This free, guided checker walks your finance team through the key decision points for IFRS 8 Operating Segments Disclosure. Answer a few questions to see the likely treatment and the evidence to document.
Answer a few quick questions below. It is private - nothing is submitted or stored - and takes about a minute.
This tool is a high-level IFRS screening aid for general information only and is not accounting, audit or legal advice. Conclusions require entity-specific evidence and judgement - confirm the treatment with your advisor.
Here is what the checker asks and why each step matters. Prefer to talk it through? Contact us and we will help directly.
IFRS 8.2 applies to the consolidated financial statements of a group whose parent has debt or equity instruments traded in a public market, or that files (or is in the process of filing) financial statements with a securities commission to issue instruments publicly. Voluntary disclosure that does not comply with IFRS 8 cannot be described as segment information (IFRS 8.3). Confirm the public-market status before scoping the entity out.
IFRS 8 segment reporting is not mandatory; confirm no local listing or regulatory requirement applies (IFRS 8.2).
Official guidance: IFRS issued standards
An operating segment must be a component for which discrete financial information is available (IFRS 8.5(c)) and whose results the chief operating decision maker regularly reviews. Identify segments from the internal reports the CODM actually uses, not from a notional external structure. A common error is designing segments top-down to match the legal group rather than the management view.
Establish internal reporting packages that produce discrete financial information before identifying operating segments (IFRS 8.5).
Official guidance: IFRS issued standards
IFRS 8.5(b) requires that a segment's operating results be regularly reviewed by the chief operating decision maker to allocate resources and assess performance. The CODM is a function, not a title (IFRS 8.7) - often the CEO or an executive committee. Identify who actually makes resource-allocation decisions and what information they use.
The component does not meet the operating segment definition where the CODM does not use its information for resource allocation (IFRS 8.5).
Official guidance: IFRS issued standards
Both limbs of IFRS 8.5(b) must be met: the CODM allocates resources to the segment and reviews its results to assess performance. A segment can earn revenues and incur expenses, including inter-segment transactions and allocated central costs, provided the CODM regularly reviews them. Where the CODM does not review a component separately, aggregate it until the criteria are met.
Combine the component with others until the CODM regularly reviews its separate results to assess performance (IFRS 8.5).
Official guidance: IFRS issued standards
A segment is reportable if it meets any one of the IFRS 8.13 quantitative thresholds: revenue (external plus inter-segment) at least 10 percent of combined revenue; absolute profit or loss at least 10 percent of the greater of combined profit of profitable segments or combined loss of loss-making segments; or assets at least 10 percent of combined segment assets. Test all three - meeting any single test makes the segment reportable.
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Official guidance: IFRS issued standards
IFRS 8.15 requires that if the total external revenue of reportable segments is less than 75 percent of the entity's revenue, additional operating segments are identified as reportable - even if they do not meet the 10 percent tests - until at least 75 percent is included. Remaining segments are combined into an 'all other segments' category (IFRS 8.16). Track external revenue coverage after applying the 10 percent tests.
Identify additional operating segments as reportable until they reach at least 75 percent of external revenue (IFRS 8.15).
Official guidance: IFRS issued standards
IFRS 8.12 permits aggregating two or more operating segments into one only if aggregation is consistent with the core principle, the segments have similar economic characteristics, and they are similar in each of five respects: nature of products or services, nature of production processes, type or class of customer, methods of distribution, and, where applicable, the nature of the regulatory environment. Aggregation is optional and judgemental; over-aggregation that obscures the CODM view is a common challenge.
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Official guidance: IFRS issued standards
Because aggregation under IFRS 8.12 is optional and can materially change the segment note, document why the combined segments are economically similar across each of the five criteria before presenting them as one reportable segment, and disclose the judgement under IFRS 8.22(aa). Retain the CODM view of the business as corroboration. Undocumented aggregation is a frequent audit and regulator focus area.
Report the segments separately or complete the economic-similarity documentation before aggregating (IFRS 8.12; IFRS 8.22).
Official guidance: IFRS issued standards
IFRS 8.28 requires reconciliations of the totals of segment revenues, reported segment profit or loss, segment assets, segment liabilities, and other material segment items to the corresponding entity amounts, separately identifying and describing material reconciling items. Perform the reconciliation on the same measurement basis the CODM uses, then bridge to IFRS amounts. Unexplained reconciling items are a common deficiency.
Complete the reconciliation of segment totals to consolidated amounts, identifying material reconciling items, before disclosure (IFRS 8.28).
Official guidance: IFRS issued standards
IFRS 8.25 requires the amount reported for each segment item to be the measure reported to the chief operating decision maker, even if it is not an IFRS measure. IFRS 8.27 requires an explanation of how segment profit or loss, assets, and liabilities are measured, including the basis of accounting for inter-segment transactions and any asymmetrical allocations. Do not force the segment measure onto an IFRS basis; disclose the CODM measure and reconcile it.
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Official guidance: IFRS issued standards
Entity-wide disclosures are required for all entities within IFRS 8, even those with a single reportable segment: revenue from external customers for each product or service (IFRS 8.32), and revenue from external customers and non-current assets split between the country of domicile and all foreign countries (IFRS 8.33). They are based on the financial information used to prepare the financial statements, not the CODM measures. Omitting them for single-segment entities is a common error.
Prepare the entity-wide revenue-by-product and revenue and non-current-assets-by-geography disclosures (IFRS 8.32; IFRS 8.33).
Official guidance: IFRS issued standards
IFRS 8.34 requires disclosure of reliance on major customers: if revenue from a single external customer is 10 percent or more of total revenue, disclose that fact, the total amount from each such customer, and the identity of the segment(s) reporting the revenue. The customer need not be named, and a group of entities under common control is treated as a single customer. Test concentration on external revenue, not inter-segment.
Disclose the major-customer concentration: the fact, the revenue from each such customer, and the reporting segment(s) (IFRS 8.34). Publish the reportable segment and entity-wide disclosures; no major-customer concentration disclosure is required (IFRS 8.34).
Official guidance: IFRS issued standards
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