European Parliament resolution opposing IFRS 8

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27 Apr 2007

The Economic and Monetary Affairs Committee of the European Parliament has proposed a Parliamentary resolution that expresses significant concerns about the adoption of IFRS 8 Operating Segments in Europe.

The resolution also:
  • calls on the European Commission to urgently carry out an in-depth impact assessment before endorsing the standard; and
  • states that, should the Commission fail to carry out the assessment, Parliament will carry out its own impact assessment.

Among the Committee's concerns about IFRS 8 are the following:

  • Changing from IAS 14 to IFRS 8 is a move "from a regime which clearly defines how listed EU companies should define and report on segments to an approach that permits management itself to define operating segments as management finds suitable and which furthermore requires a lower level of disclosure".
  • IFRS 8 should, but does not, include a defined measure of segment profit or loss, as IAS 14 does.
  • IFRS 8 does not require companies to use IFRS measures in their disclosures about operating segments, which may have a negative impact on the comparability of financial information and thus may pose difficulties for users (for example, investors).
  • Adopting IFRS 8 would "import into EU law an alien standard [SFAS 131] without having conducted any impact assessment".
Click to download the Draft Resolution (PDF 89k) proposed by the Economic and Monetary Affairs Committee of the European Parliament. Voting on the resolution by was postponed until the Parliament's September meeting.

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