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Key takeaways from the AICPA & CIMA Conference · PwC's accounting podcast

• 0:00
  SPEAKER_00: Thought leadership from PWC's national office.
• 0:07
  SPEAKER_02: Hello, and welcome to PWC's Accounting Podcast.
• 0:10
  SPEAKER_02: I'm Heather Horn.
• 0:12
  SPEAKER_02: Today's episode features insights from the recent AICPA conference on current SEC and PCOB developments, an important gathering of the year for those tracking the evolving landscape of accounting, auditing, and financial reporting.
• 0:27
  SPEAKER_02: The conference is known for surfacing timely and offering forward-looking updates on everything from standard setting and enforcement trends to the regulatory outlook to developments in emerging areas.
• 0:41
  SPEAKER_02: Hosting today's discussion is Kyle Moffitt, a partner in PWC's national office.
• 0:46
  SPEAKER_02: He's joined by Scott Feely and Kevin Vaughn, also partners in our national office.
• 0:50
  SPEAKER_02: Let's turn to their conversation and hear what stood out from this year's conference and what it can mean for you and your company.
• 0:58
  SPEAKER_01: Scott and Kevin, thank you for joining us today.
• 1:01
  SPEAKER_01: You both just attended the AI CPA conference in Washington, D.C., along with me.
• 1:06
  SPEAKER_01: I actually had the pleasure of being the chair of the AI CPA conference planning committee.
• 1:12
  SPEAKER_01: And I've certainly heard a lot of complaints about, you know, the donuts weren't good enough, or they weren't provided long enough, or where was the bacon?
• 1:20
  SPEAKER_01: You know, we we had eggs, but where the where was the bacon?
• 1:23
  SPEAKER_01: Um so there's a lot, obviously, that that uh you know happened at the conference.
• 1:27
  SPEAKER_01: Fair questions.
• 1:28
  SPEAKER_01: Very fair questions, obviously.
• 1:30
  SPEAKER_01: Um more than meals, though.
• 1:32
  SPEAKER_01: More than definitely, definitely true.
• 1:35
  SPEAKER_01: Um Scott, can you provide us a little background on the conference, the various presenters?
• 1:39
  SPEAKER_01: Um Kevin, uh obviously you you know you were also um uh previously at the SEC, but you're at the conference.
• 1:45
  SPEAKER_01: Any perspectives you guys have to share?
• 1:47
  SPEAKER_04: Sure.
• 1:47
  SPEAKER_04: Yeah, maybe I'll maybe I'll go ahead and I'll I'll I'll get us started.
• 1:50
  SPEAKER_04: So I mean it's just a a really popular, um, well-attended annual conference.
• 1:55
  SPEAKER_04: I've I've heard people describe it in the past as the Super Bowl for accountants.
• 1:58
  SPEAKER_04: Um so if you like this type of stuff, it's a pretty, pretty big event.
• 2:02
  SPEAKER_04: It's three three days uh presentations from regulators, standard setters, um, and various other parties and what I'll broadly call the the uh the financial reporting um and regulatory ecosystem.
• 2:15
  SPEAKER_04: Um so that includes audit firms uh with a heavy presence from their national offices, certainly preparers, security lawyers, academics, financial analysts, economists, lawyers, et cetera.
• 2:26
  SPEAKER_04: Um But really when you when you take a step back, it's a really good opportunity um in a lot of instances to hear directly from regulators going into year end what they're seeing and what registrants ought to be focused on going into their into their closing cycles.
• 2:42
  SPEAKER_04: So um so that's really what it's what it's about.
• 2:44
  SPEAKER_04: It's a pretty exhausting um conference.
• 2:47
  SPEAKER_04: I would say three days sitting around listening to some pretty heavy content.
• 2:50
  SPEAKER_03: But it and I think and we'll get into it a little bit more, but but the SEC chair uh came and and spoke and and he was kind of the keynote.
• 2:57
  SPEAKER_03: So good work, Kyle, and and setting that up.
• 2:59
  SPEAKER_03: Uh it you know, and it and it's good, right?
• 3:01
  SPEAKER_03: It just it speaks to the importance of the event.
• 3:03
  SPEAKER_03: It speaks to it also, right?
• 3:05
  SPEAKER_03: It was good to hear him talk about the importance of the profession and and uh clearly hear that that's top of mind.
• 3:10
  SPEAKER_03: And we haven't uh it's not it's not always a guarantee that the SEC chair can come uh and and certainly have not seen the chair there in recent years, but but it was certainly good to good to have um had have Chair Atkins there.
• 3:23
  SPEAKER_03: Um and it and I think maybe if I think back to like the podcast last year and and some of the discussions last year, right?
• 3:31
  SPEAKER_03: It was it was a lot of good content, a good variety of content.
• 3:35
  SPEAKER_03: Um, but you know, I think in in prior years, maybe sometimes sometimes there can be more drama than others.
• 3:40
  SPEAKER_03: I was actually somewhat relieved uh this year there wasn't a whole lot of drama, right?
• 3:44
  SPEAKER_03: Like in terms of the messaging, like right, it was it was all things cons fairly consistent with what we heard, certainly some some nuggets that we'll get into, uh, some additional nuggets.
• 3:52
  SPEAKER_03: Uh and so so it was really good.
• 3:55
  SPEAKER_03: Uh so again, Kyle, great job.
• 3:57
  SPEAKER_03: Uh the committee, I know that it's a it's a whole committee, right?
• 4:00
  SPEAKER_03: And I don't know you say that too, but uh you know, so but I guess maybe along that line, because you did have like as you guys were thinking about the conference, right?
• 4:08
  SPEAKER_03: Like as you were thinking about, right?
• 4:10
  SPEAKER_03: There's some standard standard sessions, but you also fill in a lot of others.
• 4:14
  SPEAKER_03: And and I think it was a good, good diversity of of perspectives and and and of of topics.
• 4:19
  SPEAKER_03: So I guess what was your thought?
• 4:21
  SPEAKER_01: What was how do you self-assess uh you you always you always you know it there's always challenges, right?
• 4:27
  SPEAKER_01: And to your point, there are kind of the staples, right?
• 4:29
  SPEAKER_01: The people that you typically get.
• 4:30
  SPEAKER_01: And and I think this year, you know, we didn't get the enforcement division, um, but then we we wound up getting a a you know a former chief accountant of the division of enforcement and three, you know, lawyers that actually are in that space.
• 4:42
  SPEAKER_01: And so they're sharing their observations.
• 4:44
  SPEAKER_01: I thought that that was you know really interesting, kind of the way that they presented information where they thought things would head with this commission versus the prior commission.
• 4:53
  SPEAKER_01: They actually had a list of cases that were brought um in the prior regimes and kind of said, well, would this action be brought today?
• 5:01
  SPEAKER_01: Where where would this land?
• 5:02
  SPEAKER_01: And so they kind of were showing that, highlighting the difference between the two um the two administrations.
• 5:09
  SPEAKER_01: And I think um the thing that stood out to me obviously was there there was a l there was more engagement from from the SEC um than in prior years, um, which I I think, like you said, the chair being there, Kurt Hall having the keynote, spending time like, and it was not a speech, it was the willingness to sit and have a conversation, have a dialogue, the the fireside chat approach.
• 5:30
  SPEAKER_01: I think it was very well received.
• 5:32
  SPEAKER_01: Um and I think that that's to your point about the various types of programs or or panels wanting people to go come away with the at the comp from the conference thinking, okay, I've learned some things that are somewhat outside of my normal everyday, but engage it informs me, and gate I'm in can now engage with my chief accounting officer, my controller, my you know, CFO, my CEO.
• 5:58
  SPEAKER_01: I understand the challenges they face in running the business.
• 6:01
  SPEAKER_01: I understand shareholder activism, we heard a lot about AI, and I know you guys will talk about that.
