Last updated on December 18, 2019. Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.
(Sections updated on the date above are indicated with an asterisk *)
Project Objective and Background
Objective:The objective of this project is to undertake improvements to the segment aggregation criteria and disclosures to provide users with more decision-useful information about the reportable segments of a public entity.
Background:In August 2016, the Board issued an Invitation to Comment (ITC), Agenda Consultation, to solicit feedback about the major financial reporting issues that the FASB should consider in its future technical agenda. Many respondents to the ITC commented that a fundamental reconsideration of Topic 280, Segment Reporting, was not needed; however, targeted improvements were warranted to the segment aggregation criteria and the disclosure requirements to provide users with more decision-useful information.
In May 2017, the Board discussed potential ways to improve the segment aggregation criteria and disclosure requirements and directed the staff to perform outreach with users, preparers, and accounting firms to assess the effect and viability of potential alternatives.
In September 2017, the Board considered a summary of the outreach and decided to add a project on segment reporting to the technical agenda.
Exposure Draft:There are no exposure documents at this time.
There are no media releases or educational materials at this time.
Media Releases and Educational Materials*
Decisions Reached at Last Meeting (December 11, 2019):
The Board discussed the preparer feedback received during the 2019 disclosure study. Based on the preparer feedback, the Board directed the staff to perform outreach with investors on certain potential segment disclosure improvements.
The Board also directed the staff to accelerate work on one specific issue that would potentially clarify the requirements in Topic 280, Segment Reporting, to encourage greater reporting of total assets by reportable segment for public entities.
Tentative Board Decisions Reached to Date (as of December 11, 2019):
April 10, 2019
May 29, 2019
As part of developing the topics for a study on segment disclosures, the Board discussed options to both require that segment information be reported in a financial statement format and require additional general disclosures in Topic 280, Segment Reporting.
The Board discussed the merits of the financial statement format alternative. Because the complexities related to that alternative would likely overwhelm the other issues included in the study, the Board decided to exclude that alternative from the study. However, the Board directed the staff to undertake research into how the segment reconciliation requirements could be improved.
The Board also directed the staff to study the effect of including additional general segment disclosure requirements.
The Board gave permission for the staff to proceed with the study.
As part of developing a study on segment disclosures, the Board discussed options to both expand the list of required disclosures in Topic 280, Segment Reporting, and require those disclosures in a tabular format.
The Board directed the staff to study the following:
- Expanding the list of required disclosures in Topic 280 to include cost of revenue, research and development expense, a measure of cash flow, and inventory by reportable segment
- Developing principles-based disclosure requirements in addition to the list of required disclosures
- Requiring an explanation of the reasons why items from the list of required disclosures are not reported.
The Board decided to exclude from the study further consideration of requiring segment disclosures in a tabular format.
February 13, 2019
As part of developing the topics for a study on segment disclosures, the Board discussed an analysis of options to potentially improve how the management approach applies to the segment disclosure requirements.
The Board directed the staff to study how clarifying the meaning of regularly reviewed segment information would affect the pieces of information public entities report by segment. The Board also directed the staff to obtain feedback from users on this matter as a part of the study.
December 19, 2018
The Board discussed feedback received on the 2018 segment aggregation study. That study considered alternatives to improve the aggregation criteria and the reportable segments process.
The Board acknowledged the challenges identified by participants in the study. Specifically, the Board was concerned that the alternatives could increase the frequency of restatements of segment information in prior reporting periods. The Board also was concerned about the incentive for entities to use the flexibility within the management approach to work around the alternatives. Overall, the Board was not persuaded that the alternatives provided cost-beneficial solutions.
The Board discussed whether to combine the Financial Performance Reporting project with the Segment Reporting project. The Board acknowledged the relationship between the two projects and that the findings in one project could be useful to the other. However, the Board concluded that the two projects should remain separate.
June 13, 2018
The staff updated the Board on the project and discussed a plan to undertake extended outreach that considers improvements to the aggregation criteria and the reportable segments process.
The extended outreach would focus on two alternatives:
- Re-order the process for determining reportable segments and move the quantitative thresholds earlier in that process
- Remove the aggregation criteria, thereby each operating segment would be reportable until a practical limit is reached.
