DISE (ASC 220-40): What Every Large Accelerated Filer Must Know Before FY2026

Understanding DISE and Its Impact

The Financial Accounting Standards Board (FASB) issued ASU 2024-03 — Disaggregation of Income Statement Expenses (DISE) — codified as ASC 220-40. This standard requires public companies to disaggregate key expense line items in the notes to financial statements.

Who Is Affected?

Large accelerated filers face the earliest compliance deadline with fiscal years beginning after December 15, 2026. All other public entities follow one year later.

Key Requirements

• Disaggregate cost of sales and SG&A into natural expense categories
• Present employee compensation, depreciation, amortization, and inventory costs separately
• Provide both interim and annual disclosures
• Reconcile disaggregated amounts to existing line items

Implementation Roadmap

• Assess current chart of accounts and data availability
• Identify gaps in expense categorization at the transaction level
• Engage IT and finance teams to update GL structures
• Perform dry-run disclosures for at least two comparative periods
• Brief the audit committee and external auditors early

Practical Tip: Start now. Retrofitting two years of comparative data under a new expense taxonomy is far more complex than it appears. Companies that adopted early found the data collection effort took 6-9 months.