The Financial Accounting Standards Board (FASB) published a proposed Accounting Standards Update (ASU) intended to provide investors with more decision-useful information about a public business entity’s expenses. Stakeholders are encouraged to review and provide comment on the proposal by October 30, 2023.

“Feedback from investors on our 2021 Agenda Consultation provided us with a fresh approach to providing more detailed information about a company’s expenses, which investors have said is critically important to understanding a company's performance, assessing its prospects for future cash flows, and comparing its performance over time and with that of other companies,” stated FASB Chair Rich Jones. “As a result, less than 18 months after revising the scope of the project, we've issued this proposed standard that would require companies to provide more information about specific expenses in the notes to financial statements.”

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.

Public Roundtable on Proposed ASU

The FASB will host a public roundtable on December 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 the FASB website.

The proposed ASU, as well as “FASB In Focus” and “Financial Reporting Spotlight: Income Statement Expense Disclosures overviews and educational videos, are available at www.fasb.org.


About the Financial Accounting Standards Board

Established in 1973, the FASB is the independent, private-sector organization, based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit www.fasb.org.