Basis of Presentation

12 Months Ended

Dec. 31, 2021

Organization, Consolidation and Presentation of Financial Statements [Abstract]

The accompanying Consolidated Financial Statements have been prepared in accordance with U.S. GAAP. The Consolidated Financial Statements include the accounts of Aon plc and all of its controlled subsidiaries (“Aon” or the “Company”). Intercompany accounts and transactions have been eliminated. The Consolidated Financial Statements include, in the opinion of management, all adjustments (consisting of normal recurring adjustments and reclassifications) necessary to present fairly the Company’s consolidated financial position, results of operations and cash flows for all periods presented.

References in this report to “Aon,” the “Company,” “we,” “us,” or “our” for time periods prior to April 1, 2020 refer to Aon Global Limited. References in the Financial Statements to “Aon,” the “Company,” “we,” “us,” or “our” for time periods on or after April 1, 2020, refer to Aon plc.

Reclassification

Certain amounts in the prior year's Consolidated Financial Statements have been reclassified to conform to the current year’s presentation. For the years ended December 31, 2020 and December 31, 2019, there was $1 million of income and $1 million of loss, respectively, including the related tax effect, from discontinued operations recognized in Net Income from discontinued operations in the Consolidated Statements of Income and Consolidated Statements of Cash Flows. These amounts are now included in Other income in the Consolidated Statements of Income and Other assets and liabilities in the Consolidated Statements of Cash Flows for the years ended December 31, 2020 and December 31, 2019. There was no impact to the effective tax rate on Net income or earnings per share in either period.

Additionally, for the years ended December 31, 2020 and December 31, 2019, a cash outflow of $127 million and a cash inflow of $3 million, respectively, was classified as an adjustment to Net income from Restructuring reserves in the Consolidated Statements of Cash Flows. These amounts are now included in Other assets and liabilities in the Consolidated Statements of Cash Flows for the years ended December 31, 2020 and December 31, 2019. There was no impact on Cash provided by operating activities.

Disaggregation of Revenue

In 2021, the Company announced steps to further accelerate its Aon United strategy, which now includes four solution lines: Commercial Risk Solutions, Reinsurance Solutions, Health Solutions, and Wealth Solutions. Disaggregation of revenue by the new solution line’s structure is reflected in Note 3 “Revenue from Contracts with Customers”, where prior period amounts have been reclassified to conform to the current periods’ presentation. The changes in the solution line structure affect only the manner in which the Company's revenue results for the Company’s principal service lines were previously reported and have no impact on the Company's previously reported Consolidated Financial Statements, results of operations, or total organic revenue growth. Refer to Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations for more information about the changes in the presentation of our principal service line reporting. The Company continues to operate as one segment that includes all of the Company’s operations, refer to Note 16 “Segment Information” for further information.

Use of Estimates

The preparation of the accompanying Consolidated Financial Statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosures of contingent assets and liabilities at the date of the Consolidated Financial Statements, and the reported amounts of reserves and expenses. These estimates and assumptions are based on management’s best estimates and judgments. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment. Management believes its estimates to be reasonable given the current facts available. Aon adjusts such estimates and assumptions when facts and circumstances dictate. Illiquid credit markets, volatile equity markets, foreign currency exchange rate movements, and the COVID-19 pandemic increase the uncertainty inherent in such estimates and assumptions. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Changes in estimates resulting from continuing changes in the economic environment would, if applicable, be reflected in the Consolidated Financial Statements in future periods.

Revision of Previously Issued Financial Statements

During the fourth quarter of 2021, the Company identified and corrected an immaterial presentation error related to funds held on behalf of clients in the Consolidated Statements of Cash Flows.

Based on an analysis of quantitative and qualitative factors in accordance with SEC Staff Accounting Bulletins 99 “Materiality” and 108 “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements”, the Company concluded that these errors were immaterial, individually and in the aggregate, to the Consolidated Statements of Cash Flows as presented in the Company’s quarterly and annual financial statements previously filed in the Company’s Quarterly Reports on Form 10-Q and Annual Reports on Form 10-K. There was no impact to the Consolidated Statements of Income, Statements of Comprehensive Income, Statements of Financial Position, or Statements of Shareholders’ Equity for any period presented.

In preparing the Company’s Consolidated Statement of Cash Flows for the year ended December 31, 2021, the Company made appropriate revisions to its Consolidated Statements of Cash Flows for historical periods. Such changes are reflected for the years ended December 31, 2020 and 2019, included in these financial statements, and will also be reflected in the historical periods included in the Company’s subsequent quarterly and annual consolidated financial statements.

The impact to the Consolidated Statements of Cash Flows previously filed in Annual Reports on Form 10-K is as follows (in millions):


	Year Ended December 31, 2020						Year Ended December 31, 2019
	As Reported		Effect of Change		As Revised		As Reported		Effect of Change		As Revised
Cash provided by operating activities	$	2,783	$	—	$	2,783	$	1,835	$	—	$	1,835
Cash used for investing activities	(679)		—		(679)		(229)		—		(229)
Cash provided by (used for) financing activities	(2,088)		316		(1,772)		(1,493)		1,246		(247)
Effect of exchange rates on cash and cash equivalents and funds held on behalf of clients	78		219		297		21		42		63
Net increase in cash and cash equivalents and funds held on behalf of clients	94		535		629		134		1,288		1,422
Cash and cash equivalents and funds held on behalf of clients at beginning of year	790		5,154		5,944		656		3,866		4,522
Cash and cash equivalents and funds held on behalf of clients at end of year	$	884	$	5,689	$	6,573	$	790	$	5,154	$	5,944

The impact to the Consolidated Statements of Cash Flows previously filed in unaudited Quarterly Reports on Form 10-Q is as follows (in millions):


	Three Months Ended March 31, 2021						Six Months Ended June 30, 2021						Nine Months Ended September 30, 2021
	As Reported		Effect of Change		As Revised		As Reported		Effect of Change		As Revised		As Reported		Effect of Change		As Revised
Cash provided by operating activities	$	561	$	—	$	561	$	1,345	$	—	$	1,345	$	1,251	$	—	$	1,251
Cash provided by (used for) investing activities	102		—		102		(27)		—		(27)		(116)		—		(116)
Cash provided by (used for) financing activities	(709)		28		(681)		(1,122)		386		(736)		(1,380)		786		(594)
Effect of exchange rates on cash and cash equivalents and funds held on behalf of clients	(16)		(18)		(34)		11		18		29		(30)		(63)		(93)
Net increase (decrease) in cash and cash equivalents and funds held on behalf of clients	(62)		10		(52)		207		404		611		(275)		723		448
Cash and cash equivalents and funds held on behalf of clients at beginning of year	884		5,689		6,573		884		5,689		6,573		884		5,689		6,573
Cash and cash equivalents and funds held on behalf of clients at end of year	$	822	$	5,699	$	6,521	$	1,091	$	6,093	$	7,184	$	609	$	6,412	$	7,021