Hot Topic | April 2020

 

Insight

Healthcare entities’ reporting impacts of COVID-19 aid

Implications of government aid on the accounting and financial reporting of healthcare entities.

Joseph Bukzin

Joseph Bukzin

Partner, Audit, KPMG US

212-954-6462

Meredith Canady

Meredith Canady

Partner, Dept. of Professional Practice, KPMG US

+1 212-909-5858

Kayla Futch

Kayla Futch

Managing Director, Dept. of Professional Practice, KPMG US

+1 212-954-6455

Jody Love

Jody Love

Partner, KPMG US

+1 410-949-8583

Healthcare entities are receiving COVID-19 government assistance from a number of different sources. KPMG addresses the accounting for this aid. 

Applicability

  • All non-governmental healthcare entities 

Relevant dates

  • CARES Act was signed into law on March 27, 2020
  • $30 billion of provider relief funding was disbursed in two installments on April 10 and April 17, 2020
  • HHS announced plans to disburse additional provider relief funding on April 22, 2020
  • Effective immediately

Key impacts

  • Payments made to a healthcare entity for services provided to its Medicare patients represent transaction price for the services provided and are accounted for under ASC 606.
  • For payments made from the $50 billion of general allocations of provider relief funding:
    • Not-for-profit healthcare entities will account for funds received as a conditional contribution under ASC 958-605.
    • For-profit healthcare entities will consider their previous accounting policies and analogous accounting guidance to account for funds received. 
    • The funds received from the CARES Act provider relief funding is considered a Type II nonrecognized subsequent event for reporting periods before its disbursement; this is because the Act required subsequent action by the HHS Secretary. 

Report contents

  • Medicare payments
  • Government assistance for COVID-19 response
  • Subsequent events 

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