Lenders and PPP loans: How can CPAs help?
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Lenders and PPP loans: How can CPAs help?

6 months ago · 1 min read

Take care when you perform services in connection with PPP loans for a lender who is your attest client. Don’t cross the line from confirmation into management participation.

CFR 120 III 3b lists loan underwriting activities a lender must perform in connection with the PPP, paraphrased here:

  • Confirm receipt of borrower certifications in the loan application.

  • Confirm receipt of information provided by borrower about employees, salaries, and payroll taxes on or around February 15, 2020.

  • Confirm the dollar amount of the average monthly payroll for the preceding calendar year from payroll information provided by borrower.

You can perform these activities for your client without impairing your independence because they are not management responsibilities. They are nonattest services. Be sure you comply with the general requirements under the Nonattest Services Subtopic.

However, as always, if you take on management responsibilities (such as approving the loan on behalf of the lender) when you’re helping your lender attest client, your independence will be impaired.

Are there threats to your objectivity?

Even if the services you provide to the lender do not impair your independence, threats to your objectivity may exist if one of your clients applies for a PPP loan with that lender.

Because you may not know whether a client applies for a loan through that lender, have safeguards already in place to reduce the objectivity threat to an acceptable level. You may end up reviewing a clients’ PPP loan application and you want to be prepared for this occurrence.

What about conflicts of interest?

Providing PPP loan services to both a lender and a borrower could create a conflict of interest.

If you believe you have a conflict of interest and you can’t put safeguards in place to eliminate or reduce the threats to an acceptable level, you should serve one client or the other, but not both.

If you can eliminate or sufficiently reduce the conflict of interest threats and serve both clients, you should disclose your relationship to both clients, communicate the safeguards you’ve applied and get both clients’ consent to proceed. If one of your clients will not consent, you can’t provide the services to both clients.

Be sure you maintain confidentiality throughout the engagements; do not disclose confidential information about one client to the other unless you have consent. (For additional information, See “Conflicts of Interest for members in public practice” interpretation.)

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