Analysis of segment reporting

Abstract

International experience shows that the basis of segment reporting is formed by the informational needs of its users, the number of which is constantly growing.

The aim of the article is to generalize types of segmental analysis for different user groups.

Since the results of segmental analysis help different users to make more objective decisions about the allocation of resources, it gives the opportunity to talk about its strategic importance. The author analyses advantages and disadvantage of preparation and presentation of segment reporting, which brings into formation of its features and limitations that has to be taken into account when it is conducted. Among the features of segmental analysis are the following: it touches different areas of the company; it makes it possible to compare identical indicators of reporting of competing companies; segment reporting reflects the management structure of the company. Despite of all the advantages of segmental analysis it is limited by the subjective decision of the company’s management in respect of certain disclosures and regulatory – legal features of its preparation and presentation. Analysis of segment reporting is based on many factors, including its purpose, objectives, methods, object, topic and subject of the analysis. Although the segment reporting itself is a certain type of analysis because it provides disaggregated information about consolidated data, the aim of segmental analysis is to evaluate the efficiency of the segments of the company. Accordingly, its topic is segment reporting of the company, its financial position and financial performance, and object – segment reporting of an entity. Subjects of segmental analysis are users of segment reporting. The author has identified two types of segmental analysis, which are analysis of trends of segments and analysis of indictors of segment reporting. Methods and worksheets proposed by the author can be used as a practical guide in order to conduct the analysis of segment reporting by different user groups.