IAS 14
Withdrawn
Segment Reporting
Required segment reporting based on business and geographical segments using a risks and returns approach, with primary/secondary reporting formats. Withdrawn in 2009, superseded by IFRS 8 Operating Segments.
Withdrawn Standard
IAS 14 (issued 1981, revised 1997) required segment reporting based on an entity's identified business and geographical segments, using a risks and returns approach. It was superseded by IFRS 8 Operating Segments, effective for periods beginning on or after 1 January 2009, which replaced IAS 14's externally-defined segment concept with the management approach.
It is retained here for historical reference. For current segment reporting, always apply IFRS 8.
Current Standard
IFRS 8 Operating Segments 1
Conceptual Framework Linkage
Why aggregate financial statements can mislead about diversified businesses
The Conceptual Framework's relevance objective recognises that a diversified entity's aggregate financial statements can obscure important differences in risk, growth, and profitability across its various lines of business or geographical markets. IAS 14 addressed this by requiring segment information – but, unlike its eventual successor IFRS 8, it defined segments using externally specified "risks and returns" criteria, rather than the entity's own internal management structure.
HOW IAS 14 MAPPED TO THE FRAMEWORK
Relevance – disaggregated segment information helps users understand risk/return profiles that aggregate figures conceal Comparability (attempted, imperfectly) – by defining segments externally (via risks and returns criteria) rather than via management's own view, IAS 14 aimed for greater cross-entity comparability than the later management approach – though this came at the cost of forcing entities to report segments possibly different from how they were actually internally managed Cost vs benefit tension – requiring entities to construct segment information not aligned with internal management reporting could impose significant additional preparation cost, a key criticism that led to IFRS 8's management approach reform
IAS 14's externally-defined segment approach was replaced specifically because it could require entities to construct and disclose segment information that did not correspond to how the business was actually run internally – a tension IFRS 8's management approach was designed to resolve.
Primary vs secondary reporting format – a structure IFRS 8 abandoned
FormatDisclosure depth
Primary formatExtensive disclosure (revenue, result, assets, liabilities, capex, depreciation)
Secondary formatLimited disclosure (revenue, assets, capex only)
An entity's dominant source of risks and returns (business or geography) determined which format was primary – a structural distinction IFRS 8 entirely abandoned in favour of a single unified reportable segment concept.
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Scope & Applicability (Historical)
What IAS 14 covered
IAS 14 applied to entities whose equity or debt securities were publicly traded, and other economically significant entities choosing to disclose segment information – broadly similar in spirit to IFRS 8's own public accountability scope trigger.
This scope-trigger logic (public accountability) was carried forward largely unchanged into IFRS 8.
Key definitions you must know (historical)
Business segment (original)
A distinguishable component providing a single product/service, or group of related products/services, subject to risks/returns different from other business segments.
Geographical segment (original)
A distinguishable component providing products/services within a particular economic environment, subject to risks/returns different from other economic environments.
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Business Segments vs Geographical Segments (with worked example)
The "risks and returns" identification criteria
Segments were identified based on factors such as: the nature of products/services; the nature of the production process; the type/class of customer; distribution methods; and, for geographical segments, similarity of economic/political conditions, currency risk, and exchange control regulations.
Example 1: Identifying business segments under the risks/returns approach
A diversified conglomerate operates a consumer electronics division and an agricultural equipment division – each facing materially different demand drivers, production processes, and customer bases, and thus different risk/return profiles.
These would be identified as two separate business segments under IAS 14's risks/returns test – a conclusion likely similar to what the management approach (IFRS 8) would also produce in this case, since the divisions are genuinely distinct in both externally observable risk/return terms and (presumably) in internal management reporting.
In many cases, IAS 14's externally-defined segments and IFRS 8's internally-defined segments would coincide – the practical divergence mattered most for entities whose internal management structure did not align neatly with externally observable risk/return groupings.
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Primary vs Secondary Segment Reporting Format
Determining which dimension dominates risk and returns
An entity determined whether business segments or geographical segments were the dominant source of risks and returns, using that dimension as the primary reporting format (extensive disclosure), with the other dimension reported in less detail as the secondary format. This two-tier structure added genuine complexity that IFRS 8's single unified segment concept later eliminated entirely.
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Identifying Reportable Segments
A 10% threshold – the direct ancestor of IFRS 8's own tests
A segment was reportable if its revenue, result, or assets were 10% or more of the combined total for all segments – essentially identical in structure to IFRS 8's own 10% quantitative thresholds (revenue, profit/loss, assets), carried forward with only minor refinement.
