DISE vs Segment Reporting: What Changes for US Registrants by Filer Type

If your team is searching for what DISE requires in "segment and disaggregation reporting," you have landed on the single most common point of confusion in the standard. DISE (ASU 2024-03) and segment reporting (ASC 280) are two distinct standards with different mechanics, different scopes, and different disclosure locations. Conflating them is the fastest way to misallocate your implementation budget.

This article separates the two clearly, explains how they interact, and then goes one level deeper: what the new DISE requirements actually mean for specific company profiles, including technology companies, oil-and-gas producers, financial services firms, pre-IPO companies, and Reg S-X 3-05/3-09 filers.

Key takeaway: DISE (ASC 220-40) adds an entity-wide, natural-expense footnote layer. Segment reporting (ASC 280) governs how you slice performance by operating segment. They overlap in data sourcing but are governed by separate codification subtopics, have separate effective dates, and produce separate disclosures.

DISE vs ASC 280 Segment Reporting: What Each Actually Requires

These are not the same standard. Understanding the distinction is the prerequisite for every implementation decision that follows.

ASU 2023-07 (Segment Reporting) is already in effect. If your company files a 10-K for a calendar year ending December 31, 2024 or later, you are already required to disclose significant segment expenses, the CODM's title and position, and how the CODM uses segment profit or loss. That ship has sailed.

DISE is the next wave. ASU 2024-03, issued November 4, 2024 and codified in the new ASC Subtopic 220-40, requires a separate, entity-wide tabular footnote disclosing the natural expense components embedded inside your functional income statement captions. It does not replace or modify the segment note.

How the Two Standards Interact

The interaction is real but manageable. ASU 2023-07 already pushed companies to identify and disclose "significant segment expenses" at the segment level. DISE now requires a parallel exercise at the entity level, disaggregating the same types of costs (employee compensation, depreciation, amortization) across the whole income statement.

The data sourcing challenge overlaps. If your ERP tracks employee compensation by cost center and you already mapped cost centers to segments for ASU 2023-07, that mapping is a starting point for DISE. But DISE requires the natural expense amounts within each functional income statement caption (cost of sales, SG&A, R&D), not within each segment. The two cuts are different, and most companies will need both.

For a detailed reference on the DISE disclosure mechanics themselves, see our DISE disclosure requirements reference guide. For the ICFR and controls angle, see what ASU 2024-03 changes about your controls.

What DISE Requires: The Five Categories and the Relevant Caption Test

DISE requires every public business entity to add a new tabular footnote disclosing the amounts of five specified natural expense categories within each "relevant expense caption" on the face of the income statement.

The five mandatory categories are:

1. Purchases of inventory
2. Employee compensation
3. Depreciation
4. Intangible asset amortization
5. Depreciation, depletion, and amortization (DD&A) recognized as part of oil-and-gas-producing activities, or other depletion expense

A "relevant expense caption" is any expense line within continuing operations on the face of your income statement that contains at least one of those five categories. For most PBEs, that means cost of sales, SG&A, and R&D are all in scope. A standalone "Depreciation expense" line that contains only depreciation is not subject to further disaggregation.

Beyond the five categories, the standard also requires:

• Certain expense, gain, or loss amounts already required under existing US GAAP to be consolidated into the same table (not scattered across separate footnotes)
• A qualitative description of amounts remaining in relevant expense captions that are not separately disaggregated
• Total selling expenses at each interim and annual period, plus an annual definition of selling expenses

As PwC confirms: "The new standard requires new disclosures with additional disaggregated information about expenses in the footnotes. It does not change or remove any existing presentation or disclosure requirements within US GAAP or SEC guidance."

What Changes by Company Type

The keyword "segment and disaggregation reporting" often reflects a company-specific question: does this apply to us, and how hard will it be? The answer varies significantly by filer profile.

Technology Companies

Technology companies face a specific challenge with intangible asset amortization and capitalized software costs. If your income statement buries amortization of acquired intangibles inside cost of revenues and SG&A simultaneously, both captions become relevant expense captions requiring separate disclosure of the amortization amount in each.

