30 November 2006

IASB convergence standard on segment reporting

The IASB issued the IFRS 8 on Operating Segments that requires an entity to adopt the ‘management approach’ to reporting on the financial performance of its operating segments. Generally, the information to be reported would be what management uses internally for evaluating segment performance and deciding how to allocate resources to operating segments.

IFRS 8 arises from the IASB’s comparison of IAS 14 Segment Reporting with the US standard SFAS 131 Disclosures about Segments of an Enterprise and Related Information. IFRS 8 replaces IAS 14 and aligns segment reporting with the requirements of SFAS 131.

The IASB believes that adopting the management approach will improve financial reporting.

“IFRS 8 continues our work to eliminate major differences between IFRSs and US GAAP and to improve financial reporting”, Sir David Tweedie, IASB Chairman, said. “It gives users of financial statements the opportunity to query how the entity is controlled by its senior decision maker.”

Press release

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