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Segment Measurement
Consistent accounting policies – the opposite of IFRS 8's approach
Segment information under IAS 14 was measured using the same accounting policies adopted for the entity's consolidated financial statements – a direct contrast with IFRS 8's later approach, which permits segment measures to reflect whatever basis management uses internally, even if that differs from IFRS. This is one of the most significant substantive differences between the two standards.
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Segment Disclosure Items
Extensive primary format disclosures
Segment revenue (external and inter-segment), segment result, segment assets, and segment liabilities Cost of property, plant, and equipment/intangible assets acquired during the period (capital expenditure) Depreciation and amortisation expense A reconciliation of segment totals to consolidated entity totals
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Why IAS 14 Was Replaced
Convergence with US GAAP, and cost-effectiveness concerns
IAS 14's externally-defined "risks and returns" segment model diverged from the US GAAP "management approach" (ASC 280, itself pre-dating IFRS 8). As part of the IASB's short-term convergence project with the FASB, IAS 14 was replaced by IFRS 8, deliberately modelled closely on the existing US GAAP standard – improving international comparability while also reducing preparer cost, since segment information could now be sourced directly from existing internal management reports rather than a separately constructed external classification.
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Disclosure Requirements (Historical)
Required disclosures under IAS 14
Factors used to identify business and geographical segments Types of products/services in each business segment Composition of each geographical segment Extensive primary format financial information (Section 7)
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Critical Judgments & Estimates (Historical)
Where management judgement mattered most
SIGNIFICANT JUDGEMENTS
Identifying business and geographical segments using the risks/returns criteria Determining which dimension (business or geography) was the dominant primary format
SIGNIFICANT ESTIMATES
Allocating shared costs/assets between segments, using consolidated accounting policies
The externally-defined segment identification exercise under IAS 14 was widely criticised as expensive and sometimes artificial – requiring entities to construct segment views that did not always correspond to how the business was genuinely managed internally.
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IAS 14 vs Modern IFRS 8
Comparison – IAS 14 (1997 revision) vs current IFRS 8
FeatureIAS 14 (withdrawn)Current (IFRS 8)
Segment identification basisExternally-defined "risks and returns" criteriaThe management approach – how the CODM actually reviews the business internally
Measurement basisMust match consolidated accounting policiesFollows whatever basis management reports internally (may be non-IFRS)
Primary/secondary format structureTwo-tier structure based on dominant risk sourceAbolished – single, unified reportable segment concept, plus mandatory entity-wide disclosures regardless of segment structure
10% quantitative thresholdsRevenue, result, assetsSame three tests, largely unchanged
The single biggest change was philosophical – moving from an externally imposed classification to the internally-driven management approach, directly converging with, and modelled on, the pre-existing US GAAP standard.
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Statement Mapping (Historical, Under IAS 14)
Comprehensive event-to-statement mapping table
Event / transactionStatement(s) affectedNotes
Segment revenue, result, assets, liabilitiesNotesUsing consolidated entity accounting policies
Reconciliation to consolidated totalsNotesSince segment measures used the same policies, reconciling items were typically limited to unallocated items
Primary vs secondary format disclosureNotesExtensive vs limited detail, per dominant risk source
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Related Standards
Cross-reference map
StandardConnection
IFRS 8The direct successor, replacing the risks/returns approach with the management approach
IAS 1Supplied the general presentation framework within which segment disclosures were made
IFRS 5Applicable segments needed to be identified for discontinued operations, even under the older IAS 14 regime
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Quick-Reference Glossary
Risks and returns approach
IAS 14's method of identifying segments based on externally observable differences in risk/return profiles, rather than internal management structure.
Primary/secondary reporting format
A two-tier disclosure structure based on whether business or geographical segmentation was the dominant source of risks and returns – abolished under IFRS 8.
Business segment
A distinguishable component providing a single product/service, or group of related products/services, subject to risks/returns different from other business segments.
Geographical segment
A distinguishable component providing products/services within a particular economic environment, subject to risks/returns different from other economic environments.
Reportable segment
A segment whose revenue, result, or assets equal 10% or more of the combined total for all segments, meeting IAS 14's quantitative threshold for separate disclosure.
Dominant source of risks and returns
The factor (business or geography) that most significantly influences the entity's risk/return profile, determining which segment dimension receives primary reporting format treatment.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows