Every profession speaks its own language. Marketing folks have their own terms, IT teams are chock full of unique words and phrases, and those in the accounting and finance department communicate in their own unique way.
Corporate accounting has seen its fair share of jargon pop over the years. From the vague terms like solution, corporate values, and bleeding edge to those terms considered a bit more specific like ICOs, ESG, and SPACs, we’ve all developed a unique language define phenomena in the finance space.
Three Terms and Acronyms Trending in Corporate Finance
So what are some of the top trending terms you should be paying attention to in 2021? Some of the same ones you’ve been watching prior to 2020, along with one of the biggest trending topics in the wake of social unrest. Here are just three you may want to look at before our upcoming webinar.
SPACs: Special Purpose Acquisition Companies
Still showing no signs of slowing down, January 2021 saw a record month for listings with around $26 billion of share sales, according to data compiled by Bloomberg News. Also referred to as a blank check company, a SPAC raises capital from investors for a future merger or acquisition target. Like most financial instruments, SPACs present risks and rewards, and require due diligence from accounting firms to help avoid landmines.
Goodwill Impairment
Another one of those terms that has seen a lot of interest in past years, Goodwill Impairments looked to be on the rise in 2020 after a slight decline a year prior. Goodwill impairment occurs when a company decides to pay more than book value for the acquisition of an asset, and then the value of that asset declines. The difference between the amount that the company paid for the asset and the book value of the asset is known as goodwill.
Early reports from public companies for 2020 indicate that the amount of goodwill impairment will far surpass that amount due to the recession caused by the pandemic. According to Accounting Today, the top 10 disclosed goodwill impairment events for 2020 have totaled $54 billion, far surpassing the top 10 GWI events reported in 2019 (at $37.4 billion).
ESG: Environmental, Social, and Governance Reporting
Often used interchangeably with the term Corporate Social Responsibility, ESG stands for Environmental, Social, and Governance reporting. This represents the following fields, as we discussed in a recent article:
- Environmental: The E in ESG stands for environmental. This component provides information on how a company is exposed to and manages risks and opportunities related to climate, natural resource scarcity, pollution, waste, and other environmental factors, as well as a company’s impact on the environment.
- Social: The S, or social, component of ESG comprises information about the company’s values and business relationships. For example, social topics include labor and supply-chain information, product quality and safety, human capital topics such as, employee health and safety, and diversity and inclusion policies and efforts.
- Governance: This component encompasses information about a company’s corporate governance. This could include information on the structure and diversity of the board of directors; executive compensation; critical event responsiveness; corporate resiliency; and policies and practices on lobbying, political contributions, and bribery and corruption.
Join Controllers Council on April 7 for Jargon Roundtable
To participate and be relevant in the C-Suite, Controllers and CFOs have to understand, if not master this specialized vernacular. However, a representative of finance, the goal is to make these understandable for those outside the department as well.
Enter the Controllers Council Board of Advisors, a seasoned and intelligent group who will each bring a few of the latest buzzwords, acronyms, and jargon to a Roundtable Discussion. On April 7, we’re going to break down some of the most commonly used terms in the finance and accounting space to discuss what’s trending in 2021 and what will be important in coming years.
Moderated by Lindy Antonelli, Controllers Council Board Chair, current board members on the Controllers Council will discuss their thoughts, as well as welcome the opinions of attendees to explore everything from the annoying and ambiguous to the necessary and specific. Click here to register.
