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The Bruce Column — Valuing the pieces of eight

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Nov 09, 2012

Segmental reporting is about to undergo the first of the IASB’s post-implementation reviews. Robert Bruce, our regular columnist, looks at the Deloitte survey of the segmental disclosure practice.

In mid-November the deadline for comments in the first of the IASB’s planned post-implementation reviews closes. Under scrutiny is IFRS 8 on Operating Segments, segmental reporting. For the first time the IASB will have gathered the evidence to assess whether the standard it introduced is producing the effects and improvements in disclosure that it had planned for and hoped for.

So the Deloitte survey: “Pieces of Eight: Surveying IFRS 8 Disclosures” provides a timely insight into IFRS 8 practices in the UK. It is based on the mass of information and analysis produced from the disclosures of 100 listed companies which feature in the main survey of annual reports produced by Deloitte.

What this survey shows, for example, is that there has been no change to the average number of reportable segments under IFRS 8 compared to its predecessor standard IAS 14. The average was three under both standards. And it also shows that the number of companies with only a single reportable segment has fallen from 18 under IAS 14 to 11 under IFRS 8.

At a time when the consistency and connection of narrative reporting with the figures is uppermost in peoples’ minds it is encouraging to see that 85% of companies were deemed to provide consistent segmentation in their narrative reporting when compared against their IFRS 8 disclosures. You would expect and hope this to be so, after all the underlying principle of IFRS 8 is based on information reported to management. But nevertheless it is a refreshing example of the theory appearing to hold true in practice, at least for most.

Click here for the full detail of the survey.

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