Are You Ready for Additional Segment Reporting Disclosure? 

^{by Dino Di Flavio}

Having an understanding of significant expenses has always been one of the keys to running a successful business.   Thanks to the advancement of technology, more information has become available to decision-makers than ever before.  As a significant number of companies are already using this information, there has been an increased demand from stakeholders for more transparency. 

In a recently published article, the Wall Street Journal made mention of the possible changes that will be coming to U.S. public companies regarding segment reporting of significant expenses.

In October 2022, the Financial Accounting Standards Board (FASB) issued a proposed accounting standards update entitled “Segment Reporting (Topic 280)” discussing the inclusion of significant segment expenses in financial statement disclosures. 

According to the proposal, “a public entity must disclose, on an annual and interim basis, significant segment expenses that are regularly provided to the chief operating decision maker (CODM).”  The disclosure would also include other segment items as defined by FASB in the proposal including revenue, significant expenses and reported measures of profit or loss.  Additional proposed requirements and definitions can be found in the FASB proposal (Topic 280).

FASB has since voted on the proposal and adopted it by a vote of 6 to 1. The requirements are set to go into effect for annual reporting periods beginning after Dec. 15, 2023, although companies may choose to implement the new requirements before this date.

Whether or not you run a public company or a private company, financial statements and disclosure by segment can be a key measure of how each significant area of your operations is performing.  Successful companies are already tracking this information and allocating revenues and expenses through the use of Excel spreadsheets.    

As is the case with most spreadsheets that involve sometimes complex allocations and are subject to formula errors, completeness problems, and the difficulty of maintaining and transitioning the worksheets to other employees. 

Simfiny is designed to easily generate reports and financial data by segment using your existing accounting software.  With Simfiny’s internal hierarchy structure, you can quickly create reports and analyze various segments designated in your accounting/ERP software.  Simfiny makes knowledge transfer to other members of your team easy and contains control points to assist in making sure that your data is always complete. 

Are you ready to gain a competitive advantage and see your organization in a whole new light?