The effects of the coronavirus pandemic continue to affect an entity’s financial reporting. Our white paper, Coronavirus: Financial reporting considerations (our coronavirus white paper), provides an overview of many financial reporting matters for consideration during the financial reporting process. We have updated our coronavirus white paper most recently to address the following financial reporting matters related to the coronavirus relief package included in the Consolidated Appropriations Act, 2021 (the 2021 CA Act) that was recently signed into law:

• The extension of the temporary optional financial reporting relief previously provided in the Coronavirus Aid, Relief and Economic Security (CARES) Act related to the application of the otherwise applicable troubled debt restructuring accounting guidance by lenders and the otherwise required adoption of the current expected credit losses model by certain financial institutions
• The need to consider the changes made in expanding the Paycheck Protection Program (PPP) when accounting for PPP loans
• The deductibility of expenses paid with proceeds from PPP loans and the related effects on deferred taxes
• The termination of the Main Street Lending Program as of January 8, 2021

We also have updated another of our white papers, Borrower’s accounting for Paycheck Protection Program loans, for the PPP-related matters in this list.

In addition, our coronavirus white paper has been updated to include discussion of evaluating the need for valuation allowances on deferred tax assets when there have been cumulative losses in recent years.

As discussed in our coronavirus white paper, the financial reporting implications of the coronavirus pandemic are on a broad spectrum and could affect the accounting (or create the need to account) for asset impairments, lease concessions, loan and debt modifications, business interruption insurance, revenue from contracts with customers, derivatives and hedging relationships, stock compensation, deferred taxes, variable interest entities and government assistance in the CARES Act and (or) the 2021 CA Act (including PPP loans and various grants), among others. The financial reporting implications of the coronavirus pandemic discussed in our coronavirus white paper also include the evaluation of the entity’s ability to continue as a going concern and disclosure of risks and uncertainties, and in the most extreme circumstances, may result in an entity’s financial reporting being affected by its reorganization under the U.S. Bankruptcy Code. 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.