FASB response to the post-implementation review on segment reporting

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07 Mar 2013

The US Financial Accounting Standards Board (FASB) has issued a response stating that the board will evaluate the overall conclusions reported by the Financial Accounting Foundation’s Post-Implementation Review (PIR) on segment reporting (Statement 131) with its stakeholders and staff of US Securities and Exchange Commission to determine whether further review of the standard is warranted.

The overall conclusions reached in the PIR report are that “segment information is better aligned with an entity’s internal structure and is more consistent with financial information reported outside the financial statements. This enables investors and users to better understand an organization’s activities and prospects for future growth.” Additionally, the PIR report states that some preparers and practitioners may be aided if there was additional guidance on certain operation aspects of Statement 131 and some would benefit from additional and comparable segment information.

The guidance in Statement 131 is substantially converged with IFRS 8. In an effort to keep the two standard remaining substantially converged, the FASB will coordinate with IASB should any changes to amend Statement 131 are made as a result of the PIR report. The IASB is also conducting a similiar Post-Implementation Review on operating segments (IFRS 8). Preliminary results from the IASB PIR were discussed during its January 2013 meeting.

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