IMA FRC comment letter response to proposed ASU on the disaggregation of income statement expenses (DISE)

Wednesday, November 1, 2023

The IMA^® (Institute of Management Accountants) Financial Reporting Committee (FRC or Committee) issued a comment letter in response to Financial Accounting Standards Board (FASB or Board) Proposed Accounting Standards Update (ASU) No. 2023-ED500, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (Proposal).

The FASB issued the Proposal in response to feedback from investors, lenders, creditors, and other allocators of capital that seeks granularity regarding certain information reported in the financial statements, including expenses reported in the income statement.

In its response, the Committee states that it supports the Board’s intent to improve income statement disclosures in response to investor-expressed informational needs. However, the Committee also observes that the Proposal, as written, broadly would affect all public companies (and companies that intend to become public companies), and it would require significant changes to the way most companies currently capture and summarize information for presentation in the financial statements. The Committee states that the disaggregation of expenses that the Proposal would require, if adopted, differs from how management accumulates and analyzes operating results, and significant costs would be necessary to consider the appropriate internal controls to gather, review, and audit the required information.