The Board discussed, at length, the timing and materials for the extended outreach, which would involve onsite visits to obtain detailed feedback on both Alternatives 1 and 2, an analysis of how reportable segments would change, and understanding operability concerns and unintended consequences of the alternatives. The Board gave permission for the staff to proceed with the extended outreach.
February 7, 2018
The Board discussed the implications associated with potentially modifying and re-ordering the process for determining reportable segments and moving the quantitative threshold tests earlier in that process. The Board also discussed potential changes to the quantitative thresholds (of revenue, profit or loss, and assets) that require public entities to separately disclose information about operating segments that meet those thresholds. The purpose of the discussion was to establish the parameters of the extended preparer outreach that the Board and staff intend to undertake this year.
December 13, 2017
The Board discussed the project plan for the segment reporting project. The Board also discussed additional information that it would like the staff to include in its research and analysis for discussion at future Board meetings, including (1) the effect of removing the aggregation criteria on goodwill impairment testing and (2) the effect of requiring additional segment information on audit costs.
The Board also discussed the interaction between the segment reporting project and the project on disclosure framework: disclosure review, inventory. The Board had previously decided in that disclosure project to require that a public business entity disclose, in annual and interim periods, inventory by reportable segment or by component for each reportable segment if that information is regularly provided to the chief operating decision maker.
The Board discussed including this previous decision on inventory disclosure within the segment reporting project, rather than making a standalone change to the Topic 280, Segment Reporting, disclosure requirements within the project on disclosure framework: disclosure review, inventory.
September 20, 2017
The Board decided to add a project to the technical agenda on segment reporting that will focus on improvements to the segment aggregation criteria and disclosure requirements.
Segment Aggregation Criteria
For segment aggregation criteria, the Board decided it could:
- Move the reportable segment thresholds to form part of the aggregation guidance, that is, develop a bright-line threshold for aggregation.
- Remove the aggregation criteria, but retain the practical limit guidance.
Segment Disclosure Requirements
For segment disclosure requirements, three alternatives were considered. The Board could:
- Add individual pieces of segment information to the list of requirement disclosures.
- Require the disclosures in Topic 280, Segment Reporting, to be reported in a table.
- Require a table of regularly reviewed information based on how it relates to the lines in the financial statements.
Board members expressed a preference for Alternatives 1 and 2 but asked the staff to perform additional research to understand the cost of implementing all of those approaches.
The Board meeting minutes, handouts, and videos are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
Board Meeting Materials and Information*
The following are links to the minutes for each meeting. To view Board meetings and handouts from the past 90 days, click here.
|December 11, 2019*||Board Meeting—Discussed the preparer feedback received from the 2019 disclosure study and next steps for the project.|
|May 29, 2019||Board Meeting—As part of developing the topics for a study on segment disclosures, the Board will discuss an analysis of options to both require segment information be reported in a financial statement format and to require additional general disclosure requirements in Topic 280, Segment Reporting.|
|April 10, 2019||Board Meeting—Discussed an analysis of options to both expand the list of required segment disclosures in Topic 280, Segment Reporting, and to require that the disclosures in Topic 280 be reported in a tabular format.|
|February 13, 2019||Board Meeting—Discussed an analysis of options to potentially improve how the management approach applies to the segment disclosure requirements.|
|December 19, 2018||Board Meeting—Discussed the feedback received on the 2018 segment aggregation study.|
|June 13, 2018||Board Meeting—Discussed a plan to undertake extended outreach that considers improvements to the aggregation criteria and the reportable segments process.|
|February 7, 2018||Board Meeting—Discussed potentially reordering the reportable segments process and moving the size tests earlier within that process.|
|December 13, 2017||Board Meeting—Discussed the project plan and additional research requests.|
|September 20, 2017||Board Meeting—Project was added to the Technical Agenda.|
The staff will undertake investor outreach and will present that feedback at a future meeting. The staff will also separately analyze potential ways to clarify the requirements in Topic 280 on the disclosure of total assets by reportable segment and will discuss that analysis at a future meeting.
Supervising Project Manager
Postgraduate Technical Assistant
Postgraduate Technical Assistant