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CMA Final · Corporate Financial Reporting · Operating Segments (Ind AS 108)

Kaveri Textiles Ltd's Managing Director, the Chief Financial Officer and two whole-time directors jointly meet monthly to allocate resources to the business units and review their performance. There is no individual titled 'chief operating decision maker'. Under Ind AS 108, what is the correct conclusion?

The group of executive directors can be the chief operating decision maker. Ind AS 108 treats the term as a function of allocating resources to and assessing performance of segments, not a specific title, and it may be a group of executive directors.

  1. AThe chief operating decision maker must be the Managing Director alone, since only one person can hold the function
  2. BThe chief operating decision maker can be this group of executive directors, as the term identifies a function rather than a titleCorrect
  3. CNo chief operating decision maker exists, so the entity cannot report segments
  4. DThe board's independent directors must be treated as the chief operating decision maker

Explanation

Ind AS 108 says the chief operating decision maker is 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 may be a CEO or COO, or a group of executive directors or others. Hence the group performing these tasks qualifies.

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