Segment Reporting

SEC Rules

S-K 101(b)

Incorporates GAAP standard for financial segment reporting
Also see S-K 102 (re: location of properties)

S-K 101(d)

Disclosure requirements by geographic area

FASB 131 1997

Text of FASB 131

Sets GAAP standard for segment reporting
FASB summary
FASB status
Superseded FASB 14 1976

Operating segment is a component of a business for which separate financial information is available that management regularly evaluates in deciding how to allocate resources and assess performance

Commentary

Foreign Accounting

IASB 14 (1997) uses "product and services" approach
rather than FASB's 131's "management" approach

IASB 14 summary (Deloitte)
SEC statement on IASB 14
SEC statement on foreign compliance with FASB 131

M&A Acccounting

For purposes of testing goodwill impairment under FASB 142, a "reporting unit" is defined as a FASB 131 operating segment or "one level below"

See M&A Accounting

SEC FAQs

SEC's Current accounting issues 2005

Topic II J Segment Disclosure

J 1 Identification of operating segments
J 2 Aggregation of operating segments
J 3 Other compliance issues
J 4 Changes in segments

Notable Cases / Enforcement Actions

Kaman Corp 2007

Form 8-K 6.19.07
Company splits its aerospace segment into four pieces in response to SEC comment
Company had discussed these smaller segments in its MD&A - but aggregated them for purposes of segment presentation
Restates three years of financials; Re-evaluates its disclosure controls and procedures

In re W R Grace & Co 1999

C&D order
SEC charges were based on materiality
to a business segment

In re: Sony 1998

C&D order
Sony reported only two segments in 1994:
electronics and entertainment
Failure to report Columbia Pictures separately
obscured adverse developments
that later required $2.7 billion goodwill write-down

Intelligent Electronics Securities Litigation 1996