1.8 SEC Considerations
Given its importance to investors in presenting insight into
management’s approach to the company and review of key financial results, segment
reporting continues to be a source of SEC comments. In a manner consistent with the
previous year’s trends, comments focus on (1) the identification of operating segments,
(2) the aggregation of operating segments, (3) changes in reportable segments, (4)
entity-wide disclosures, and (5) the use of multiple measures of segment performance
when one or more measure is not consistent with the measurement principles determined in
accordance with GAAP. See Deloitte’s Roadmap SEC Comment Letter Considerations, Including Industry
Insights for discussions of SEC comment letter trends observed in
practice.
In addition to the disclosure requirements prescribed under ASC
280-10-50, SEC filers should be cognizant of the relationship between segment reporting
and certain required SEC disclosures and guidance, such as those within the business and
MD&A sections of the registrant’s filing and the SEC’s guidance on non-GAAP
measures. Further, a change in an entity’s segment structure may have certain reporting
implications on historical financial statements, registration statements, and other
nonpublic offerings. See Chapter
7 for a discussion of these SEC reporting considerations.