PPP Loans and Forgiveness: Accounting & Financial Reporting

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Course Description

Paycheck Protection Program Loans and Forgiveness: Accounting & Financial Reporting Issues- 2 hrs. CPE

The objective of this course is to inform the reader of the accounting and financial reporting issues related to the receipt and forgiveness of loans received under the Paycheck Protection Program (PPP), including first and second-draw loans.

Topics include: Understanding the basic rules for Paycheck Protection Program loans; a review of how the loans should be accounted for under GAAP; accounting for the treatment of the loans as debt; how to account for debt issuance costs; accounting for forgiveness of debt; presentation of eligible expenses; presentation of  loan transactions on the statement of cash flows; disclosures required for Paycheck Protection Program loans; accounting for advances received under the Economic Injury Disaster Loan (EIDL); accounting for PPP loans as grants; CPA independence issues when there is involvement in PPP loan transactions; accountant and auditor reporting issues and use of an emphasis-of-matter paragraph in reports; and more.

Course Information

Price: $24
This course is included in our Mega CPE Special.

Course No. F160
Format: Online pdf (95 pages). Printed book available.
Instructional Delivery Method: QAS Self-Study
Prerequisites: General understanding of accounting, financial reporting, auditing and compilation and review standards
Advance Preparation:None
Level: Overview
CPE Credit: 2 hrs.
Field of Study: Accounting: Technical
Course expiration:  You have one year from date of purchase to complete the course.
Course Revision Date: November 2022


Paycheck Protection Program Loans and Forgiveness Course Objectives:

• Identify some of the eligible expenses related to use of PPP loan proceeds
• Recognize approaches to account for Paycheck Protection Program loans under GAAP
• Recall how to present debt issuance costs on the financial statements
• Recognize how to account for PPP loan forgiveness
• Recognize how to present a gain on extinguishment on the statement of cash flows
• Identify how to treat the forgiveness of a PPP loan for tax purposes
• Recognize how the IAS 20 grant approach is used to account for its PPP loan
• Recognize actions that impact a CPA’s independence in a PPP loan assistance engagement
• Recall some of the rules pertaining to a CPA receiving an agent fee from a PPP loan lender, and
• Identify whether an emphasis-of-matter paragraph may be used in an accountant’s report when there is a forgiveness of a PPP loan


Course Contents:

Basic Rules for Paycheck Protection Program Loans- SBA
General rules- CARES Act, as amended by Consolidated Appropriations Act, 2021
How Should the Loans be Accounted for Under GAAP?
Accounting for the the Loans as Debt
Debt issuance costs
Accounting for forgiveness of Paycheck Protection Program loans
PPP loan eligible expenses
Presentation of  loan transactions on the statement of cash flows
Tax Effects of PPP Loans
Disclosures Required- Loan Treated as Debt
Bank Covenants and Impact of Loan Treated as Debt
Accounting for an Economic Injury Disaster Loan (EIDL)
PPP Loans in Tax-Basis Financial Statements
Other GAAP Approaches for Paycheck Protection Program Loans
Account for the loans as a grant using ASC 958 guidance
Account for the loans as a governmental grant using IAS 20
Account for the loans as a gain contingency using ASC 450-30
CPA Involvement in a Paycheck Protection Program Loan Application and Forgiveness
Impact on a CPA’s independence
CPAs receiving agent fees from Paycheck Protection Program loan lenders
Accountant and Auditor Reporting Issues
Reporting and Disclosure Issues Peculiar to 2021 First and Second-Draw

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