What makes segment reporting a valuable tool for investors and stakeholders?

The segment reporting standard is operating segment ifrs8 guides the processes involved and ensure that the processes are followed and it also ensures uniformity and acceptability.

In the business context, we can perceive segment reporting standards as an essential "temporal map." These standards serve as guides, allowing companies to navigate through the complexity of business operations across different segments. Just as a map details an unknown terrain, segment reports offer a clear and structured insight into performance, efficiencies, and necessary adaptations. They enable companies to chart their course over time, ensuring informed and strategic management, akin to navigating an unfamiliar landscape with a well-drawn map.

The benefits include: it helps investors to identify interested areas of business and also limit a relevant information in making investment decisions

Segment reporting is particularly beneficial in the diverse Nigerian economy. It allows investors to understand how different sectors like oil and gas, telecommunications, and agriculture contribute to a conglomerate's overall performance. This granular insight is crucial in a market where sectors respond differently to local economic conditions.

The segment reporting is helping the stakeholders to know the best of "buy" or "make", "continue" or "stop" without involving management accountant which in turn reduce its operating costs.

The major challenges segment reporting is the separation of cost allocation to each segment which might be impracticable in certain circumstances. In this wise, judgment is applied instead of any precise metrics which might compromise the integrity of figures.

A common challenge in Nigeria is allocating costs to conglomerates with interdependent divisions. We faced this with a Nigerian manufacturing company that had intertwined operations in different regions. The solution involved developing a region-specific cost allocation model that respected both the operational interdependencies and the unique economic factors of each region

While monitoring your financial analyst to get the true position can increase your opportunity cost, however, you are required to know the nitty gritty of the segment report with a view to forestalling the wrong decision making.

For the best practices, businesses more be able to allocate cost in a precise an accurate manner so as to minimize errors in estimation/allocation

One of the best practices in segment reporting involves clear communication and relevance to local economic conditions. We advised a Nigerian fintech company on segmenting their reports according to different service lines, which was key in attracting targeted investments for their mobile money and online payment platforms.

Segment reporting is the best for Holdco structure. You don't need any more energy to pass your homily to the potential investors.

Segment reporting can vary greatly across industries. For a multinational client in the retail sector, we implemented segment reporting based on geographical regions, which revealed significant differences in profitability and market growth rates across different continents. This allowed for more targeted strategic decisions at the regional level to better enhance the company's performance and growth

Where an entity publishes separate and consolidated financial statements, segment reporting as per IFRS 8 mandatorily apply only to consolidated financial statements. This means that segment reporting is looked at as a tool for investors and not for regulators. This also means that the entity wide disclosures required by IFRS 8 even for single reporting segment is applicable only to consolidated financial statements. I think at least the entity wide disclosures must be made mandatory for all types of financial statements, individual, separate and consolidated.

The overall objective of segment reporting is to provide investors with further information to aid their risk assessment. It's provide further details on company's top line including revenue and profitability. For example a prospective investor would be interested in knowing the performance of new products lines and their overall contribution to revenue. Information like that can provide more insights to management performance and ability to take new products to market.

Allocation of revenue might be an easy process however sometimes it might be complex and professionals like actuary and valuation experts needs be employed.

Segment reporting is valuable for investors and stakeholders as it offers detailed insights into individual business segments, allowing for a more comprehensive assessment of a company's performance, risk, and profitability. This transparency aids in making informed investment decisions and evaluating management strategies.

Segment reporting is evolving to include non-financial metrics, such as ESG (Environmental, Social, and Governance) factors. One of our partners in the energy sector used segment reporting to not only show financial performance but also the environmental impact of each division. This holistic approach provided a more comprehensive view for investors and stakeholders.