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Actions companies can take to enhance their disclosures
  • Segment disclosures are intended to provide a view of the business through the eyes of management. This information can help financial statement users to enhance their understanding of a company’s performance, better assess its prospects for future net cash flows and make more informed judgments about the company as a whole.
  • Some stakeholders have raised concerns over management’s aggregation of segments for reporting purposes, the number of segment realignments, and the lag in providing recasted segment data to the market following any realignment.
  • The Financial Accounting Standards Board (FASB) is currently evaluating whether the segment reporting standard is an area that should be considered for improvement. In the interim, there are a number of actions companies can consider now to enhance their disclosures beyond existing requirements.
  • Transparent discussion of segment performance provides stakeholders with insight into how the company is structured to run its business. Management has an opportunity to voluntarily take action now around transparency, consistency and comparability to enhance their segment reporting beyond the current requirements and provide more useful and meaningful information to stakeholders.
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