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Improvements to IFRS 8, Operating Segments [Completed]

Effective date:

The IASB decided not to proceed with the amendments proposed in the ED. Therefore, the project summary concludes this project.

Last updated:

February 2019

Reach out to our IFRS 8 Specialist

Kerry Danyluk

Overview

IFRS 8, Operating Segments sets out the requirements that enable investors to understand how separate units affect the overall performance of a business.

The International Accounting Standards Board (IASB) has undertaken a Post-implementation Review (PIR) of IFRS 8. The PIR of IFRS 8 concluded that the benefits of applying the Standard were largely as expected and that overall the Standard had achieved its objectives and improved financial reporting. However, some areas for potential improvement were identified.

The Board intended to address the areas identified in the PIR in the Exposure Draft Improvements to IFRS 8 Operating Segments –Proposed amendments to IFRS 8 and IAS 34, issued March 2017. The Exposure Draft proposed amendments including:

  • Clarifying how to identify the chief operating decision maker (CODM).
  • Disclosing the title and description of the role of the CODM.
  • Requiring disclosures explaining differences in segments disclosed in the financial statements and other parts of the annual reporting package.
  • Providing additional illustrative examples to clarify the application of the aggregation criteria.
  • Clarifying that additional segment information may be disclosed.
  • Requiring additional detail in explanations of reconciling items.
  • Requiring earlier presentation of restated interim information.

The Board published the Exposure Draft Improvements to IFRS 8 Operating Segments—Proposed amendments to IFRS 8 and IAS 34 (Exposure Draft) in March 2017 to address the findings from the Post-implementation Review (PIR) of IFRS 8.

Having considered the feedback, the Board decided not to proceed with the amendments proposed in the Exposure Draft. The Board noted that some of its proposals could be dealt with by existing requirements and other proposals would not be effective in addressing the findings from the PIR of IFRS 8. The Board considered the remaining proposals and concluded that they would not result in sufficient improvements in information to investors to justify the additional costs stakeholders would incur if the Board were to proceed with these proposed amendments.

The Board published a project summary in February 2019. The project summary sets out the Board’s rationale for not proceeding with the proposals in the Exposure Draft.

 

Other developments

February 2019

On February 28, 2019, the IASB published Improvements to IFRS 8 Operating Segments — Proposed amendments to IFRS 8 and IAS 34 project summary. The Board will not conduct any further work regarding this project.

December 2018 

On December 14, 2018, the IASB® staff updated the work plan to indicate that the Board expects to issue a Feedback Statement in February 2019.

September 2018 

On September 20, 2018, the IASB staff updated the work plan to indicate that the Board plans to issue a Feedback Statement in December 2018.

July 2018 

On July 18, 2018, the IASB staff updated the work plan to indicate that the Board plans to issue a Feedback Statement in Q4/2018.

March 2018 

On March 23, 2018, the IASB staff updated the work plan to indicate that the Board expects to issue a Feedback Statement in the second half of 2018.

January 2018

On January 26, 2018, the IASB Staff updated this project to indicate that the IASB now expects to decide the project direction in March 2018. 

November 2017

On November 16, 2017, the IASB staff updated the work plan to indicate that the IASB expects to decide the project direction in January 2018.

September 2017

On September 22, 2017, the IASB staff updated the work plan to indicate that the IASB expects to review the Exposure Draft Feedback in November 2017.

June 2017

In June 2017, the IASB staff updated the work plan to indicate that the IASB expects to discuss the Exposure Draft feedback in Q4/2017.

April 2017

On April 28, 2017, the AcSB issued its Exposure Draft that corresponds to the IASB’s Exposure Draft on this topic. Stakeholders are encouraged to submit their comments by July 31, 2017.

March 2017

On March 29, 2017, the IASB published an exposure draft Improvements to IFRS 8, Operating Segments (Proposed amendments to IFRS 8 and IAS 34). It contains proposed amendments in five areas. Comments are requested by July 31, 2017.

February 2017

On February 27, 2017, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment in March 2017.

January 2017

On January 19, 2017, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment in April 2017.

December 2016

On December 15, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment by June 2017.

September 2016

On September 23, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment by March 31, 2017.

July 2016

On July 20, 2016, the IASB staff updated the Work Plan in respect of this project to indicate that the IASB expects to publish an Exposure Draft for comment sometime before January 31, 2017.

March 2016

On March 18, 2016, the IASB updated its Work Plan in respect of this project to note that it is currently drafting an Exposure Draft, which it expects to issue by September 30, 2016.

November 2015

On November 23, 2015, the IASB updated its Work Plan in respect of this project to note that it is currently drafting an Exposure Draft, which it expects to issue by May 31, 2016.

July 2013

On July, 18, 2013, the IASB published Report and Feedback Statement Post-implementation Review: IFRS 8 Operating Segments. The report concluded that the benefits of applying the Standard were largely as expected and that overall the Standard achieved its objectives and has improved financial reporting. However, the IASB identified a number of issues that could be considered for improvement and that warrant further investigation. These include feedback that:

Requests for implementation guidance

  • The concept of an identifiable chief operating decision maker (CODM) is confusing and outdated. Identification of the CODM is difficult in practice.
  • Some preparers are uncertain how the reconciliation should be presented and how reconciling amounts should be disclosed. Some investors find the items included in the reconciliations difficult to understand.

Requests for improved disclosures

  • Any change in the basis of segmentation from one year to the next results in the loss for investors of valuable trend information for that entity.
  • Many entities present different definitions of ‘operating result’ or ‘operating cash flow’, making comparison difficult between entities. Investors report that important line items needed to derive these sub-totals are often not separately reported.
  • Many investors think that operating segments are aggregated inappropriately, reducing the value of the information presented. Some preparers find the aggregation guidance difficult to apply in practice.
  • Some investors cannot understand how reconciling amounts relate to an individual segment.

 

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