On May 1, the AICPA Professional Ethics Division updated guidance on assisting clients with PPP (Paycheck Protection Program) loans. The update focuses on the ethical considerations of assisting a lender that is an attest client. Possible services include loan underwriting activities that occur in connection with PPP. In summary, these include confirming the following:
- receipt of borrower certifications in the loan application.
- receipt of information provided by the borrower about employees, salaries and payroll taxes on or around February 15, 2020.
- dollar amount of the average monthly payroll for the preceding calendar year from payroll information provided by borrower.
Assuming a firm meets the general requirements for performing nonattest services per ET 1.295.040 in the AICPA Code, these activities would be permissible as they are not management responsibilities. However, the practitioner should not approve loans or assume any other managerial duties in connection with these loans, as that would impair independence.
Beyond independence considerations, providing these services to a lender could create a potential conflict of interest if another of the practitioner's clients applies for a PPP loan with that lender. The guidance states that practitioners should be prepared for the possibility that they may review a client's loan application and put safeguards in place to mitigate threats to their objectivity. (My thoughts: one could arrange for another professional to perform a second review of the client's loan application (with appropriate permissions to protect the confidentiality of the client's information), or the practitioner could alert the lender to the possibility that one or more of the practitioner's clients may be borrowers and the practitioner could recuse him-or herself from reviewing those applications.)
Another possible conflict could arise if a practitioner provides PPP loan services to both a lender and a borrower. The guidance says to consider whether you can objectively service both clients and if so, whether you can sufficiently reduce the threat by applying safeguards. You should disclose the situation and obtain consent from both clients to proceed with the services. If you lack sufficient safeguards, or one or both clients does not consent to your involvement, you should not provide services to both clients.
