Segment Reporting  IGAAP

Segment Reporting IGAAP PowerPoint PPT Presentation


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Segment Reporting IGAAP

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2. IGAAP Examples – Contd IT Industry – varying application of AS 17 – Similar Companies in terms of Business and Size Example 1 – Infosys Primary – Business Segment - Secondary – Geographical – Full Disclosure Given for Secondary Also Example 2 – TCS Primary – Geographical Secondary – Products – Revenue / Assets shown as required IGAAP Examples – Contd IT Industry – varying application of AS 17 – Similar Companies in terms of Business and Size Example 1 – Infosys Primary – Business Segment - Secondary – Geographical – Full Disclosure Given for Secondary Also Example 2 – TCS Primary – Geographical Secondary – Products – Revenue / Assets shown as required

4. IGAAP & IFRS - Similar Objectives Emphasis on Products & Services and Geographies IGAAP AS 17 – Mandatory w.e.f 1st April 2004 IFRS IAS 14 – Mandatory from 1st July 1998 US GAAP Emphasis on Business Activities & Economic Environments No Upfront reference to Products / Services or Geographies Determination of Segments is very different from IGAAP / IFRS US GAAP FAS 17 – 15th Dec 1997 IGAAP & IFRS - Similar Objectives Emphasis on Products & Services and Geographies IGAAP AS 17 – Mandatory w.e.f 1st April 2004 IFRS IAS 14 – Mandatory from 1st July 1998 US GAAP Emphasis on Business Activities & Economic Environments No Upfront reference to Products / Services or Geographies Determination of Segments is very different from IGAAP / IFRS US GAAP FAS 17 – 15th Dec 1997

6. IGAAP Listing in India Intent of Listing – Applicability Period ? Further Applicable to Banks Incl. Coop Banks / Insurance Companies / 10 Cr Borrowings or Public Deposits – Emphasis is on public dealing entities Turnover > Rs.50 Crs – Partnership Firms etc / Non Profit ?? Non Compliance with AS 17 Permitted in ASI 20 if there is not more than one Business / Geographical Segment – Disclosure required IFRS Public Entities anywhere in the world US GAAP Publicly traded companies – US / Outside US Markets / OTC Intended Issuer - Applicable if company provides financials for issuing securities Not Applicable – Separate Parent/Subsidiary/JV Company if they are included in a consolidated financial statements Not Applicable – Not for Profit Org SEC Registrants All Companies which are listed in US Any US Company having at least 500 Shareholders / $10 Mn assets – Even though Not Listed IGAAP Listing in India Intent of Listing – Applicability Period ? Further Applicable to Banks Incl. Coop Banks / Insurance Companies / 10 Cr Borrowings or Public Deposits – Emphasis is on public dealing entities Turnover > Rs.50 Crs – Partnership Firms etc / Non Profit ?? Non Compliance with AS 17 Permitted in ASI 20 if there is not more than one Business / Geographical Segment – Disclosure required IFRS Public Entities anywhere in the world US GAAP Publicly traded companies – US / Outside US Markets / OTC Intended Issuer - Applicable if company provides financials for issuing securities Not Applicable – Separate Parent/Subsidiary/JV Company if they are included in a consolidated financial statements Not Applicable – Not for Profit Org SEC Registrants All Companies which are listed in US Any US Company having at least 500 Shareholders / $10 Mn assets – Even though Not Listed

7. IGAAP AS – Not Specifying Interim Reporting requirements Specifies only Subsidiary – No Reference to Associate / JV Clause 41 – Interim & Annual Requirements – Segment As per AS 17 Segment Revenue Results Before Interest & tax Segmental Capital Employed IFRS – No Interim Reporting requirements specified – Varies by Country Specific Reference to Associate / JV if they are also public IGAAP AS – Not Specifying Interim Reporting requirements Specifies only Subsidiary – No Reference to Associate / JV Clause 41 – Interim & Annual Requirements – Segment As per AS 17 Segment Revenue Results Before Interest & tax Segmental Capital Employed IFRS – No Interim Reporting requirements specified – Varies by Country Specific Reference to Associate / JV if they are also public

8. US GAAP Interim Period – Applicable – Specific Mention in FAS 131 Revenue ?? Not Applicable – Separate Parent/Subsidiary/JV Company if they are included in a consolidated financial statements US GAAP Interim Period – Applicable – Specific Mention in FAS 131 Revenue ?? Not Applicable – Separate Parent/Subsidiary/JV Company if they are included in a consolidated financial statements

