Post-implementation review — IFRS 8 Operating Segments
In its March 2012 Board meeting, the IASB discussed the post-implementation review (PIR) of IFRS 8, Operating Segments and tentatively decided to (1) extend the review of IFRS 8 to include investigating whether IFRS 8 improved financial reporting and (2) consult publicly as part of the PIR of IFRS 8. This meeting discussed the PIR of IFRS 8, specifically asking the IASB the following questions:
- Whether the Board agrees with the proposed structure for conducting the investigation and reporting phases of the PIR of IFRS 8;
- Whether the Board agrees with the proposed structure of the Request for Information (RFI); and
- Whether the preliminary issues identified and to be included in the RFI are complete or require amending.
Structure of the investigation and reporting phases
The staff indicated that the process is most conveniently structured by considering the key decisions that the IASB took in drafting IFRS 8 and assessing the effect of each decision. Those decisions were:
- Use a management perspective, rather than geographical location or deliverables, as the basis for identifying operating segments;
- Amounts reported should be measured on the same basis as reported to the chief operating decision maker (CODM); and
- Line items reported in the segment disaggregation would be those line items regularly used by the CODM.
The Board agreed with the staff’s proposed review process.
Structure of the RFI
The staff recommended that the RFI comprise the following tentative questions:
- What was the effect of the Board’s decision to identify and report segments based on management perspective?
- What was the effect of the Board’s decision to require reported line items to be measured on a basis consistent with amounts reported to the CODM?
- What was the effect of the Board’s decision to report only line items regularly reviewed by the CODM?
- A question on disclosures required by IFRS 8.
- A question to identify whether any unintended consequences or unexpected costs arose from applying IFRS 8.
The RFI would ask the above questions in a manner that would require answers to be provided with evidence and examples rather than views and opinions.
The Board agreed with the staff’s proposed RFI structure.
The investigation process
As part of the review process, the staff prepared a schedule of preliminary issues to be investigated based on issues that arose or are expected to arise on the application of IFRS 8. These issues have been collected from discussion and correspondence with the International Forum of Accounting Standard Setters, firms, regulators, investors, and others. The issues and questions intended to be used in the RFI can be found in the Board meeting handout (link to IASB website).
The Board agreed with the preliminary issues identified by the staff to be investigated as part of the RFI.