DISE Disclosure Explained: What It Is and Why It Exists

DISE disclosure is the shorthand for the new footnote requirement under FASB's Accounting Standards Update 2024-03, formally titled Income Statement, Reporting Comprehensive Income, Expense Disaggregation Disclosures (Subtopic 220-40). Issued on November 4, 2024, it is the most significant change to income statement expense disclosure requirements for public companies in decades. If your company files with the SEC, or is preparing to, this standard almost certainly applies to you.

Key takeaway: DISE does not change how expenses appear on the face of the income statement. It adds a new tabular footnote that breaks those expense captions open by nature, giving investors the granular cost data they have been requesting for years.

What Is DISE Disclosure?

DISE stands for Disaggregation of Income Statement Expenses. The standard, codified in ASC Subtopic 220-40, requires all public business entities (PBEs) to disclose, in a new tabular footnote, the natural expense components hidden inside the functional captions on their income statements, things like cost of sales, SG&A, and R&D.

Before DISE, US GAAP had almost no general requirement to break down those functional captions by the nature of the underlying costs. A company could report $2 billion in SG&A without separately disclosing how much of that was employee compensation, how much was depreciation, or how much was amortization of acquired intangibles. Investors could not easily compare cost structures across companies or assess how a company's expense mix was shifting over time. DISE closes that gap.

As PwC notes, "it is expected that nearly all PBEs will be required to disclose more information about income statement expenses upon adoption of the new standard." This is not a niche or edge-case rule. It is a universal compliance requirement for public companies.

Why Did the FASB Create DISE?

The FASB's motivation was direct investor feedback. For years, investors told the Board that function-based income statement presentation, cost of sales here, SG&A there, provides insufficient insight into the nature of expenses. They specifically requested more information about employee compensation, depreciation, and amortization, the categories that reveal how capital-intensive a business is, how labor-dependent it is, and how much of its cost base is driven by past acquisition activity.

The FASB's stated objectives for DISE are threefold:

1. Help investors better understand entity performance.
2. Help investors better assess prospects for future cash flows.
3. Enable comparison of performance over time and across entities.

DISE is the third installment in a trilogy of FASB transparency initiatives. ASU 2023-07 expanded segment reporting disclosures; ASU 2023-09 overhauled income tax disclosures; ASU 2024-03 completes the picture by opening up the expense line. Together, they represent a sustained push to make US GAAP financials more analytically useful to the buy side.

Who Is Required to Disclose DISE?

DISE applies to all public business entities (PBEs) as defined in the ASC Master Glossary. That definition is broader than most controllers assume.

• All SEC registrants (domestic and foreign private issuers filing on US GAAP).
• Entities that are not themselves SEC registrants but whose financial statements must be included in another SEC registrant's filing under Regulation S-X Rules 3-05 or 3-09, for example, a significant acquired business or an equity-method investee.
• Entities with securities traded on an over-the-counter market.

DISE does not apply to private companies, not-for-profit entities, or employee benefit plans.

One frequently overlooked point: a private company planning an IPO must apply DISE when preparing its registration statement, such as a Form S-1. If you are in pre-IPO mode, the standard is already relevant. For a full walkthrough of how DISE fits into the S-1 process, see Form S-1 Filing: A Practitioner's 2026 Walkthrough.

What Are the Five Required Natural Expense Categories?

The core of DISE disclosure is a mandatory tabular footnote that disaggregates five natural expense categories within each "relevant expense caption" on the income statement.

The five categories, as specified in ASC 220-40, are:

A relevant expense caption is any line item presented on the face of the income statement within continuing operations that contains one or more of these five categories. For most companies, that means cost of sales, SG&A, and R&D will all be relevant expense captions, each requiring its own disaggregation within the table.

Note that an expense caption presented entirely as a single natural category does not require further disaggregation. A line item labeled "Depreciation expense" that contains only depreciation is already disaggregated. It is the blended functional captions that DISE targets.

What Exactly Does the DISE Footnote Disclose?

