PwC's accounting podcast

In our Full disclosure podcast series, we’re bringing you back to the basics on all things related to financial statement presentation and disclosure, from the top of the financial statements through the footnotes. Our inaugural episode this week focuses on general reporting and balance sheet presentation requirements. Kyle Moffatt, a partner in our National Office, is back in the guest seat to set the stage for the series with our host, Heather Horn. Topics include:1:32 - General presentation reminders. GAAP comes first. Kyle reminds our listeners of the FASB codification guidance for interim and annual financial statement presentation for both public and private companies, as well as the incremental guidance from the SEC for public companies.2:37 - Significant accounting policies. Kyle reminds companies how to determine which accounting policies are significant, and encourages listeners to take a fresh look at their disclosures.9:13 - Significant account balances. Kyle outlines the SEC rules regarding when balances should be broken out and presented separately on the balance sheet. 14:53 - Balance sheet classification. Reporting entities are required to present a classified balance sheet. Kyle explains the requirements and how they provide insights for the users of the financial statements.17:55 - Balance sheet offsetting.  Kyle breaks down the key criteria that must be met to determine whether you can offset assets and liabilities on the balance sheet. 22:00 - Other considerations. We discuss other important considerations for balance sheet presentation, what the SEC staff focuses on, and key takeaways. Want to learn more? Read the following chapters from our Financial statement presentation guide: Chapter 1: General presentation and disclosure requirementsChapter 2: Balance sheetChapter 29: Interim financial reportingKyle Moffatt is a partner in PwC's National Office where he consults with engagement teams and audit clients on SEC reporting matters. He joined PwC in 2020 after spending almost 20 years with the SEC, most recently as Chief Accountant and Disclosure Program Director in the Division of Corporation Finance.Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Identifying performance obligations in revenue contracts continues to be a hot topic as more companies are exploring business models that include a combination of products and services. In this week’s episode, Mike Coleman and Angela Fergason, partners in PwC’s National Office, join host Heather Horn to help navigate the accounting guidance in this area.Topics include:1:04 - Background. The most critical step in the ASC 606 5-step model for recognizing revenue is identifying performance obligations, as it determines the unit of account to apply to the rest of the model. Mike breaks down why we are talking about this now.3:35 - Identifying performance obligations: an overview of the accounting model. Angela provides an overview of the guidance and criteria around identifying performance obligations.5:45 - Separately identifiable. Angela highlights some of the indicators that a good or service might not be separately identifiable.9:50 - Real life example: Sale of equipment with installation and consulting services. Mike walks us through a real life example and how to apply the guidance to determine whether there are separate performance obligations. 13:30 - Real life example: Licenses of software. Angela and Mike explain some other real life examples commonly seen with software licenses and how these could impact the identification of performance obligations. 22:14 - Real life example: Hardware and software. We talk about scenarios where products are also sold with software and how companies should determine whether the software is integral to the functionality of the equipment. We also discuss when the product is sold with cloud-based subscription services and whether to combine these elements into a bundled performance obligation.26:24 - Key takeaways. Diligence and outreach across your organization is necessary to understand your contracts and get the right accounting and disclosure.Want to learn more? Read chapter 3 of our Revenue from contracts with customers guide.Mike Coleman is a partner in PwC's National Office with over 30 years of experience specializing in accounting for revenue and software arrangements. In addition, Mike has been one of the firm's representatives on the AICPA Software Task Force. Prior to his time in National, Mike was an audit partner in the firm's NY Metro assurance practice serving technology clients.Angela Fergason is a partner in PwC's National Office with over 20 years of experience who specializes in accounting for revenue and employee compensation arrangements. She is a frequent speaker on accounting and financial reporting topics and is a contributor to many PwC National Office publications, including our accounting guides on revenue and stock-based compensation.Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accDid you enjoy this episode? Text us your thoughts and be sure to include the episode name.

