EFRAG’s final comment letter on the IASB’s ED/2017/2 on improvements to operating segments

03 August 2017

EFRAG has published its final comment letter in response to the IASB's ED/2017/2 Improvements to IFRS 8 Operating Segments – Proposed amendments to IFRS 8 and IAS 34.

On 29 March 2017, the IASB issued the Exposure Draft ED/2017/2 Improvements to IFRS 8 Operating Segments– Proposed amendments to IFRS 8 and IAS 34 ('the ED') with a comment period ending on 31 July 2017.

The ED proposes the following amendments:

• Clarify the description and role of the chief operating decision maker (CODM) and require an entity to disclose the title and description of the individual or group identified as the CODM.
• Require an explanation of why segments identified in the financial statements differ from segments identified in other parts of the entity's 'annual reporting package'.
• Emphasise the criteria that must be met before two or more operating segments may be aggregated.
• Clarify that an entity may disclose segment information in addition to that reviewed by the CODM.
• Require entities to present restated segment information for all interim periods presented earlier (current and prior financial years) in the first interim period after a change in the composition of an entity's reportable segments.

In its final comment letter, EFRAG welcomes the IASB’s efforts to improve IFRS 8 and address issues identified in the Post-implementation Review (PIR) of that Standard. EFRAG also supports most of the amendments proposed in the ED, as they provide useful clarifications of the existing requirements in IFRS 8 and should therefore improve the quality of disclosure of operating segment information.

However, EFRAG disagrees with the proposal to require an entity to explain in the notes why the reportable segments identified in an entity’s financial statements are different to the segments reported outside of the financial statements. EFRAG is also concerned that the proposed definition of an entity’s ‘annual reporting package’ may prove difficult to apply in practice, and therefore disagrees with this proposal. 

Full press release

Final comment letter

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