EU Parliament committee discusses endorsement of IFRS 8

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12 Sep 2007

In a presentation to the Committee on Economic and Monetary Affairs of the European Parliament, Charlie McCreevy, the European Commissioner for Internal Market and Services, discussed the endorsement of IFRS 8 Operating Segments for use in the European Union.

He presented the Commission's analysis of IFRS 8 and expressed the hope that the Parliament will agree with the Commission that endorsement of IFRS 8 should go ahead. An excerpt from Mr McCreevy's remarks is below. Click to download:

I am therefore pleased to present our 'Analysis of Potential Effects' on the introduction of IFRS 8 in the EU. Our report is based on a wide-ranging consultation to which more than 200 organisations replied. It focuses on the issues discussed in ECON last April.

The report concludes that adoption of IFRS 8 would have positive cost-benefit effects. This is in line with the clear majority of answers to our consultations and with most views expressed in discussions with stakeholders. In particular, the report concludes that:

  1. The use of the 'management approach' in IFRS 8 has an overall positive effect on the quality of segment information, whose usefulness and relevance would increase.
  2. The increased usefulness and relevance of segment information based on the management approach outweigh concerns expressed about the comparability of financial reports.
  3. IFRS 8 appropriately addresses the global needs of users of financial statements' for geographical disclosures and, in practice, would not reduce this information by comparison with the 'old standard' IAS 14.
  4. IFRS 8 does not create problems relating to corporate governance in the EU.
  5. IFRS 8 provides appropriate segment reporting rules for smaller listed companies. It is in the interest of smaller listed companies to provide the same information as larger companies as the information needs of investors are do not substantially differ according to company size.


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