Segment Reporting Memo Template (IFRS 8, ASC 280)

Segment memo: CODM identification, operating segments, aggregation criteria, 10% and 75% tests, significant segment expenses, reconciliations, ASU 2023-07 comparison

Фінанси, інвестиції та облікСтандартIFRS 8; ASC 280 (ASU 2023-07)segment reporting memoОновлено 29 жовт. 2026 р.

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Як використовувати: Use it at first application, on any reorganisation and each year end to document segment judgements. Fill the CODM evidence and the threshold workings first, from the actual CODM package. The main pitfall is aggregating segments with materially different margins to reduce disclosure.

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Segment Reporting Memo: [Entity name], [Reporting period]

Technical accounting memo that identifies the chief operating decision maker (CODM), the operating segments, any aggregation, the reportable segments and the segment disclosures, including significant segment expenses. Structure aligned with IFRS 8 Operating Segments (as amended, including consequential amendments from IFRS 18 issued April 2024) and FASB ASC Topic 280 Segment Reporting as amended by ASU 2023-07, cited by paragraph or section number only. Obtain the standards for the normative text. Replace every [bracketed] value and every row marked Example. This is a documentation format, not accounting, audit or financial advice: check the current official text and a qualified professional.

Document control

Field	Value
Document ID	[SEG-YYYY-NN] Example: SEG-2027-01
Reporting entity	[Group name] Example: Orvane Instruments Group plc
Framework	[IFRS 8 / ASC 280 / both] Example: IFRS 8; ASC 280 comparison in section 8
Period	[Year ended YYYY-MM-DD] Example: year ended 2027-12-31
CODM package reviewed	[Name, version, dates] Example: Monthly Executive Committee pack, January to December 2027
Version	[0.1]
Status	[Draft / In review / Final]
Owner	[@group-reporting-lead]
Approvers/reviewers	[@group-controller], [@cfo], [@audit-committee-chair]
Last updated	YYYY-MM-DD
Classification	[Confidential]

Approvals

Role	Name	Decision	Date
Preparer	[@name]	[Prepared]	YYYY-MM-DD
Group controller	[@name]	[Reviewed]	YYYY-MM-DD
CFO	[@name]	[Approved]	YYYY-MM-DD

Revision history

Version	Date	Author	Change summary
0.1	YYYY-MM-DD	[@name]	Draft
1.0	YYYY-MM-DD	[@name]	Example: Approved for 2027 financial statements

1. Summary and conclusion

Example: The CODM of Orvane Instruments Group plc is the Executive Committee, chaired by the Chief Executive Officer. The group has five operating segments. None are aggregated. Four are reportable: Industrial sensors, Medical devices and Software and services meet the revenue test, and Aftermarket parts meets the profit test. Training is shown in "All other segments". Reportable segments carry 98.0% of external revenue, above the 75% threshold. There is no change from 2026.

2. Identifying the CODM

Question	Evidence	Answer
Who allocates capital and headcount between units?	[Budget approval minutes]	Example: Executive Committee, quarterly
Who assesses performance and sets targets for unit heads?	[Incentive plan, review minutes]	Example: Executive Committee
What information does that body receive regularly?	[Pack contents]	Example: revenue, adjusted operating profit and four cost lines by business unit
Does the board do more than approve?	[Board minutes]	Example: No, it approves the group budget only

Reference: IFRS 8 para. 7; ASC 280-10-50. Under ASC 280 as amended by ASU 2023-07, disclose the title and position of the CODM and how the CODM uses the segment profit measure.

3. Identifying operating segments

Candidate unit	Business activities with revenue and expenses	Results regularly reviewed by CODM	Discrete financial information	Segment manager	Operating segment?
Example: Industrial sensors	Yes	Yes	Yes	Divisional president	Yes
Example: Medical devices	Yes	Yes	Yes	Divisional president	Yes
Example: Software and services	Yes	Yes	Yes	General manager	Yes
Example: Aftermarket parts	Yes	Yes	Yes	General manager	Yes
Example: Training	Yes	Yes	Yes	Director	Yes
Example: Group head office	Incidental income only	Cost review	Yes	CFO	No, corporate

Reference: IFRS 8 paras. 5 to 10. Where several overlapping sets of information exist (by product and by region), explain which one is the basis and why.

4. Aggregation

Criterion (IFRS 8 para. 12)	Segment A	Segment B	Similar?
Economic characteristics (long-term margin, growth)	[Data]	[Data]	[Yes/No]
Nature of products and services
Production processes
Type or class of customer
Distribution methods
Regulatory environment, where relevant
Conclusion			[Aggregate / Do not aggregate]

Example: Aftermarket parts and Industrial sensors were considered for aggregation; they were not aggregated because the aftermarket margin (9 / 60 = 15.0%) differs from industrial sensors (38 / 440 = 8.6%) and customers and distribution differ. Under IFRS 8 para. 22(aa), disclose the judgements made in applying the aggregation criteria.

5. Quantitative thresholds

Tests (IFRS 8 para. 13; ASC 280-10-50): a segment is reportable if its total revenue (external plus inter-segment) is 10% or more of combined revenue of all segments, or the absolute amount of its profit or loss is 10% or more of the greater of combined profit of profitable segments and combined loss of loss-making segments, or its assets are 10% or more of combined segment assets.

