Segment reporting is a perennial topic when it comes to Corp Fin’s review of SEC filings. So far in 2025, the Staff’s comments in this area have focused on ASU 2023-07, FASB’s revised segment disclosure reporting requirements which went into effect this year. This Maynard Nexsen memo reviews some of the significant recurring Staff comments on compliance with the new requirements.  This excerpt discusses Staff comments challenging whether a registrant that reports a single segment actually has multiple reportable segments:

Single segment registrants: are you sure you don’t really have multiple segments?

Compliance with the Segment Reporting Standard requires an analysis of the registrant’s operating segments and reporting segments. Operating segments reflect how an entity manages its business (e.g., by products and services or geographically). Important aspects of an operating segment include that it has available financial information and its operating results are regularly reviewed by the CODM.

Each operating segment may become a reportable segment if it meets certain size thresholds included in the Segment Reporting Standard (e.g., 10% of combined segment revenues). Two or more operating segments also may be combined for this purpose if they are sufficiently similar in certain characteristics listed in the Segment Reporting Standard (e.g., nature of products and services, production processes or customers). Many registrants have determined that they operate only one reportable segment.

Registrants that have determined that they have a single reportable segment sometimes receive a comment from the staff challenging that determination. Historically, this has been one of the most frequent topics for comments on segment reporting. Occasionally the Staff will request to see the reports that the registrant provides to the CODM to understand how management evaluates segment performance. Responding to such comments requires a detailed analysis of the application of the Segment Reporting Standard, which analysis is fact-specific for each registrant.

The memo says that other areas that the Staff frequently comments upon include disclosures relating to reconciliation requirements, significant segment expenses and other segment items, and how the Chief Operating Decision Maker uses the segment performance measure. Staff comments have also focused on whether a segment performance measure is also a non-GAAP financial measure.

– John Jenkins