The Roadmap to Effective Segment Reporting, At the Core of Value Discovery

Current segment reporting does not assist investors in their use of valuation models. Investors would like more segment-level information. These are key findings of the Post-Implementation
Review (PIR) of IFRS 8 (2013) and PIR SFAS 131 (2012). They highlight that the development and improvement of segment reporting is long overdue. Although it is as a critical cornerstone for forecasting future firm performance and firm value, the current status quo of segment reporting does not enable investors to perform segment analysis with a focus on operating activities,profitability, and growth. In order to address key concerns of the PIR on segment reporting,the IASB proposes the disclosure of additional line items to the segment statements (IFRS 8 Staff Paper, October 2016). We appreciate the IASB’s initiative to improve segment reporting.At the same time, we would like to emphasize that segment reporting from the investors’perspective can only be improved if it aims to identify value drivers, thus sharpening the focuson operations.