FASB seeks comments on proposal to improve disclosures around income statement expenses

FASB published a proposed Accounting Standards Update (ASU) intended to provide investors with more decision-useful information about a public business entity’s expenses.  

The proposed ASU would require public companies to provide detailed disclosure of specified categories underlying certain expense captions in interim and annual periods. It would provide investors with more detailed information about the types of expenses, including employee compensation, depreciation, amortization, and costs incurred related to inventory and manufacturing activities in income statement expense captions such as cost of sales; selling, general and administrative; and research and development. 

The amendments in the proposed ASU do not change or remove existing expense disclosure requirements and do not change requirements for presentation of expenses on the face of the income statement. They would require public companies to include certain existing disclosures in the same tabular format disclosure as the other disaggregation requirements set forth in the proposed ASU. 

FASB will host a public roundtable on Dec. 13, 2023, to obtain additional feedback on the proposed ASU. Those interested in participating in the roundtable should submit a comment letter and register for consideration. Roundtable participants will be selected to ensure a balance of perspectives from investors, preparers, auditors, and other stakeholders. Details about the roundtable, including registration information for both participants and observers, will be announced on FASB’s website. 

Stakeholders are encouraged to review and provide comments on the proposal by Oct. 30, 2023.