• 6:06
  SPEAKER_01: But I think look, I think I was I was very pleased with it.
• 6:08
  SPEAKER_01: And obviously you get a lot of complaints, as I said.
• 6:11
  SPEAKER_01: I'm surprised I can still talk after after three and a half days of being kind of floating around since Sunday through through even today.
• 6:17
  SPEAKER_01: Trevor Burrus, Jr.
• 6:17
  SPEAKER_03: The mayor of the AI CPA council.
• 6:20
  SPEAKER_01: I mean, it it's it is a lot.
• 6:21
  SPEAKER_01: It's a lot of work, right?
• 6:22
  SPEAKER_01: And so you're you're definitely, you know, you're up on stage, so you you tend to, you're you're kind of you know, kissing baby, shaking hands.
• 6:29
  SPEAKER_01: And so it's it's it's pretty exhausting to your point, right?
• 6:32
  SPEAKER_01: And so this is the culmination.
• 6:34
  SPEAKER_01: So after today, I think all three of us will be happy to to head you know, head home for the weekend and and and relax a little bit.
• 6:41
  SPEAKER_01: No doubt.
• 6:42
  SPEAKER_01: So look, I think uh the the one thing I'd say as I think about kind of the the the conference and the the benefit of going or or listening or watching it virtually is I always feel enlightened after hearing directly from the source.
• 6:55
  SPEAKER_01: Um and so you you always want to know what's top of the mind of mind at the SEC, the PCOB, and the FASB.
• 7:02
  SPEAKER_01: Um I think starting even with the first day when you know Chairman Paul Atkins spoke, one of the regulatory themes was on what he said.
• 7:09
  SPEAKER_01: And we even saw it in in I think it was a meeting they had with the New York Stock Exchange or making IPOs great again.
• 7:17
  SPEAKER_01: Um so Scott, can you share a little bit about what you glean from that uh part of the conference?
• 7:22
  SPEAKER_04: Yeah, I I guess there was no real, no real surprise, as you allude to.
• 7:26
  SPEAKER_04: He's um used that tagline in in numerous forums that preceded um preceded this one.
• 7:31
  SPEAKER_04: So it's um this administration and and commission has been pretty clear about their intent to focus on facilitating capital formation.
• 7:38
  SPEAKER_04: Um so he got us kicked off early on day one and you know, sort of laid out this um this tagline and then you know, maybe lamented a little bit the fact that the number of public registrants in the United States has declined pretty uh pretty substantially over the past uh 30 years, perhaps since he was last um last at the SEC.
• 8:00
  SPEAKER_04: And while there's probably many reasons for that, some of which may be outside of the SEC's control, including the availability of private capital and and um and and things like this that have evolved in the intervening period, he did articulate a vision to you know attempt to address what the SEC could address in terms of um making IPOs great again by really anchoring it to three legs of a of a stool.
• 8:24
  SPEAKER_04: So one and most relevant for the financial reporting audience, I would say, was oriented towards what he characterized as the weight of um the weight of disclosures.
• 8:34
  SPEAKER_04: Um and you hear things along those lines, you know, couched in various, various different ways.
• 8:38
  SPEAKER_04: It might be cost-benefit.
• 8:40
  SPEAKER_04: Um, you know, he spoke a lot about materiality, you know, and what disclosures are material and really letting that inform um what should be required in regulatory documents.
• 8:50
  SPEAKER_04: Um I think he talked about separating the wheat from the chaff.
• 8:53
  SPEAKER_04: And maybe that's really difficult for some investors to do today because of the volumes of disclosure that show up in typical, um, typical registration statements.
• 9:01
  SPEAKER_04: So he used things like risk factors as you know an anecdotal situation to illustrate this point where he said when that you know rule first came out, you know, maybe people envisaged that it would be a bulleted list, you know, of a handful of risks that investors ought to focus on.
• 9:19
  SPEAKER_04: And it evolved over time to be one of the largest, if not the largest, section of a document to the point where the SEC had to do rulemaking recently to, you know, move in the direction of this bullet.
• 9:29
  SPEAKER_01: That was the first Trump term, right?
• 9:31
  SPEAKER_01: Or it happened during that, the first Trump term.
• 9:33
  SPEAKER_04: Exactly.
• 9:34
  SPEAKER_04: Yeah.
• 9:34
  SPEAKER_04: So he used he used that to illustrate, illustrate the point.
• 9:36
  SPEAKER_04: Um, he certainly alluded to other rulemaking that may make IPOs more attractive again, and we'll we'll cover that in a little bit of detail later.
• 9:44
  SPEAKER_04: Um there were two other legs uh they're really better addressed by lawyers, but I'll just allude to them because it was part of his commentary.
• 9:50
  SPEAKER_04: So he he alluded to you know the rise of shareholder activism and the manner in which that interplays with the proxy process and attempting to um to address that a little bit.
• 10:01
  SPEAKER_04: And then, you know, there was some discussion of um, you know, legal provisions that might have been included in registration statements with respect to either mandatory arbitration or fee shi- uh fee shifting and things like this.
• 10:12
  SPEAKER_04: And he said, you know, historically the the SEC would have stopped those IPOs.
• 10:18
  SPEAKER_04: And they're gonna move in the direction of relying more on state law.
• 10:21
  SPEAKER_04: Defer to state law exactly is what I what I heard from him on that topic.
• 10:23
  SPEAKER_04: Yeah.
• 10:24
  SPEAKER_04: Yeah.
• 10:24
  SPEAKER_01: And he seems to be kind of he he continues to double down on that commentary of look, there's there's going to be a lot of deference to state law on a lot of topics.
• 10:33
  SPEAKER_01: I think one thing that surprised me was not hearing much, at least on proxy advisory firms and kind of the you know, the view from from from kind of that side of the aisle about, hey, you know, there the do these proxy advisory firms have too much power, too much control um over vote, you know, shareholder voting recommendations.
• 10:49
  SPEAKER_01: And so I think what we've obviously heard noise about is this something that the White House might might potentially focus on.
• 10:56
  SPEAKER_01: So um, but again, though, I think um, you know, as you think about kind of his commentary, you know, obviously very interesting of where are we headed, uh where are we headed from a regulatory perspective?
• 11:07
  SPEAKER_01: Then I think one thing that stood out to me, and it'd be interesting, Kevin, your thoughts, but it it seemed sounded like he he made a comment about like we're gonna be doing this stuff, we're gonna be pumping stuff out.
• 11:18
  SPEAKER_01: Like we we have a very short window.
• 11:20
  SPEAKER_01: And so the the message that I heard from from him, from and Kurt Hall, and and even from Jim Maloney is it's gonna be fast and furious.
• 11:29
  SPEAKER_01: Um, and and so we can expect to see a lot of proposals coming out in the next in the next few months.
• 11:34
  SPEAKER_01: Um, I think we're gonna see some activity uh at the board of the PCOB, so just broadly, right?
• 11:40
  SPEAKER_01: Um, and so it's hey, they're fast and furious.
• 11:43
  SPEAKER_01: Um, you can have some proposals and adopt a bunch of rules.
• 11:46
  SPEAKER_01: Those are they're not gonna adopt the rules right away, right?
• 11:49
  SPEAKER_01: They're gonna propose things.
• 11:50
  SPEAKER_01: But I don't know, Kevin, anything that you wanted to add on kind of what you heard?
• 11:54
  SPEAKER_03: Yeah, no, I mean I think I think that's exactly right.
• 11:57
  SPEAKER_03: And and um we can probably get into a little bit later some of the specific rulemakings, but certainly, you know, that is gonna be the focus.
• 12:05
  SPEAKER_03: Uh I think we heard the words uh early in 2026, so so you know, not sure uh exactly the timing.
• 12:12
  SPEAKER_03: Um, but but certainly I I do think that you know when you think about the cycle of a rulemaking, uh that that needing to get started on that uh you know as soon as you can, and the shutdown didn't help them from that perspective.
