Our ref: Tech4/SC0108
International Accounting Standards Board
30 Cannon Street,
London EC4M 6XH
Submitted electronically to www.iasb.org
23 January 2009
Dear Sir or Madam
EXPOSURE DRAFT
Discontinued Operations - Proposed amendments to IFRS 5
CIPFA is pleased to present its comments on the above exposure draft, which has
been reviewed by CIPFA’s Accounting and Auditing Standards Panel.
While we consider that segment reporting provides an important strategic view of a
business or other operation, we are not convinced that it provides the only relevant
information used by high level decision makers.
In our view, the effect of the proposed amendments is to obscure the notion of a
discontinued operation under IFRS by narrowing the definition while broadening the
disclosure of items that do not satisfy that definition.
More detailed responses to the questions in the exposure draft are provided in the
attached Annex.
I hope these comments are a helpful contribution to the development of improved
standards.
Yours faithfully
Steven Cain
Technical Manager, Financial Reporting and Auditing Standards
CIPFA
3 Robert Street, London WC2N 6RL
Tel +44 (0)20 7543 5794
steven.cain@cipfa.org
ANNEX
RESPONSE TO INVITATION TO COMMENT
Question 1 – Definition of discontinued operations
(a) Do you agree with the proposed definition? Why or why not? If not, what
definition would you propose, and why?
(b) If an entity is not required to apply IFRS 8, is it feasible for the entity to
determine whether the component of an entity meets the definition of an operating
segment? Why or why not? If not, what definition would you propose for an entity
that is not required to apply IFRS 8, and why?
(a) CIPFA does not agree with the proposed definition.
While a segment as defined in IFRS 8 ‘Operating Segments’ will often be an
appropriate unit of account for triggering separate presentation, this may not
always be the case. The current IFRS 5 definition of discontinued operation reflects
on the significance of an operation to the overall business, and seems to better
capture the notion of a ‘strategic shift’.
(b) As noted above, we consider that it would be better to use text based on the
extant IFRS 5 drafting.
Question 2 – Amounts presented for discontinued operations
Do you agree that the amounts presented for discontinued operations should be
based on amounts presented in the statement of comprehensive income? Why or
why not? If not, what amounts should be presented, and why?
CIPFA agrees that discontinued operations should be disclosed in a manner which
is consistent with relevant IFRS to ensure comparability with other amounts
presented in the financial statements.
Question 3 – Disclosure of all components of an entity that have been disposed of
or are classified as held for sale
(a) Do you agree with the disclosure requirements? Why or why not? If not, what
changes would you propose, and why?
(b) Do you agree with the disclosure exemptions for businesses that meet the
criteria to be classified as held for sale on acquisition? Why or why not? If not,
what changes would you propose, and why?
(a) CIPFA does not agree with the proposed disclosure requirements. In our view
these have the effect of making less clear the distinction between changes
resulting from strategic shifts and other less significant changes.
(b) We agree with the disclosure exemption.
Question 4
Are the transitional provisions appropriate? Why or why not? If not, what would
you propose, and why?
The transitional provisions appear appropriate.