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Financial Reporting
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The IASB issued International Financial Reporting Standard (IFRS) 8, Operating Segments, which requires entities to adopt a “management approach” to reporting the financial performance of operating segments. This approach requires management to disclose information used internally in evaluating segment performance and deciding how to allocate resources to operating segments. Management would have to explain the basis on which segment information is prepared and reconcile differences with amounts recognized on the income statement and balance sheet.
IFRS 8 replaces IAS 14, Segment Reporting, and aligns segment reporting with FASB Statement no. 131, Disclosures About Segments of an Enterprise and Related Information.
The change is part of a joint short-term convergence project the IASB and FASB have under way to reduce the differences between international financial reporting standards and U.S. GAAP. IFRS 8 applies to periods beginning on or after January 1, 2009, but earlier application is permitted.