The new tabular disclosure has four components, all required at each interim and annual reporting period:

1. The five natural expense amounts within each relevant expense caption (described above).
2. Existing GAAP disclosures folded in. Certain amounts already required to be disclosed under US GAAP, such as impairment losses on intangibles or gains and losses on assets held for sale, must be included in the same table rather than disclosed separately elsewhere. This is a consolidation of existing disclosures, not a new requirement for new data.
3. A qualitative description of remaining amounts. Whatever is left in a relevant expense caption after the five categories and the folded-in items are disclosed must be described qualitatively. The standard does not prescribe the level of detail, which creates both flexibility and interpretive uncertainty. Preparers are actively working through how much description is enough.
4. Selling expenses disclosure. Entities must disclose the total amount of selling expenses in each interim and annual period. In annual periods only, they must also disclose their definition of selling expenses. The standard gives entities flexibility to define selling expenses, but that definition must be applied consistently and disclosed every year.

Key takeaway: The selling-expense definition decision is more consequential than it looks. Because the definition must be disclosed annually and applied consistently, the choice a company makes in 2027 will shape comparability for years. Companies that define selling expenses broadly will show a larger number; those that define it narrowly will not. Investors and analysts will notice the differences.

For a deeper look at how these disclosure requirements interact with non-GAAP metrics, see ASU 2024-03 Non-GAAP Disclosure Overlap: What Changes and What to Do.

What Are the DISE Effective Dates?

The effective dates were clarified by a subsequent update, ASU 2025-01, and are now settled:

Early adoption is permitted. Transition may be applied either prospectively (to periods after the effective date) or retrospectively (to any or all prior periods presented).

The transition method choice has a significant practical consequence. A company that wants to present 2025 comparative data on a retrospective basis needs DISE-level data going back to January 1, 2025. That window has already opened. Companies that have not yet decided on their transition method risk closing off the retrospective option by default, simply because the underlying data was never captured.

For a detailed compliance calendar and transition decision framework, see ASU 2024-03 Effective Date: 2026 Compliance Calendar for Public Companies.

What Does DISE Change, and What Does It Not Change?

This is a common source of confusion. DISE is a disclosure-only standard.

What DISE changes:

• Adds a new tabular footnote disaggregating natural expense categories within relevant income statement captions.
• Requires annual disclosure of total selling expenses and the entity's definition of selling expenses.
• Requires a qualitative description of remaining undisaggregated amounts.
• Consolidates certain existing GAAP disclosures into the new table.

What DISE does not change:

• The face of the income statement. No new line items, no new subtotals, no change to how expenses are presented on the primary financial statements.
• Expense recognition or measurement. DISE does not affect when or how expenses are recorded.
• Any existing SEC disclosure requirements under Regulation S-X or MD&A. DISE adds to the footnote package; it does not replace or supersede SEC rules.

For companies that also report under IFRS, it is worth noting that IFRS 18, effective for periods beginning on or after January 1, 2027, takes a different approach: it restructures the income statement itself and introduces new presentation categories. The two standards are complementary but distinct. See IFRS 18 vs ASU 2024-03: The Definitive Expense Disaggregation Comparison for a side-by-side analysis.

What the FASB's May 2026 Roundtable Revealed

On May 27, 2026, the FASB held a public roundtable specifically to assess DISE implementation progress, gathering input from both preparers and investors. The meeting minutes are publicly available and represent the most current primary-source intelligence on where implementation stands.

The roundtable confirmed what practitioners have been experiencing: implementation is harder than the standard's text suggests. The challenges preparers flagged most consistently were:

• Data availability. Most companies aggregate expenses by function in their ERP systems, not by nature. Extracting natural expense data from systems built around functional reporting requires new mapping logic, allocation methodologies, and in many cases, system changes.
• Employee compensation complexity. Compensation costs appear across multiple income statement captions and include salaries, bonuses, stock-based compensation, benefits, and payroll taxes. Pulling these together consistently across captions, geographies, and business units is operationally demanding.
• Inventory purchase disclosure. The standard permits either a cost-incurred or expense-incurred approach for purchases of inventory. Choosing between them, and then implementing the chosen method consistently, requires careful analysis, particularly for manufacturers where direct materials are embedded in overhead allocations.
• Estimates. The FASB explicitly acknowledged in ASU 2024-03 that entities may use estimates or other methods that produce a reasonable approximation of the required amounts. Deloitte's implementation guide confirms this: "Entities may need to consider using estimates, making changes to their information technology (IT) systems and reporting capabilities, and adjusting processes and controls." The audit risk that estimation creates, and the documentation required to support it, is a dimension many preparers are still working through.

