Operating Segments - Applying IFRS 8 in Practice

The International Accounting Standards Board (IASB) published IFRS 8 Operating Segments to replace IAS 14 Segment Reporting for annual periods beginning on or after 1 January 2009 with earlier application permitted.

For entities that operate in a variety of classes of business, geographical locations, regulatory or economic environments or markets, segmental information is an essential management tool.  It enables management to monitor performance, allocate resources and devise business and market strategies.  IFRS 8 requires much of this management information to be published externally so that investors, analysts and other users of entities' financial statements can review an entity's operations from the same perspective as management.

This is a radically different approach from IAS 14 and has the potential to highlight sensitive information to competitors as well as other users of financial statements.  Management need to understand the requirements of IFRS 8 and think carefully about what the required disclosures say about the way they manage their business.
There is no exemption from the disclosures on the grounds that management may consider the segment information sensitive or that its disclosure may cause 'competitive harm'.

In this regard, the IFRS team at Grant Thornton International Ltd published the guide Operating Segments - Applying IFRS 8 in Practice, which explains IFRS 8's key implementation issues and includes interpretational guidance in certain problematic areas.  The guide also includes several examples illustrating the requirements of the standard.