Accounting Standard Updates
VIDEO: Your Insurance Entity Received a PPP Loan, Now What?
With the urgency and speed in which Congress delivered the Paycheck Protection Program to the public, loan recipients have developed a barrage of questions regarding the program implementation, the accounting for the loans, loan forgiveness, and several other key facets. The U.S. Treasury and Small Business Administration have issued multiple discussions to answer the user community. The insurance industry, with its unique regulatory accounting environment, has certainly been impacted. Though the insurance regulators have issued no formal guidance, JLKR has assessed the applicable accounting promulgations and Ani Zadorian summarizes our perspective on reporting the various loan aspects.
Several of our insurance company clients have asked for guidance on the recognition of loan proceeds under the Payroll Protection Program (PPP). The Statutory Accounting Principles Working Group has taken up several issues stemming from COVID-19 and may still take up the matter of PPP loans. As of this video’s recording, the National Association of Insurance Commissioners (NAIC) has not taken up the issue of PPP loans. Under existing guidance, the accounting for loans and extinguishment of related liabilities is governed by SSAP No. 15, Debt and Holding Company Obligations.
To read more about recognition of loan proceeds and view a table with a tabular view of three key aspects of accounting for the loan program and further segregates them by Statutory, GAAP and non-profit reporting, click here.