IMA FRC comment letter response to proposed ASU on segment reporting

Wednesday, December 21, 2022

The IMA^® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to the Financial Accounting Standards Board (FASB or Board) Proposed Accounting Standards Update (ASU) No. 2022-ED100, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, (Proposal or Exposure Draft).

The FASB Accounting Standards Codification issued the Proposal in response to requests from certain investors for more detailed information about public entities’ reportable segments, particularly around expenses. In the view of these investors, the information provided about an entity’s expenses at the segment level is generally limited.  

In its response, the Committee expresses a general understanding that investors are seeking more detailed segment-level information than currently required, and the Committee agrees that the proposed guidance, if adopted, would be operable.  However, the Committee expresses concerns about the cost benefit of the information that the Proposal, if adopted as exposed, would require. Moreover, the FRC observes that the Proposal is being offered while the FASB has an ongoing project, Disaggregation – Income Statement Expenses (Disaggregation Project). Therefore, it may be beneficial to reconsider the timing and approach for the Proposal to ensure alignment with the specifics of the Disaggregation Project.

In addition, the FRC responds to several questions raised in the Exposure Draft, including the application of the chief operating decision-maker concepts and guidelines.