European Commission seeks input on IFRS 8 Operating Segments

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05 Jun 2007

The European Commission is conducting a public consultation regarding the endorsement of IFRS 8 Operating Segments before finalising a report on the potential impact of endorsement for submission to the European Parliament in September 2007. The Commission seeks input from a broad range of constituents, including preparers, users, auditors, standard setters, and academics, via a questionnaire that it has posted.

Responses to the questionnaire are due by 29 June 2007. Click to Download the Questionnaire  (PDF 33k). The eight questions to which the Commission is seeking responses are set out below:
  • Question 1: Please indicate whether you submitted comments to IASB and/or EFRAG during their consultations.
  • Question 2:
    • a) Do you think information prepared under the management approach on which IFRS 8 is based is more relevant, reliable, comparable, understandable and useful than information prepared under IAS 14?
    • b) Do you think that information prepared under the management approach improves the true and fair representation of business activities?
    • c) Are you of the opinion that segment information based on the management approach provides greater accuracy for measuring individual segments and ultimately results in greater forecast precision than segment information based on IAS 14?
  • Question 3:
    • a) Do you assess that cost for preparation of information is lower under IFRS 8 than under IAS 14?
    • b) Do you think that the cost/benefit balance of replacing IAS 14 by IFRS 8 is positive (e.g. lower cost outweighing the potentially lower quality of information provided or potentially higher quality of information provided outweighing higher cost)?
  • Question 4: Do you consider that the principles on which IFRS 8 is based, in particular the fact that information for segment reports should be prepared through the eyes of the 'chief operating decision maker', would pose problems on established EU practices, e.g. in the area of corporate governance?
  • Question 5: Do you agree with the argument that IFRS 8 requires smaller listed companies to report a segment by segment analysis of their business including commercial sensitive information with the effect that competitiveness of smaller listed companies in the EU will be harmed? Please provide reasons for your view and indicate how far that constitutes a change compared to the requirements of IAS 14.
  • Question 6:
    • a) Do you believe that the lack of mandatory requirements for full segment information on a geographical basis in IFRS 8 gives sufficient reason for a non-endorsement decision?
    • b) Do you believe that other mandatory requirements for segment information are missing in IFRS 8 (compared to IAS 14)? If yes, which ones?
  • Question 7: Can you provide any information that has been generated by field studies, research work, internal analysis carried out in your organisation, jurisdiction?
  • Question 8: If you have any further comments on this consultation please provide them to us .

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