FASB responds on segment reporting
06 March 2013
The FASB will review the issues raised by the Post-Implementation Review of its business segment reporting standard with its stakeholders and the staff of the SEC, to determine whether further review of the standard is warranted.
The announcement came in the FASB’s response to the FAF Post-Implementation Review (PIR) report on FASB Statement No 131, 'Disclosures about Segments of an Enterprise and Related Information' (codified in Accounting Standards Codification Topic 280, Segment Reporting), which addresses the way public companies report financial information about their business segments.
In its response, the FASB noted that the PIR report findings affirm that segment information is better aligned with an organisation’s internal structure and is more consistent with financial information reported outside the financial statements, which enables investors and users to better understand an organisation’s activities and prospects for future growth.
Additionally, the report commented that some preparers and practitioners would find additional guidance on certain operational aspects of Statement 131 to be helpful, and that some users would like additional and comparable information to be presented by segment.
The IASB is also conducting a PIR of IFRS 8, 'Operating Segments', which is substantially converged with Statement 131. The IASB staff has presented and discussed the preliminary results from their PIR outreach at the January 2013 IASB meeting. The FASB believes that any plan to undertake a separate project to review or amend Statement 131 as a result of the PIRs should be coordinated with the IASB to maintain a converged approach to segment reporting.
The FASB issued Statement 131 in 1997 to improve the way public companies report financial information about their business segments. Statement 131 establishes standards for the way that public companies report information about operating segments in annual and interim financial statements. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. The Statement does not apply to private companies or to not-for-profit organisations.
This is the second Post-Implementation Review of a FASB standard, as the team completed its first review of FASB Interpretation No 48, 'Accounting for Uncertainty in Income Taxes' (FIN 48) (codified in Accounting Standards Codification Topic 740, Incomes Taxes), in January 2012.
Press release
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