The Financial Accounting Standards Board is looking for public companies that are willing to participate in research on potential improvements to the segment aggregation guidance and the reportable segments process.

The study is part of the preparer outreach FASB is doing on segment reporting. For the study, FASB wants public companies that prepare financial statements using the aggregation criteria in FASB Accounting Standards Codification Topic 280, Segment Reporting. Companies will be asked to offer information on how they now employ the criteria and how two potential alternative approaches would have an impact on their segment reporting.

The current standard on segment reporting covers how companies can do financial reporting on various segments of their business, such as products, services, geography and customer base. The standard has been around since 1997, but segment reporting continues to be a focus of comment letters from the Securities and Exchange Commission. FASB is looking to improve the standard, especially in light of the changes in the revenue recognition standard that took effect this year.

Feedback elicited from the study will help tell FASB more about the costs and benefits of various alternatives for improving the reportable segments process. Individual feedback will stay confidential, but a summary of the findings will be presented to FASB at future public meetings.

The project is not aimed at fundamentally revising Topic 280. Instead, it's targeting two specific aspects of the segment reporting requirements for improvement. First, FASB hopes to improve the segment aggregation guidance and the reportable segments process. Second, it's trying to improve the segment disclosure and reconciliation requirements, which will be analyzed in a separate study in 2019.

The outreach is going to focus on two potential alternatives: either reorder the process for determining reportable segments and move the quantitative thresholds earlier in that process; or remove the aggregation criteria, so each operating segment would be reportable until a practical limit is reached.

The initial study starts this month and is expected to last for two to three months. Public companies interested in participating can sign up at www.fasb.org/2018segmentstudy.

FASB, GASB and FAF logos on the wall at headquarters in Norwalk, Connecticut
Courtesy of GASB

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