AES CORP
For the period ended Dec 31, 2025. Filed Mar 2, 2026.
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FY2025 · Filed Mar 2, 2026
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Part A— Report of Independent Registered Public Accounting Firm
Our auditors are Ernst & Young LLP, located in Tysons, Virginia. Their PCAOB ID number is 42.
Part B— Financial Statements and Supplementary Data
To the Stockholders and the Board of Directors of The AES Corporation
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of The AES Corporation (the Company) as of December 31, 2025, and 2024, the related consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for each of the three years in the period ended December 31, 2025, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 2, 2026 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.
| Allocation of Earnings to Noncontrolling Interests in Tax Equity Partnerships | |
| Description of the Matter | As described in Notes 1 and 18, certain renewables projects have been financed with tax equity structures, where tax equity investors receive a noncontrolling interest in consolidated partnerships where the allocation of the economic attributes, including tax attributes vary over the life of the project. When the allocation of the partnership’s earnings and losses, cash distributions, and tax benefits are not based on fixed ownership percentages, the Company uses the hypothetical liquidation at book value (HLBV) method to calculate the earnings attributable to the noncontrolling interests for these consolidated partnerships, when it is a reasonable approximation of the profit-sharing arrangement. The Company recorded $748 million of net loss attributable to noncontrolling interests and redeemable stock of subsidiaries on the consolidated statements of operations in 2025, the majority of which was allocated using the HLBV method.Auditing the allocation of earnings and losses to noncontrolling interest holders using HLBV for partnerships related to renewable projects that were placed into service during the period was complex due to the evaluation of whether a newly established HLBV calculation used to allocate earnings appropriately reflects the unique substantive profit-sharing terms and features within each partnership agreement. A greater extent of audit effort and specialized skill and knowledge was required to evaluate the contractual provisions in each partnership agreement as well as the appropriateness of the investors’ claim to the net equity of the partnership used in the HLBV method. |
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| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of the controls over the Company’s process for developing the HLBV calculations for partnership agreements related to renewable projects that were placed into service during the period. For example, we tested management’s review of substantive profit-sharing terms to evaluate whether they are properly reflected in the HLBV calculations.To test the allocation of earnings and losses to noncontrolling interest holders for partnership agreements related to certain renewable projects that were placed into service during the period, we read the related partnership agreements to understand the substantive profit-sharing provisions. We evaluated the HLBV calculations for consistency with the contractual provisions in the related partnership agreements and tested the capital transactions of the tax equity investors. We involved tax subject matter professionals to assist in evaluating the calculation of the investors’ net equity accounts used in the HLBV method, including the proceeds attributable to the tax equity investor due to the recognition of investment tax credits and other adjustments as required by the U.S. Internal Revenue Code. Additionally, we tested the allocation of earnings by recalculating the hypothetical liquidation in the HLBV method based on the liquidation provisions of the related partnership agreements. |
/s/ Ernst & Young LLP
We have served as the Company's auditor since 2008.
Tysons, Virginia
March 2, 2026
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