Compliance

FASB’s DISE regulation will take some heavy lifting

New regs will require more disclosures around compensation, other factors.
article cover

Yauhen Akulich/Getty Images

less than 3 min read

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.

Be prepared for a lot of corny puns from your favorite accounting publications: FASB has voted to implement an accounting standard dealing with the disaggregation of income statement expenses, or DISE.

Jokes aside, the new standard may pose quite the burden on public companies. It will require them to provide additional disclosures on a variety of items, including employee compensation, inventory purchases, amortization of intangible assets, and property and equipment depreciation, the Wall Street Journal reported.

Companies will need to disclose this information for each relevant expense item line in the footnotes of both their annual and quarterly income statements, starting in 2027 and 2028, respectively. They’ll also need to include a description of how they define selling expenses on an annual basis.

The new standard is intended to give investors more granular insight into companies’ sales and selling, general, and administrative (SG&A) expenses, something investors have requested, the FASB said.

But collating the required information will be a “significant lift” for companies, FASB chair Rich Jones acknowledged in March 2023, when the new standard was first proposed. To comply with it, many companies may incur one-time costs as they make changes to their ERP systems and potentially hire staff. Some large companies, including Apple, Starbucks, and IBM, have requested changes to the standard, calling it burdensome.

FASB member Christine Botosan called the rule a “compromise,” according to the Wall Street Journal. “I suspect that all parties are happy with parts of this and not happy with other parts of it, and that probably means that we’ve struck the right balance,” she said.

But companies will have time to come to grips with the standard. FASB intends to release the final regulations later this year, and public companies will need to follow them for annual statements for fiscal years starting after December 15, 2026, and for interim periods for fiscal years starting after December 15, 2027.

News built for finance pros

CFO Brew helps finance pros navigate their roles with insights into risk management, compliance, and strategy through our newsletter, virtual events, and digital guides.