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Deloitte letter on ED 8 on segment reporting

  • Deloitte Comment Letter Image

13 May 2006

We have posted the Deloitte letter of comments to the IASB on (PDF 45k).

Our overall view:

Whilst we support much of the Board's strategy on convergence between IFRS and US GAAP, we do not believe that the tactic on converging the requirements on segmental reporting is necessary at this time, and share many of the concerns of the three dissenting Board members. We believe that convergence should be to the superior standard and, as discussed further below, do not believe that a sufficient case has been made that moving to the approach required by SFAS 131 Disclosures about Segments of an Enterprise and Related Information would result in enhanced segmental disclosures.

In 1997, when IAS 14 and SFAS 131 were being developed, the IASC deliberately chose not to take a purely management approach to segmental reporting. We do not believe that convergence alone is justification for the proposed changes. Segmental reporting is solely a disclosure requirement and so does not affect reconciliations between IFRS and US GAAP. The convergence project should focus on items reported in the primary financial statements. If the two Boards believe that IAS 14 needs improving, they should do so by considering the advantages and disadvantages of both it and SFAS 131, rather than converge to a single standard that has not proved to be superior and we believe to be inferior.

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