Exposure Draft ED/2017/2 Improvements to IFRS 8 Operating Segments (Proposed amendments to IFRS 8 and IAS 34)

The International Accounting Standards Board (the IASB), in response to the post-implementation review of IFRS 8 Operating Segments where it concluded that IFRS 8 was functioning as expected except for some areas that could benefit from improvements, proposes to amend IFRS 8 and IAS 34 Interim Financial Reporting as follows:

(1) Description of the chief operating decision maker (“CODM”). The IASB proposes to clarify IFRS 8 by:
(a) emphasising that the CODM is a function that makes operating decisions and decisions about allocating resources to, and assessing the performance of, the operating segments of an entity;
(b) explaining that the CODM may be either an individual or a group;
(c) explaining the role of non-executive members when identifying an entity’s CODM; and
(d) requiring the disclosure of the title and description of the role of the individual or the group that is identified as the CODM.
(2) Identification of reportable segments. Proposed amendments include:
(a) requiring an explanation in the notes to the financial statements if segments identified by an entity for the financial statements differ from other parts of its annual reporting package; and
(b) adding further examples of similar economic characteristics to the aggregation criteria.
(3) Additional segment information. The IASB clarifies that an entity may disclose segment information in addition to that reviewed by, or regularly provided to, the CODM if that helps the entity to meet the core principle of the Standard.
(4) Description of reconciling items. The IASB clarifies that the explanations of reconciling items shall be given with sufficient detail to enable users of financial statements to understand the nature of the reconciling items.
(5) Change in the composition of an entity’s reportable segments. IAS 34 is amended to require presentation of restated segment information for all interim periods (both of the current financial year and of prior financial years) in the first interim report after a change in the composition of an entity’s reportable segments, unless the information is not available and the cost to develop it would be excessive.

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