and the U.S. member of RSM International, a global network of independent audit, tax and consulting firms with more than 43,000 people in over 120 countries.

Our membership in RSM US Alliance has elevated our capabilities in the marketplace, helping to differentiate our firm from the competition while allowing us to maintain our independence and entrepreneurial culture. We have access to a valuable peer network of like-sized firms as well as a broad range of tools, expertise, and technical resources.

For more information on how Insero & Co. CPAs can assist you, please call (800) 232-9547.

About the Author:

Avatar