AICPA issues guidance on ethics implications of PPP loan applications

On April 3, the AICPA issued updated guidance on the ethics and independence implications of helping an attest client prepare a Payroll Protection Program (PPP) loan application. The guidance reminds practitioners that assisting the client in this capacity is considered a nonattest service requiring application of the independence and related rules in the Code of Professional Conduct. See ET 1.295, especially 1.295.040, General Requirements.

In particular, the practitioner should not sign the loan application as the authorized representative (i.e. as the client's agent) since making the majority of the representations and certifications the form requires are management responsibilities that run afoul of the independence rules. The practitioner may help the client complete the application but should ensure that the client reviews and takes responsibility for the application. The client or its representative (e.g., attorney) should sign the form.

The guidance also addresses the question of whether being compensated as a percentage of the loan proceeds creates a prohibited contingent fee arrangement. Since the government is determining the amount of the loan, the AICPA indicated that this is not the case.

Lastly, if the firm is the borrower, it is precluded from obtaining a loan via the PPP program from an existing attest client.

This is a fluid situation - the AICPA may update or add further guidance, as needed.