Paper on the satisfaction with existing segment disclosure requirements

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10 Sep, 2018

The CFA Institute, a global association of investment professionals, has published 'Segment Disclosures: Investor Perspectives'. For the paper, the CFA Institute surveyed its members, including portfolio managers and analysts, regarding their level of satisfaction with existing segment disclosure requirements and solicited their views on areas for improvement as well as general perceptions about segment disclosures.

The survey results show that 75% of investors rate segment disclosures as very important to their analysis, but that only 13.4% are satisfied with the segment disclosures as currently provided. The survey therefore concludes that the implication for standard-setters is that there is substantial work to be done to meet segment disclosure investor needs.

The following additional results are also provided in the report:

  • 83.4% of respondents strongly agreed or agreed that segments should be disclosed as a critical audit matter.
  • 67.8% of respondents agreed or strongly agreed that competitive harm is overstated as a reason not to improve segment disclosures.
  • 86.6% of respondents agreed or strongly agreed that technological improvements should, but have not, substantially improved segment disclosures.
  • 72.7% of respondents agreed that regulators do not seem to enforce segment disclosure requirements effectively.
  • 61.8% of respondents indicated that the public discussion of results was not necessarily consistent with segment results.
  • 74.8% of respondents agreed that non-GAAP measures are not, but should be, reconciled to segment results.
  • 77.8% of respondents noted that segment disclosures are not always presented clearly and reconciled to the basic financial statements.
  • 82.4% stated that presentation by product/service or by region made comparative analysis more difficult.

Although the paper is more focused on US GAAP and Topic 280, the paper points at the similarity of the segment reporting requirements between US GAAP and IFRS and notes that a review of IFRS 8 Operating Segments should also be a project for the IASB.

Please click to access the full report on the CFA Institute website.

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