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Segment reporting disclosure requirements are changing. In November 2023, the Financial Standards Accounting Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which introduced new annual and interim disclosure requirements for all public entities and modified some existing disclosures. The ASU responds to investor requests for more detailed segment expense information and is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.
Historically, public entities with more than one reportable segment disclosed information about segment revenues, profit or loss, and assets, while single reportable segment entities provided only some entity-wide disclosures. After the ASU’s effective date, single reportable segment entities must provide both existing and new segment reporting disclosures each period. The ASU also requires that public entities, including those with single reportable segments, disclose the following:
- Significant segment expenses for each reportable segment (see Section 3)
- Other segment items for each reportable segment (see Section 4)
- Title and position of the individual or name of the group or committee identified as the chief operating decision maker (the CODM) (see Section 5)
- Explanation of how the CODM uses the disclosed measure(s) of segment profit or loss (see Section 5)
While the ASU requires new disclosures, it does not change or remove existing disclosures such as reporting depreciation, amortization, and depletion under some circumstances. It also does not change how entities identify and aggregate operating segments or how they apply qualitative thresholds to determine reportable segments.
This publication examines in more detail the new and modified disclosure requirements in the ASU and has been updated for recent SEC staff views.