Skip to content

CA Final · Financial Reporting · Ind AS 108 Operating Segments

Sagar Foods Ltd is run by a three-member executive committee comprising the CEO, COO and CFO. The committee meets monthly to decide how capital is allocated among the business units and to review each unit's performance. The board of directors only reviews annual results. A trainee argues that the chief operating decision maker (CODM) must be the person titled 'Chief Operating Officer'. Which view is consistent with Ind AS 108?

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

  1. AThe CODM must be the COO because the term refers to that designated title
  2. BThe CODM must be the board of directors because it is the highest governing body
  3. CThe CODM is a function of allocating resources to and assessing performance of segments, and here it can be the group of executive directors forming the committeeCorrect
  4. DThe CODM cannot be a group of persons; it must be a single individual

Explanation

Ind AS 108 says the CODM identifies a function, not necessarily a manager with a specific title. The function is to allocate resources and assess segment performance, and it may be a group of executive directors or others. The committee performs this function, so it is the CODM; the title-based view is wrong.

Did you get it right without looking?

One question tells you little. A timed set on Ind AS 108 Operating Segments shows your real accuracy, how long you take and where you lose marks.

Practise Ind AS 108 Operating SegmentsFree diagnostic mock

More Ind AS 108 Operating Segments questions