Skip to main content

IFRS 8 - Segmental Reporting

Early this year, the biggest single body of investors, in the world’s largest IFRS-using capital market (the ABI, NAPF and IMA) objected to the European Union’s adoption of IFRS 8, the proposed standard for segmental reporting of companies. Read More

What is IFRS 8 ?

The IFRS requires an entity to adopt the ‘management approach’ to reporting on the financial performance of its operating segments. Generally, the information to be reported would be what management uses internally for evaluating segment performance and deciding how to allocate resources to operating segments. Such information may be different from what is used to prepare the income statement and balance sheet. The IFRS therefore requires explanations of the basis on which the segment information is prepared and reconciliations to the amounts recognised in the income statement and balance sheet. Click here to know more




The adoption of IFRS 8 is an ideal way of financial reporting ie. merging the traditional as well as management accountant thereby giving the readers of financial statement objective view of performance of the organisation. With this role of management accountants enhances with increased responsibility.

Although the reporting sounds great, the question is whether the Accounting systems are geared up to provide information i.e. how much investments in IT has to be made to provide P&L and Balance Sheet at the segment level ? Or will it be a case of paralysis by analysis !!!

Does the world's no.1 ERP Solution SAP provide segmental reporting ?

Yes. From Release E.C 5.0 has a facility called New GL that combines the approach of financials and management accounting. The reporting can be done by Segments and the business has to decide their segments.

During the implementation, many financial controllers ask why SAP has FI reporting is different to CO. Now for any green field implementation of SAP from Release EC 6.0, new GL has become mandatory.

SAP listens to the needs of the business.

Regards,

Santosh Puthran

Add to Technorati Favorites

Do you like to be updated in Accountancy ?

Subscribe to Management Accountant by Email


Or

Subscribe in a reader


SAP Store, UK


Visit MA Stores ? You will find something you are looking for ....

MA Stores, US - Powered by Amazon
MA Stores, UK Stores - Powered by Amazon, UK
Digital Stores, US






Did you like the remain updated in Accountancy?
Subscribe to Management Accountant by Email

You may also like to read
Labels:
Post a Comment

Popular posts from this blog

Throughput Accounting

Throughput accounting (TA) is an alternative to cost accounting proposed by Eliyahu M. Goldratt. It is not based on Standard Costing or Activity Based Costing (ABC). Throughput Accounting is not costing and it does not allocate costs to products and services. It can be viewed as business intelligence for profit maximization. Conceptually throughput accounting seeks to increase the velocity at which products move through an organization by eliminiating bottlenecks within the organization.


Cost (or Management) accounting is an organization's internal method used to measure efficiency. Since no one outside the organization uses such internal accounts for investment or other decisions, any methods that an organization finds helpful can be used.


Throughput accounting improves profit performance with better management decisions by using measurements that more closely reflect the effect of decisions on three critical monetary variables (throughput, inventory, and operating expense — defin…
Read more

Learning Curve Theory

Learning Curve Theory is concerned with the idea that when a new job, process or activity commences for the first time it is likely that the workforce involved will not achieve maximum efficiency immediately. Repetition of the task is likely to make the people more confident and knowledgeable and will eventually result in a more efficient and rapid operation. Eventually the learning process will stop after continually repeating the job. As a consequence the time to complete a task will initially decline and then stabilise once efficient working is achieved. The cumulative average time per unit is assumed to decrease by a constant percentage every time that output doubles. Cumulative average time refers to the average time per unit for all units produced so far, from and including the first one made.

Major areas within management accounting where learning curve theory is likely to have consequences and suggest potential limitations of this theory.


Areas of consequence:
A Standard Costing …
Read more

Resistence to Change - Approaches of Kotter and Schlesinger

The Six (6) Change Approaches of Kotter and Schlesinger is a model to prevent, decrease or minimize resistance to change in organizations.
According to Kotter and Schlesinger (1979), there are four reasons that certain people are resisting change: Parochial self-interest (some people are concerned with the implication of the change for themselves ad how it may effect their own interests, rather than considering the effects for the success of the business)Misunderstanding(communication problems; inadequate information)Low tolerance to change (certain people are very keen on security and stability in their work)Different assessments of the situation (some employees may disagree on the reasons for the change and on the advantages and disadvantages of the change process) Kotter and Schlesinger set out the following six (6) change approaches to deal with this resistance to change: Education and Communication - Where there is a lack…
Read more