1.4 Interactions With Other Published Information
A public entity’s reportable segments form the framework for certain other
disclosures within the entity’s periodic filing, including the business and MD&A
sections. The SEC staff’s review primarily aims to ensure consistency between the
manner in which an entity’s management presents its business to the public and the
information provided in the entity’s segment footnote disclosures. The SEC staff
frequently requests explanations from registrants if they identify inconsistencies
between the details outlined in the segment footnote and the publicly available
information from sources such as the entity’s Web site, earning calls, press
releases, analyst reports, public comments, social media posts, investor
presentations, and other parts of its periodic report. Moreover, the staff has
emphasized that when determining operating segments, entities should take into
account the totality of information considered by the CODM.
The interaction of segment reporting in the financial statements with
information provided in other parts of the
entity’s periodic report is discussed further in
Chapter 7.
Example 1-1
Management has concluded that Company A has a single operating segment. However,
a review of the executive leadership's Web page indicates
that A has a senior vice president in charge of each of its
three main product lines. Each reports directly to the CEO,
who is A's CODM. In addition, A’s most recent investor
presentation specifies a measure of profitability for each
product line.
Company A’s Web page, executive leadership structure, and investor presentation
that includes a measure of profitability by
product line suggest that the management approach
is based on product line and that a single
operating segment may not properly reflect that
management approach. Company A would be expected
to be able to reconcile this contradictory
evidence to its determination that it is a single
operating segment.