10. IGAAP / IFRS Similar Requirements Two types of Segments – Business & Geographical Factors to Be Considered are Inclusive not Exclusive A segment can be identified if Majority of factors are met Similar Risk & Returns is the primary driver for Identification Regulatory Environment – Insurance/ Banking Companies Proximity of Ops – Eg. India & Thailand Ops can be classified as Asia Ops IGAAP / IFRS Similar Requirements Two types of Segments – Business & Geographical Factors to Be Considered are Inclusive not Exclusive A segment can be identified if Majority of factors are met Similar Risk & Returns is the primary driver for Identification Regulatory Environment – Insurance/ Banking Companies Proximity of Ops – Eg. India & Thailand Ops can be classified as Asia Ops

11. US GAAP Emphasis is on Business Activity – Not Products / Services Measurement – May Differ for Segmental Vs General Financial s CODM – Function / Group of People – Board of Directors Segment Manager – A function or a group – Accountable for Segment Start Up / Pre Operative Stage Not Included in IGAAP/IFRS – No Products / Services at this stage May Be a Segment on the Basis of Business Activity US GAAP Emphasis is on Business Activity – Not Products / Services Measurement – May Differ for Segmental Vs General Financial s CODM – Function / Group of People – Board of Directors Segment Manager – A function or a group – Accountable for Segment Start Up / Pre Operative Stage Not Included in IGAAP/IFRS – No Products / Services at this stage May Be a Segment on the Basis of Business Activity

13. IGAAP / IFRS Similar Requirements Primary Segment & Secondary Segments to be Identified Business Segment Products / Services Similar Risks & rewards Geographical Segments – In Similar Economic Environment Majority of Factors may only be met IGAAP / IFRS Similar Requirements Primary Segment & Secondary Segments to be Identified Business Segment Products / Services Similar Risks & rewards Geographical Segments – In Similar Economic Environment Majority of Factors may only be met

14. IGAAP / IFRS Primary Segment Disclosures - Revenue – Includes - Directly Attributable / Allocated / Inter Segment / Share of JV Associates - Only IFRS – Includes – Share of JV & Associate Excludes – Extraordinary Item Excludes - Interest Income / Dividends/ Gains on Inv Sale/ Extinguishment of debt Unless Financial Operations Expenses Includes – Directly Attributable / Allocated / Inter segmental Only IFRS – Includes – Share of JV & Associate Excludes – Extraordinary Items / Income Tax / HO CO Expenses Excludes - Interest Expenses / Loss on Investments / Extinguishment of debt unless Finance Ops Segment Result – Segment Revenue Less Segment Expenses Segment Assets Includes - Employed by Segment / / Allocated / Excludes – Income tax Assets Includes – Receivables for Interest/Dividend etc if Included in Segment Results Includes - Investment accounted under Equity method – If included in results Segment Liabilities Includes – Directly Attributable / Allocated / Interest Bearing Liabilities (If Intt Expense Included in segment expenses) Excludes – Income Tax Liabilities Segment Cash Flow – Recommended No Disclosure of Depreciation/Amortization/Non Cash Exp Required if cash flow presentedIGAAP / IFRS Primary Segment Disclosures - Revenue – Includes - Directly Attributable / Allocated / Inter Segment / Share of JV Associates - Only IFRS – Includes – Share of JV & Associate Excludes – Extraordinary Item Excludes - Interest Income / Dividends/ Gains on Inv Sale/ Extinguishment of debt Unless Financial Operations Expenses Includes – Directly Attributable / Allocated / Inter segmental Only IFRS – Includes – Share of JV & Associate Excludes – Extraordinary Items / Income Tax / HO CO Expenses Excludes - Interest Expenses / Loss on Investments / Extinguishment of debt unless Finance Ops Segment Result – Segment Revenue Less Segment Expenses Segment Assets Includes - Employed by Segment / / Allocated / Excludes – Income tax Assets Includes – Receivables for Interest/Dividend etc if Included in Segment Results Includes - Investment accounted under Equity method – If included in results Segment Liabilities Includes – Directly Attributable / Allocated / Interest Bearing Liabilities (If Intt Expense Included in segment expenses) Excludes – Income Tax Liabilities Segment Cash Flow – Recommended No Disclosure of Depreciation/Amortization/Non Cash Exp Required if cash flow presented

15. IGAAP / IFRS Secondary Segments Disclosure Revenue Only External Customers Assets Cost Incurred during the year to acquire segment assets Other Disclosures Inter Segment Transfers – Measured at Actual Amount Material Changes in Segment A/C Policies Types of Product / Services Included in Each Segment IGAAP / IFRS Secondary Segments Disclosure Revenue Only External Customers Assets Cost Incurred during the year to acquire segment assets Other Disclosures Inter Segment Transfers – Measured at Actual Amount Material Changes in Segment A/C Policies Types of Product / Services Included in Each Segment

16. IGAAP Examples FMCG Major – HLL Primary – Business Segment - Products Secondary – Geographical – India / Outside India – No breakup within India – Similar Economic Environment Assumed Second Example ???IGAAP Examples FMCG Major – HLL Primary – Business Segment - Products Secondary – Geographical – India / Outside India – No breakup within India – Similar Economic Environment Assumed Second Example ???

