Public companies across the United States face a strict compliance deadline starting January 1, 2027, as new accounting regulations from the Financial Accounting Standards Board take effect.
DISE Rule Forces Detailed Expense Disclosures for Public Companies
The primary regulatory shift, known as income-statement expense-disaggregation (DISE), applies to annual periods beginning after December 15, 2026. Under the incoming standard, firms can no longer bundle massive expenditures into broad categories like selling, general and administrative expenses or cost of goods sold. Instead, according to Christine Smith, a professor at Tulane University’s Freeman School of Business, organizations must itemize specifics like employee pay, depreciation, and amortization.
While the overall bottom line remains unchanged—aggregate expenses and revenue stay the same—the disclosure mandate gives outside investors visibility previously restricted to internal management. Smith notes that multinational firms juggling disparate accounting systems across units and countries may struggle to pull this granular data from standard reporting software.
Additional FASB Updates Compound Corporate Workload
Alongside DISE, a wave of narrower Financial Accounting Standards Board updates goes live for the same reporting periods. These secondary rules govern purchased loans, hedge accounting, derivatives, complex acquisitions, stock-based customer incentives, preferred-stock dividends, and codification corrections. Michaels warns that finance teams must review each standard individually rather than assuming exemptions apply.
For the banking sector, loan-purchase accounting rules alter profit timing. According to Smith, banks buying troubled loans will no longer record an immediate, day-one profit and loss hit for expected losses. Instead, expected losses convert into an allowance against the loan and get spread out over its life, temporarily boosting post-purchase earnings and per-share metrics compared to prior standards.
Pro Tip: Do not wait for a year-end crunch. Review every pending Accounting Standards Update now to determine exact operational impacts before auditors and shareholders demand compliance.
Frequently Asked Questions
When do the new FASB accounting rules take effect?
The rules apply to annual periods beginning after December 15, 2026, translating to January 1, 2027, for companies operating on a calendar year, according to advisory experts.
Will DISE change a company’s total reported revenue or net income?
How do the 2027 rules impact bank earnings on troubled loans?
Banks will no longer book immediate day-one P&L expenses for expected losses on purchased troubled loans. The losses will instead form an allowance spread across the life of the loan, removing the initial negative earnings hit.
What is the primary risk for companies failing to prepare?
Firms risk a chaotic scramble to rebuild financial reports, examine contracts, and explain last-minute changes to auditors and shareholders, according to Bob Michaels, a partner in CrossCountry Consulting’s accounting advisory practice.
Explore our finance archive for more analysis on regulatory shifts, or subscribe to our newsletter for weekly corporate governance updates.
Related reading