SEGMENTAL REPORTING

Segmental Reporting

Segmental Reporting

Segment Reporting

Introduction

“Segment reporting is the disclosure of financial information about the major components of the company's various lines of businesses” (Bragg, 2010, pp. 292). It is only related on publicly held businesses. Deloitte on its website has summarized the IAS 14 in user friendly manner which will ease the process for the users of segment accounting. Bragg has highlighted three tests in this book which can be employed to check if the company is subject to segment reporting or not. In view of different accounting standards, PWC issued a practical guide on the topic in 2008 which comprehensibly covers the topic as well as compared the regulations as it is present in IAS14 and IFRS 8. Apart from these publications, few others were also consulted for reference purposes. However, fundamental analysis is based on above three publications.

Segment Reporting & IAS 14

IAS 14 is devoted exclusively to issues of disclosure - the recognition and evaluation of the elements described in the report it is not. In the case of presentation of the consolidated and also detached financial statements of parent, segment information should be submitted only in the form of consolidated financial statements. The purpose of IAS 14 which directly addresses segment reporting is to set up guidelines for the financial information reporting by segments (information on various types of goods and services produced by the company and various geographic regions in which it functions), in order to aid users of financial statements:

- To comprehend the firm performance in earlier years;

- Evaluate the risks and profits of the firm;

- Make more knowledgeable decisions about the firm as a whole.

Indicators of profitability, opportunities for development (eg, due to population growth), the prospects for the future (eg, entry into the EU, WTO), as well as investment risk can vary significantly depending on economic and sectoral or geographical segment. Therefore, to assess the risks and prospects for diversified companies need users to segment information, which is not always obvious from the summary data (www.iasplus.com).

Many companies produce the groups of goods or services, or are present in geographical regions with diverse standards of profitability, risks, the future outlooks, and opportunities for growth. Information about the diverse range of products as well as services firm and its functions in dissimilar physical regions, often known as segment information, is imperative to review the risks and advantages of diversified global firm, but possibly indeterminable from the collective data. Hence, segment information is extensively observed as essential to fulfill the requirements of users of these financial statements.

IAS 14 should be implemented in absolute sets of issued financial statements that abide by International Financial Reporting aStandards. aA atotal aset aof afinancial astatements acomprises aof aa aincome astatement, aa abalance asheet, acash aflow astatement, astatement aof achanges ain aequity aand anotes, aas specified in IAS 1 that is "Presentation of Financial Statements". IAS 14 should be employed by publicly traded companies having equity or debt securities being traded in regular markets, ...