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1. Introduction
As part of its convergence programme with the US Financial Accounting Standard Board, the International Accounting Standards Board (IASB) issued International Financial Reporting Standard No. 8 (IFRS 8) "Operating Segments" in November 2006; this became effective for periods beginning on or after 1 January 2009 ([23], [24] IASB, 2006a). IFRS 8 converges with its US counterpart, Statement of Financial Accounting Standard (SFAS) No. 131[1] , except for minor differences of interpretation and terminology to conform with other International Accounting Standards (IASs).
IFRS 8 supersedes the previous IAS: IAS 14 Revised (IAS 14R) "Segment Reporting" ([22] IASB, 1997). IAS 14R defined reportable segments according to a two-tier approach as described by [33] Street and Nichols (2002). Companies had to select either business class or geographic activities as their primary segments; the segment type not selected for the primary segments was then used to identify the secondary segments. Identifying segments required preparers to consider "the predominant source and nature of risks and differing rates of return facing the entity" (IAS 14R, para 27). By contrast, the new standard (IFRS 8) requires segments to be identified in accordance with the management approach. Operating segments are to be identified on the basis of internal reports that are "regularly reviewed by the Chief Operating Decision Maker (CODM) to make decisions about resources to be allocated to the segment and assess its performance" (IFRS 8, para 5)[2] ; there is no distinction between primary and secondary segments under IFRS 8.
The core principle of IFRS 8 requires an entity to: "[...] disclose information to enable users of its financial statements to evaluate the nature and financial effects of the business activities in which it engages and the economic environments in which it operates" (IFRS 8, para 1). At the time of its adoption, a number of commentators in the UK expressed concerns about the possible reduction in the quality and quantity of segmental information that would be published under IFRS 8 ([15] Financial Reporting Review Panel (FRRP), 2010; [9] Crawford et al. , 2010). In addition, concerns were also raised that the identity of the CODM was not specified, disclosure of geographic segments was not mandated, and non-IFRS measurements were permitted for segmental information ([24] IASB, 2006b).
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