• 12:26
  SPEAKER_03: And another shutdown may not help them either.
• 12:28
  SPEAKER_03: Right.
• 12:29
  SPEAKER_01: And if that happens, then then we're really in trouble, right?
• 12:31
  SPEAKER_01: From a you know, from an agenda perspective, capital formation perspective, at least when I say we're really in trouble, I mean from the perspective of issuers wanting action quickly, wanting to close out comment letters, if they're you know back and forth dialogue right now, um if there's pre-clearances they want to get in, things like that.
• 12:47
  SPEAKER_01: And then we'll get to that in a little bit.
• 12:49
  SPEAKER_01: So um so so another theme um really was emerging issues, right?
• 12:55
  SPEAKER_01: And I think we had heard last year um there was a there were a lot of there were a lot of there was a lot of feedback from the people that attended um the sessions that there was too much of an emphasis on certain topics.
• 13:07
  SPEAKER_01: Um and I won't mention what those topics are, but they were really looking more for, hey, can you do something you know on other emerging areas, right?
• 13:15
  SPEAKER_01: Like let's understand what's going on with trade and tariffs, let's let's you know bring back, you know, an economist to really dive into what's going on.
• 13:24
  SPEAKER_01: Um, can can you, you know, what about generative AI and where are we headed there?
• 13:28
  SPEAKER_01: So um what can you share, Kevin, about some of those emerging things, you know, issues that caught your attention.
• 13:35
  SPEAKER_01: Yeah.
• 13:36
  SPEAKER_03: Yeah.
• 13:36
  SPEAKER_03: I mean, I think I'll I'll start with that last one because it's you can't go anywhere without talking about AI, right?
• 13:41
  SPEAKER_03: And I think it was, I would say, pervasive throughout almost uh pretty much every session.
• 13:46
  SPEAKER_03: There was there was some sort of discussion about how that was impacting things.
• 13:50
  SPEAKER_03: Uh and in a pretty broad range, right?
• 13:52
  SPEAKER_03: It's just transforming.
• 13:54
  SPEAKER_03: Uh, so we heard discussion about how it's impacting preparers, impacting auditors, uh, impacting analysts and investors, et cetera.
• 14:01
  SPEAKER_03: So um, you know, I I I guess I would maybe a few different versions of the commentary.
• 14:07
  SPEAKER_03: One uh talking about the risk associated with it.
• 14:10
  SPEAKER_03: Uh and so certainly we heard um some of the SEC staff, right, thinking about the thinking about the risk if you're gonna bring it into your financial reporting process.
• 14:19
  SPEAKER_03: Um, you know, I think Kurt Hole made made mention about like, hey, like is AI gonna be used to to prepare financials, prepare disclosures, right?
• 14:27
  SPEAKER_03: And and uh, but but you know, you still have to have controls and governance around that.
• 14:31
  SPEAKER_03: The the same internal controls requirements will apply regardless, right?
• 14:35
  SPEAKER_03: And so how do you think about that?
• 14:37
  SPEAKER_03: Uh they shared some insights in terms of things that they think about in terms of of thinking about that.
• 14:42
  SPEAKER_03: We also heard it a little bit, um, we talked a little bit about risk factors.
• 14:46
  SPEAKER_03: So certainly one comment that was made by by uh one of the panelists and uh and one of the panels was was just the pervasiveness of companies disclosing risk factors on AI.
• 14:57
  SPEAKER_03: Uh and so um that's that's not surprising, but but certainly an area that companies are thinking about.
• 15:02
  SPEAKER_03: Uh and then on the accounting side, right, there's there's a lot of things in the news, a lot of a lot of different topics that can come up there, um, all you know, some very unique structures that can that can arise there.
• 15:14
  SPEAKER_03: And so the OCA staff talked about some of the consultations that they've dealt with there that they've seen or or thought about, right?
• 15:21
  SPEAKER_03: And some of the issues uh that you think about there.
• 15:24
  SPEAKER_03: It could be consolidation, right?
• 15:25
  SPEAKER_03: Is it a VIE?
• 15:26
  SPEAKER_03: Uh, and you kind of work through a waterfall, you know, you might think about consolidation, you might need to think about leasing, uh, whether there's embedded leases.
• 15:34
  SPEAKER_03: Uh and then there's also like fixed assets, like what's a useful life, um, you know, and things like and impairment considerations.
• 15:41
  SPEAKER_03: Uh so kind of a broad range uh I would say attacked AI from from a lot of different angles.
• 15:48
  SPEAKER_01: Well, the one one thing I'd uh kind of layer on there, and and I think this this I actually was pleased about this was the fact that they were willing, the staff was willing to talk about generative AI and its use.
• 16:00
  SPEAKER_01: And I think, look, I think you so setting aside what what you talk to companies today, they'll say, look, we don't have really not using it much in the way of the the financials, and you know, you're putting it, you know, disclosures in your, you know, fine, you know, your footnotes, you're not seeing financial statement footnotes include inclusive of all this generative AI.
• 16:19
  SPEAKER_01: There's no real disclosures, but there are disclosures outside, right?
• 16:22
  SPEAKER_01: Disclosures kind of throughout the filing.
• 16:24
  SPEAKER_01: So um, you know, and and certainly business description, like you said, a risk factor.
• 16:28
  SPEAKER_01: So I I think it was definitely timely for them to talk about it.
• 16:32
  SPEAKER_01: I think what I expect will happen next year is that like ESG evolved into was a bigger thing, and then now it's not.
• 16:40
  SPEAKER_01: I I do uh envision that, you know, in a situation that hey, next year generative AI really is gonna be especially at the speed and the pace, it's gonna be all throughout the agenda.
• 16:53
  SPEAKER_01: And and I and to your point, I want to echo like it was really felt.
• 16:57
  SPEAKER_01: Um any anything else for like from the from other conversations and and Chairman Atkins things that he said that Yeah, I mean I you know, another like thinking about emerging issues, right?
• 17:08
  SPEAKER_03: And and certainly Chairman Atkins, like like what he's been focused on, right, is cryptocurrencies.
• 17:13
  SPEAKER_03: Uh and so so that certainly was something they talked about it from the standpoint of rulemaking uh activity, and and that would be in the population of of those things that we expect to see uh coming in 2026.
• 17:25
  SPEAKER_03: Uh it came up some in the in the FASB discussion, right?
• 17:29
  SPEAKER_03: They talked about some of their agenda, pulling both what they've done to date, and then also pulling in some of those things.
• 17:35
  SPEAKER_03: Uh and and Kurt Hole talked about uh some of the interaction there and and uh and some of the focus there from an accounting perspective.
• 17:43
  SPEAKER_03: Um Kurt actually made a comment, I think, that that he thinks that the that the staff saved up all the accounting issues uh for when he got there.
• 17:51
  SPEAKER_03: I you know, I think I'm sure when he got back to the when he got back to the office, they they reminded him that they've been they've been working on this knee deep in this for years.
• 18:00
  SPEAKER_03: So uh they did address some accounting, some specific accounting issues they've dealt with there around stable coins.
• 18:05
  SPEAKER_03: Um, you know, and I I I you know, like we had a podcast series, uh, a number of different people spoke on a number of different crypto issues.
• 18:14
  SPEAKER_03: I, you know, I can't do it justice the way that they did.
• 18:16
  SPEAKER_03: They're really actually uh a number of people came up to me in the hallway at the conference said, like, I loved, you know, what you guys did on the crypto.
• 18:23
  SPEAKER_03: So if you haven't listened to that, that's I think that's really gives you a good walkthrough in terms of in terms of a lot of the issues and and and stable coins uh is one of the issues that I think is top of mind to a lot of people right now.
• 18:35
  SPEAKER_03: Uh so so that's a good that's a good that's a good plug.
