Segment reporting tops the SEC's agenda for the first time
After nine consecutive years at the top, non-GAAP measures no longer leads SEC comment letter conversations. Segment reporting has taken its place and the data shows why this shift matters for every company preparing its next filing.
28% of all 2025 comment letter conversations cited segment reporting, up from 14% over the full 10-year period.
38% of conversations that included any accounting issue in 2025 cited segment reporting, making it the leading accounting topic.
75%+ of companies that received segment reporting questions also received revenue recognition questions in the same conversation.
Nine years at the top, then displaced in one
Non-GAAP measures led SEC comment letter conversations for nine of the ten years covered in our 2026 report. It peaked at 516 conversations in 2016 and held the top spot through changes in SEC guidance, the COVID pandemic and two cycles of heightened capital markets activity. In 2025, it ranked third.
Segment reporting took first place. Cited in 117 conversations and 28% of all conversations started during the year, it nearly doubled its 14% share over the full ten-year period. Among conversations that included any accounting issue, it appeared in 38%, making it the most commonly raised accounting topic the SEC staff pursued in 2025.
The driver is specific: ASU 2023-07, Segment reporting: Improvements to reportable segment disclosures, which requires companies to disclose significant segment expense categories reported to the chief operating decision maker (CODM). For calendar-year companies, the standard first applied to annual filings for fiscal year 2024. Companies are still adapting their disclosures and the SEC staff is actively reviewing compliance. The pattern in the data suggests that review is far from complete.
Financial statement segment reporting in SEC comment letters, 2016-2025
Annual conversation count and share of total conversations
Source: Ideagen Audit Analytics SEC Comment Letters 2016-2025 | Periodic filings | 2025 through March 6, 2026
| Year | Total conversations (all issues) | Segment reporting conversations | % of total conversations |
|---|---|---|---|
| 2016 | 1,485 | 214 | 14.4% |
| 2017 | 1,360 | 148 | 10.9% |
| 2018 | 892 | 61 | 6.8% |
| 2019 | 650 | 70 | 10.8% |
| 2020 | 636 | 95 | 14.9% |
| 2021 | 545 | 125 | 22.9% |
| 2022 | 958 | 130 | 13.6% |
| 2023 | 1,074 | 130 | 12.1% |
| 2024 | 975 | 183 | 18.8% |
| 2025 | 423 | 117 | 27.7% |
| 10-YR AVG | 900 | 127 | 15.3% |
| 2025 vs 10-YR AVG | +13.7% | ||
Verification: 2025 segment reporting % = 117/423 = 27.7%, rounding to 28% as reported.
10-year average share = sum of annual segment counts / sum of annual total conversations across 2016-2025.
What the SEC is actually examining
ASU 2023-07 is not only about adding a new table to the footnotes. The standard requires companies to identify and disclose the significant expense line items that management, specifically the CODM, reviews when evaluating segment performance. That means the SEC can compare what a company says publicly about how its segments operate with how those segments are actually managed internally.
The pairing of segment reporting and revenue recognition questions in the same conversations makes the SEC's focus clear. Over three quarters of the companies that received segment reporting questions in 2025 also received revenue recognition questions. The two issues are linked by the same underlying question: does the company's public disclosure reflect how management actually views the business? Disaggregated revenue under ASC 606 and segment expense disclosures under ASU 2023-07 are both surfaces on which that alignment (or lack of it) becomes visible.
The SEC staff has also been reviewing earnings releases and investor calls, requesting information about metrics used in those presentations that are not currently disclosed in SEC filings. Segment reporting questions are increasingly the vehicle for that broader inquiry into operational transparency.
This matters beyond the accounting team. If a company describes its business one way to analysts on an earnings call and presents segments differently in its 10-K, the SEC now has a clearer framework to ask why. The practical implication is that segment disclosures need to be designed in coordination with investor relations, not just prepared by the accounting function after the fact.
Top 5 accounting issues: 2016-2025 full period vs. 2025 alone
Percent of total conversations for each period
Source: Ideagen Audit Analytics SEC Comment Letters 2016-2025 | % of total conversations in each period
| Rank | Issue | 2016-2025 conversations | 2016-2025 % of total | 2025 conversations | 2025 % of total | Rank change |
|---|---|---|---|---|---|---|
| 1 | Fin statement segment reporting | 1,250 | 14% | 117 | 28% | NEW #1 |
| 2 | Revenue recognition | 1,380 | 15% | 69 | 16% | Held |
| 3 | Fair value measurement | 1,286 | 14% | 0 | 0% | Dropped out of top 10 |
| 4 | Acquisitions, mergers & business combos | 868 | 10% | 27 | 6% | Down |
| 5 | Intangible assets and goodwill | 803 | 9% | 27 | 6% | Down |
| 6 | Research and development | N/A | N/A | 36 | 9% | New entrant |
| Percent of total conversations for each period |
Verification: 2025 segment reporting 117 conversations / 423 total = 27.7% ≈ 28%. Full-period: 1,250/8,998 total conversations ≈ 14%.
