Audits conducted in accordance with generally accepted auditing standards (GAAS) are performed under the concept of a risk-based approach. In an effective audit, firms perform a risk assessment for both inherent risk and control risk and then design audit procedures responsive to those risks. Auditing Paycheck Protection Program (PPP) funds are no different. However, there are some unique factors that should be considered including:
Firm-wide quality control considerations
Understanding the risk profiles of the PPP loan accounting models
PPP loan eligibility testing concerns
In response to multiple requests from CPEA members on the final point, we have also issued a full report covering illustrative management representations related to PPP loans.