• 18:38
  SPEAKER_01: I and I think look, I think it it is evolving so quickly too that that it's one where you look and say, hey, like generative AI in the crypto space, like every time I talk to our experts on crypto, whether it's you know Beth Paul, whether it's John Van Osdall in our national office, like it's evolving very quickly.
• 18:59
  SPEAKER_01: There's always a new issue, a new consult, a new conversation with the other firms, the FASB, whatever.
• 19:04
  SPEAKER_01: So I think it's one for people to not ignore.
• 19:07
  SPEAKER_01: Um, and I think you know, some people would like to ignore it just because they we're not gonna go down that path.
• 19:11
  SPEAKER_01: But I think like a uh you got to pay attention to these things.
• 19:15
  SPEAKER_01: Um so we also heard a lot, and and this was something I think we we've already got some level, some preview of this in and various conversations and hearing and seeing speeches, some of the commentary from from Chairman Atkins on international standards, right?
• 19:29
  SPEAKER_01: From a from a sustainability perspective, um certainly some commentary on on that, um, his views on funding the the IASB, right, and the the financial uh statements, but then also the funding, uh split funding to the Sustainability Standards Board.
• 19:45
  SPEAKER_01: So we've heard a lot of that commentary, but there were a lot of, I think, very interesting tidbits that I kind of gleaned from from various individuals.
• 19:52
  SPEAKER_01: And then I start to think about layering in like, well, you also heard Kurt talk about it, right?
• 19:58
  SPEAKER_01: Kurt Hall.
• 19:58
  SPEAKER_01: And Kurt Hall is very, very knowledgeable on the international uh stage.
• 20:04
  SPEAKER_01: And because he actually, as a you know, a retired UI partner spent a number of years in Europe um working on a uh in the global firm of UI.
• 20:13
  SPEAKER_01: So he's he does have a unique perspective.
• 20:15
  SPEAKER_01: And of course, Commissioner Mark Ueda, he continues to have conversations, and so we know he's taken a role in coordinating a lot of the the SEC's international coordination effort.
• 20:26
  SPEAKER_01: So, Scott, I know I said a lot there.
• 20:28
  SPEAKER_01: Maybe I stole some of your talking points, but these were just kind of things that I noticed.
• 20:32
  SPEAKER_01: What what what did what were some of the key themes you heard there?
• 20:35
  SPEAKER_04: Yeah, so uh I actually thought it was interesting.
• 20:37
  SPEAKER_04: So as as you know, I spent um I spent quite a bit of time overseas myself.
• 20:40
  SPEAKER_04: Um and I might still be living overseas if we didn't think at some point IFRS was going to be.
• 20:46
  SPEAKER_04: Right.
• 20:46
  SPEAKER_04: That's true.
• 20:47
  SPEAKER_04: That's right.
• 20:47
  SPEAKER_04: Back in 2008, when I when I repatriated, it was it was it was the talk of the town, right?
• 20:52
  SPEAKER_04: We were all talking about possible convergence, the gap reconciliation for foreign private issuers had been recently eliminated and and so on and so forth.
• 21:00
  SPEAKER_04: And you know, we really haven't heard about it in more than a in any meaningful way in in well over a decade.
• 21:07
  SPEAKER_04: And so I'll come to the funding here in a second, but I did find it pretty interesting, and maybe to your point, it wasn't a one and done.
• 21:14
  SPEAKER_04: It it it recurred uh, you know, a few times throughout the conference, these themes around international, I'll call it collaboration wasn't limited to accounting, right?
• 21:26
  SPEAKER_04: So, you know, it was both on the accounting side and also on the on the auditing side.
• 21:31
  SPEAKER_04: So I don't know, for me, that was a you know, while we've heard you know some of the concerns about funding, and again I'll come to that, you know, it was a bit of a change in direction with this focus on you know, not seeking perfect convergence, but attempting to leverage leverage each other's work and you know, maybe eliminate differences where you know where we um where we can to make it.
• 21:54
  SPEAKER_01: I mean, we we are this I mean the the nature of business today and and you know obviously the the administration There's some changes, but the nature of the business today and the business work environment, a lot of our big clients, right?
• 22:05
  SPEAKER_01: Multinationals.
• 22:06
  SPEAKER_04: Exactly.
• 22:07
  SPEAKER_01: Right.
• 22:07
  SPEAKER_01: And so, you know, we you know, you are we as a firm and and the other firms are always uh they have an understanding of the international standard setting, what's going on, and the impacts for at least from an audit perspective.
• 22:19
  SPEAKER_01: Um, right.
• 22:20
  SPEAKER_01: So I think those are I think those are great points.
• 22:22
  SPEAKER_01: Aaron Powell Yeah.
• 22:23
  SPEAKER_04: So I so that was all pretty, pretty interesting.
• 22:25
  SPEAKER_04: And again, it went in in many different directions.
• 22:27
  SPEAKER_04: It was leveraging each other's work, it was maybe influencing each other's work, you know, and sort of achieving convergence where you where you can, again, across auditing and accounting.
• 22:35
  SPEAKER_04: I I would caveat all of that with you know some of the concerns we've historically heard around funding and things like this.
• 22:43
  SPEAKER_04: Those were what you lived through before.
• 22:45
  SPEAKER_04: Yeah, those were certainly present, you know.
• 22:47
  SPEAKER_04: So uh Chairman Atkins as well as um Kurt continued to highlight the dependence of you know the various international standard setters on stable funding, you know, and and uh Chairman Atkins even alluded to you know his prior experience where he said, you know, when the gap reconciliation requirement for again for foreign private issuers was eliminated, part of the thinking that sat underneath that elimination was that you know the IASB was going to have a stable source of funding.
• 23:17
  SPEAKER_04: And it's in this intervening period that the IASB has emerged and you know, some of the sources of funding have maybe had to had to be split.
• 23:26
  SPEAKER_04: And you know, so the SEC has expressed some concern about the stability of the funding for the ISB and the knock-on impact to their ability to produce high-quality standards and everything else.
• 23:36
  SPEAKER_04: So I would just say, you know, pretty interesting watch watch this space for further development.
• 23:41
  SPEAKER_01: I think look, my my takeaway on all this, right, is like, look, you we we get the nuances of these various accounting and auditing regulators and standard setters, right?
• 23:52
  SPEAKER_01: And I think our audience typically does not, but I think what it highlights is that what is going on internationally, it's just going to be very different.
• 24:00
  SPEAKER_01: And and the focus of the SEC on really engaging and and not necessarily intervening, but having some say, level of s of influence on the standard setting across the globe is going to be there more so than it has been.
• 24:16
  SPEAKER_01: And I think it's not just with on on the sustainability side, but it's really to your point, it's on the accounting side, the auditing side.
• 24:24
  SPEAKER_01: How do we leverage some of the work that others are doing and engage so that we all get to a good place?
• 24:30
  SPEAKER_01: And and you look, we all see the benefits of of something being a global standard.
• 24:35
  SPEAKER_01: Or if if and and FASB and and you know, IFRA, if you've converged as a standard, there's some benefits to that, right?
• 24:42
  SPEAKER_01: Um, no doubt.
• 24:43
  SPEAKER_04: I was gonna say, I mean, the overarching objectives here, one, produce higher quality standards, again, both accounting and auditing, and two, make things simpler for um for multinational registrants.
• 24:52
  SPEAKER_04: Yeah.
• 24:53
  SPEAKER_04: Right.
• 24:53
  SPEAKER_04: I mean, it's it's undoubtedly a more complex world where they're dealing with multiple sets of auditing standards and multiple sets of uh of accounting standards.
• 25:00
  SPEAKER_01: Now I'm I'm glad you guys had that international flavor in in in here because I think it is definitely something to be paying attention to.
• 25:07
  SPEAKER_01: Um I want to kind of switch gears a little bit um and and really talk a little bit about the staff and kind of their work.
• 25:13
  SPEAKER_01: So we did hear a lot of conversation around um, you know, the shutdown, um they're they're digging out of the hole.
