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This letter reflects the evidence gathered from European constituents during EFRAG’s outreach activities, conducted in partnership with European National Standard-Setters and user organisations, and with involvement of the IASB. The appendix summarises the evidence gathered at the various outreach events held throughout Europe, responses to questionnaires to constituents, and EFRAG staff reviews of operating segment disclosures in financial statements.
EFRAG highlights that, similarly to the IASB’s own efforts, it has been difficult successfully to engage a wide range of constituents in this evidence gathering exercise. Therefore the summary of evidence gathered should be read in this context.
EFRAG believes that these difficulties in gathering evidence should be considered when further Post-implementation Reviews are carried out. In particular, the feedback EFRAG received was that Post-implementation Reviews should focus on the effects and usability of the current standard, rather than on a comparison to its predecessor.
The summary of EFRAG's findings are set out in Appendix 1 following the questions in the Request for Information, issued by the IASB in July 2012 (RFI). The key areas of IFRS 8 with which constituents (including users, preparers, auditors and regulators) had particular comments and concerns were the level of aggregation of operating segments, the identification of the Chief Operating Decision Maker, reconciliations of line items between the total for reportable segments and the values reported in the primary statements and the preparation of entity-wide information. The results of EFRAG´s review corroborate ESMA’s findings as published in its 2011 report on the implementation of IFRS 8. The difficulties encountered and comments provided differed given the background of the constituents. In general preparers considered IFRS 8 to work reasonably well. Users and ESMA indicated that they are able to work with it, but identified several specific areas for improvement.
However, in some instances it is not clear whether the difficulties were caused by the standard, and could therefore be resolved through a change in or interpretation of the standard, or by how IFRS 8’s requirements have been implemented and applied in practice. Before any further standard-setting effort is undertaken following the results of the Request for Information of this Post-implementation Review, the evidence EFRAG found demonstrates the need for the IASB to examine in more detail with regulators, such as ESMA, and auditors the application of the standard in practice to identify implementation issues; and possibly the need for guidance to improve the clarity of the standard and the usefulness of the information it results in.