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ARTICLE
The analytical value of segment information will be Discretion in particular is recognized in the translation of
greater as it is consistent with internal management re- the management accounts (internal report) to the finan-
port of the entity. Segment disclosure following the man- cial accounts (annual reports). In this age of convergence,
agement approach in financial reports does not result in the introduction of Ind AS 108 will be welcomed particu-
significant extra efforts, time and cost as it has already larly for realizing the advantages such as cost of capital,
been used in the internal reports. The presentation of seg- saving in cost of preparation of financial statements and
ment information through the eye of management will be increasing opportunities for investors or analyst.
useful to investors, creditors and other users of financial
statements, as it will highlight the risk and opportunity Moreover, with a view to promoting greater conver-
measures in a timely basis. The management approach gence, like other countries, India's apex standard setting
provides an additional insight about the company to the body ICAI has rightly revised of its early standards on seg-
financial statements users. ment reporting AS 17 and issued Ind AS 108 at par with
the IASB requirements. The fundamental change, using
However, it hampers the comparability criteria of financial the management approach should enable the entity to
statements among the entity in some extent, but it insists gather information in a relatively easier manner as those
the unique and creative reporting, that's why this might be information should ideally be available internally.
given less significance. Like any other new things, although
the management may has to spend some extra efforts for While the reporting under Ind AS 108 insists the creativity
implementing this new approach in segment reporting but in accounting; at the same time it also enables the users
it ensures a series of promising prospects. to view the different perspective including future pros-
pects of the operating segments through the eye of man-
In this respect, it is quite important to mention the obser- agement. With this modern approach this standard would
vations of IASB regarding the management approach. The ensure accurate, relevant and adequate disclosures of
IASB believes that adopting the management approach segment information.
will improve financial reporting. First, it allows users of
financial statements to review the operation through the References
eye of management. Secondly, as the information is al-
ready used internally by management, there are few costs X Educational Material on Indian Accounting Standard
for preparers and the information will be available on a (Ind AS) 108 Operating Segments, (2013) Ind AS Imple-
timely basis. mentation Committee, ICAI, New Delhi, February.
This means that the internal reporting of segment infor- X Ghosh, T. P., (2009) Understanding IFRSs, Taxmann Pub-
mation might be extended beyond the current require- lications (p.) Ltd., New Delhi.
ments. Finally, according to the chairman of IASB Sir David
Tweedie "…. It therefore, gives users of financial state- X Nobes, C. and Parker, R., (2000) Comparative Interna-
ments the opportunity to query how the entity is con- tional Accounting, Prentice Hall.
trolled by its senior decision maker. It does this by en-
abling entities to provide timely segment information at X Adukia, R. S., (2008) "Convergence of Accounting Stan-
little extra cost…. ". dards World Over With IFRS", The Chartered Accoun-
tant, May.
Conclusion
X Banerjee, B., (1999) "Regulation of Corporate Reporting
Generally accepted principles allow management wide lati- in India: Perception of Users- A Case Study", Indian
tude in the choice of accounting policies. Given adopted Journal of Accounting, December.
accounting principles, management faces discretionary ac-
counting decisions, which are heavily oriented to a judg- X Bharuka, A., (2013) "Ind AS 108: Operating Segments",
ment process of determining amounts, rates and timing. The Chartered Accountant, Vol. 61, No. 11, May, Pp-
1738-1740.
X Hayes, R. & Lundholm, R., (1996) "Segment reporting to
the capital market in the presence of a competitor",
Journal of Accounting Research, 34(2), Pp. 261-279.
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