• 25:18
  SPEAKER_01: Um, certainly heard a lot of insights from kind of how that impacted what Chairman Atkins is, what they're focused on, timing of things, what we heard from Kurt Hall, you know, Court Finn chief accountant Heather Rosenberger.
• 25:29
  SPEAKER_01: Um really very interesting insights.
• 25:32
  SPEAKER_01: Um and and Kevin, I I guess from your perspective, you live through a shutdown.
• 25:37
  SPEAKER_01: Um I'm just wondering, like, what did you hear was any different from when you were there?
• 25:42
  SPEAKER_01: But it I felt like it was a lot of pressure to dig out, and it took a it took a long time to really get back up to speed.
• 25:48
  SPEAKER_01: But I gotta believe that that people are gonna be impacted.
• 25:51
  SPEAKER_01: And if there's another shutdown, it could get in even even worse.
• 25:55
  SPEAKER_01: So you talk about kind of what you heard.
• 25:56
  SPEAKER_03: Yeah, yeah, yeah, right.
• 25:58
  SPEAKER_03: I mean, this was 43 days, right?
• 26:00
  SPEAKER_03: That would that's how long it was.
• 26:01
  SPEAKER_03: And and one thing um I definitely felt that the last shutdown that we were both in, too, when we were both there, um, that there was definitely like this like, okay, well, now we've got to catch back up.
• 26:11
  SPEAKER_03: Um, but uh, you know, I think I I think one one thing to keep in mind this time is that where the capital markets were this time versus last time.
• 26:20
  SPEAKER_03: It was we were already seeing a a pretty significant uptick in terms of transactions uh and things like that before this shutdown, right?
• 26:28
  SPEAKER_03: And certainly there were a lot of transactions happening the last time too.
• 26:31
  SPEAKER_03: Like there's kind of just normal course, but but we we were seeing kind of an uptick in that anyway.
• 26:36
  SPEAKER_03: Um, and so so this was longer, um longer in length, you know, by about 10 days, uh, and then and then also right, more filings just in general that came in.
• 26:48
  SPEAKER_03: So uh they shared there were uh in excess of a thousand uh registration statements uh waiting for them to process when they came back.
• 26:56
  SPEAKER_01: And and to be clear, uh the staff looks at each one.
• 27:00
  SPEAKER_01: They may not review it, but he even Jim Maloney, the director of Corpfin, says we do screen, which means they take a quick read to see what's in there, what it looks like to determine the level of review they plan to conduct.
• 27:12
  SPEAKER_03: Yeah.
• 27:13
  SPEAKER_03: So it's a lot to get through.
• 27:14
  SPEAKER_03: Yeah, some of that thousand may have been ones that that had come in before the shutdown, right?
• 27:18
  SPEAKER_03: Like the guy started to work on.
• 27:20
  SPEAKER_03: Um so so what they shared is is that they're like of that population, they're about halfway through uh in terms of like churning through and and whether it's doing a screening uh and and and deciding not to review it or or doing a review and issuing comments.
• 27:36
  SPEAKER_03: Um so, but at the same time, once they reopened, right, people kept filing registration statements.
• 27:42
  SPEAKER_03: Like I said, it's a busy capital markets, and so those are those are coming in as well.
• 27:46
  SPEAKER_03: So we don't know what the incremental additional ones are.
• 27:49
  SPEAKER_03: Um you know, they said consistent with the statement that they released, uh, you know, pretty much immediately when it opened back up, uh, they're processing everything in the order that it came in.
• 27:57
  SPEAKER_03: Uh, I would say anecdotally, that's entirely consistent with what I've seen in terms of ones that that I've worked on.
• 28:04
  SPEAKER_03: Uh and and but it's just gonna take time.
• 28:07
  SPEAKER_03: They're working, they're working very hard to try to get through, to get through everything.
• 28:10
  SPEAKER_03: It just takes time.
• 28:12
  SPEAKER_03: Uh and and I think um uh Tim Maloney did say that he hopes by early next year they'll be back to their kind of normal cadence and their normal, yeah, um, their normal time.
• 28:22
  SPEAKER_03: But but like you mentioned, like the current funding bill runs out at the end of January.
• 28:25
  SPEAKER_03: So uh hopefully that gets resolved and we don't have to worry about this again.
• 28:29
  SPEAKER_03: Um, but but certainly, you know, they're they're thinking about that.
• 28:33
  SPEAKER_03: And and in terms of the work they're doing, they're focused on the IPOs, right?
• 28:37
  SPEAKER_03: The capital raising transactions.
• 28:39
  SPEAKER_03: They did kind of talk about that's really a big area of focus for them.
• 28:43
  SPEAKER_03: Um, and and some of the others, you know, if it's a follow-on offering, resale registration statement, some of those things, they may, they may end up not reviewing it, but but it is an important point.
• 28:53
  SPEAKER_03: They still, they still have to pick it up and look at it and make that decision.
• 28:57
  SPEAKER_03: So you can't just, you know, they kind of reiterate you can't just file that thing and immediately start an LTK and say, like, hey, can you take it effective?
• 29:04
  SPEAKER_03: Because you're not gonna review this.
• 29:05
  SPEAKER_03: Like he made very clear to say, uh, I'm not saying we're not gonna review it.
• 29:10
  SPEAKER_03: Um, you know, it's it's just they have a process that they'll have to go through there.
• 29:14
  SPEAKER_04: Yeah, and then they're not making that choice on the review or no review until they get to its place in the line, right?
• 29:20
  SPEAKER_04: So it's not like they're projecting out and saying we don't have to.
• 29:24
  SPEAKER_01: We talked about that this morning, right?
• 29:25
  SPEAKER_01: With like it was, I think we were, I mean, it makes sense, right?
• 29:27
  SPEAKER_01: Like, and that that's the way that we would operate when I was there.
• 29:31
  SPEAKER_01: But um, but I I did I I did find it interesting that they did, you know, that they really were saying, hey, look, look, if you are a new issuer looking to access the capital markets, that that's the message.
• 29:43
  SPEAKER_01: Like that is their priority.
• 29:45
  SPEAKER_01: And as you say, Kevin, like when you talk about resale registration, so basically, you know, there's a lot of other registration statements that go in.
• 29:53
  SPEAKER_01: Now, could we see maybe mergers, you know, uh registration statements, you know, form S4, whatever, could we see them getting prioritized to some extent?
• 30:02
  SPEAKER_01: Maybe, maybe not.
• 30:03
  SPEAKER_01: I don't I think it had it probably need to be it's not gonna be prioritized over something as a new capital raise.
• 30:08
  SPEAKER_01: So I think it's important to think about timing all of that.
• 30:11
  SPEAKER_01: And then I'd layer on top of that, again, if you are going to, you know, if you have a comment letter, you have process, you know, things going on with the SEC today, or let's say you historically go in every year with a waiver of the financial statements for some equity method investee, I think the message is, hey, look, you want a waiver of the rules or some sort of accommodation from the staff, and there are listeners out there that do this and have this issue, get that in sooner than later.
• 30:41
  SPEAKER_01: Um, because if you delay, if you wait, um, if we have another shutdown, you may not have any certainty going into year end.
• 30:49
  SPEAKER_01: And you may be scrambling trying to figure out like, do we have to get this audit?
• 30:52
  SPEAKER_01: How are we going to get this audited?
• 30:54
  SPEAKER_01: Like, we've not gotten the waiver.
• 30:55
  SPEAKER_01: We don't have the blessing from the staff.
• 30:57
  SPEAKER_01: Our circumstances, fact patterns different than last year.
• 31:00
  SPEAKER_01: So we do feel we need to write in.
• 31:02
  SPEAKER_01: So I mean, any any observations on that or any other things to add?
• 31:07
  SPEAKER_01: I mean, I think that is what we would tell our clients, right?
