- Emergency Consultation Services
- FMG BlogLine
The CPA’s client received funds from the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and is asking if and how they will qualify for PPP loan forgiveness. As of this date, there is uncertainty over some of the program details and businesses worry about meeting and maximizing the loan forgiveness requirements. With the uncertainty surrounding the loan forgiveness process how can CPA’s protect themselves from liability while assisting clients seeking loan forgiveness?
The best protection tool in a CPA’s arsenal is the Engagement Letter. An engagement assisting clients seeking loan forgiveness under the PPP is considered a consulting engagement in accordance with the Statement on Standards for Consulting Services issues by the American Institute of Certified Public Accountants (“AICPA”). Like any engagement letter, the PPP loan forgiveness engagement letter should spell out the nature and scope of work to be performed, the CPA firm’s responsibilities, the client’s responsibilities and the work product to be delivered to the client. The Engagement Letter should also contain limitation of liability and indemnification clauses.
In drafting the engagement letter, the following considerations should be taken into account:
We also recommend stating the CPA is not involved with and has no influence upon the loan forgiveness process and cannot guarantee the Application will be approved. It is important for the client to accept responsibility for the accuracy and completeness of all certifications included in the Application and maintain all required documentation to support the application.
While clients may be anxious to apply for forgiveness keep in mind the following factors:
While it can be difficult for a client to be patient with the ongoing uncertainty prevented by COVID-19, as their trusted advisor, a CPA can help calm the fears while awaiting proper guidance from the PPP.
Even apart from Coronavirus issues, CPAs should periodically review and update their engagement letters. Stay tuned for our upcoming Webinar on Engagement Letters.