Our white paper, Expanded Reportable Segment Disclosures, which discusses the requirements of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, has been updated to reflect clarified Securities and Exchange Commission (SEC) staff views regarding the implementation of ASU 2023-07.
The SEC staff previously discussed the interaction between the new requirements in ASU 2023-07, primarily the ability to disclose multiple measures of segment profit or loss, and the SEC’s rules and interpretative guidance on financial measures that are not calculated in accordance with generally accepted accounting principles (GAAP) at public forums such as the 2023 AICPA & CIMA Conference on Current SEC and PCAOB Developments. As a result of those comments, the SEC staff received questions about the disclosure of additional measures of segment profit or loss that are non-GAAP financial measures in the notes to the financial statements.
In a recent discussion with RSM US LLP, the SEC staff clarified that despite the SEC’s rules and interpretative guidance on non-GAAP financial measures, including the prohibition of non-GAAP financial measures in the notes accompanying the financial statements, the SEC staff would not object to an entity including additional measures of segment profit or loss that are non-GAAP financial measures in the segments note if the additional measures meet the requirements in Topic 280 and the entity complies with all the relevant non-GAAP SEC rules and interpretative guidance. The SEC staff also discussed considerations for entities with a single reportable segment.
The updated white paper provides additional details about the clarified views from the SEC staff, including how to comply with the SEC rules and interpretative guidance on non-GAAP financial measures and how to assess whether an entity with a single reportable segment is managed on a consolidated basis.