The roundtable also surfaced investor expectations: buy-side participants want the disclosures to be consistent across periods and comparable across companies, which puts pressure on preparers to make definitional choices carefully and document them thoroughly.

DISE Readiness: What It Actually Requires

DISE readiness is not just a disclosure exercise. Deloitte's implementation framework identifies four phases: understanding and planning, assessment, implementation, and adoption and post-adoption. The assessment phase alone, which involves a scope and gap analysis of what data exists in current systems versus what DISE requires, is substantial for most companies.

The key dimensions of readiness are:

• Data and systems. Relevant information may reside across general ledger systems, payroll platforms, inventory modules, fixed-asset subledgers, consolidation tools, and data warehouses. Tracing costs by nature through allocations and consolidation entries requires new processes. For a technology-focused view of what your reporting stack needs to handle, see DISE and IFRS 18 Reporting Technology: What Your Stack Must Do Before 2027.
• Cross-functional team. Deloitte explicitly recommends assembling a team spanning accounting, finance, operations, IT, investor relations, and internal audit before management agrees to an implementation plan. Multinational and decentralized companies need regional contacts as well.
• Internal controls. New data sources and new disclosure processes require new controls. The ICFR implications of DISE are underappreciated by many preparers. New controls must be designed, documented, and tested before the first DISE-compliant filing. For a detailed walkthrough of the control and DC&P obligations, see IFRS 18 and DISE: Disclosure Controls and Procedures Walkthrough.
• Auditor alignment. Deloitte's guide is direct: "Engage with external auditors and, if applicable, advisers early in the implementation process to obtain input on the entity's policies and positions regarding the DISE standard, clarify interpretations on the standard, and align expectations on the plan for implementing the standard." With interpretive questions still being actively worked through (PwC updated its DISE In-depth in November 2025 to clarify inventory purchase questions and add interim reporting guidance), early auditor engagement is not optional.

FAQ

What is DISE disclosure? DISE disclosure is the new footnote requirement under FASB ASU 2024-03 (ASC Subtopic 220-40) that requires public business entities to disaggregate specified natural expense categories, purchases of inventory, employee compensation, depreciation, intangible asset amortization, and DD&A from oil-and-gas activities, within a tabular footnote mapped to each relevant income statement expense caption.

What is DISE readiness? DISE readiness refers to a company's preparedness to produce the required disclosures on time and with sufficient accuracy and auditability. It encompasses data availability, ERP and system capabilities, cross-functional team structure, internal control design, and auditor alignment. Most companies are still in the assessment phase as of mid-2026.

What is the effective date for DISE disclosures for public business entities? For annual periods, DISE is effective for fiscal years beginning after December 15, 2026. Calendar-year companies first apply it in their 2027 annual report. For interim periods, the requirement kicks in for periods within annual periods beginning after December 15, 2027, meaning Q1 2028 for calendar-year companies. Early adoption is permitted.

Who is required to disclose DISE? All public business entities as defined in the ASC Master Glossary, including SEC registrants and certain non-SEC-registrant entities whose financial statements are included in another registrant's SEC filing under Regulation S-X Rules 3-05 or 3-09. Private companies, not-for-profits, and employee benefit plans are excluded, though private companies preparing for an IPO must apply DISE in their registration statement.

Does DISE change the income statement? No. DISE does not alter the face of the income statement. It adds a new tabular footnote disclosure. Existing presentation requirements under US GAAP and SEC rules remain unchanged.

Can companies use estimates to comply with DISE? Yes. ASU 2024-03 explicitly permits entities to use estimates or other methods that produce a reasonable approximation of the required amounts. However, estimates must be supportable, documented, and auditable, and they carry audit risk that companies should address early with their external auditors.