Accounting Standard From The Financial Information Reporting Perspective

2946 Words Jan 26th, 2015 12 Pages
EXECUTIVE SUMMARY
AASB 8 is an important Accounting Standard from the financial information reporting perspective. It ensures that the entity has to disclose enough information to the user of financial information about the economic activities the entity is involved into and the scope or spread of these activities. The standard requires the entity to provide information about the reportable operating segments of the entity. Operating segments are the components of the entity of which separate financial information is available and it is regularly evaluated by the management – more specifically – the CODM – i.e. the Chief Operating Decision Maker to assess the performance of the particular component and to allocate resources in appropriate manner.
Prior to adoption of AASB 8, AASB 114 for Segment reporting required an entity to identify two sets of segments (business and geographical) using a risks and rewards approach, with the entity’s system of internal financial reporting to key management personnel serving only as the starting point for the identification of such segments.
INTRODUCTION
The Australian Accounting Standard Board(AASB), issued AASB 8 Operating Segments in place of the previous standard - AASB 114 Segment Reporting. The standard applies for all annual reports that begin on or after January 1, 2009. The main difference between the previous accounting standard and the current one is the introduction of the ‘management approach’. The ‘management approach’ was…
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