• 31:10
  SPEAKER_03: Yeah, no, no, I think that's fair.
• 31:11
  SPEAKER_03: Okay.
• 31:12
  SPEAKER_03: Absolutely.
• 31:13
  SPEAKER_01: So you're thinking about just the impact of all of this, right?
• 31:16
  SPEAKER_01: It's kind of the elephant in the room, is is these other topics, the rulemaking, right?
• 31:21
  SPEAKER_01: And you have a a chairman that starts very late in the year, builds his team, hires individuals, and you know, and the ones that we think about are the corp fin director, because that's most impactful to what we do.
• 31:32
  SPEAKER_01: And that's Jim Maloney.
• 31:33
  SPEAKER_01: Jim Maloney started pretty much a day before the shutdown or a week before the shutdown.
• 31:38
  SPEAKER_01: I'm sure they just wanted to get him in.
• 31:41
  SPEAKER_01: Um, and then of course, then you have this, you know, this period of time shutdown.
• 31:44
  SPEAKER_01: And they can't work on rulemaking.
• 31:45
  SPEAKER_01: They can only, as we've heard, it's it's per protection of life and property, which means you're not able to do a whole heck of a lot.
• 31:52
  SPEAKER_01: So the staff's not working, you kind of don't have the resources to do any work.
• 31:56
  SPEAKER_01: You have time to think about things, um, but you got to be very careful about doing anything in the way of rulemaking or other, you know, actions that that are outside of what's allowed by the law.
• 32:06
  SPEAKER_01: Um Scott, what were your reactions on the discussion surrounding rulemaking?
• 32:10
  SPEAKER_01: What would you get from the conference?
• 32:11
  SPEAKER_04: Well, I guess I would say a couple of things.
• 32:13
  SPEAKER_04: I mean, cer certainly, you know, rulemaking um, you know, was pretty pervasive again across across the conference.
• 32:19
  SPEAKER_04: I would say that the staff, other than talking about at the high level, you know, they attempted to avoid talking about any um, you know, specific rulemaking initiatives.
• 32:28
  SPEAKER_04: Um you know, and so that that was kind of that was kind of interesting to watch them do that, do that dance over the course of the course of three days.
• 32:36
  SPEAKER_04: But you know, it was pretty clear that the 43-day shutdown had a meaningful impact on their ability to move things forward, and to some degree, pretty, you know, it's a it's a commission that wants to move pretty quickly on some of these rules, and so maybe some degree of of frustration with being being behind.
• 32:53
  SPEAKER_04: I would say, you know, we joked on a on a recent podcast, Kyle, that we got the spring regulatory flex agenda in uh, I think it was in September.
• 33:00
  SPEAKER_04: And so now we're we're talking about getting the fall regulatory a little bit closer to uh the normal calendar.
• 33:05
  SPEAKER_04: I think that normally comes out in October.
• 33:06
  SPEAKER_01: Maybe not.
• 33:07
  SPEAKER_01: Who knows?
• 33:08
  SPEAKER_04: Yeah, I I guess we understood from the conference that you know the SEC's you know rulemaking agenda has already been submitted.
• 33:14
  SPEAKER_04: They're maybe dependent on other agencies because the complete reg flex agenda gets released at at one time.
• 33:20
  SPEAKER_04: Um so there were there were a handful of comments along the way.
• 33:23
  SPEAKER_04: You know, I I think uh I think it was Chairman Atkins, you know, who said uh maybe it was maybe it was Maloney who said that it would it would take all of 2026 to get you know everything they want to do from a rulemaking standpoint, you know, moving.
• 33:36
  SPEAKER_04: Yeah.
• 33:37
  SPEAKER_04: But he simultaneously, I would say maybe put everybody on on notice in the room that I think you used his terms.
• 33:44
  SPEAKER_04: You know, he he said fast and furious, right?
• 33:46
  SPEAKER_04: So he said early 2026, you know, they expect some stuff.
• 33:50
  SPEAKER_04: Yeah, yeah, they expect to start releasing, um releasing um, you know, proposals and whatnot.
• 33:56
  SPEAKER_04: And he he he sort of urged the room to, you know, one, be be ready for that, and two, you know, to be to be really engaged in that um in those uh rulemaking processes, right?
• 34:09
  SPEAKER_04: That the the value of the the feedback that they collect from everybody in that ecum ecosystem is really critically important to um um to the rulemaking rulemaking process.
• 34:20
  SPEAKER_04: I I would say I I know I said earlier they they all r really tried to avoid saying anything specific about you know individual rulemaking initiatives, but you know, maybe indirectly there were a number of initiatives that were alluded to.
• 34:34
  SPEAKER_04: There's no real surprises there.
• 34:35
  SPEAKER_04: So there was quarterly reporting.
• 34:37
  SPEAKER_04: I know Kevin's gonna say a few words about that here in a second.
• 34:39
  SPEAKER_04: They certainly alluded to you know what we've talked about again on a prior podcast around um, you know, how do you draw the line between large registrants and small registrants, right?
• 34:48
  SPEAKER_04: And you know, who qualifies and how long do you qualify and what accommodations do you enjoy while you're while you're qualified?
• 34:55
  SPEAKER_04: Um, crypto, um, you know, and that was really similar commentary to what we've seen previously in terms of you know ending regulation by enforcement, establishing a clear regulatory framework for various market participants to to operate within, um, executive comp and then and then foreign private issuers, which of course we had already gotten a concept release issued on.
• 35:16
  SPEAKER_04: I I had understood from some of the commentary at the um at the conference that maybe the foreign private issuer rulemaking might actually be deprioritized along the way, notwithstanding the fact they got out of the gate first.
• 35:27
  SPEAKER_04: So all pretty pretty interesting.
• 35:28
  SPEAKER_04: But again, it's indirect commentary, and you know, we're gleaning things from from things that are that are said along the way.
• 35:34
  SPEAKER_01: Well, and I think the what what it highlights for me is the influence and the impact of the administration, the Trump administration, on their agenda.
• 35:42
  SPEAKER_01: And so, you know, obviously the the you know, some of these topics were pushed and pushed, and then it's like, okay, well, and that hits the back burner.
• 35:50
  SPEAKER_01: And a lot of that may be, hey, we think there are certain things that might be more impactful.
• 35:54
  SPEAKER_01: Um, I think it's the the one thing I'd say is up in the air is whether it'd be more impactful or not would be the Kevin, you know, you're the what you you're gonna talk about next, which is, you know, you think about the cadence of reporting, right?
• 36:04
  SPEAKER_01: Going from quarterly reporting to semi-annual reporting.
• 36:07
  SPEAKER_01: I mean, they they didn't talk a ton about it, but I mean, anything that you wanted to share on what kind of what you you heard.
• 36:12
  SPEAKER_03: Yeah, no, I mean, I think I think like literally every single sec uh session of the of the event, right?
• 36:20
  SPEAKER_03: There was a question in the in the question in the polling questions asking whoever the speaker was what they thought about it um and and from their angle.
• 36:27
  SPEAKER_03: Um so it was it was another one of those pervasive topics.
• 36:30
  SPEAKER_03: It was obviously top of mind, understandably, for everybody in the audience.
• 36:34
  SPEAKER_03: Um, you know, maybe maybe we've built this up a little bit.
• 36:37
  SPEAKER_03: There wasn't a whole lot shared other than it's also top of mind for for for Paul Atkins and and uh senior leadership of the SEC.
• 36:46
  SPEAKER_03: It's something that they're thinking about and working, working through.
• 36:48
  SPEAKER_03: And so um, I think reiterating some of their prior messages there.
• 36:52
  SPEAKER_03: Um, so we didn't really get any specific answers in terms of exactly what that model is.
• 36:57
  SPEAKER_03: Uh, I will say that there was, I, you know, to me, I thought there was a lot of really good discussion um on you know all sides of the issue.
