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Are Your Clients Ready for a PPP Compliance Audit?


The U.S. Department of Treasury and Small Business Administration (SBA) have promised the government will audit all recipients of Paycheck Protection Program (PPP) loans over $2 million who seek loan forgiveness. So, the question is not if, but when, an audit is coming.

May 8th 2020
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Your clients that fail audits jeopardize all or part of their loan forgiveness, and, worse, might face False Claims Act prosecutions by the U.S. Department of Justice (DOJ). Besides SBA audits, borrowers must prepare for investigations by the Special Inspector General for Pandemic Recovery and reviews by the Pandemic Response Accountability Committee and the Congressional Oversight Commission. In addition, the DOJ and State Attorneys General have announced enforcement initiatives. 

Below are five practical steps borrowers can take to withstand the scrutiny of PPP audits and investigations:

1. Start Preparing Now

Do not wait for the government to come calling. Auditors regard contemporaneous documentation—or an accurate written record of how the funds were applied—as more persuasive than information created once an audit begins. Contemporaneous documentation also saves time. It is more efficient to organize records, receipts and documents now than it would be to re-create them later.

2. Assess Risks

PPP loan recipients must certify that “current economic uncertainty makes this loan request necessary to support the ongoing operations of the Applicant.” And, companies seeking loan forgiveness must certify they “used the forgiveness amount to keep employees and make eligible mortgage interest, rent, and utility payments.”

Certifications found to be inaccurate or untrue are punishable under criminal and civil law. But, how does a company certify to an uncertainty and what makes the funds necessary?

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By One 8 Solutions
May 11th 2020 12:02 EDT

Any guidance on Sched C & K filers that got the money based on their net income and not what they were paying for payroll?

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