Who is most exposed right now
Large accelerated filers bore the heaviest concentration in 2025. Segment reporting appeared in 37% of large accelerated filer conversations, tied with non-GAAP measures as their most commonly cited issue. These companies tend to have more complex, multi-segment structures, and ASU 2023-07's disclosure requirements create more surface area for SEC questions in their filings.
Manufacturing companies face particular exposure. Segment reporting ranked third in manufacturing conversations in 2025, appearing in 37% of them. Diversified manufacturers with multiple reportable segments are in the process of revising how they describe segment expenses, and many are still working out what "significant" means in the context of their CODM's review process. That ambiguity is exactly what the SEC staff is probing.
The effect is visible in trade and services as well, where segment reporting ranked second and in technology, where it also ranked second behind results of operations. In other words, no industry with reportable segments is outside the scope of this review cycle. The companies with the most complex segment structures and the widest gaps between CODM-reported metrics and public disclosures face the most exposure.
Top issues in 2025 by filer status
Percent of conversations for each filer group citing each issue
Source: Ideagen Audit Analytics SEC Comment Letters 2016-2025 | % of each filer group's total conversations
| Filer Status | Rank | Issue | # Conversations | % of filer group conversations |
|---|---|---|---|---|
| Large accelerated filers | 1 | Results of operations (MD&A) | 74 | 38% |
| Large accelerated filers | 2 | Fin statement segment reporting | 73 | 37% |
| Large accelerated filers | 3 | Non-GAAP measures | 73 | 37% |
| Accelerated filers | 1 | Results of operations (MD&A) | 28 | 45% |
| Accelerated filers | 2 | Fin statement segment reporting | 23 | 37% |
| Accelerated filers | 3 | Non-GAAP measures | 20 | 32% |
| Non-accelerated filers | 1 | Results of operations (MD&A) | 38 | 24% |
| Non-accelerated filers | 2 | Signatures/exhibits/agreements | 34 | 22% |
| Non-accelerated filers | 3 | Research and development issues | 25 | 16% |
NOTE: Non-accelerated filers diverge significantly — segment reporting does not appear in their top 3. R&D ranks third, reflecting higher proportion of smaller life sciences companies.
Verification: Large accelerated filers = 47% of 2025 conversations (up from 30-33% in 2022-2024). Total large AF conversations ~200 in 2025.
| Issue | Large accelerated | Accelerated | Non-accelerated |
|---|---|---|---|
| Results of operations (MD&A) | 38% | 45% | 24% |
| Fin stmt segment reporting | 37% | 37% | |
| Non-GAAP measures | 37% | 32% |
What comes next
ASU 2023-07 was effective for annual periods beginning after December 15, 2023, meaning most calendar-year companies applied it for the first time in their 2024 Form 10-K, filed in early 2025. The SEC staff's comment letter activity on this topic began building in 2024, when segment reporting already ranked second among accounting issues, cited in 19% of all conversations. In 2025, it reached 29% for domestic filers and 22% for foreign private issuers.
The standard also applies to interim periods beginning after December 15, 2024, bringing quarterly filings into scope for the first time. That means the question of how well a company's segment disclosures align with its internal management reporting is no longer a once-a-year consideration. It surfaces with every 10-Q.
The broader context is also worth noting. Overall comment letter volume fell to 423 conversations in 2025, down from 975 in 2024. But average conversation length reached 72 days, the highest in the ten-year period. When the SEC does engage, it is spending more time on each file. For companies whose segment disclosures are still in transition, the combination of active SEC scrutiny and longer, more detailed conversations means the cost of getting this wrong has increased.
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Marie is a CPA and Accounting Research Manager at Ideagen, where she leads the research team and serves as a subject matter expert for Audit Analytics. With thirty years of experience spanning public accounting and corporate finance, Marie began her career at PwC managing audits of SEC registrants and international entities. She later specialized in post-acquisition integration, leading accounting teams, ERP implementations, and financial reporting and analysis. Her diverse leadership experience across accounting, IT, risk management and HR gives her a comprehensive perspective on financial operations and compliance.
