Apr 08, 2020

PPP Loan Application Assistance: CPAs Be Cautious!

By Allison M. Henry, CPA, CGMA, vice president – professional and technical standards

To combat the economic fallout from the COVID-19 pandemic, the Small Business Administration and U.S. Department of Treasury are attempting to push out about $350 billion in loans to eligible businesses in a matter of months. Specifically, businesses in operation as of Feb. 15, 2020, that have fewer than 500 employees can borrow up to two and a half times their monthly payroll costs (excluding the pay for those who more than $100,000 per year) incurred in the year before the loan is made, with an overall limit of $10 million. (Some businesses with more than 500 employees in certain industries also may be eligible.) The Paycheck Protection Program (PPP) proceeds can be used for covered expenses incurred from Feb. 15, 2020, to June 30, 2020, such as payroll, benefits, taxes on compensation, mortgage interest, rent, utilities, and interest on existing loans. The loans can be forgiven if the funds are used for specified expenses.

Filling out a client's formsThis unprecedented opportunity has CPAs scrambling to help their clients fill out the necessary application and provide the needed supporting information. Caution is needed, however. You must make sure that your firm is not crossing the independence line by serving as an agent for any of your attest clients.

The AICPA has issued guidance on the ethical implications for PPP loan applications. The guidance reiterates that this type of assistance is considered to be a nonattest service, and it concludes that all management representations should be made by the client. This means practitioners should not sign the loan applications as an authorized agent. It also concludes that the PPP agent fee arrangement is not to be considered a contingent fee because the fee will be determined by the Treasury and Small Business Administration. The AICPA has also issued a statement on CPAs serving as agents for PPP applications.

The rules and guidance for these loans are evolving rapidly. For more information, please visit our COVID-19 resource page or feel free to reach out to me at or at (215) 972-6187 with any questions regarding independence and nonattest services. Or read AICPA's Center for Plain English Accounting report on issues related to CPA involvement with small-business loans under the PPP.

Also, you can learn more about independence issues, financial statements, and more during our Accounting Issues During the Pandemic webinars.

Sign up for weekly professional and technical updates in PICPA's blogs, podcasts, and discussion board topics by completing this form


Leave a comment
  • Allison Henry | Apr 08, 2020

    Hello Russell. From an ethics standpoint the independence rules only apply to attest clients.    Thanks. 


  • Russell Cooper, CPA | Apr 08, 2020
    can a CPA sign as an authorized representative for a non attest client?
  • James Newhard | Apr 08, 2020
    Though the Peer Review approach is not really intended or conducted in a "Gotcha" approach, it seems it would be hard for 2021 peer reviewers to not inquire about attest clients who sought funding from SBA via PPP (or any alternative additional funding applications) and the nonattest services threat assessment. Perhaps even inquiries as to whether the firm performed any compliance certifications on the extent of qualifying expenditures made with PPP loan proceeds in the SBA assessment for forgiveness process -- to which the image from the movie Return of the Jedi comes to mind - "it's a trap!" Thanks for the cautionary reminder, Allison.

    Leave a comment

    PICPA Staff Contributors
    Statements of fact and opinion are the authors’ responsibility alone and do not imply an opinion on the part of PICPA officers or members. The information contained in herein does not constitute accounting, legal, or professional advice. For professional advice, please engage or consult a qualified professional.
    Follow @PaCPAs on Twitter