The Financial Accounting Standards Board (FASB) has published a proposed Accounting Standards Update (ASU), Segment Reporting (Topic 280) – Improvements to Reportable Segment Disclosures (the proposed Update) for comment by December 20, 2022.
The proposed Update was issued to improve disclosures about a public entity’s reportable segments and provide more information, as requested by investors, about a segment’s reportable expenses (as there is limited information currently required on a segment’s expenses). The proposed Update would introduce incremental disclosure requirements but would not change or remove any of the existing requirements for disclosure of specific items (such as depreciation, amortization or depletion expenses). The amendments in the proposed Update also would not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.
The proposed amendments for public entities include:
- Disclosure, on an annual and interim basis, of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of profit or loss
- Disclosure, on an annual and interim basis, of an amount for other segment items by reportable segment and a description of its composition. The ‘other segment items’ is the difference between the segment revenue less the significant expenses and each reported measure of segment profit or loss
- Disclosure in interim periods of a reportable segment’s profit or loss and assets as required currently by Topic 280 for annual periods only
- Clarification 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 the public entity’s consolidated financial statements (i.e., a public entity is not precluded from reporting other measures of a segment’s profit or loss used by the CODM as long as there is disclosure of the segment’s profit or loss that is most consistent with generally accepted accounting principles).
- Clarification that where the entity has a single reportable segment, all the disclosures in the amendments in the proposed Update and all existing segment disclosures in Topic 280 are required.