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Segment Disclosure Updates: Key Post-Adoption Observations You Need to Know

In November 2023, the Financial Accounting Standards Board (FASB) issued an Accounting Standards Update (ASU 2023-07) to enhance segment disclosures under Topic 280 – Segment Reporting. This update applies to all public entities and became effective for calendar year-end companies beginning with their 2024 annual and first quarter 2025 interim filings.

For a detailed overview of the amendments, please refer to our previous article here.

As companies begin to adopt these new requirements, we’ve gathered key insights from our work supporting 2024 year-end and first quarter 2025 interim financial statement preparations. These observations, drawn from close collaboration with management teams and auditors, highlight common challenges and best practices:

• If your company is not a calendar year-end company and has not yet adopted ASU 2023-07, and has not considered this update, we recommend starting now.
• Identification of significant expenses per reportable segment, and evaluation of whether the significant expenses are significant both qualitatively and quantitatively.
• For companies with multiple segments, determining and disclosing the various measures of segment profit or loss.
• Ensuring significant expenses are regularly provided to the CODM and are easily computable.
• Ensuring internal reporting aligns with how the CODM reviews the operating segments’ operating performance, reflective of new disclosures by the amendment.
• Retrospective application of disclosures.

The SEC has historically focused on a company’s segment disclosures, which are heavily scrutinized and subject to comment letters. Over the past few years, Segment Reporting has consistently ranked among the top three areas of focus, with approximately 15% of registrants receiving related comments.[1].

In the first half of 2025, Centri analyzed recent SEC comment letters related to segment reporting. Our review revealed several recurring themes and areas of regulatory focus:

• The SEC asked a life sciences company how they track research and development expenses and whether they should be disclosed by program and/or product candidate for disaggregation disclosure.
• The SEC advised a single reportable segment to ensure adequate disclosures are included in future filings by ASC 280 and ASU 2023-07.
• The SEC advised to ensure that qualitative description is adequately disclosed regarding other segment expenses.
• The SEC advised disclosure on how CODM uses the reported measures of segment profit or loss in assessing performance and deciding how to allocate resources.
• The SEC advised on the proper reconciliation of segment profit or loss to the consolidated income before income tax to be disclosed.
• The SEC asked for additional information on how the company determined that the operating expenses were significant under the significant expense principle.
• The SEC commented on the consistency of segment disclosures in SEC filings vs. information disclosed in earnings releases and investor presentations.

Given the new guidance, we expect an increased focus on segment disclosures, particularly those with one reportable segment and significant segment expense disclosures. 

How Centri Can Help

Navigating the enhanced segment reporting requirements under ASU 2023-07 can be complex and time-consuming. Whether your company is in the early stages of adoption or refining its disclosures post-implementation, Centri is here to support you every step of the way.

We can assist by:

• Serving as the central point of contact for the working group, ensuring that responsibilities are clearly defined and critical deadlines are met.
• Enhancing existing segment documentation in a memorandum to align with the new ASU, or if one has not been previously prepared, preparing a memorandum of how the company complies with ASC 280, including the adoption of this Update.
• Assisting with the preparation of the segment footnote and its related required disclosures in the financial statements.
• Assisting with the preparation of SEC comments and remediation within the financial statement disclosures. 
• Developing/enhancing internal controls over developing control activities over how the CODM determines measures of segment profit or loss in allocating resources and assessing performance, and if applicable, on how such non-GAAP measures are reconciled back to consolidated GAAP measures. 

At Centri, our team of technical accounting experts has the knowledge and expertise to help your business navigate the new requirements. Contact us to learn more.

[1] Source: SEC Reporting Update – Highlights of trends in 2024 SEC staff Comment letters

Blake Roberts

Partner | Technical Accounting Practice Leader | CPA

Blake is a Partner at Centri Business Consulting and the leader of the firm’s Technical Accounting Practice. He has more than 18 years of public accounting experience. View Blake Roberts's Full Bio

Michael Kirchner

Managing Director | CPA, MBA

Mike is a Managing Director at Centri Business Consulting. He has more than 19 years of accounting, advisory, and audit experience. View Michael Kirchner's Full Bio