DISE: An ASU 2024-03 Readiness Guide for PBEs
By now, most public business entities (PBEs) understand that Accounting Standards Update (ASU) 2024-03 introduces new expense disaggregation disclosure requirements. The challenge for many organizations is no longer understanding the standard itself but understanding what may be required to implement it efficiently and support compliance on an ongoing basis. Disaggregation of income statement expenses (DISE) implementation readiness means evaluating whether existing data, systems, reporting processes, controls, and governance can support the expense disaggregation disclosures required by ASU 2024-03.
While DISE does not change the face of the income statement, it will require organizations to evaluate how expense information is captured, accumulated, reported, reviewed, and supported. Depending on an entity’s existing systems and processes, implementation could involve considerations related to data availability, reporting processes, internal controls, estimation methodologies, and the processes used to review, approve, and support the required disclosures.
This article focuses on practical DISE implementation readiness considerations. A more detailed discussion of the technical requirements of ASU 2024-03 is found in the related FORsights™ articles referenced at the conclusion of this piece.
What Is DISE & Why Does It Matter?
DISE is the expense disclosure framework established by ASU 2024-03 and codified into Accounting Standards Codification (ASC) 220-40, Expense Disaggregation Disclosures. The standard requires PBEs to provide additional information about specified natural expense categories included within relevant expense captions.
The objective of the standard is to improve transparency by providing users of financial statements with greater insight into the nature of expenses included within broad functional expense captions. Importantly, the standard does not change existing income statement presentation requirements. Rather, it requires additional disclosures in a tabular format within the notes to the financial statements.
Who Must Comply With ASU 2024-03?
ASU 2024-03 applies to PBEs. Private companies, employee benefit plans, and not-for-profit entities are outside the scope of the standard.
New annual disclosures are effective for fiscal years beginning after December 15, 2026, and interim disclosures are effective for interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. PBEs may apply the guidance of the standard prospectively or retrospectively to any or all of the prior periods being presented.
Does DISE Change the Face of the Income Statement?
No. ASU 2024-03 does not change existing income statement presentation requirements. Instead, the standard requires additional expense disaggregation disclosures within the notes to the financial statements for relevant expense captions.
A relevant expense caption is an expense caption presented on the face of the income statement that contains one or more of the specified natural expense categories required by the standard. For those captions, PBEs must disclose the amount of the following natural expense categories included within the caption:
- Purchases of inventory
- Employee compensation
- Depreciation
- Intangible asset amortization
- Certain depreciation, depletion, and amortization expenses associated with oil- and gas-producing activities (or other depletion expenses).
For each relevant expense caption, the required information generally is presented in a tabular disclosure within the notes to the financial statements. The amounts disclosed in the table should reconcile to the related expense caption presented on the face of the income statement. In certain circumstances, existing U.S. GAAP disclosures may also need to be incorporated into the tabular disclosure when the applicable requirements are met.
In addition to the tabular disclosures, DISE requires PBEs to disclose the total amount of selling expenses for both annual and interim reporting periods. PBEs also are required to disclose their accounting policy for defining selling expenses in annual reporting periods. Because the standard does not prescribe a single definition of selling expenses, organizations will need to determine a definition that is appropriate based on their facts and circumstances and apply it consistently.
For many organizations, the most significant effort may involve identifying where the required information resides (that is, which income statement captions the relevant natural expense categories flow into), evaluating whether existing systems can support the disclosures, and establishing a repeatable reporting approach.
What Does a DISE Implementation Roadmap Look Like?
Implementing ASU 2024-03 will look different for every organization. However, most implementation efforts are likely to involve three broad phases:
- Understanding the requirements
- Conducting a gap analysis and readiness assessment
- Planning and executing implementation activities
Understand the Standard
Review ASU 2024-03 requirements and scope in detail.
Collaborate across functions, e.g., accounting, financial planning and analysis (FP&A), IT, and internal control owners, to support a coordinated, entitywide implementation.
Conduct Gap Analysis
Compare current reporting with new ASU requirements.
Perform materiality analysis (current and forward-looking).
Assess system capabilities and data availability for capturing required disaggregated expense details.
Review internal controls for completeness and accuracy of data and disclosures.
Evaluate impact on KPIs, MD&A, and segment reporting.
Plan & Execute Implementation
Form the right cross-functional team (including external advisors as needed).
Update systems to track, capture, and map disaggregated expense categories.
Train employees on updated processes.
Maintain clear documentation of estimates, methodologies, and classification decisions for audit support and internal governance.
Test, validate, and review new disclosure output for accuracy.
Establish continuous monitoring.
The roadmap above highlights activities that many organizations may consider as they think about readiness, including assessing data availability, reviewing existing systems and processes, evaluating internal controls, documenting methodologies, and testing proposed disclosures before adoption.
DISE Readiness Assessment & Gap Analysis
The purpose of the readiness assessment, or gap analysis, phase is to evaluate current reporting capabilities and identify potential gaps between existing processes and the information required by ASU 2024-03. The areas evaluated during this phase can help management understand when additional analysis, process changes, or implementation efforts may be needed before adoption.
Relevant Expense Captions
An important step in the readiness assessment is identifying which income statement captions represent relevant expense captions under the standard and determining the natural expense categories included within those captions. It may involve a detailed and tedious tracking of where the recorded specified natural expense categories flow to in the income statement, likely compounded in difficulty for expense items that first get capitalized or deferred on the balance sheet before being relieved as an expense to the income statement.