17. IGAAP Examples – Contd IT Industry – varying application of AS 17 – Similar Companies in terms of Business and Size Example 1 – Infosys Primary – Business Segment - Secondary – Geographical – Full Disclosure Given for Secondary Also Example 2 – TCS Primary – Geographical Secondary – Products – Revenue / Assets shown as required IGAAP Examples – Contd IT Industry – varying application of AS 17 – Similar Companies in terms of Business and Size Example 1 – Infosys Primary – Business Segment - Secondary – Geographical – Full Disclosure Given for Secondary Also Example 2 – TCS Primary – Geographical Secondary – Products – Revenue / Assets shown as required

18. IGAAP Auto Industry – Varying Policies Highlighting Materiality and Relevance Example – 1 – Maruti No Segmental Information Given Auto Business – Main Business Investment / Insurance – Ancillary Business – Not Material Single Segment Fact Disclosed Example – 2 – Bajaj Auto Primary Segment – Business Segment Auto Insurance Investment Amounts are material – case similar to Maruti No Secondary Segment Disclosed – Export is less than 10% Fact Disclosed IGAAP Auto Industry – Varying Policies Highlighting Materiality and Relevance Example – 1 – Maruti No Segmental Information Given Auto Business – Main Business Investment / Insurance – Ancillary Business – Not Material Single Segment Fact Disclosed Example – 2 – Bajaj Auto Primary Segment – Business Segment Auto Insurance Investment Amounts are material – case similar to Maruti No Secondary Segment Disclosed – Export is less than 10% Fact Disclosed

19. IGAAP Adani Exports – Only Export Revenue No Segmental Disclosure Neither more than one Business Nor Geographical Segment ASI 20 Applied and Fact Disclosed IGAAP Adani Exports – Only Export Revenue No Segmental Disclosure Neither more than one Business Nor Geographical Segment ASI 20 Applied and Fact Disclosed

20. IFRS Example China Petroleum Allianz – German Reinsurer Primary – Business Secondary – Geographical IFRS Example China Petroleum Allianz – German Reinsurer Primary – Business Secondary – Geographical

21. US GAAP Operating Segment – Management Approach Case Study in Subsequent Pages will illustrate Threshold Limits Revenue – 10% or more of total (Internal + External) revenue Result – Profit 10% or more of Those Segments which have a Profit Result - Loss 10% or more of Those segment which have a loss Additional Segments - Additional Segments – to be identified till at least 75% of external revenue is covered by disclosed segments US GAAP Operating Segment – Management Approach Case Study in Subsequent Pages will illustrate Threshold Limits Revenue – 10% or more of total (Internal + External) revenue Result – Profit 10% or more of Those Segments which have a Profit Result - Loss 10% or more of Those segment which have a loss Additional Segments - Additional Segments – to be identified till at least 75% of external revenue is covered by disclosed segments

22. US GAAP If CODM reviews only One Measure of Segment Profit / Loss and Assets Segment Profit / Loss shall be reported only at those measures If EBIDTA is Used Depreciation / Amortization / Interest need not be disclosed Other Disclosures - Descriptive Information about way the segments were Identified Acctg. Basis for transactions between segments Difference btw enterprise acctg. Policies basis and Segment Policies if any Nature of any asymetrical allocation to segments (Eg Depn allocated to only one segment without assets allocation) Interim Period Disclosures Revenue from External Customers & Intersegment Revenues Segment Result Total Assets which had a material change from last annual report Difference in basis of segmentation from last annual report Reconciliation of segment to total enterprise US GAAP If CODM reviews only One Measure of Segment Profit / Loss and Assets Segment Profit / Loss shall be reported only at those measures If EBIDTA is Used Depreciation / Amortization / Interest need not be disclosed Other Disclosures - Descriptive Information about way the segments were Identified Acctg. Basis for transactions between segments Difference btw enterprise acctg. Policies basis and Segment Policies if any Nature of any asymetrical allocation to segments (Eg Depn allocated to only one segment without assets allocation) Interim Period Disclosures Revenue from External Customers & Intersegment Revenues Segment Result Total Assets which had a material change from last annual report Difference in basis of segmentation from last annual report Reconciliation of segment to total enterprise

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