PPP Client Fraud: How Much Risk Is Too Much?

bar chartWhere do you fall on the risk-tolerance scale?

PPP: Are the Risks Worth It?
Practice Management Do’s and Don’ts
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By Sandi Leyva

How aggressive should you be when advising clients on Paycheck Protection Program (PPP) forgiveness?

MORE: Survey: Who’s Not Billing for PPP Services? | PPP Traps: 1 in 5 Accountants Report Shady DealingsAdd These Money-Making Rituals to Your Work Day | 3 Ways to Opt Out of Any Downturn

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While any risk stance should always be the decision of the clients, we asked this question in a recent joint Accountant’s Accelerator / CPA Trendlines PPP Survey: On average, across all of your clients, how aggressive of a stance are you taking with PPP forgiveness?

We asked 600+ survey respondents to choose a number between zero and 100 where zero is conservative or extremely risk-avoidant and 100 is aggressive or extremely risk-tolerant. The mean was 42, or slightly more conservative than aggressive.

After plotting a histogram of the results, you can see that the mode is very much in the middle of the road. In this chart, the x-axis displays the respondent’s risk value from zero to 100 in buckets of 15. The y-axis shows the number of participants with values falling into those buckets.

There are far more extremely risk-averse scores than there are extremely aggressive scores. This is likely because of the severe penalties, including jail time, outlined by the PPP legislation and the SBA.

It could also be because there is so much PPP fraud that accountants are advising their clients to be a little more careful with their applications.

Are you consulting with clients on PPP forgiveness?  If so, we would love to read your comments about your PPP forgiveness experiences below.

Or, join the survey:

PPP: Are the Risks Worth It?
Practice Management Do’s and Don’ts
Join the Survey. Get the Results.

6 Responses to “PPP Client Fraud: How Much Risk Is Too Much?”

  1. Gary Leeman

    The next concern is the CPA firm representing the client in a PPP investigation.

    Which entity or governmental agency will be investigating?

    What will be the nature of the CPA’s role in the investigation?

    The role will dictate the professional standards required to be followed.

    It could be, for example, tax standards or agreed upon procedures standards.

    Engagements letters should be issued.

    I suggest the malpractice insurance carrier agrees the services are covered.

    Reply
    • Sandi Leyva

      Thank you for your comment. There is a ton of guidance on may of these concerns at the AICPA site. They have really delivered on this topic. Issues, engagement letters, guidelines for engagements including consulting or agreed-upon procedures. And right now, the SBA is judge, jury, and executioner when it comes to these loans.

      Reply
  2. Les Orr

    Thank you for this helpful post. Would you know if the related financial risk to the CPA / Consultant would be covered by ‘regular’ Accountant’s Liability Insurance (like through the AICPA)? I’m guessing that the “jail time” probably isn’t covered. Thanks for any reply that you give me.

    Reply
    • Sandi Leyva

      You should contact your specific insurance company and discuss your specific policy coverage with them. I wouldn’t want to answer that in general terms!

      Reply
  3. F. George Dunham, III

    Do I need to worry because I took as much PPP as I could get but I also made my employees take a big pay cut at the same time even though I didn’t fire them.

    Reply

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