This article also appeared on NetAssets.org on May 16th, 2020.
Many independent schools and other not-for-profits applied for and received loans under the Small Business Administration’s (SBA) Paycheck Protection Program (PPP). The major appeal of this program is the ability to have the loan forgiven provided the funds are used for specified purposes – primarily payroll costs. One of the major unknowns was whether this forgiveness would constitute federal financial assistance and subject the school to the Uniform Guidance single audit requirements which would add additional unforeseen compliance costs. The AICPA contacted the SBA and was informed that the PPP loans are administered under the 7(a) guaranty loan program and will NOT subject recipients to the single audit requirements. This information was included in the AICPA’s Government Audit Quality Center Alert No. 404.