Hot Topic | December 2020

 

Insight

CARES Act & other relief for COVID-19

Updated: The latest relief (tax, loan, grant and other provisions) may significantly affect financial reporting.

Scott Muir

Scott Muir

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5073

Valerie Boissou

Valerie Boissou

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-1723

Meredith Canady

Meredith Canady

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5858

Regina Croucher

Regina Croucher

Partner, Dept. of Professional Practice, KPMG US

+1 816-802-5840

Mahesh Narayanasami

Mahesh Narayanasami

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-7355

Mark Northan

Mark Northan

Partner, Dept. of Professional Practice, KPMG US

+1 212-954-6927

Angie Storm

Angie Storm

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5488

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act was signed into law. It is the third COVID-19-focused relief package and by far the largest in terms of scope and cost. In June and December, two additional COVID-19 relief bills were enacted into law.

Applicability

  • All companies that report under US GAAP

Relevant dates

  • CARES Act was signed into law on March 27, 2020
  • Paycheck Protection Program Flexibility Act was signed into law on June 5, 2020
  • Consolidated Appropriations Act, 2021 was signed into law December 27, 2020
  • Effective immediately

Key impacts

  • The CARES Act and subsequent COVID-19 related relief include many provisions that could significantly affect the financial reporting of companies applying US GAAP.
  • The changes in law are, in general, recognized events for annual and interim reporting periods ending on or after their respective enactment dates, and a nonrecognized subsequent event for annual and interim reporting periods ending before that date.
  • KPMG addresses the primary accounting and reporting impacts of the relief provisions as we currently understand them.

Report contents

  • Background
  • Applicability
  • Key impacts
  • Income taxes
  • Employee retention credit and payroll taxes
  • Paycheck protection program
  • Government grants and payments for goods and services
  • Debt and equity instruments issued
  • Deferral of credit impairment guidance, and suspension of troubled debt restructuring guidance
  • Mortgage relief
  • Lease eviction moratoriums
  • Subsequent events and going concern

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