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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Aarav Textiles Ltd has no officer titled CEO or COO. Strategic decisions on resource allocation and performance review of its divisions are made jointly by a committee of three executive directors. Under Ind AS 108, how should the chief operating decision maker (CODM) be identified?

The committee of executive directors is the CODM. Under Ind AS 108, CODM denotes a function, namely allocating resources to and assessing performance of operating segments, rather than a particular title. It may be a CEO, COO or a group of executive directors, so the absence of titles is irrelevant.

  1. AThe CODM must be the Managing Director, as the senior-most titled manager
  2. BThe CODM must be the statutory auditor, who reviews divisional results
  3. CThe CODM is the committee of executive directors, because CODM is a function of allocating resources and assessing segment performance, not a specific titleCorrect
  4. DNo CODM exists, so the entity cannot have operating segments

Explanation

Ind AS 108 says the term CODM identifies a function, not necessarily a manager with a specific title. The function is to allocate resources to, and assess the performance of, operating segments. It is often the CEO or COO but may be a group of executive directors. Option A is wrong because a title is not required.

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