• 37:05
  SPEAKER_03: Uh and so um I don't know if the SEC can grab uh grab recordings of of this and and that'll feed into like as they think about what that proposal looks like, right?
• 37:14
  SPEAKER_03: Like it's um and a lot of it, you know, probably isn't different from the from the prior request for comment.
• 37:19
  SPEAKER_03: But yeah, um, you know, it's it's certainly something and and you know, as you mentioned, Scott, like, you know, definitely gonna see stuff in 2026.
• 37:28
  SPEAKER_03: And so um, you know, I think this will be on that list as well.
• 37:31
  SPEAKER_03: Uh, and I think a lot of people are are really anxious to kind of see what the model is that that the that the SEC comes out with in the proposal.
• 37:39
  SPEAKER_01: Yeah.
• 37:39
  SPEAKER_01: So so speaking of of 2026, um, as many companies are are now heading into um year end, and of course, engagement teams, you know, are our folks that are listening, and maybe our I'm sure our competitors are also listening because the quality of of you guys, you know, my guests are amazing.
• 37:56
  SPEAKER_01: Um, what are a few of the kind of key takeaways or reminders for for for folks out there listening?
• 38:03
  SPEAKER_03: Yeah, I mean, I think I think one of the things we heard from um Court Finn, uh an area of interest rate was around around the disclosures on segment, right?
• 38:12
  SPEAKER_03: And we saw this last year was a new standard.
• 38:14
  SPEAKER_03: All right, how did everybody adopt?
• 38:16
  SPEAKER_03: Now we have the benefit of seeing across across the landscape.
• 38:19
  SPEAKER_03: Uh so we did get some some observations from the staff.
• 38:22
  SPEAKER_03: Um, you know, I I think, you know, one observation I had was that a lot of their observations were the same as the observations that that um Kyle, you and me, and and Jay Celeber had in our in our podcast uh that came out recently as well.
• 38:36
  SPEAKER_03: Um so I won't repeat those here, but um, a lot of the compliance type of things, um, they, you know, obviously segments is a very important disclosure area, uh, and the staff kind of always is reiterating points on that.
• 38:49
  SPEAKER_03: Um, they talked about some of the challenges with determining the required measure, uh, especially, you know, as as CODMs will often get uh maybe different different types of information and and more than one measure of profitability uh that they use.
• 39:03
  SPEAKER_03: Uh so they talked about some of the nuances uh in that and the but also the importance of getting that required measure right.
• 39:10
  SPEAKER_03: Uh and then um uh another area was the single segment, some of the pitfalls there uh that they've seen in disclosures uh from single segments uh um that you know you can't just say, well, we're a single, we're a single operating segment, and so therefore just look at the consolidated statements.
• 39:26
  SPEAKER_03: There's there's incremental disclosures that would be required regardless, uh, and also questions around well, what are the significant expenses there?
• 39:33
  SPEAKER_03: Um and uh and then they reiterated, and again, I think we had all these points in the podcast too, but um the other podcast uh about subtotals and some of the formatting and table.
• 39:43
  SPEAKER_01: So I was happy to to know that the podcast that we did publish the same day, we published it the same day and we recorded it earlier, that was spot on with what the staff said and their observations, right?
• 39:57
  SPEAKER_03: Jay, Jay and I were were actually talking and uh we were sweating a little bit.
• 40:02
  SPEAKER_03: Um uh and and uh yeah, but yeah, it was it was good uh to hear that.
• 40:07
  SPEAKER_03: Uh maybe along the same line of consistent themes, um, because you know we are in the midst of the comment letter themes podcast.
• 40:14
  SPEAKER_03: Uh MDNA was another, right?
• 40:16
  SPEAKER_03: Just constantly thinking about it.
• 40:17
  SPEAKER_03: You mentioned tariffs earlier.
• 40:19
  SPEAKER_03: Uh, I think that's kind of like a big, a big point, right?
• 40:22
  SPEAKER_03: As people think about, well, how are those tariffs impacting uh the business?
• 40:25
  SPEAKER_03: And so I know we we talk a lot about mDNA considerations, uncertainties, right, that could have a material impact.
• 40:32
  SPEAKER_03: Uh and so they reiterated some of those.
• 40:35
  SPEAKER_03: Non-gap, another one, right?
• 40:37
  SPEAKER_03: Top of mind for everybody.
• 40:38
  SPEAKER_03: So um, you know, I I don't think I I wouldn't say that anything that they said at the conference relating to non-gap was really any different from what they've said in the past or or any real change in tune.
• 40:50
  SPEAKER_03: Um, so but I think it just highlights that it's it's something that they spend a lot of time on.
• 40:54
  SPEAKER_03: Uh and so, so I think good information.
• 40:56
  SPEAKER_03: Scott, anything you wanted to add there?
• 40:58
  SPEAKER_04: Yeah, I was I had just a couple of a couple of the things that you know they highlighted that are really um also you know, just application of existing guidance, I would say, but they called it out as you know, specific things that they're seeing which are maybe relevant for registrants going into your end.
• 41:11
  SPEAKER_04: So the first was in relation to the statement of cash flows and you know, ensuring that you know the captions and the disaggregation that you're showing on the face of the statement of cash flows is sufficiently detailed, breaks out any material um components of the cash flows.
• 41:23
  SPEAKER_04: The example that they specifically cited was in relation to um operating activities and disaggregating changes in receivables, payables, and and inventory to present those separately.
• 41:33
  SPEAKER_04: Um they highlighted the need for non-SRC registrants under under 408 um to disclose material-related party transactions on the base of the rule rule 408 of regulation.
• 41:46
  SPEAKER_01: Exactly.
• 41:47
  SPEAKER_01: Yep, thank you.
• 41:48
  SPEAKER_04: SX, sorry.
• 41:49
  SPEAKER_04: SX.
• 41:49
  SPEAKER_04: Yeah.
• 41:49
  SPEAKER_04: So on the face of the primary financial statements, that's a good reminder for registrants going into year end.
• 41:54
  SPEAKER_04: Um and then they reminded registrants of the need to disaggregate when you exceed certain quantitative thresholds to report revenue from tangible goods and services separately, again, on the face of the income statements to do the same for the related um cost of goods sold or services.
• 42:11
  SPEAKER_04: And I would just say, you know, on that one, it's it's maybe like some other things where you know they they stress the need to continuously re-evaluate those numerical thresholds.
• 42:20
  SPEAKER_04: So you might have disproportionate growth in different areas of your business that cause you to exceed a quantitative threshold.
• 42:26
  SPEAKER_04: Certainly seen situations in the past where registrants get caught off guard late in the year when they have MA-related activity.
• 42:32
  SPEAKER_04: You know, they divest of something that is classified as a discontinued operation and all of a sudden, you know, you exceed a numerical threshold.
• 42:39
  SPEAKER_04: So that was another, I think, a good reminder that the staff put out there for um for registrants in relation to um to year-end year-end recording.
• 42:47
  SPEAKER_01: One of the things that stood out to me on that point, right, as you said, is the nate the the our listeners need to be thinking about what has happened to the business over the course of the year.
• 42:58
  SPEAKER_01: And it set aside what you've been doing quarterly, right?
• 43:01
  SPEAKER_01: Like, but we're thinking about the staff that's gonna pick up your 10K for review, they're gonna have certain expectations, they're gonna understand what you've done, where you've been, like you've had mergers, you've had changes in the business, and it not only just the the impact across the filing, right?
• 43:16
  SPEAKER_01: Thinking about, and I heard we heard this on segments, right?
• 43:18
  SPEAKER_01: Is he you know, you got to be thinking about that because, you know, with the economics, we think about tariffs.
• 43:24
  SPEAKER_01: We've already talked about that, right?
• 43:25
  SPEAKER_01: You have tariffs that are impacting the, you know, your segment analysis potentially.
