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FASB authorizes drafting of expense disclosure proposal

Written on Apr 12, 2023

FASB has authorized the drafting of a newly proposed standards update that would require companies to break out expenses for employee compensation, depreciation, intangible asset amortization and inventory in the notes to their financial statements.

The proposal sparked debate during the meeting over how to best calculate inventory and drew a critique from one member who said the proposal should have required the breakout of even more details such as company costs related to raw materials, freight and fuel costs.

Several FASB members said investors have provided positive feedback already but that they hoped to get a better sense from preparers of the cost and operability of the new requirements in the public comment period.

While some companies already disclose some expense information in their financial reports, the requirements and the planned format in which they appear will be new for most companies.

FASB Chair Richard Jones said the proposal has been in the works since at least 2004, noting that improvements to financial statements that are subject to GAAP have long been at the top of the list for investors.