The Board discussed the analysis of comment letters received in response to ED 8 Operating Segments, in respect of the following issues:
- adoption of the management approach
- scope of the standard
- exemption for separate financial statements
- competitive-harm exemption
- minor issues on the scope.
Adoption of the management approach
The Board supported the adoption of the management approach as set out in ED 8.
Scope of the standard
The Board tentatively decided that the standard should not apply to entities that hold assets in a fiduciary capacity. However, the Board took the view that publicly accountable entities should be within the scope of the standard, and that a future amendment of the scope of the standard should be proposed to include publicly accountable entities. The proposed amendment is likely to be exposed around the same time as the ED of the IFRS for SMEs.
Exemption for separate financial statements
The Board tentatively decided to include in the standard a scope exemption similar to that in paragraph 6 of IAS 14. That paragraph gives an exemption from segment reporting in the separate financial statements of a parent when a financial report contains both consolidated financial statements, including segment reporting, and the parent’s separate financial statements.
The Board tentatively decided not to include an exemption in the standard allowing entities to limit their segment reporting disclosures on the ground of competitive disadvantage or harm.
Minor issues on the scope
The Board tentatively decided that if an entity that is not required to apply the standard chooses to disclose segment information that does not fully comply with the standard, it should disclose that the segment information does not comply with the standard.
The Board tentatively decided that there is no need to include in the standard a reference to not-for-profit entities, since standards are designed for profit orientated entities.
The Board tentatively decided to change the wording of the scope paragraphs of the segment reporting standard and IAS 33 Earnings per Share to clarify that the entity referred to in the scope paragraph is the parent preparing consolidated financial statements, and that the standard applies to entities that are presently required to file their financial statements with a regulator.
The remaining issues arising from the comments on ED 8 will be discussed by the Board at its meeting in September.