Employee compensation is the harder problem. Engineering, sales, and G&A headcount costs flow into multiple functional captions. Most tech companies track compensation by cost center or department, not by income statement caption. Mapping payroll data to functional captions requires coordination between HR, FP&A, and the ERP team, and the mapping logic will need to be documented and audited.

Capitalized software under ASC 350-40 adds another wrinkle: amortization of capitalized internal-use software is typically buried in cost of revenues or SG&A. DISE will require that amount to be surfaced separately as depreciation or intangible amortization within each relevant caption.

Oil-and-Gas Producers

Oil-and-gas companies are the only filer type with a category specifically written for them: DD&A recognized as part of oil-and-gas-producing activities. This is category (e) in the standard and exists because DD&A is often the single largest cost item for E&P companies and is already required to be disclosed under existing US GAAP (ASC 932). DISE pulls that existing disclosure into the new tabular format.

The practical implication: if you already track DD&A separately by producing activity, the data likely exists. The work is integrating it into the new table format and ensuring the qualitative description of remaining amounts in each relevant caption is complete and auditable.

Financial Services Firms

Financial services companies face a structural question: does "purchases of inventory" apply to them? For most banks and insurers, the answer is no, because they do not hold inventory in the traditional sense. However, employee compensation and depreciation (on premises, equipment, and right-of-use assets) almost certainly appear in their functional expense captions.

The more significant issue for financial services is the selling expenses disclosure. The standard requires an annual definition of selling expenses, but gives entities significant latitude in how they define the term. For a bank with a retail distribution network, the boundary between "selling" and "service" expenses is genuinely ambiguous. The definition you choose will be disclosed annually and will be subject to SEC staff review. Drafting a definition that is defensible, internally consistent, and comparable to peers requires early engagement with your auditors.

Pre-IPO Companies and S-1 Filers

This is the most underserved audience in current DISE guidance. DISE does not apply to private companies. But the moment a private company files a registration statement (Form S-1 or otherwise), it becomes a public business entity for purposes of the financial statements included in that filing. As PwC notes, "a private company considering an initial public offering would need to apply it when preparing its registration statement."

For a company planning an IPO in 2027 or 2028, this means:

• The S-1 financial statements must include DISE-compliant footnotes
• Retrospective application may require natural expense data going back to 2025
• The data collection and system work must begin well before the IPO process, not during it

For a practitioner walkthrough of S-1 requirements, see What Is an S-1 Filing? The 2026 CFO's Reference Guide.

Reg S-X 3-05 and 3-09 Filers

Private companies that are required to file financial statements with the SEC under Regulation S-X Rule 3-05 (acquired businesses) or Rule 3-09 (equity method investees) are in scope for DISE. They meet the ASC Master Glossary definition of a PBE for those filed financial statements. This catches many companies off guard: a private subsidiary of a public parent, or a significant acquired business, may need to produce DISE-compliant footnotes for the financial statements included in the parent's proxy or 8-K filing.

Effective Dates: When Does DISE Apply by Filer Type

The mandatory effective dates, confirmed by the FASB and clarified by ASU 2025-01, are:

Retrospective adopters face the tightest timeline. If a calendar-year filer applies DISE retrospectively to the two prior years presented in its 2027 10-K, it needs natural expense data for fiscal years 2025 and 2026. That data collection window is open now, and it closes with the 2025 year-end close.

Key takeaway: Retrospective adoption requires 2025 natural expense data. If your team has not started collecting it, the window is narrowing.

The Selling Expenses Definition: A Hidden Comparability Risk

The selling expenses disclosure is one of the least-discussed requirements and one of the most consequential for investor relations. Every PBE must disclose total selling expenses at each interim and annual period. In annual periods, they must also disclose their definition of selling expenses.

The standard gives significant flexibility in how "selling expenses" is defined. That flexibility creates a comparability problem: two companies in the same industry may define selling expenses differently, making peer benchmarking unreliable. The definition is disclosed annually, so it will be visible to analysts, investors, and the SEC staff.

