Revamp Your Segment Reporting

June 25, 2018

Given recent moves by the SEC to tighten regulations, simple mistakes in segment reporting can raise a red flag with the Securities Exchange Commission and result in large fines. Of course, careful reporting allows your investors to have an accurate understanding of your company’s performance.

To improve your segment reporting, make sure to focus on internal control of the following:

> Identification of operating segments and the chief operating decision-maker (CODM). Determine your operating segments, based on FASB Accounting Standards Codification, and decide who is in charge of assessing and allocating resources to those segments.

> Aggregation of operating segments for reporting purposes. Don’t take the aggregation of segments for reporting lightly. If separate reporting will give investors any more insight into your company,
don’t aggregate.

> Documentation of reasonable judgment. Ensure that every decision related to segment reporting is documented thoroughly and that every public and internal reference to company performance adheres to those decisions.