Example, year 2027, EUR millions:

Segment	External revenue	Inter-segment revenue	Total revenue	%	Segment profit or loss	% of 80	Assets	%	Reportable
Industrial sensors	410	30	440	48.5%	38	47.5%	520	49.4%	Yes
Medical devices	265	5	270	29.8%	31	38.8%	390	37.0%	Yes
Software and services	120	0	120	13.2%	(14)	17.5%	95	9.0%	Yes (revenue, profit)
Aftermarket parts	48	12	60	6.6%	9	11.3%	40	3.8%	Yes (profit)
Training	17	0	17	1.9%	2	2.5%	8	0.8%	No
Total	860	47	907	100%	66		1,053	100%

Profitable segments total 80 and loss-making segments total 14, so the profit test base is 80. External revenue of reportable segments is 410 + 265 + 120 + 48 = 843, or 98.0% of 860, above the 75% test (IFRS 8 para. 15). Training (EUR 17 million external revenue) is presented in "All other segments" (para. 16).

6. Segment measures and significant expenses

Segment profit measure: [measure name and definition] Example: adjusted operating profit, which excludes amortisation of acquired intangibles, restructuring and share-based payment expense, all held centrally.

Under ASU 2023-07, disclose significant segment expenses regularly provided to the CODM and included in segment profit, and the amount and composition of "other segment items". Under IFRS 8 para. 23, disclose the specified amounts when they are included in the measure of segment profit reviewed by the CODM or otherwise regularly provided, even if not reviewed separately; this follows the IFRS Interpretations Committee agenda decision on disclosure of revenues and expenses for reportable segments (finalised June 2024; the IASB did not object in July 2024).

Example, EUR millions:

Line	Industrial sensors	Medical devices
Total revenue	440	270
Cost of materials	(172)	(98)
Staff costs	(118)	(84)
Depreciation and amortisation	(34)	(22)
Other segment items (freight, energy, facilities)	(78)	(35)
Segment profit	38	31

Repeat for every reportable segment.

7. Reconciliations and entity-wide disclosures

Example, EUR millions:

Reconciliation	Amount
Total segment revenue	907
Elimination of inter-segment revenue	(47)
Group revenue	860
Total segment profit (reportable 64, all other 2)	66
Central costs not allocated	(18)
Group operating profit	48
Total segment assets	1,053
Unallocated assets (cash, tax, head office)	[amount]

Entity-wide disclosures (IFRS 8 paras. 32 to 34): revenue by product or service group, revenue and non-current assets by country of domicile and material foreign countries, and reliance on major customers (any single customer at 10% or more of revenue, with the segments that report it).

8. US GAAP comparison (ASC 280 and ASU 2023-07)

Topic	IFRS 8	ASC 280 after ASU 2023-07
Significant segment expenses	Specified amounts per para. 23	Significant expenses regularly provided to the CODM, plus other segment items
CODM disclosure	Judgements on aggregation	Title and position of the CODM, and how the CODM uses the measure
Interim periods	Limited per IAS 34	Annual segment disclosures also in interim periods
Single segment entities	Entity-wide disclosures	Full segment disclosures also required
Additional profit measures	One measure	More than one measure allowed if used by the CODM, with one consistent with GAAP measurement
Effective date	In force	Fiscal years beginning after 2023-12-15, interim periods within fiscal years beginning after 2024-12-15, applied retrospectively

9. Change and monitoring

Triggers: reorganisation, new CODM or committee membership, a new internal reporting package, acquisitions or disposals, a segment crossing a 10% threshold, or a regulator comment. When segments change, restate comparative information unless the information is not available and the cost to develop it would be excessive (IFRS 8 paras. 29 and 30).

10. Glossary and references

Term	Meaning in this memo
CODM	The function that allocates resources to and assesses the performance of the operating segments
Operating segment	A component with its own revenue and expenses whose results the CODM reviews and for which discrete information exists
Reportable segment	An operating segment, or an aggregation of segments, that meets a quantitative threshold or is chosen for disclosure
Significant segment expense	An expense category regularly provided to the CODM and included in the segment measure (ASC 280)

Reference	Version or date	URL
IFRS 8 Operating Segments	As amended, including IFRS 18 consequential amendments	https://www.ifrs.org/issued-standards/list-of-standards/ifrs-8-operating-segments/
IFRS Interpretations Committee, Disclosure of Revenues and Expenses for Reportable Segments	Agenda decision finalised June 2024, IASB did not object July 2024	https://www.ifrs.org/projects/work-plan/disclosure-of-revenues-and-expenses-for-reportable-segments-ifrs-8/
FASB ASU 2023-07, Improvements to Reportable Segment Disclosures	Issued November 2023	https://www.fasb.org/standards

Standard and licence note

Structure aligned with IFRS 8 Operating Segments and FASB ASC Topic 280 as amended by ASU 2023-07. Standards are cited by name and paragraph or section number only; no text from the IFRS Foundation or FASB is reproduced. Official text: IFRS Foundation (IFRS Accounting Standards, licensed access at https://www.ifrs.org/) and FASB (Accounting Standards Codification, access at https://asc.fasb.org/). Check later amendments, agenda decisions and effective dates. Orvane Instruments Group and all figures are fictional. The text is original and is not accounting advice. Template licence: MIT.

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