FASB issues new segment reporting guidance
November 27, 2023
A final Accounting Standards Update (ASU) issued by FASB on Monday aims to improve the disclosures of a public entity's reportable segments.
"The new segment reporting guidance is based on the FASB's extensive outreach with stakeholders, including investors, who indicated that enhanced disclosures about a public company's segment expenses would enable them to develop more decision-useful financial analyses," FASB Chair Richard R. Jones said in a news release. "It will improve financial reporting by providing additional information about a public company's significant segment expenses and more timely and detailed segment information reporting throughout the fiscal period."
Jones explained in a FASB video that the new ASU, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, "significantly expands the segment disclosures from the original requirements established in 1997 while retaining the management approach to that information."
The final ASU was issued 13 months after the proposed ASU. All public entities will be required to report segment information in accordance with the new guidance starting in annual periods beginning after Dec. 15, 2023.
The ASU's key amendments include requirements that:
- Public entities disclose significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss.
- Public entities disclose 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.
- Public entities provide all annual disclosures about a reportable segment's profit or loss and assets currently required by FASB Accounting Standards Codification Topic 280, Segment Reporting, in interim periods.
[Journal of Accountancy]