Reporting reset – Consolidation disclosures

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Apr 8, 2025

Matt Sabatini, a Partner in PwC's National Office, guides clients through complex financial reporting, while Alexander Martin, a Partner in PwC's Deals practice, tackles transformational business issues. They dive into the intricacies of consolidation disclosures, especially concerning variable interest entities (VIEs) and voting interest entities (VOEs). The discussion emphasizes transparency, detailing regulatory compliance, maximum exposure to losses, and the importance of clear presentation principles in financial statements for effective user communication.

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INSIGHT

Purpose of Consolidated Statements

Consolidated financial statements combine the parent and its subsidiaries as one reporting entity for clarity.
This approach offers a complete picture of overall financial performance for entities with controlling interest.

ADVICE

Presentation Tips for Consolidation

When consolidating subsidiaries, eliminate intercompany transactions to avoid double counting.
Present non-controlling interests separately to show ownership clearly.

ADVICE

General Consolidation Disclosure Advice

Always disclose your consolidation policy and basis for consolidation for transparency.
Explain any exceptions, changes, or deconsolidation events clearly.

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We continue our back-to-basics series on financial statement presentation with an episode focused on consolidation disclosures. These disclosures can be complex, covering both consolidated entities – such as variable interest entities (VIEs) and voting interest entities (VOEs) – as well as variable interests in VIEs that are not consolidated. This episode breaks down the relevant frameworks, presentation principles, and disclosure requirements.

In this episode, we discuss:

2:00 – The purpose of consolidated financial statements and the guiding frameworks
5:50 – General consolidation presentation and disclosure principles
8:00 – Principles and objectives for the presentation and disclosure of variable interests in VIEs, including from the perspective of:
- 12:22 – A holder of variable interests in a VIE, regardless of primary beneficiary status
- 14:21 – A primary beneficiary of a VIE
- 16:17 – An entity with variable interests in VIEs for which it is not the primary beneficiary
20:35 – Presentation and disclosure considerations for VOEs

For more information, see chapter 18 of our Financial statement presentation guide and our Consolidation guide. You can also listen to the other episodes in this miniseries:

About our guests
Alexander Martin is a partner in PwC's Deals practice who specializes in helping clients solve complex accounting, financial reporting, and business issues arising from deals, structured transactions, and other transformational events. With over 15 years of experience, Alexander has deep expertise in US GAAP and SEC reporting, gained through his roles as an advisor in PwC's Deals practice, a regulator at the SEC, and most recently as a partner in PwC's National Office.

Matt Sabatini is a partner in PwC's National Office who helps clients and engagement teams navigate the accounting and financial reporting for complex transactions. He specializes in the accounting for M&A, consolidations, corporate reorganizations, recapitalizations, joint ventures, and other investments.

About our guest host
Diana Stoltzfus is a partner in the National Office who helps to shape PwC’s perspectives on regulatory matters, responses to rulemakings, and policy development, and implementation related to significant new rules and regulations. Prior to rejoining PwC, Diana was the Deputy Chief Accountant in the Office of the Chief Accountant (OCA) at the SEC where she led the activities of the Professional Practices Group within the OCA.

Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.

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