• 43:30
  SPEAKER_01: So you you need to make you can't just you know, rinse and repeat and just throw in the same disclosures or say you have to always re-re can reevaluate and revisit these disclosures.
• 43:40
  SPEAKER_04: Yeah, they did call that one as well, right?
• 43:42
  SPEAKER_04: In terms of just the economics, right, in this environment.
• 43:44
  SPEAKER_04: It's pretty volatile.
• 43:45
  SPEAKER_04: And the economics of you know, individual operating segments may diverge as a result of you know, the economy impacting them in different ways, diverge in a way that perhaps they don't meet the aggregation criteria any longer to be reported as a single reportable segment.
• 43:59
  SPEAKER_04: So another good another good reminder.
• 44:00
  SPEAKER_01: All right.
• 44:01
  SPEAKER_01: Let's let's let's jump right over to uh to OCA and the FASB.
• 44:05
  SPEAKER_01: Um and and I get I guess I'll start maybe Scott with you um kind of get your your your thoughts, anything that you wanted to highlight uh beyond kind of some of what we've been covering already.
• 44:15
  SPEAKER_04: Yeah I think we're gonna do this at a pretty cursory cursory level um but just to say a couple of words about you know some of the topics that OCA hits.
• 44:22
  SPEAKER_04: So the um one of them was certainly fair value.
• 44:25
  SPEAKER_04: It's been a recurring recurring theme over the past several several years.
• 44:28
  SPEAKER_04: We hear about it almost almost every year.
• 44:32
  SPEAKER_04: You know if I take a step back, you know it's just a an area of a lot of a lot of judgment right so where there's a lot of judgment you know there's estimates involved and you know it's always going to be a focus of the um of the SEC staff.
• 44:44
  SPEAKER_04: I would say I distilled it down into really three things that they hit this year at a at a high level.
• 44:49
  SPEAKER_04: One was the involvement of appropriate specialists.
• 44:53
  SPEAKER_04: And interestingly they called out the fact that you know valuation specialists are not fungible.
• 44:58
  SPEAKER_04: You know somebody who specialized in the valuation of financial instruments you know is totally different skill set than someone who deals with fixed assets or intangibles or something like this.
• 45:08
  SPEAKER_04: They again articulated this concept of calibration which they've hit over the past couple of years, which is this idea that your current model, you know, if it uses inputs if you change your model over time, you ought to generate you know consistent results.
• 45:22
  SPEAKER_04: You shouldn't have you know essentially differentials being generated from from altering models.
• 45:29
  SPEAKER_04: And then you know and again I think this is a consistent theme but this idea that you know you should have into valuation models you should have consistent inputs across your organization.
• 45:37
  SPEAKER_04: So when you think about goodwill impairment, you know, how does how do those cash flow forecasts match up with what you use for deferred tax valuation allowances, for example, right?
• 45:47
  SPEAKER_04: And being consistent across the organization.
• 45:49
  SPEAKER_04: Yeah.
• 45:49
  SPEAKER_04: Yeah that's great point.
• 45:50
  SPEAKER_03: Kevin Yeah I mean I, you know, as I preparing for the conference I saw on the agenda that John Dirsch uh was going to be speaking and Kyle you and I worked with John for many years and he's a great guy.
• 46:01
  SPEAKER_03: But I was like oh we're just we're definitely going to hear something about an oil and gas uh type of issue and either debt and equity or derivatives.
• 46:09
  SPEAKER_03: Um he didn't disappoint uh so he definitely uh he he talked about uh among some other things uh when he talked about a derivative issue um uh you know particularly around normal purchase normal sale uh the scope exception there um and so uh those things right very nuanced fact patterns and very specific uh so so um won't get into the the details there but but I think just a helpful discussion of of how they thought through uh an issue in particular um which which I think was good and and I'm sure like our publication will have all the specific details yeah our written public publication that we put out right is it I think that's always kind of a nice treasure trove of of details on on some of those these nuances right I think there were a lot and there's a lot that was said that I think some people might look and say that's pretty in the weeds we certainly don't want to talk about on the podcast because no one can we probably won't be able to follow it but but you know I think it's you know be on the lookout for that.
• 47:06
  SPEAKER_01: Any anything else or we can move to the to the to the lot the final item I think which is which is you scott and kind of want to get your reaction to kind of what we what we heard from whether from the PCOB or related to the BCOB from from the SEC who obviously exercises oversight of of of uh the PCOB and anything that you want to quickly touch on.
• 47:28
  SPEAKER_04: Yeah I'll do this very quickly I'll try to do it very quickly um sometimes I struggle with that I'll attempt to do this very quickly and we won't go into you know what various um you know staff members of the PCOB actually said at a more tactical level just maybe hit um environmental conditions so um certainly the SEC reaffirmed their intent to exercise oversight over the PCAOB.
• 47:51
  SPEAKER_04: You know you may recall in connection with the um the One Big Beautiful Bill Act there was initially some provisions in there that might have um you know sort of collapsed the PCOB down into the SEC so there were questions about whether the PCAOB's mandate would be rescinded and I think um I think Kurt Hole um in response to perhaps a question along those lines you know quickly um disposed with it and he said you know it's gonna require act an act of Congress um I think he said that's not going to happen although this is a crazy town so you never know.
• 48:20
  SPEAKER_04: Okay.
• 48:20
  SPEAKER_04: But I I think I think the PCAOB will continue to exist and um you know various people it may have been chairman atkins who you know reinforced the importance of the PCAOB and their role in this um in this ecosystem.
• 48:37
  SPEAKER_04: So again Kurt was a a he went a bit deeper on his on his commentary and he lighted he highlighted a few focus areas I would just say on inspections you know there was some discussion about focusing on firm level systems of quality management versus you know engagement level inspections, maybe severity ratings for um for inspection results, et cetera he talked about a possible pre-clearance type process similar to what we do frequently with the SEC would that be something that would respect the accounting issues the auditing issues.
• 49:10
  SPEAKER_01: Yeah.
• 49:10
  SPEAKER_01: So but we they you do the pre-clear for the accounting and then you also can pre-clear for reporting issues but hey it would be great if you could pre-clear for auditing exactly exactly so that was interesting that was a theme of Kurt's commentary.
• 49:22
  SPEAKER_04: And then you know from a standard setting standpoint he you know we talked a little bit about you know maybe there's benefit to doing an agenda consultation similar to what the FASBI does.
• 49:30
  SPEAKER_04: Again this theme of convergence that we talked about earlier sort of pervaded pervaded the conference.
• 49:37
  SPEAKER_04: So some interesting commentary there.
• 49:39
  SPEAKER_01: Yeah and I look as as we've been hearing we heard throughout the conference you know they they really encourage to you know to reach out to the staff, participate in roundtables, respond to requests for for comments on these proposals or or even concept releases um you know you you you you can engage with the SEC, the FASBI and the PCOB.
• 50:00
  SPEAKER_01: So I think if you know I always say like don't complain about it like you you can after the fact complain about it before you can get in during the the comment letter process.
• 50:09
  SPEAKER_01: I also want to encourage our audience to listen to some of the other podcasts that that we've we've mentioned and of course read our in-depth um for a deeper dive on on these topics and other tech technical topics uh discussed at the conference but I want to thank the two of you today for joining me and not only is it great that you join me today, we've had a very long week to thank you kind of for you know sticking with it from Sunday through now today.
• 50:33
  SPEAKER_01: Thank you so much for joining.
• 50:35
  SPEAKER_04: Happy to do it thank you appreciate it.
• 50:37
  SPEAKER_02: That's our show for today tune in next week for more fresh episodes so that you never miss any of our audio content follow the PWC Accounting podcast wherever you listen to your podcasts.
• 50:50
  SPEAKER_02: And to stay up to date on all our latest accounting and reporting news sign up for our newsletter at viewpoint.pwccom from Thought Leadership at PWC, I'm Heather Horn.
• 51:04
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