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The SEC staff comments for liabilities, payables, and accrual estimates focused on:
  • the quantification of amounts accrued for contingencies, if any, and the possible loss or range of loss or disclosure about why an estimate cannot be made;
  • the timing of loss provisions;
  • the nature of the accounts payable and accrual balances and the appropriate disclosure of components of such balance; and
  • the accounting literature referenced to either include or exclude a liability from the accounting records.
Comment examples
Guidance references
  • Explain the factors considered in determining the timing for recognition of the stated loss provision. Quantify for us your range of reasonably possible losses related to your exposure, and explain why you did not disclose such range pursuant to ASC 450-20-50-4.
  • Please explain the nature of the acquisition-related accruals. Please also explain the reason for the increase in the insurance accrual.
  • We note your disclosure related to the materiality of your legal proceedings. In accordance with ASC 450-20-50, please revise future filings to clearly disclose the following information for your loss contingencies in aggregate or individually: The amount or range of reasonably possible losses in addition to amounts accrued, or that reasonably possible losses cannot be estimated, or that any reasonably possible losses in addition to amounts accrued are not material to your financial statements.
  • We note the statement that due to uncertainties inherent in litigation, you cannot predict the outcome of certain legal proceedings. Please tell us how your accounting policies for the recognition and disclosure of loss contingencies complies with ASC 450-20-25-2. Please also confirm that you disclose the nature of accruals for estimated losses from a loss contingency when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated; and you disclose the nature of the contingency and an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made if there is at least a reasonable possibility that a loss or additional loss may have been incurred and an accrual is not made or an exposure to loss exists in excess of the amount accrued. Refer to ASC 450-20-50-3 through ASC 450-20-50-6.

PwC. All rights reserved. PwC refers to the US member firm or one of its subsidiaries or affiliates, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see www.pwc.com/structure for further details. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors.

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