Not-for-profit and for-profit health care entities that have received or expect to receive government assistance relating to the COVID-19 pandemic need to consider the financial reporting and compliance implications of accepting the aid. Entities will need to evaluate whether the aid is an income tax credit, a payment for goods or services, or a loan before accounting for it as a grant or contribution. Not-for-profit entities apply ASC 958-605 to account for grants or contributions, while for-profit entities must analogize to accounting guidance such as IAS 20 (the IFRS guidance on government grant accounting) because there is no required US GAAP guidance. Entities also need to monitor changes in program rules and they may be subject to government audit requirements.
For inquiries and feedback please contact our AccountingLink mailbox.