Academic journal article Journal of Accountancy

FASB, Canadians and IASC Address Segment Reporting

Academic journal article Journal of Accountancy

FASB, Canadians and IASC Address Segment Reporting

Article excerpt

The Financial Accounting Standards Board published Statement no. 131, Disclosures about Segments of an Enterprise and Related Information, which supersedes Statement no. 14, Financial Reporting for Segments of a Business Enterprise. It is part of the FASB's consolidations project, which includes still-unreleased statements on consolidations policy and procedures and unconsolidated entities. Simultaneously, the Accounting Standards Board (AcSB) of the Canadian Institute of Chartered Accountants issued a nearly identical statement. The two boards had been working together on their pronouncements.

The International Accounting Standards Committee voted to issue its own statement, but it is not identical to the FASB/AcSB pronouncements. Rather, it is more like Statement no. 14, according to FASB Project Manager Liz Fender. The IASC statement will be available shortly.

Statement no. 131 requires disclosure about different parts of a business, according to Fender, but does not require changes in the basic income statement or balance sheet. It does change the way public companies will report information about segments in annual financial statements.

Competitive concerns

The FASB received 220 comment letters during the exposure period. "Mostly, we heard concerns about competitive harm," said Fender. "Companies were concerned that increased disclosure requirements would put them at a disadvantage with suppliers and competitors by making public what a company earned on different products. …

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