AICPA encourages COVID-19 tax relief and issues new auditing standards

By Nekose Wills

Along with more than 180 organizations, the AICPA signed a letter requesting Paycheck Protection Program (PPP) loan forgiveness-related expenses remain deductible. According to the letter, when the PPP was adopted as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, P.L. 116-136, Congress made clear that any loan forgiveness under the program would be excluded from the borrower’s taxable income but was silent regarding expenses even though deductibility was Congress’s intent.

However, IRS Notice 2020-32 denies borrowers the ability to deduct the same expenses that qualified them for the loan forgiveness, eliminating any benefit. The AICPA believes that denying the intended tax treatment of these loans will result in hardship for many struggling businesses.

The AICPA also recently advocated on many other important issues.

Tax administrative and penalty relief. In a letter to the IRS and Treasury, the AICPA urged the IRS to automatically waive failure-to-file and failure-to-pay penalties to the millions of taxpayers affected by and working through the challenges created by the coronavirus. The AICPA also asked the IRS to set up an expedited process to help taxpayers establish or revise an installment agreement based on their current financial circumstances so they can comply with their tax obligations. In addition, the IRS was asked to delay collections activities at least 90 days after July 15, 2020.

(Click here for all tax advocacy comment letters.)

AICPA seeks feedback on working draft related to insurance standard implementation. The AICPA Financial Reporting Executive Committee (FinREC) has issued a working draft related to the implementation of FASB Accounting Standards Update (ASU) No. 2018-12, Financial Services — Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The draft discusses considerations for application of ASU No. 2018-12, which is designed to make targeted improvements to the existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts issued by an insurance company. The AICPA is seeking feedback from preparers of financial statements, practitioners, and other interested parties. Informal feedback should be submitted to Kim.Kushmerick@aicpa-cima.com by Sept. 25, 2020.

“Modernizing Audit for the Future” podcast with Bob Dohrer. In a recent podcast, AICPA Chief Auditor Bob Dohrer, CPA, CGMA, and Bloomberg Tax & Accounting Senior Accounting Analyst Joseph Bailey discussed developments affecting auditors for the long term, including how to keep up with a changing business environment as the audit evolves (e.g., newly established remote audit procedures related to COVID-19). The podcast delves into the ways in which the audit profession is modernizing and focuses on changing audit trends; private company audit standards; new AICPA Statements on Auditing Standards; and key areas of judgment.

CIMA produces a 20-point plan for economic recovery in the U.K. The International Monetary Fund estimates that the coronavirus pandemic will trigger the biggest hit to global growth since the Great Depression and cost the global economy an estimated $12 trillion. The Chartered Institute of Management Accountants (CIMA) produced a 20-point plan for U.K. economic recovery, which falls under four areas:

  • Providing businesses and consumers with the confidence to invest.
  • Reducing uncertainty for businesses.
  • Creating a more sustainable business environment.
  • Investing in skills to help generate economic growth and improve productivity.

Read more about the 20-point plan.

Auditing Standards No. 142 and 143 finalized. The AICPA Auditing Standards Board issued two final standards designed to help auditors tackle technology and enhance audit quality. Statement on Auditing Standards No. 142, Audit Evidence, modernizes private company auditing standards by recognizing technology and information. SAS No. 143, Auditing Accounting Estimates and Related Disclosures, is one piece of a larger project to enhance audit quality. The standards take effect in December 2022 and December 2023, respectively.

AICPA’s digital assets practice aid examines client acceptance and continuance. AICPA updated its practice aid Accounting for and Auditing of Digital Assets to include nonauthoritative guidance on how to audit digital assets. This new material complements accounting guidance that was issued last year and is based on professional literature and experience from members of the AICPA Digital Assets Working Group and AICPA staff. The guidance is specific to U.S. generally accepted auditing standards and helps auditors consider the potential risks unique to the digital assets ecosystem and the skill sets needed to conclude whether to accept or continue an engagement.

AICPA addresses investor calls for ESG reporting and assurance. In July, the AICPA, along with the Sustainability Accounting Standards Board (SASB) and World Business Council for Sustainable Development (WBCSD), hosted a live digital event with environmental, social, and governance (ESG) experts from BlackRock and Deloitte. The virtual event was designed to examine companies’ responses to COVID-19 and the effect of COVID-19 on investor demand for ESG reporting. It was geared toward accounting and finance professionals, corporate secretaries, investors, investor relations professionals, and sustainability professionals.

For more information on the AICPA’s advocacy efforts, visit the JofA’s AICPA Advocacy page.

Nekose Wills is a manager–Advocacy Communications for the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Ken Tysiac (Kenneth.Tysiac@aicpa-cima.com), the JofA’s editorial director.

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