NAICU Washington Update

Guidance Issued on Accounting for PPP Loans

July 09, 2020

The National Association of College and University Business Officers (NACUBO) issued updated guidance on how auditors may account for loans received via the Paycheck Protection Program (PPP).  

According to NACUBO, the portion of a PPP loan received by a college or university that is likely to be forgiven may be counted as revenue.  This is in line with guidance issued by the Department of Education in May. For institutions that received a PPP loan, the NACUBO guidance should be useful in assuring their accountants that the portion of a PPP loan that is likely to be forgiven many be counted as revenue.

NACUBO’s guidance is based on the department’s allowance of revenue recognition for financial responsibility, prevailing grant accounting practice, and literature from the Financial Accounting Standards Board (FASB) literature.  Neither the American Institute of Certified Public Accountants or FASB released authoritative guidance on this question because of disagreement as to whether sign off from the Small Business Administration should drive revenue recognition. 

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