Improvements to IFRS 8 Operating Segments (Amend IFRS 8 and IAS 34)

Current Status Next Steps

Comment period on IASB and AcSB Exposure Drafts ended on July 31, 2017.

Fourth Quarter of 2017 – IASB and AcSB to deliberate comments received.

BACKGROUND

The Accounting Standards Board (AcSB) is participating in the International Accounting Standards Board’s (IASB) project to amend International Financial Reporting Standard (IFRS) 8 Operating Segments and IAS 34 Interim Financial Reporting.

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The IASB’s Post-implementation Review of IFRS 8 confirmed that the standard generally functions well but identified some areas for potential improvement:

  • identification of the chief operating decision maker;
  • aggregation of operating segments into reportable segments;
  • understandability of the segment reconciliation;
  • increasing the number of reported line items; and
  • preservation of trend data on a change in composition of reportable segments.

The AcSB’s due process includes ensuring that Canadian entities’ financial reporting needs are considered by the IASB and issuing the AcSB’s own exposure draft on each IASB proposal. Subject to the responses to the AcSB’s exposure draft on whether the IASB’s proposals are appropriate for application in Canada, the AcSB expects that the amendments will be incorporated into Canadian GAAP in accordance with the AcSB’s strategy of adopting IFRSs for publicly accountable enterprises.

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PROJECT NEWS & DECISION SUMMARIES

AcSB Response – Improvements to IFRS 8 Operating Segments (Amendments to IFRS 8 and IAS 34)
On July 31, 2017, the AcSB submitted a comment letter to the IASB’s Exposure Draft issued in March 2017. The letter placed emphasis on the importance of globally comparable financial reporting outcomes. Investors rely heavily on segment disclosure and common financial reporting, including information about segments, helps to facilitate efficient capital markets, increase investor confidence, and potentially reduce the cost of capital. The letter acknowledges that challenges have been experienced in practice in applying some of the requirements of IFRS 8. However, it raises concerns with several of the IASB’s proposed amendments to address these issues, specifically whether they will result in improved disclosures in practice. Read the AcSB letter posted by the IASB.

 

Disclaimer: This project summary has been prepared for information purposes only. Decisions reported are tentative and reflect only the current status of discussions on this project, which may change after further Board deliberations. Decisions to publish Handbook material are final only after a formal ballot process.