There are many challenging financial reporting considerations a company faces as it goes through the process of becoming public, including those related to stock-based compensation. Stock-based compensation in traditional IPOs and SPAC mergers is also an area where the SEC has issued comment letters.In this week’s episode, Jay Seliber, a partner in PwC’s National Office, joins host Heather Horn to discuss the compensation-related financial reporting matters for companies to consider as they go public.Topics include:0:58 - Cheap stock valuation. Jay opens with a discussion on what companies should think about as they are measuring the fair value of awards in the period leading up to the IPO, including what circumstances might warrant revisiting the initial valuations.8:44 - Recognition of compensation awards that vest upon an IPO. Jay breaks down what to consider when recognizing compensation for awards where the vesting is contingent upon an IPO, including considerations in the quarterly filings leading up to the IPO.13:30 - Employee stock purchase plans. Some companies will have employee stock purchase plans (ESPPs) that give employees the right to have money withheld from their paycheck in order to purchase stock at a discount in the future. Jay covers the accounting for ESPPs in an IPO.17:55 - Earnings per share. Newly-public companies will have to incorporate earnings per share in their filings. Jay explains some of the complexities, including calculating the weighted average shares outstanding needed to disclose earnings per share for each period presented as required by the SEC.24:58 - Mezzanine equity. Lastly, Jay walks us through mezzanine equity—what it is and what companies going public need to be thinking about.Want to learn more? Read:Our Stock-based compensation guideSection 7.3.4 of our Financing transactions guideChapter 7 and Chapter 15 of our Financial statement presentation guideOur Observations from the front lines: Avoiding "cheap stock" SEC scrutinyAnd listen to our Podcast: Got EPS questions? We've got answers.Jay Seliber is a partner in PwC’s National Office with over 30 years of experience. He helps clients with their most complex accounting matters, particularly in the areas of stock compensation, revenue recognition, M&A, employee benefits, restructurings, impairments, and financing transactions.Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters.Transcripts available upon rDid you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Finding embedded leases in your contracts is important to avoid misstating the balance sheet, and a lot of judgment is involved. Here to answer common questions, host Heather Horn is joined by Chad Soares and Marc Jerusalem to walk through the steps to identify embedded leases. Topics include:0:47 - Guidance reminder. Before we get into how to identify embedded leases, Marc gives a refresher on the accounting and why this topic is top of mind for companies.4:17 - Identifying embedded leases. As a general rule, an embedded lease exists if there is an explicit or implicit identified asset in the contract and the customer controls use of the asset. Chad and Marc walk through assessing if an arrangement contains an embedded lease, and covers related topics such as:7:09 - Substitution rights12:54 - Customer control over the use of the asset22:08 - You have an embedded lease. Now what? Once you identify an embedded lease, the contract needs to be separated into its lease and nonlease components. Chad walks through the steps and key considerations.28:25 - Final reminders. There are a lot of contracts that aren’t called a “lease,” but that still fall within this guidance. Marc and Chad close with some reminders and some other key takeaways.Chad Soares is a partner in PwC's National Office focused on leasing and financing arrangements. He was a primary author of PwC’s lease accounting guide and contributes to a variety of thought leadership related to leasing and financial instruments. Marc Jerusalem is a director in PwC’s National Office specializing in leasing. As a leasing specialist, Marc consults with clients on complex lease accounting issues and is a contributor to many related PwC National office publications. Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

