NEWS RELEASE 03/06/13
FASB Responds to Financial Accounting Foundation´s Post-Implementation
Review Report on Statement 131 on Segment ReportingNorwalk, CT,
March 6, 2013—The Financial Accounting Standards Board (FASB) will
review the issues raised by the Post-Implementation Review of its business
segment reporting standard with its stakeholders and the staff of the U.S.
Securities and Exchange Commission to determine whether further review of the
standard is warranted, the Board said today.
The announcement came in the
response to the Financial Accounting Foundation´s (FAF)
Post-Implementation Review (PIR) report on FASB Statement No. 131,
Disclosures about Segments of an Enterprise and Related Information
(codified in Accounting Standards Codification Topic 280, Segment Reporting),
which addresses the way public companies report financial information about
their business segments.
"The FASB welcomes the overall conclusion in the
PIR report that Statement 131 is working effectively and is providing more
information about an organization´s business activities than the prior segment
reporting standard and enhancing the relevance of segment disclosures," said
FASB Chairman Leslie F. Seidman. "The report´s findings indicate that some
stakeholders believe certain operational aspects could be improved with
"Therefore, the FASB will consult with
stakeholders to understand the significance of the issues raised and their
priority in relation to other potential agenda items. We will also meet with
representatives of the U.S. Securities and Exchange Commission and the
International Accounting Standards Board (IASB) in response to the report´s
findings and will report back to the FAF Trustees and the FAF´s Oversight
Committee as progress is made," Seidman added.
In its response, the FASB
noted that the PIR report findings affirm that segment information is better
aligned with an organization´s internal structure and is more consistent with
financial information reported outside the financial statements, which enables
investors and users to better understand an organization´s activities and
prospects for future growth.
Additionally, the report commented that
some preparers and practitioners would find additional guidance on certain
operational aspects of Statement 131 to be helpful, and that some users would
like additional and comparable information to be presented by segment.
The IASB is also conducting a PIR of IFRS 8, Operating
Segments, which is substantially converged with Statement 131. The IASB
staff has presented and discussed the preliminary results from their PIR
outreach at the January 2013 IASB meeting. The FASB believes that any plan to
undertake a separate project to review or amend Statement 131 as a result of the
PIRs should be coordinated with the IASB to maintain a converged approach to
The FASB´s full response to the Statement 131 PIR
report is available on the FASB
The FASB issued Statement 131 in 1997 to improve
the way public companies report financial information about their business
131 establishes standards for the way that public companies report
information about operating segments in annual and interim financial statements.
It also establishes standards for related disclosures about products and
services, geographic areas, and major customers. The Statement does not apply to
private companies or to not-for-profit organizations.
This is the second
Post-Implementation Review of a FASB standard, as the team completed its first
review of FASB Interpretation No. 48, Accounting for Uncertainty in Income
Taxes (FIN 48) (codified in Accounting Standards Codification Topic 740,
Incomes Taxes), in January 2012. More information on the FAF´s PIR process can
be found on the FAF
The PIR process, which is independent of the
standard-setting process of the FASB and the Governmental Accounting Standards
Board (GASB), is intended to assist the FAF´s Board of Trustees with its ongoing
efforts to evaluate the effectiveness of the standard-setting process for both
organizations. The FAF Trustees´ oversight responsibility does not extend to
recommending standard-setting action, which is the sole, independent
responsibility of the FASB and the GASB.