Accountants should check that banks will pay their fees before helping their small business clients apply for a second round of coronavirus relief loans or else stick with a traditional consulting services agreement.
The American Institute of CPAs issued updated guidance Thursday on the fees that accountants may collect to cover their services advising and assisting clients with the federal-backed loan applications for the Paycheck Protection Program.
If the bank agrees to pay the CPA or firm, accountants should document and disclose that to the client and describe the services that they will provide including compiling payroll reports, calculating monthly payroll costs, and reviewing the application, the guidance reads.
Accountants may also choose to use the more routine advisory services engagements to spell out how they will help, and their obligations to the client, said Erik Asgeirsson, president and CEO of CPA.com.
Under Treasury Department guidance, accountants, attorneys, or loan brokers, among others, could be considered an agent and eligible for a fee paid by lenders. The law that created the loan program also specifies that agents may not collect any fees from the small business itself.
Not all banks have agreed to pay accountants an agent fee. Most accountants have been relying on consulting engagements to cover their costs and to help clients decide which relief option they should pursue, said Anne Zimmerman, who provides off-site CFO services to many of her small business clients in Ohio.
“The application is only two pages so filling that out is not the hard part. Figuring out how to get there and whether its the right choice, I think is the harder part,” Zimmerman said.
Asgeirsson acknowledged that not all banks have agreed to pay the agent fees, but leaders of the banking industry understand CPAs are important to their operation.
“This is a critical time for firms to be playing the trusted advisor role. This is much broader than just the PPP application,” he said.
CPAs have been on the front lines of the massive effort to get the initial $350 billion in federal-backed loans into the hands of shuttered and struggling business owners. But questions about what fees were covered, how to calculate payroll, and the legal and ethical obligations of accountants have quickly mounted amid the hurried roll out.
The AICPA addressed some of accountants’ top questions about fees and their legal and ethical obligations in a Q&A issued April 22.