The assessment also should consider how the required tabular disclosures will be developed and validated, including how the disaggregated amounts will reconcile to the related expense caption presented on the face of the income statement. In addition, consideration should be given to the information that will be included within the remaining balance of the caption (other expenses), and any qualitative disclosures required to explain significant components not separately presented in the table.
Data Availability
One of the most common implementation challenges is determining whether the information required for the disclosures is currently available and can be reconciled to the related expense caption presented on the face of the financial statements.
For many entities, the required information may not reside in a single location. Instead, it may be maintained across multiple legal entities, business units, accounting systems, inventory systems, payroll systems, fixed asset records, consolidation processes, or manually maintained schedules. As a result, management may need to evaluate not only whether the information exists, but also whether it can be accumulated, validated, and reported consistently on a recurring basis.
Systems & Reporting Processes
Once entities understand where the required information resides, the next consideration is whether existing accounting systems and reporting tools can efficiently capture, accumulate, and report that information. This will include evaluations of accounting systems, enterprise resource planning (ERP) systems, consolidation tools, disclosure management applications, or other reporting solutions used throughout the organization—perhaps even recalibrating source level journal entries.
The next step is establishing a repeatable process for gathering, mapping, reviewing, and reporting the information each reporting period. Organizations may need to evaluate whether existing workflows or supporting schedules need to be updated to support ASU 2024-03.
Inventory Disaggregation Approaches
Organizations with inventory may need to consider which inventory disaggregation approach, such as the cost-incurred approach (based on when expenses are paid or accrued for) or the expense-incurred approach (based on when they are reflected in or relieved to the income statement), is most appropriate and operationally feasible based on how inventory costs are accumulated, tracked, and reported.
Chart-of-Accounts Structure
Although ASU 2024-03 does not prescribe changes to the chart of accounts, the readiness assessment should consider whether existing account structures and reporting attributes provide sufficient visibility into the required natural expense categories. Depending on current practices, implementation may involve evaluating whether additional account-level detail, subaccounts, cost-center mappings, or reporting attributes are needed, along with the associated effect on preparing and posting individual journal entries.
Existing Disclosure Integration
The new DISE tabular disclosures do not operate entirely in isolation. Certain disclosures currently required elsewhere in U.S. GAAP may need to be incorporated into the tabular disclosures when applicable. As a result, implementation teams should understand how existing disclosures intersect with the new reporting framework.
Use of Reasonable Approximations
ASU 2024-03 permits the use of estimates or other reasonable methods to approximate the required amounts when applied systematically and rationally. Organizations should explore how such methodologies will be developed, documented, reviewed, and applied consistently across reporting periods to result in representationally faithful results from the estimate.
Selling Expense Definition & Disclosure
In addition to the tabular disclosures, PBEs are required to disclose total selling expenses each period and, annually, their accounting policy for defining selling expenses. Because the standard does not prescribe a single definition, management may need to consider existing classifications, policies, and reporting processes to support a definition that is appropriate and applied consistently.
Internal Control Considerations
New disclosure requirements often create new control considerations. Management should evaluate controls over data completeness, account mapping, estimates, reconciliations, disclosure preparation, and review processes.
Ownership, Documentation, & Ongoing Oversight
Implementation may involve accounting, financial reporting, FP&A, information technology, and internal control stakeholders. Clear ownership, documentation, review responsibilities, and ongoing monitoring can help support a coordinated implementation effort and sustainable recurring disclosures.
DISE Readiness Questions for Management
As implementation planning progresses, management may wish to consider whether it can confidently answer the following questions:
- Have we traced through the specified natural expenses, identified the relevant expense captions, and determined how the required disaggregated expense information will be developed, supported, and disclosed?
- Do we understand where the required information resides and whether it is available, reliable, and capable of being accumulated and reconciled on a recurring basis?
- Are our systems, reporting processes, and chart-of-accounts structures sufficient to support the required disclosures efficiently and consistently?
- Have we evaluated key implementation considerations, including inventory disaggregation approaches, selling expense disclosures, estimates and reasonable approximations, and the integration of existing U.S. GAAP disclosures?
- Have we established appropriate governance, ownership, documentation, controls, and a timeline for testing and validating disclosures before adoption?
Moving From Understanding to Implementing DISE
For many PBEs, the most significant implementation questions are not about the technical requirements of the standard itself. Rather, the challenge involves understanding whether the organization’s existing data, systems, controls, and governance can support the required disclosures on a recurring basis.
A structured readiness assessment can help management identify gaps, explore alternatives, prioritize implementation activities, and establish a practical path for complying with ASU 2024-03’s expense disaggregation requirements.
Additional DISE Resources
For a more detailed discussion of the technical accounting requirements of ASU 2024-03, see these related FORsights:
- Details on FASB’s New Public Company Expense Disclosures (DISE) – Overview of the scope, disclosure requirements, practical expedients, and transition provisions associated with ASU 2024-03.
- Unpacking DISE: Insights Into Disaggregation Requirements – Discussion of implementation considerations, inventory reporting approaches, illustrative disclosures, and planning considerations related to DISE adoption.
- Quarterly Perspectives Q3 2026: Financial Reporting & Beyond – Webinar featuring a moderated discussion that will dive into DISE and related financial reporting considerations.
For more information, reach out to a professional at Forvis Mazars.