DISE
Disaggregation of Income Statement Expenses | ASU 2024-03
DISE readiness isn't a single workstream—it spans technical accounting interpretation, data architecture, systems configuration, and financial reporting process design. As a pure advisory firm with no audit independence constraints, we can go as deep as the work requires.
What you need to know about DISE
Does DISE apply to you?
- Required for all Public Business Entities (PBEs)
- All SEC registrants (NYSE, NASDAQ, etc.)
- Companies with securities traded on OTC markets
- Subsidiaries included in a parent's SEC filing (e.g., S-X Rule 3-05 or 3-09)
- Companies in the process of an IPO or going public
- Private companies being acquired by a public company if their financials must be filed with the SEC
Why are many companies not ready?
- Cross-functional coordination: Finance, HR, IT, operations, and procurement all need to align. In decentralized or multi-segment companies, this coordination effort can be substantial.
- Retrospective data requirements: If you elect retrospective adoption, you'll need comparative data going back to 2025—data many companies have never tracked. Starting now is essential.
- Data & systems gaps: Most ERP and GL systems weren't designed to tag expenses by natural category. Chart of accounts restructuring and new data capture fields will likely be required.
- Internal controls & SOX implications: New disclosures require new controls around data accuracy and completeness. ICFR and SOX implications need to be assessed and documented before you go live.
The time to start is now
- FY2027: Annual deadline (public cos.)
- FY2028: Quarterly (interim) deadline
- Anytime: Early adoption permitted
How Embark can help
Draft the tabular footnote disclosure, develop the supporting disclosure language, and build tie-out procedures that hold up under auditor scrutiny.
For companies preparing for an IPO, M&A, or SPAC, DISE compliance is increasingly part of the story. We can scope and sequence the work alongside your broader transaction preparation.
DISE FAQs
What is DISE?
DISE stands for Disaggregation of Income Statement Expenses. In November 2024, FASB issued ASU 2024-03 requiring public companies to break open broad expense line items—like COGS or SG&A—and show investors exactly what's inside them.
Today, a company can report $500M in "SG&A" and investors largely have to guess at the mix. Under DISE, companies will need to show a footnote table breaking out how much of that was employee compensation, depreciation, amortization, inventory purchases, and so on.
The face of the income statement doesn't change—the new required disclosures live in the footnotes—but getting them right requires significant work on data, systems, and process behind the scenes.
What are the 5 required natural expense categories under DISE?
Every relevant income statement line item must be disaggregated into these five categories (where applicable):
1. Purchases of inventory: Raw materials and goods bought during the period
2. Employee compensation: Salaries, wages, benefits, and stock-based comp
3. Depreciation: PP&E wear-and-tear charges
4. Intangible asset amortization: Including capitalized software
5. DD&A / depletion: Depreciation, depletion, and amortization recognized as part of oil- and gas-producing activities or other depletion
Do private companies have to comply with DISE?
Private companies are not currently required to comply. However, if there's any chance of an IPO, a sale to a public acquirer, or a SPAC transaction in the next few years, it's worth assessing your readiness now.
Does DISE apply to companies preparing for an IPO?
Yes. Companies in the process of going public are required to comply with DISE. It's listed as a required category alongside SEC registrants and OTC-traded companies.
Does DISE apply to subsidiaries of public companies?
Yes. Subsidiaries included in a parent's SEC filing, such as those filed under S-X Rule 3-05 or 3-09, are required to comply with DISE.
What if a private company is being acquired by a public company, does DISE apply?
Yes. Private companies being acquired by a public company where their financials must be filed with the SEC are required to comply with DISE.
When is the DISE compliance deadline for public companies?
The annual disclosure deadline is fiscal years beginning after December 15, 2026—meaning most calendar-year public companies will need DISE disclosures in their 2027 10-K filing.
When do quarterly DISE disclosures become required?
Quarterly (interim) disclosures in 10-Q filings are required for interim periods beginning after December 15, 2027—effectively FY2028 for most companies.
Can companies adopt DISE early?
Yes. Early adoption is permitted at any time.
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Experienced DISE advisors
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Our client satisfaction scores are more than 70% higher than the industry average — here’s why:
Our company brought in three Embark consultants, who have become a seamless part of our team and have served as crucial resources. As our team and company have experienced rapid growth and have undertaken several significant projects, the Embark consultants have done more than just plug the gaps, bringing in fresh perspectives and a wealth of knowledge to improve processes, create automations, and strengthen financial reporting. They learned the business quickly and have become go-to assets on our team.
Nearly every Embarker we have worked with has been outstanding. They are professional, incredibly smart, and charismatic.
Excellent team to partner with. Thoughtful, analytical, and solutions oriented. They approach projects strategically and apply the latest technology and software platforms to drive efficient, practical outcomes. I highly recommend them.
We are able to develop and implement solutions timely with our consultants which is more than great. Embark is helping us leverage technology to become more efficient.
Embark is already ready and able to help us when needed. They have the appropriate knowledge, expertise and resources to assist with all our technical accounting needs.
Embark has consistently provided a highly knowledgeable group of finance professional that are an absolute pleasure to work with!
The Embark team is easy to work with and very knowledgeable. They go above and beyond, and I am thankful for the relationships I have built with each person I have had the privilege of working with.
From top down, Embark has been fantastic. Have some of the brightest team members you'll ever encounter and they blend right into great cultures. They are highly engaged and always looking for ways to help improve your business!!
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