The Financially Accounting Standards Board (FASB) at its Feb. 13, 2019, meeting discussed its ongoing project to improve how companies provide information around business segments. Board members urged staff to reach out to more investors on what segment data they would like to see disclosed.
The FASB has spent months on outreach related to potential tweaks to FASB Accounting Standards Codification (ASC) 280, Segment Reporting, formerly Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures About Segments of an Enterprise and Related Information. In June 2018, the board began surveying issuers on ways to improve segment reporting.
Under FASB ASC 280, companies are required to provide certain segment information if that information is “regularly reviewed” by the chief operating decision maker (CODM).
The FASB staff explored three options for changing the so-called management approach under ASC 280 for determining which segment information needs to be reported. The management approach “requires an entity to report segment information in the way that management internally organizes its segments to make operating decisions and assess performance,” according to meeting materials prepared by the FASB.
Of the three alternatives, FASB staff did not recommend pursuing two of them. Under the remaining alternative, staff will study how to clarify the meaning of “regularly reviewed information,” with a particular focus on technology changes and information that is reviewed by the CODM only on an irregular basis.
Board members also said more investors should be consulted as part of the ongoing study.
“The path you’re on gets us the better, at least, information from companies,” said FASB member Gary Buesser, who went on to suggest that “we should go out to investors and ask them ‘what do you want for segments?’”
He advocated the FASB to be “thinking about both groups in this equation: companies who report and investors who consume the info.”
For more information on this topic, or to learn how Baker Tilly accounting and assurance specialists can help, contact our team.
We have partnered with Thomson Reuters to issue our monthly Accounting insights. Please feel free to contact Baker Tilly at email@example.com if you have any questions related to these articles or Baker Tilly's Accounting and Assurance Services. ©2019 Thomson Reuters/Tax & Accounting. All Rights Reserved.
The information provided here is of a general nature and is not intended to address the specific circumstances of any individual or entity. In specific circumstances, the services of a professional should be sought. Tax advice, if any, contained in this communication was not intended or written to be used by any taxpayer for the purpose of avoiding penalties.