Segment Disclosure Reporting Requirements Update:  

The accounting world is buzzing with new and expanded segment disclosure requirements that will soon impact all public companies, including those with a single reportable segment. This new guidance is designed to enhance transparency and offer deeper insights into how companies manage their operations.  

As experts in supporting public companies with segment disclosure reporting, we’ve outlined some essential information about the new requirements to help you prepare. 

Key Segment Disclosure Reporting Requirements Facts At-a-Glance: 

• Effective Date: All public entities with fiscal years beginning after December 15, 2023. 

• Interim Reporting: Required for periods within fiscal years beginning after December 15, 2024. 

• Judgment: New disclosures allow for managerial judgment, especially in defining significant expenses and in using non-GAAP metrics. 

• Scope: These requirements extend to all public companies, including those with only one reportable segment, ensuring consistency in disclosures across industries. 

What’s New in Segment Disclosures?  

1. Expanded reporting for single segment entities 

Companies with only one reportable segment must now provide the full range of segment disclosures. This represents a meaningful shift from past guidance and ensures stakeholders gain deeper insights into the operational aspects of an entity’s business. 

2. Multiple profit or loss measures allowed 

Companies can report more than one measure of profit or loss for a segment if the Chief Operating Decision Maker (“CODM”) uses more than one metric for resource allocation. This gives investors a richer picture of how businesses are managed and measured internally. 

3. Significant expenses disclosure 

For each reportable segment, on an interim and annual basis, companies must disclose significant segment expenses regularly provided to the CODM and included in the segment’s profit or loss. While the guidance leverages the existing approach in ASC 280 Segment Reporting, judgement is still required to apply the new principles.  The reported expenses could result from a computation not determined in accordance with US GAAP but meet all other required guidance of ASC 280 and Rule 4-01(a) of Regulation S-X.  

4. Introduction of ‘other segment items’ 

A new category called “Other Segment Items” must now be reported. This represents the difference between segment revenue, the segment disclosed significant expenses, and the reported segment measure of profit or loss, offering clarity on operational nuances. 

5. Annual disclosures required quarterly 

Annual segment disclosures are now required in quarterly filings, ensuring stakeholders have timely access to crucial financial insights throughout the year. 

6. Disclosure of CODM’s identity 

Companies must also disclose the title and position of the CODM or management committee responsible for decision-making. This transparency supports better governance and accountability. 

7. Focus on internal controls 

With expanded disclosures, internal policies, process and controls may need to be updated to ensure data consistency and reliability, including determining whether sufficient evidence is available to support the segment information. 

8. Segment definition remains unchanged 

There are no changes to the way segments are defined, maintaining continuity in segment reporting while expanding on the information required. 

Final Thoughts on the New Segment Disclosure Requirements  

The new segment disclosure requirements signal an important shift toward greater transparency and accountability in financial reporting. With enhanced disclosures, even for single-segment entities, companies must adapt to meet these expectations.  

Proactive preparation will not only ensure compliance but also provide stakeholders with the valuable insights they need to assess the business effectively. 

If you’re looking for some guidance to ensure you can easily adapt to these new regulations with little interruptions to operations, our team at Kranz is here to help you by: 

• Reviewing existing segment reporting frameworks to identify gaps or areas that require adjustment to meet the new requirements. 

• Assisting in the enhancement of existing internal controls tailored to the expanded requirements. 

• Providing training and guidance to finance teams and decision-makers on interpreting and applying the new requirements. 

• Offering support in quarterly filings and year-end disclosures and, assisting companies in their efforts to maintain compliance throughout the reporting cycle.  

• Implementing data management tools and reporting solutions to streamline segment reporting processes and ensure data accuracy.