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In December 2023, FASB finalized ASU 2023-07, which made changes to segment disclosure requirements. Calendar year companies became required to follow the new guidance beginning with their Form 10-K filed in 2025. The CAQ’s summary of its SEC Review Committee’s March 2025 meeting with the Corp Fin staff indicates that compliance with ASU 2023-07 is high on the staff’s review agenda. It also offers some guidance to registrants on drafting these disclosures:

The staff also commented on the implementation of ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, noting that they are reviewing disclosures for compliance and will comment where appropriate. The staff reminds registrants that they are not precluded from disclosing additional measures of segment profitability used by Chief Operating Decision Maker (CODM) in assessing performance and allocating resources in accordance with ASC 280-10-50-28A through 28C. However, any additional reported measures of segment profit or loss that are not calculated using measurement principles consistent with the corresponding measure presented in a registrant’s consolidated financial statements prepared in accordance with U.S. GAAP should be identified as non-GAAP measures and must comply with the SEC’s non-GAAP regulations, rules and guidance.

Although Item 10(e) of Regulation S-K includes a general prohibition against the inclusion of non-GAAP measures in the financial statement footnotes, the staff will not object to additional measures of segment profitability disclosed in accordance with ASC 280-10-50-28A through 28C being included in the notes to the financial statements, provided they otherwise comply with the non-GAAP rules.

The staff also indicated that reviewers are keeping an eye on disclosures about generative AI activities and comparing those disclosures to what companies are saying outside of SEC filings.

– John Jenkins