Additional updates to Coronavirus: Financial reporting considerations
FINANCIAL REPORTING INSIGHTS |
Authored by RSM US LLP
We have updated our white paper, Coronavirus: Financial reporting considerations, to include discussion of the following:
- To the extent an insured depository institution, bank holding company or any affiliate thereof deferred its adoption of Accounting Standards Update (ASU) 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, based on the optional temporary relief provided in the CARES Act, but would like to adopt ASU 2016-13 prior to the extended expiration date for that relief provided in the Consolidated Appropriations Act, 2021, the approaches that may be used to do so
- The audits of Paycheck Protection Program (PPP) loans that may be performed by the Small Business Administration (SBA) up to six years after the loan is forgiven (depending on the amount of the loan and the requirements being audited), and as a result, the need to consider the disclosure and recognition guidance in Topic 450, “Contingencies,” of the Accounting Standards Codification (ASC) during the period of time the PPP loan is subject to audit by the SBA
- The effects of PPP loan forgiveness on the cash flow statement when ASC 470, “Debt” is the accounting policy applied to the loan
We have also updated our white paper, Borrower’s accounting for Paycheck Protection Program loans, for the PPP-related matters listed.
Given the broad spectrum of financial reporting issues that could arise due to the coronavirus pandemic, we encourage the review of our coronavirus white paper in conjunction with the year-end financial reporting and audit processes that are or will be occurring for many entities now and in the coming months.
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This article was written by RSM US LLP and originally appeared on 2021-01-28.
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