During its May 20, 2020 meeting, the Financial Accounting Standards Board (FASB) discussed proposed limited deferral of the effective dates of certain new accounting standards in light of the COVID-19 pandemic, including Topic 606: Revenue from Contracts with Customers and Topic 842: Leases, as follows:
Government Assistance Disclosures
The FASB also discussed Paycheck Protection Program (PPP) loans in relation to commonly encountered situations facing stakeholders and referred constituents in the forthcoming guidance from the American Institute of Certified Public Accountants (AICPA).
With respect to the potential financial statement’s disclosures related to participation in PPP, the FASB Staff indicated that certain types of government assistance may require disclosure under Topic 235: Notes to Financial Statements. Specifically, management should consider highlighting the impact of accounting for government assistance received in its disclosure of significant accounting policies if that accounting considerably affects the presentation of the company’s financial position, cash flows, and/ or results of operations.
Many companies who received, or will receive, government assistance as a result of the COVID-19 pandemic have not historically accounted for similar transactions, and therefore must consider what accounting policies would be appropriately applied to the current circumstances. These policies may vary for public companies, private companies, and not-for-profit entities.