FASB Seeks Input on Segment Reporting Proposal
The Financial Accounting Standards Board (FASB) recently issued a proposed Accounting Standards Update (ASU) intended to improve the disclosures about a public entity’s reportable segments and address requests from investors and other allocators of capital for additional, more detailed information about a reportable segment’s expenses. Stakeholders are encouraged to review and provide comments on the proposed ASU by Dec. 20, 2022.
The proposed ASU would represent the FASB’s most significant change to segment reporting since 1997, the FASB said. The amendments in the proposed ASU respond to feedback received from investors and other allocators and would improve reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses. The key amendments would:
- Require that a public entity disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit or loss.
- Require that a public entity disclose, on an annual and interim basis, an amount for other segment items by reportable segment and a description of its composition. The other segment items category is the difference between segment revenue less the significant expenses disclosed and each reported measure of segment profit or loss.
- Require that a public entity provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by Topic 280, Segment Reporting, in interim periods.
- Clarify that if the CODM uses more than one measure of a segment’s profit or loss, at least one of the reported segment profit or loss measures (or the single reported measure if only one is disclosed) should be the measure that is most consistent with the measurement principles used in measuring the corresponding amounts in a public entity’s consolidated financial statements.
- Require that a public entity that has a single reportable segment provide all the disclosures required by the amendments in the proposed ASU and all existing segment disclosures in Topic 280.
The amendments in the proposed ASU would apply to all public entities required to report segment information in accordance with Topic 280.
The proposed ASU, along with a “FASB In Focus” document and brief video summarizing the Board’s proposed changes, is available at www.fasb.org.
Investors interested in providing input on the proposal may contact FASB investor liaisons Chandy Smith at ccsmith@fasb.org and Jeff Brickman at jmbrickman@fasb.org or submit comments through the FASB investor web portal.