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Heads Up: FASB Has a New DISE Standard

Kelen Camehl, CPA, MBA

At first glance, the FASB’s new Disaggregation of Income Statement Expenses (DISE) standard introduced in 2024 might seem minor, but it’s the most significant change to reporting that FASB has had in years. Investors have been asking for clearer insight into expense structures, and DISE is FASB’s answer to the request. DISE doesn’t necessarily create new income statement line items, change recognition methods, or alter measurement principles, but it does require companies to pull together expense information in ways that many systems weren’t designed to handle.

What the DISE Standard Requires

DISE requires companies to disclose the “natural” components of certain expense captions, including inventory purchases, employee compensation, depreciation, intangible amortization, and DD&A, in a tabular footnote. On paper, that may sound manageable, but it’s challenging in practice. Most systems are organized around functional areas such as cost of goods sold, SG&A, or R&D, and once costs are capitalized, reclassified, or allocated, that natural detail can quickly get lost. Because of this, teams may have to untangle years of system logic or redesign parts of the chart of accounts to create reporting that is reliable and repeatable. Even though the new requirements allow for reasonable estimation, producing (and supporting) those estimates requires data structures, controls, and documentation that will hold up to audit scrutiny.

Data, Systems, and Process Challenges

At the risk of stating the obvious, a large part of the work for DISE is not about accounting policy itself. Instead, companies need to determine which expense captions are considered relevant, assess what natural expense information is available, and decide how to handle categories like inventory purchases and employee compensation. These policy choices should be made early and applied consistently.

Beyond policy decisions, DISE will likely drive changes to data mapping, reporting system configurations, and allocation methods, especially when a single cost center supports multiple functions. Furthermore, many companies may also find that the “other items” disclosure (i.e., the residual amount in the tabular disclosure for each relevant expense caption that reconciles to the income statement) can become a large bucket because only five natural categories are required to be disclosed separately. To manage these changes effectively, internal controls will need to be updated, and cross‑functional coordination will need to become a routine part of the close process.

A New Footnote That Requires Early Work

Because DISE adds more expense-level detail, most companies will likely present it as a standalone footnote rather than trying to fit it into an existing disclosure. This adoption is not required until 2027 for calendar-year public companies, with interim disclosures shortly afterward. Companies need to decide whether to adopt the standard on a prospective or retrospective basis, with a prospective approach resulting in a gradual buildup of comparative information over time. Preparing this note is still the final step in a process that begins many months in advance. Teams will need time to identify gaps, redesign data flows, align policies, establish controls, and validate outputs across multiple test cycles.

Teams Should Begin Preparing Now

The challenge with DISE comes from the need to build processes and systems to support it consistently. Companies need time to work through policy questions, align their data, and make sure natural expense components can be reported reliably for both annual and interim periods. This standard touches many areas such as accounting, FP&A, supply chain, payroll, and IT. Starting DISE prepare early will give teams room to plan, test, and refine their approach so reporting can be done smoothly instead of scrambling at the last minute.