Segment Reporting (Portfolio 5119)

  • This portfolio explains and analyzes the disclosure and reporting requirements of FASB Accounting Standards Codification (ASC) Topic 280, Segment Reporting, and discusses other applicable FASB Codification Topics.


Portfolio 5119-2nd, Segment Reporting, explains and analyzes the disclosure and reporting requirements of FASB Accounting Standards Codification (ASC) Topic 280, Segment Reporting, and discusses other applicable FASB Codification Topics and the related accounting and reporting requirements of the U.S. Securities and Exchange Commission (SEC). Examples of segment reporting from the financial statements of various companies are analyzed.

ASC 280 applies to the annual and interim external financial reports of public business enterprises (i.e., publicly-owned companies, most of which are typically SEC registrants and/or file reports with the SEC). The Topic prescribes a “management approach” requiring enterprises to report segment information in a manner consistent with the way that management has organized the firm internally for making operating decisions and assessing performance. Therefore, enterprises can provide segment information based on products and services, geographic location, legal entity, customer type, or another basis as long as the reporting comports with the way in which management has organized segments internally for decision-making purposes.

The Portfolio also compares and contrasts ASC 280 with international accounting guidance on segment reporting. International Financial Reporting Standard 8, Operating Segments (IFRS 8), issued in November 2006, applies to annual financial statements for periods beginning on or after Jan. 1, 2009, with earlier application permitted. Until then, international segment reporting is governed by IASB International Accounting Standard 14, Segment Reporting (IAS 14 (rev.)). The Portfolio includes an example illustrating disclosures under IAS 14 (rev.).

The Detailed Analysis and Worksheets illustrate and highlight contemporary reporting practices and auditing issues demonstrating: (1) that segment data can be utilized as inputs into both accrual and cash flow ratios, (2) how segment data may be utilized to analyze the acquisition of a business entity to supplement or complement the company’s existing operations, (3) that the Management Discussion and Analysis (MD&A) component of the annual report filed with the SEC on Form 10-K often provides relatively more comprehensive segment information than do company disclosures provided under the provisions of FAS 131, (4) the use of segment information where each segment is defined by a geographic unit, (5) the manner in which some companies interpret the precise technical requirements of ASC 280, and (6) the background, review, and analysis of audit standards as they apply to ASC 280.

In November 2006, the International Accounting Standards Board (IASB is the successor to the International Accounting Standards Committee) issued IFRS, Operating Segments. IFRS 8, replaces IAS 14 and more closely aligns international segment reporting with the requirements of ASC 280. Section V.C. covers IFRS 8.

This Portfolio may be cited as BNA Tax and Accounting Portfolio 5119-2nd, Schiff, Schiff and Mazza, Segment Reporting (Accounting Policy and Practice Series).

Table of Contents

I. Introduction and Scope of Portfolio
II. Reporting and Disclosure of Segments Under U.S. Accounting Standards
III. Illustrations and Analysis of Key Issues in Segment Reporting
IV. Auditor Considerations
V. International Segment Reporting

Allen Schiff
Professor, Area Chair of Accounting & Taxation, Faculty Director of MS in Accounting and MTA Programs, & Lead Faculty Represent
Fordham University, School of Business
Jonathan Schiff
Fordham University, Fairleigh Dickinson University
Cheri Mazza
CEO and Owner
CRM Accounting and Financial Consulting