As we wrap up the first quarter of the new year, join host Heather Horn and PwC tax specialists, Jenn Spang and Kassie Bauman, as they discuss some of the key considerations and complexities in accounting for income taxes during interim periods.Topics include:0:51 - How it works. We begin with an overview of how to calculate a quarterly income tax provision, including how to estimate the annual effective tax rate (AETR). 7:39 - Ordinary income. What does ordinary income mean in the context of your interim tax provision? Jenn explains.10:21 - Discrete items. Kassie shares examples of what qualifies for treatment as a discrete item and the judgment involved. 16:51 - Exceptions and limitations. Kassie and Jenn discuss a few exceptions to using the worldwide estimated AETR.22:55 - Roll of the controller. Setting the AETR involves more than just the tax department—it is a cross-specialty process. We close by discussing the importance of engaging the right people from the beginning and working together to apply the right controls and processes.  Jennifer Spang is a tax partner in PwC's National Office specializing in tax accounting under US GAAP and IFRS. She has over 25 years of experience helping companies in a variety of industries navigating complex tax accounting matters. Kassie Bauman is a managing director in PwC's National Office who consults on tax accounting under US GAAP and IFRS. Kassie has more than 20 years of auditing and accounting experience, including almost a decade of experience addressing complex technical accounting matters as part of our National Office. Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Distinguishing between a change in accounting principle and a change in estimate can be difficult, but the distinction is critical to applying the correct guidance. To help think through the accounting, host Heather Horn is joined by Pat Durbin and Tom Barbieri, Deputy Chief Accountants in PwC’s National Office. Topics include:0:41 - Background. We start with an overview of the different types of accounting changes and provide examples of each. 4:33 - Change in accounting principle. Pat walks through the steps that companies should take when changing an accounting principle, and how to navigate the preferability assessment. 18:03 - Accounting for changes in accounting principles. Once you’ve identified a change in principle, how is that reflected in the financial statements? Tom explains the two step process and shares thoughts on disclosures. 30:21 - Change in estimate. Changes in estimate frequently come up as a result of new information or modifications to estimating techniques. Pat highlights the accounting considerations.35:33 - Key reminders. Don’t wait! Tom covers key reminders, including preferability letters and capturing the appropriate disclosures.Want to learn more? Read chapter 30 of our Financial statement presentation guide.Tom Barbieri is a Deputy Chief Accountant in PwC’s National Office and the financial instruments accounting leader. He has nearly 30 years of experience advising clients on complex accounting and financial reporting issues relating to financial instruments. During Tom’s tenure in National, he has been at the forefront of emerging accounting issues and has regular interactions with the FASB, SEC, and other regulators and standard setters. Pat Durbin is a Deputy Chief Accountant in PwC’s National Office and the leader of the revenue and liabilities division. He has nearly 30 years of experience consulting with our clients and engagement teams on complex accounting matters, including issues related to revenue, compensation, income taxes, and inventory under both US GAAP and IFRS.  Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

Variable consideration in revenue contracts is more common than you might think, and the accounting for it can require  a considerable amount of judgment. To help make sure you have the right revenue recognition, we’ve asked Angela Fergason, a partner in our National Office, to join host Heather Horn to walk through the guidance. Topics include: 0:47 - The many forms of variable consideration. We begin with an overview of variable consideration under the new revenue guidance and share some common examples of the common types of variable consideration in a revenue contract. 6:25 - Estimating variable consideration. We cover the two methods for estimating variable consideration at contract inception: the “expected value” method and the “most likely amount” method.9:36 - Constraint on variable consideration. An estimate of variable consideration is subject to a constraint. Listen as Angela breaks down what exactly this means.15:49 - Exceptions for estimating variable consideration upfront. There are a few situations when you might not have to estimate variable consideration upfront. Angela walks through a few of the scenarios.23:24 - Revenue vs lease components. We frequently see contracts with revenue and lease components. Angela explains how the revenue and lease models differ when contracts have variable fees.25:38 - Reminders and disclosures. We close by wrapping-up with key takeaways and an overview of the multiple disclosure requirements. Want to learn more? See chapter 4 of PwC’s Revenue from contracts with customers guide.Angela Fergason is a partner in PwC's National Office with over 20 years of experience, specializing in accounting for revenue and employee compensation arrangements. She is  a frequent speaker on accounting and financial reporting topics and is a contributor to many PwC National Office publications, including our accounting guides on revenue and stock-based compensation.Heather Horn is PwC’s National Office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

2020 has brought us a global pandemic, an election, and adoption of some major new accounting standards. So what does it all mean for your EPS calculations? In this episode, John Horan, a PwC managing director in our national office, joins host Heather Horn to discuss some important EPS reminders for companies to think about for their year-end reporting. Topics include: 0:45 - Basic EPS: 2:13 - Participating securities—John describes what they are and why you may need to consider them in your EPS calculations.11:53 - Mezzanine securities—John walks through how having securities classified here impacts  EPS.16:58 - Diluted EPS:18:45 - Settlements in cash or shares—how it settles makes a difference to EPS - we give examples on each.23:08 - Liability classified warrants—warrants classified as liabilities can be dilutive to EPS - even in periods of loss.26:09 - New convertible debt standard—how does the new FASB standard on liabilities and equity change the presumption of share settlement? John brings you the inside scoop.Want to learn more? See chapter 7 of our Financial statement presentation guide and listen to our podcast on Earnings per share: 5 things to know.John Horan is a managing director in PwC’s National office where he assists clients with complex accounting issues in the areas of foreign currency, liabilities and equity, earnings per share, and derivatives and hedging. John specializes in large capital transactions and initial public offerings.Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

