Accounting for the CARES Act

Financial accounting and reporting-related implications

[Updated September 2020 to add disclosure considerations related to various provisions of the CARES Act.] The Coronavirus Aid, Relief and Economic Security Act (CARES Act) and Paycheck Protection Program and Health Care Enhancement Act (Enhancement Act) provide over $2 trillion in economic financial stimulus to small and large businesses. We’ve broken down the key financial accounting and reporting implications for those affected by these programs and their provisions. Read our analysis.

Overview of the CARES Act

To date, the United States government has passed four new laws designed to help the nation respond to the coronavirus disease 2019 (“COVID-19”) pandemic.

The third law (enacted March 27, 2020) is the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act” or the “Act”), which, from a monetary-relief perspective, dwarfs the prior two acts. The CARES Act provides $2.2 trillion of economy-wide financial stimulus in the form of financial aid to individuals, businesses, nonprofit entities, states, and municipalities. Such stimulus includes emergency funding in the form of higher payments for hospitals that respond to COVID-19 by using existing mechanisms. The Act also increases the flexibility under various programs for the use of telemedicine.

Highlights of the CARES Act

The fourth and most recent law (enacted April 24, 2020) is the Paycheck Protection Program and Health Care Enactment Act (the “Enhancement Act”), which provides an additional $484 billion in funding for CARES Act programs. This includes over $321 billion of additional funding to support small businesses (of which $60 billion is set aside for loans made by small banks, credit unions, minority-owned banks, and other small lenders); $75 billion of additional funding for hospitals and health care providers; and $25 billion for COVID-19 testing. The Enhancement Act generally does not change the terms of the programs under the CARES Act.

By Ashley Carpenter, Matt Himmelman, Consuelo Hitchcock, Dennis Howell, Sandie Kim, Patrice Mano, Ignacio Perez, Ruth Uejio, and John Wilde, Deloitte & Touche LLP

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Updated September 18, 2020

This publication was updated on September 18, 2020, to add disclosure considerations related to various provisions of the CARES Act. See the appendix for a list of affected sections.

Connecting the Dots: CARES Act implementation

Several of the CARES Act’s provisions and programs are designed to assist small and large businesses and include billions of dollars in loan and grant allocations, regulatory relief for certain industries, and income tax relief. For most of those provisions, implementation action is required by the following agencies:

The Federal Reserve has also taken actions under its authority in Section 13(3) of the Federal Reserve Act, with the approval of the U.S. Treasury Department, to provide up to $2.3 trillion in loans to support the economy. For information about those actions, see the Assistance to Small and Midsized Businesses and Nonprofit Entities discussion.

Financial reporting implications of the CARES Act for US businesses

Titles I and IV of the CARES Act provide most of the economic support for American businesses. This Heads Up discusses key aspects of those titles and other significant sections and provisions of the CARES Act as supplemented by the Enhancement Act.

View the full Heads Up on DART here

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Accounting and financial reporting-related resources

Heads Up is prepared by members of Deloitte's National Office as developments warrant. This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor. Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.

The services described herein are illustrative in nature and are intended to demonstrate our experience and capabilities in these areas; however, due to independence restrictions that may apply to audit clients (including affiliates) of Deloitte & Touche LLP, we may be unable to provide certain services based on individual facts and circumstances.

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