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CA Final · Financial Reporting · Ind AS 108 Operating Segments

Kaveri Textiles Ltd is managed by a three-member committee of executive directors, who together allocate resources to the company's divisions and review their performance every month. The company has no person titled 'Chief Operating Decision Maker'. The finance head argues that no CODM exists and therefore segment reporting is not possible. Which view is consistent with Ind AS 108?

The committee of executive directors can be the CODM. Ind AS 108 treats the CODM as a function of allocating resources to and assessing the performance of operating segments, not a titled manager, and expressly allows it to be a group of executive directors.

  1. AThe CODM must be the CEO, so the CEO must be designated even if the committee decides
  2. BThe committee of executive directors can be the CODM because it is a function, not necessarily a manager with a specific titleCorrect
  3. CNo CODM exists without a specific title, so the company need not identify operating segments
  4. DOnly the board of directors including non-executive directors can be the CODM

Explanation

Ind AS 108 says the term chief operating decision maker identifies a function, not necessarily a manager with a specific title. The function is to allocate resources to and assess performance of the operating segments. It may be a group of executive directors. Hence the committee performing this function is the CODM and the absence of a title is irrelevant.

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