• AICPA Issues Guidance on PPP Loans
• New Courses Added to Fall Offerings
• Save the Date: 2021 Conferences

AHACPA continues to receive questions about the potential impacts of projects in receipt of PPP loans. The situations vary by client. Some received PPP loans at the management company. Others requested loans directly at the project. Now that CPAs are involved in assisting clients with preparation of the of loan forgiveness documents, questions are being raised. These questions include:

1. If loans were received at the management company level, should they be allocated to the project?
2. If the loans resulted in surplus cash, should we include the loan as a deduction of potential surplus cash or can the owner simply take the distributions?
3. Do these loans mean the a project is being paid twice if they have subsidy and does that affect my audit?
4. How should the potential forgiveness of the loans be accounted for?
5. Are there tax consequences to loan forgiveness?

Assuredly, there are more questions than these. Unfortunately, the fairly immediate distribution of CARES Act funds means that the rules for managing the funds are being developed as we go. In fact, it is likely very few of the loans will actually be formally forgiven by December 31, 2020. Despite this uncertainty, there are answers to several of these questions.

In June the AICPA issued guidance under Q&A Section 3200 pertaining the recognition off a Forgivable Loan Received Under the Small Business Administration Paycheck Protection Program. Under this guidance projects have multiple choices to determine when to recognize revenue. Those choices include:

• All borrowers may treat the loan as Debt under ASC 470. Under this standard, the loan would remain on the books until either 1) the loan is forgiven or other the borrower is released or 2) The debt is paid.
• For-profit borrower may account for the loan under IAS 20, which allows the project to record the loan as if it was a grant that is expected to be forgiven. Under this scenario, the CPA would have to analogize to IAS 20. Under this model, such assistance is not recognized until there is reasonable assurance that 1) any attached conditions will be met and, 2) The assistance will be received.
• All not-for-profits and for-profits, who elect this method, could apply ASC 958-605. This model is also referred to as ASU 2018-08. Under this model the loan would be considered a conditional contribution. It would recognize revenue when it has determined that the conditions of the grant have been substantially met or explicitly waived.

HUD has not announced any positions relative PPP loans except for the following from the HUD COVID-19 Q&A, page 10.

This question indicates that HUD-insured mortgage clients who requested PPP loans from the project were required to obtain HUD approval to obtain a PPP loan. Failure to obtain such approval would be a violation of HUD’s subordinate financing rules. It is uncertain how many projects received this approval. This is specifically mentioned in Item No. “N” of the HUD Audit Guide as Unauthorized Change of Ownership/Acquisition of Liabilities. Such requirements may also apply to certain Section 8 projects.

AHACPA has added 4 new courses to the training schedule. We will be sending out detailed information on these courses in the next day or two.  Stay tuned!

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