The AICPA's Professional Ethics Executive Committee (PEEC) updated guidance issued earlier this month on the independence implications of assisting attest clients applying for loans through the federal Payroll Protection Program (PPP) initiated to help businesses stay afloat during the COVID-19 pandemic.
The April 13 update provides greater clarity on a CPA's acceptance of an "agent fee" from the lender as compensation for advisory services and the types of services he or she may perform within the constraints of the independence rules. As in previous guidance, the PEEC stated that it does not consider the fee to be a "contingent fee" that would be prohibited when an attest client is involved in the transaction. The reasoning is:
- the loan amount is a straightforward calculation based on the client's payroll;
- the fee amount is set by federal law; and
- the name "agent's fee" does not in and of itself imply that the recipient is an agent.
Also, since the government's intent is that all loans will be funded, concerns about possible advocacy on behalf of the client are not applicable.
Generally speaking, CPAs may advise and assist the client to help them (i) understand what information PPP requires, (ii) gather the relevant information, and (iii) determine the amounts to be included in the application.
Activities the CPA should avoid include:
- preparing the application on management's behalf, or
- signing the application or performing any other management responsibilities.