Companies may be required to reimburse all or part of the public aid they have received for the health crisis. Like last year, they must carry out an analysis when closing the annual accounts. Explanations.
In concrete terms, companies must look into the fixed cost aid, partial activity, the solidarity fund or even the reductions in social charges that they have received in order to examine whether there is a risk of restitution (clarification: we are dealing here with the annual accounts produced in accordance with French standards).
In our view, this analysis potentially concerns aid recognized in 2022 and/or 2021. Indeed, certain aid linked to the health crisis was maintained in 2022, such as the solidarity fund in January and February 2022, reductions in social charges in January 2022, the aid fixed costs in January 2022. In addition, aid allocated for 2021 could be accounted for in 2022.
Finally, a question arises concerning aid that would have been accounted for in 2020: should an analysis of the risk of restitution be carried out when closing the 2022 accounts?
1st case: treatment in the 2022 accounts of uncertainty about aid granted (and accounted for) in 2022
In cases where there is uncertainty about aid granted (and accounted for) in 2022, the position of the National Company of Auditors (CNCC) issued in 2021 (CNCC, FAQ relating to the consequences of the health and economic crisis linked to the Covid-19 epidemic – 9th edition of 8-12-2021) remains valid, in our opinion, for the 2022 accounts.
The CNCC specifies that if, during the financial year in which the aid is granted and recorded, the entity considers that there is uncertainty as to the fulfillment of certain conditions and/or the estimate of the amount to which it has law, only the part of the aid or subsidy deemed certain is accounted for. The sums received, to which this uncertainty relates, are recorded as debts in liabilities. When this uncertainty results from events occurring after recognition of the sums received (see facts and circumstances below) but before the accounts are closed, the amount recognized as income is adjusted accordingly (FAQ, no. 7.2).
2nd case: treatment in the 2022 annual accounts of aid granted (and accounted for) in 2021 likely to be repaid
Other statuson the basis of this same FAQ (no. 7.2) produced by the CNCC, that of aid granted (and accounted for) in 2021 for which it appears, in 2022, that the administration is likely to call into question the payment aid with regard to its assessment of compliance with the award conditions (for example, error by the company, which ultimately does not comply with the substantive conditions, error by the administration, uncertainty about the achievement of a ceiling linked to uncertainty about the notion of group depending on the aid concerned, uncertainty about the interpretation of a text, etc.).
What is the accounting treatment to be carried out for the 2022 financial year? According to the CNCC, the entity must, without waiting for the control of the administration, estimate the risk of calling into question the sums collected according to the information of which it is aware. The CNCC distinguishes the following two cases:
1. If the entity is certain of having to repay all or part of the sums initially collected, i.e. the proceeds are no longer certain, it must correct the amount of the proceeds (or the reduction expense) initially recognized
- debited from the “other day-to-day management expenses” account if the correction is not qualified as an error correction (appearance of new elements for assessing the substantive conditions giving rise to the right to aid);
- outside the current result if the entity considers that it is a correction of error (all the elements of appreciation of the right to the aid were available on the date of initial recognition, but the entity in misinterpreted).
These adjustments are recorded against a debt on the liabilities side of the balance sheet.
2. If it appears that the sums initially collected are likely to be called into question and to be the subject of restitution, the entity must then assess and recognize a provision for the sums which are likely to be restored.
> When a company considers that it has received and accounted for aid or subsidies in 2021 which could in whole or in part be called into question in 2022 by the administration, it must, before an inspection is notified to it, estimate the risk of calling into question the sums received depending in particular on the existence of facts likely to call into question its eligibility for aid, the existence of controls of the same type in the group or within companies in the same sector or meeting the same issues and subsequent clarifications made by the administration on the reading of the texts.
@ copyright: My Financial Management Alerts & Advice – Editions FRANCIS LEFEBVRE
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