Segment Reporting

Date recorded:

(afternoon only)

The Board considered an analysis of the differences between IAS 14 Segment Reporting and SFAS 131 Disclosure about Segments of an Enterprise and Related Information. IAS 14 focuses on segment information that is consistent with the consolidated financial information in the financial statements, while SFAS 131 focuses on information that reflects the manner in which the entity manages the business. It was noted that prior to the introduction of SFAS 131 the US standard was based on similar principles to those currently in IAS 14. The Board noted that both academic research and meetings with analysts had revealed that the SFAS 131 approach was preferred and provided more useful information.

It was noted that information prepared for the purposes of decision making was likely to be more accurate than that prepared solely to satisfy external reporting requirements. The one concern noted by some analysts and board members about the SFAS 131 approach was the fact that SFAS 131 does not require consistent accounting policies to be used between segment information and other financial reporting information; however differences in accounting policies must be disclosed. It was noted that the objective of this project is to achieve convergence, and it is highly unlikely the FASB would move to a model where consistent policies were required. The Board agreed that in the interests of convergence, SFAS 131 should be brought to them in IASB Exposure Draft form for consideration and release for comment. The Board also noted that SFAS 131 itself was developed in conjunction with the Canadian standard setter, and therefore is already in a format more consistent with IFRS than most US pronouncements. However, the Board noted that there have been differences of interpretation between Canada and the US, and that the Board should endeavour to resolve those so that only one interpretation is possible under IFRS.

The Board agreed to consider the Exposure Draft at a future meeting, and that as few changes as possible should be made to the US pronouncement. If any issues arise as a result of commentators concerns these could be brought to the attention of the FASB for attention at a later time.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.