FASB Wants Public Companies for Segment Reporting Study
Marking the first phase of its segment reporting outreach, the Financial Accounting Standards Board (“FASB”) is requesting that public companies participate in a study to improve U.S. GAAP guidance regarding the aggregation of operating segments and the reportable segments method. Specifically, the FASB wants public companies to share how they apply the criteria under FASB Accounting Standards Codification (“ASC”) 280, Segment Reporting, and how two alternatives would impact how their financial statements are presented.
One alternative involves reorganizing the process for deciding which operating segments are reported and moving the quantitative thresholds for reportable segments to an earlier stage of the process. The second alternative would eliminate the criteria for aggregating segments, meaning that each segment of a company will be reportable unless it is deemed impractical.
Information received from the study will be used to review the costs and benefits of the various approaches to improving the reportable segments process. The FASB has no plans to rewrite FASB ASC 280, but it wants to improve the details companies disclose regarding their segments. Next year, the FASB intends to examine the disclosure requirements from FASB ASC 280 to determine how they could be updated.