SEC’s Segment Accounting Warning Sparks Compliance Confusion

Securities and Exchange Commission accountants this week urged companies to take the unusual step of checking with the regulator before they follow a part of new segment accounting rules designed to help businesses convey a clearer picture of profits and losses in their business units.

The subtext in the message: proceed with caution or risk scrutiny from the regulator.

Part of the Financial Accounting Standards Boards new rules lets public companies disclose more than one profit measure—including unofficial accounting results—for their operating segments, the financial reporting term for how they group their main business lines. The SEC has tight guardrails ...