PSAF discussion on segment reporting – assessment of support functions..

Entities are uncertain whether support and administrative units meet the definition of a segment in GRAP 18 on Segment Reporting.

The PSAF noted that entities should consider the following:

• The objective of GRAP 18 should be kept in mind when assessing which parts of an entity’s activities meet the definition of a segment. This includes understanding what information would be useful for users of the financial statements. Information about support functions may not meet this requirement.
• Management may review financial information from an internal control perspective e.g. information about the condition of a unit’s assets, but this would not automatically mean that the unit meets the definition of a segment.

Each entity should consider its own circumstances and develop a policy to determine which units would meet the definition of a segment.