How CPAs Can Minimize Liability When Assisting Clients With PPP Loan Forgiveness


By: Nancy Reimer and Elizabeth Lowery

The CPA’s client received funds from the Paycheck Protection Program (“PPP”) under the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act and is asking if and how they will qualify for PPP loan forgiveness. As of this date, there is uncertainty over some of the program details and businesses worry about meeting and maximizing the loan forgiveness requirements. With the uncertainty surrounding the loan forgiveness process how can CPA’s protect themselves from liability while assisting clients seeking loan forgiveness? 

The best protection tool in a CPA’s arsenal is the Engagement Letter. An engagement assisting clients seeking loan forgiveness under the PPP is considered a consulting engagement in accordance with the Statement on Standards for Consulting Services issues by the American Institute of Certified Public Accountants (“AICPA”). Like any engagement letter, the PPP loan forgiveness engagement letter should spell out the nature and scope of work to be performed, the CPA firm’s responsibilities, the client’s responsibilities and the work product to be delivered to the client.  The Engagement Letter should also contain limitation of liability and indemnification clauses. 

In drafting the engagement letter, the following considerations should be taken into account:

  • The terms and scope of the consulting services should be discussed with the client and clearly described in the letter
  • Describe the engagement’s objectives.
  • Describe the scope and limitations of the engagement.
  • List the services that are not within the scope of the engagement.
  • Summarize the tasks to be performed and completed.
  • Describe the deliverables.
  • List the applicable professional standards.
  • List the client’s responsibilities.
  • List the CPA’s responsibilities.
  • State when the services will begin and conclude.
  • State the limitations on the use of the deliverables.

We also recommend stating the CPA is not involved with and has no influence upon the loan forgiveness process and cannot guarantee the Application will be approved. It is important for the client to accept responsibility for the accuracy and completeness of all certifications included in the Application and maintain all required documentation to support the application.

While clients may be anxious to apply for forgiveness keep in mind the following factors:

  • Most lenders are not ready to process forgiveness applications as they are awaiting guidance from the Program.
  • Many lenders are developing forgiveness portals to make the process more efficient.
  • Businesses have 24 weeks to use the PPP funds leaving more time to take steps to help qualify for forgiveness
  • Payroll costs are a significant component of PPP forgiveness. Most payroll providers are developing special reports to help the process. But they too are waiting for guidance.
  • Payments are not due yet. Borrowers are not required to make loan payments before they apply for forgiveness or until 10 months after the covered loan period ends.

While it can be difficult for a client to be patient with the ongoing uncertainty prevented by COVID-19, as their trusted advisor, a CPA can help calm the fears while awaiting proper guidance from the PPP.

Even apart from Coronavirus issues, CPAs should periodically review and update their engagement letters. Stay tuned for our upcoming Webinar on Engagement Letters.

If you have questions or would like more information, please contact Nancy Reimer at or Elizabeth Lowery at