DipIFR Syllabus C. Presentation and additional disclosures - IFRS 8 Pros and Cons - Notes ^{3 / 3}

IFRS 8 follows what we call the “managerial approach” as opposed to the old “risks and rewards” approach to determining what segments are.

This has the following advantages:

1. Cost effective as data can be reported in the same way as it is in the managerial accounts (though it does need reconciling)

2. The segment data reflects the operational strategy of the business

However there are problems also:

1. It gives a lot of subjective responsibility to the directors as to what they disclose

2. Also the internal nature of how it is reported may actually make it less useful to some users and lead to problems of comparability

3. There is also no defined measure of profit/loss in IFRS 8