Practical guidance for drafting the definition:

• Be specific about what is included (direct sales force compensation, commissions, trade promotion costs) and what is excluded (customer service, account management)
• Align the definition with how your CODM and IR team already talk about selling costs externally
• Engage your auditors before finalizing the definition, not after
• Recognize that changing the definition in a future period requires recasting prior periods (unless impracticable) and disclosing the reason for the change

What the FASB's May 2026 Roundtable Revealed

The FASB held a public roundtable on May 27, 2026, to discuss DISE implementation. The meeting minutes are publicly available and represent the most current intelligence on where preparers are struggling.

The roundtable confirmed what practitioners already suspected: the data availability gap is the primary implementation challenge, not the accounting interpretation. Preparers reported that employee compensation data is the hardest natural expense category to map to functional income statement captions, particularly for companies with shared services centers and decentralized ERP environments. Investors, for their part, indicated they are preparing to use DISE data for peer benchmarking and cost structure analysis from day one of adoption.

The roundtable also surfaced a practical question that the standard does not fully resolve: how granular must the qualitative description of remaining amounts be? The FASB has not issued additional guidance on this point, which means auditor alignment will be critical before the first filing.

Implementation Priorities by Company Profile

Deloitte recommends a four-phase implementation framework: understanding and planning, assessment, implementation, and adoption/post-adoption. The right starting point depends on your company profile.

For calendar-year PBEs with complex cost structures (technology, industrials, healthcare):

1. Complete a relevant expense caption inventory before year-end 2026
2. Build the natural expense mapping matrix (captions x categories) and identify data gaps
3. Engage HR, FP&A, and IT to assess whether payroll and depreciation data can be pulled by functional caption from existing systems
4. Decide on prospective vs. retrospective transition before Q1 2027 (retrospective requires 2025 data now)
5. Draft the selling expenses definition and align with auditors
6. Assess ICFR implications: new data sources and estimates introduce new control risks that must be documented

For pre-IPO companies targeting a 2027 or 2028 listing:

1. Treat DISE as a day-one S-1 requirement, not a post-IPO concern
2. Begin natural expense data collection for all periods that will appear in the registration statement
3. Engage underwriters' counsel and auditors on DISE compliance as part of IPO readiness diligence

For Reg S-X 3-05/3-09 filers:

1. Confirm whether the acquired or investee entity meets the PBE definition for the relevant filing
2. Assess whether the entity's financial reporting systems can produce the required natural expense data
3. Coordinate with the parent company's accounting team on disclosure format and auditor expectations

As Deloitte advises: "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."

The investor relations dimension also deserves attention before the first DISE filing. Analysts will use the new natural expense data to rebuild cost structure models and benchmark peers. CFOs and IR teams should anticipate new questions on earnings calls and consider whether to provide supplemental context in investor presentations before the data goes live in the footnotes.

FAQ

Does DISE change how expenses appear on the face of the income statement? No. DISE is a footnote-only disclosure standard. Your income statement continues to present expenses by function (cost of sales, SG&A, R&D). The new tabular disclosure lives entirely in the notes.

Is DISE the same as ASC 280 segment reporting? No. ASC 280 (updated by ASU 2023-07, already effective) governs segment-level disclosures by reportable segment. DISE (ASU 2024-03 / ASC 220-40) requires an entity-wide natural expense disaggregation in a separate footnote table. They share some data sourcing challenges but are distinct standards.

When is DISE mandatory for calendar-year filers? The first mandatory annual DISE disclosure is in the fiscal year 2027 10-K (for the year ending December 31, 2027), filed in early 2028. Interim DISE disclosures are first required in Q1 2028.

Does DISE apply to private companies? Not directly. But private companies filing S-1 registration statements, and private companies required to file financial statements with the SEC under Reg S-X Rule 3-05 or 3-09, are in scope because they meet the ASC Master Glossary definition of a PBE.

What if we cannot get exact natural expense data from our systems? The standard explicitly permits the use of estimates where exact data is not readily available. However, estimation methodologies must be documented, consistently applied, and aligned with your external auditors before adoption.

Can we adopt DISE early? Yes. Early adoption is permitted for any annual period for which financial statements have not yet been issued. The transition can be prospective or retrospective. Retrospective adoption requires natural expense data for all comparative periods presented, potentially going back to fiscal year 2025.