The GASB recently issued Technical Bulletin No. 2020-1 Accounting and Financial Reporting Issues Related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and Coronavirus Diseases. 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. This technical bulletin addresses common reporting matter questions that relate to each of these programs.
Technical Bulletin No. 2020-1 is organized into several specific questions and responses. Question 1 asks 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 is 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 should 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 concludes 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, are considered eligibility requirements. Revenue should be recognized as the government meets these eligibility requirements.
The response to Question 3 specifies that any amendment to the CARES Act enacted after the statement of net position date but prior to issuance of the financial statements is 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 should continue to report the loan as a liability until that entity is legally released from the debt. The entity should report an inflow of resources in the reporting period that the entity is legally released from the debt.
The full text of Technical Bulletin No. 2020-1 is available here.
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