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On July 2, the Governmental Accounting Standards Board released Technical Bulletin (TB) 2020-1, Accounting and Financial Reporting Issues Related to the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and Coronavirus Diseases. Using a question-and-answer format, the TB addresses CARES Act restrictions and eligibility requirements, lost revenue, subsequent events, the Paycheck Protection Program (PPP), the Higher Education Emergency Relief Fund (HEERF), health-care funds, and whether the effects of COVID-19 on governmental entities qualify as extraordinary items.

Conclusions in the TB for the HEERF parallel accounting and reporting guidance released in NACUBO’s Tutorial, CARES Act Grant Accounting. Specifically, both the institutional and student aid portion are non-exchange and non-operating grant revenue. Further, revenue can be recognized as eligibility criteria are met and restricted assets decrease as expenses are incurred.

Concerning the PPP, for nonprofit entities that follow GASB for financial reporting, the program is considered a non-exchange loan subject to a financial guarantee. Consequently, loan accounting and reporting would be followed until the Small Business Administration legally releases the borrower from the debt. This is a departure from Financial Accounting Standards Board guidance, where nonprofit entities can use conditional contribution guidance. (See NACUBO’s June 24 Tutorial, Paycheck Protection Program Revenue Recognition for more.)

Finally, GASB concludes in the TB that extraordinary item reporting would not be an appropriate presentation for the financial impact of COVID-19. In drawing this conclusion, GASB reasoned that because novel viruses have previously occurred, COVID--19 is not considered unusual – a notion NACUBO has disputed.

The TB is effective immediately and should be used when preparing FY20 financial statements.


Sue Menditto

Senior Director, Accounting Policy


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