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Segment Reporting: Short-term Convergence

Date recorded:

The IASB staff initiated this session by indicating that they would like the Board to vote on seven main issues raised by the Board members on the first pre-ballot draft of a segment reporting exposure draft. The votes were based on the following recommendations arising from the pre-ballot reviews:

  • 1. The title of the proposed IFRS should be changed from 'Segments' to 'Operating Segments'. The Board disagreed with the staff on the basis that the term 'operating' is not defined in IAS 1 as well as for anti avoidance reasons.
  • 2. The style of the objective paragraph should be made consistent with the approach taken in IFRS 7. The Board deferred this issue to the 'plain English' sub-group for consideration and resolution.
  • 3. The proposed IFRS should define the term 'public accountability' and extend the scope to include all entities that have public accountability. The Board noted that the notion of a 'publicly accountable' entity is still evolving as part of the SME project. Consequently, the Board decided to scope in publicly listed entities as well as unlisted entities that receive funds in a fiduciary capacity, such as banks, insurance companies, brokerages, and mutual funds.
  • 4. The requirement to disclose impairments by segment should be deleted. The Board agreed on the basis that a difference with US GAAP should not be created.
  • 5. A disclosure requirement for 'material items of income and expense' in accordance with paragraph 86 of IAS 1 should be added. The Board concluded that a disclosure item should be added.
  • 6. Need for a separate appendix for defined terms. The Board concluded that this is not necessary.
  • 7. The basis for conclusions of SFAS 131 should be included as an appendix to the basis for conclusions of the proposed IFRS. The Board agreed.

In addition to the above issues, the Board discussed comments received from the Accounting Standards Board of Japan (ASBJ). The underlying concern raised by the ASBJ was characterised as stemming from the ASBJ's disagreement with the focus on management systems driving the disclosures in the segments standard. It was concluded that the issues raised by the ASBJ should be taken to a meeting between the ASBJ and the IASB on 23 September, although the IASB had not been convinced that its positions so far in this project required revisiting.

The Board clarified that segment information will be required in interim reporting via a consequential amendment to IAS 34.

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