Segment reporting disaggregates an entity’s financial information by its different activities, divisions or geographical areas, etc., enabling the entity’s stakeholders to better understand the performance of individual segments. The disaggregated information on segments is aimed to provide better information about the specific operational objectives and major activities of the entity, as well as the resources devoted to and costs of those objectives and activities. Entities often try to use GRAP 18 to identify its important activities, but this is not the purpose of the Standard. The purpose is for entities to report on those activities that they have already deemed as important to track and monitor separately. This disclosure provides users of general purpose financial reports the benefit of the same information that management uses to make decisions and assess the entity’s performance.

Segment reporting is applicable when an entity has determined that it has activities that meet the definition of a segment in terms of GRAP 18.05:
A segment is an activity of an entity:
(a) that generates economic benefits or service potential (including economic benefits or service potential relating to transactions between activities of the same entity);
(b) whose results are regularly reviewed by management to make decisions about resources to be allocated to that activity and in assessing its performance; and
(c) for which separate financial information is available.

Not every part of an entity generates economic benefits or service potential. For example, an administrative unit or functional department may not undertake activities of the entity that generates economic benefits or service potential. As a result, these activities may not be regularly reviewed by management. These activities are not reported as segments as they do not meet the definition of a segment.

Where activities are not regularly reviewed for decision-making and assessed for performance, it may indicate that the activity is not crucial for the entity to deliver on its mandate or that separate financial information is not available for that activity. GRAP 18 is not applicable in this case.

Disclosure of information about geographical areas in GRAP 18 is applicable to all entities and not only those who have determined that they have reportable segments per GRAP 18.05. Refer to FAQ 4.13 in the Frequently Asked Questions on the Standards of GRAP for guidance on disclosing information about geographical areas.

The Secretariat will conduct a desktop review of GRAP 18 during the latter part of 2025. Look out for communication around this to be a part of the discussion.

Disclaimer
The article has been prepared by the Secretariat of the ASB for information purposes only. It has not been reviewed, approved, or otherwise acted on by the Board.