The GASB has issued a proposed technical bulletin to clarify the accounting for funds received by governments as a result of the Coronavirus Aid, Relief, and Economic Security (CARES) Act. The three primary CARES Act programs that have provided funds to governments and organizations that report under GASB standards include the Coronavirus Relief Fund, the Provider Relief Fund, and the Paycheck Protection Program.

The proposed technical bulletin is divided into several specific questions and responses. Question 1 considers if resources from the Coronavirus Relief Fund are subject to eligibility requirements or to purpose restrictions and when revenue from those resources should be recognized. The response would be that a recipient government should recognize resources received as liabilities until the applicable eligibility requirements are met including the incurrence of eligible expenditures. Once the eligibility requirements have been satisfied, the government would then recognize revenue.

Question 2 considers how to account for resources from CARES Act provisions such as the Provider Relief Fund that address a government’s loss of revenue attributable to the effects of COVID-19. The response to Question 2 would conclude that in these cases, the specified actions of the recipient that resulted in the loss of revenue, such as the cancellation of elective procedures by healthcare entities, would be considered eligibility requirements. Revenue would be recognized as the government meets these eligibility requirements.

The response to Question 3 specifies that any amendments to the CARES Act enacted after the statement of net position date but prior to issuance of the financial statements would be a nonrecognized subsequent event.

The response to Question 4 states that a governmental entity (such as a not-for-profit that reports in accordance with GASB standards) that receives a forgivable loan as part of the Paycheck Protection Program would continue to report the loan as a liability until that entity is legally released from the debt. The entity would report an inflow of resources in the reporting period that the entity is legally released from the debt.

The full text of the proposed technical bulletin is available here.

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