While financial statements users have always placed a lot of importance on the statement of cash flows, the focus has sharpened in today’s turbulent environment. Listen as host Heather Horn and Suzanne Stephani, a director in PwC’s national office, discuss frequently asked questions and share useful reminders for those in the process of preparing the cash flow statement for their year-end reporting. Topics include:0:16 - Debt restructuring. Debt restructuring often brings fees. We look at a few reporting scenarios and discuss the presentation of these fees. 7:04 - Borrowings and repayments under revolvers. Some companies are drawing down on their revolvers as a way to access liquidity. We discuss whether the borrowings and repayments under a revolver should be presented gross or net on the cash flow statement and share other key reminders.9:48 - Supply chain financing. As a result of liquidity struggles, companies have gotten creative with pushing out payment terms in a variety of ways—and this raises questions on the statement of cash flows. Through practical examples, we look at how these transactions should be presented and discuss the FASB’s project on the disclosure of supply chain finance programs.  16:38 - Lease modifications/terminations. During 2020, many companies made changes to their lease agreements, especially real estate leases. We talk through presentation considerations in this area. 18:42 - Sale of accounts receivables. What are the cash flow considerations when a company sells or factors their trade receivables? Suzanne explains.Have more cash flow presentation questions? Read our Financial statement presentation guide and listen to our podcast, Statement of cash flows: Back to basics. About our guestSuzanne Stephani is a director in PwC’s National Office specializing in the application and interpretation of the accounting guidance related to financing transactions.About our hostHeather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.

After looking at CECL disclosures from the first three quarters of 2020, we’ve noted some clear trends. In this timely episode, host Heather Horn is joined by Chip Currie and Jonathan Odom, two PwC National office partners, to discuss CECL disclosures and share important reminders as calendar year-end companies dive into their year-end reporting cycle.Topics include:0:45 - Introduction. Before launching into the CECL disclosures, we highlight some changes made to the CARES Act deferral of CECL and troubled debt restructuring guidance as a result of the recent stimulus bill signed into law in December.6:01 - Q3 2020—What we saw. We provide perspectives on how CECL-related disclosures have evolved through Q3 of 2020, including what we’ve heard from analysts.14:18 - The FASB. The FASB has been actively working on their post-implementation review of the CECL accounting standard. In this section, we discuss what they’ve heard in terms of disclosures and share other observations on what we expect to come out of their review. 16:58 - SEC comment letters. Any new developments or focus areas of the SEC? We take a look.   18:22 - Final reminders. As companies prepare and refine their disclosures for their annual reports, we share some general best practices.Chip Currie is a partner in PwC’s National Office with over 20 years of experience assisting companies in resolving complex business and accounting issues. He concentrates on the accounting for financial instruments for both current and emerging standards and works with many of the firm's largest financial services clients and a number of non-financial service clients on treasury-related matters.Jonathan Odom is an assurance partner in PwC’s National Office SEC services practice with over 20 years of experience in providing accounting and advisory services to the financial services sector. Heather Horn is PwC’s National office thought leader, responsible for developing our communications strategy and conveying firm positions on accounting and financial reporting matters. She is the engaging host of PwC’s accounting and reporting weekly podcast and quarterly webcast series, as well as periodic webcasts for the power and utilities industry. With nearly 30 years of experience, Heather’s accounting and auditing expertise includes financial instruments and rate-regulated accounting.Transcripts available upon request for individuals who may need a disability-related accommodation. Please send requests to us_podcast@pwc.com.Did you enjoy this episode? Text us your thoughts and be sure to include the episode name.