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

Sagar Textiles Ltd has a Managing Director, a CFO and a board of directors. The Managing Director regularly allocates resources to the business units and assesses their performance. Under Ind AS 108, who is the chief operating decision maker (CODM)?

The CODM is the Managing Director in this case, because the CODM is a function, not a title. Ind AS 108 defines it as the function that allocates resources to and assesses the performance of operating segments, and the Managing Director performs exactly that role.

  1. AThe CFO, because the CODM must always hold a finance title
  2. BThe function of allocating resources to and assessing performance of the segments, here performed by the Managing DirectorCorrect
  3. CThe board of directors, because the CODM must be a group
  4. DThe statutory auditor, who reviews segment information

Explanation

Paragraph 7 says the CODM identifies a function, not necessarily a manager with a specific title. That function is allocating resources to and assessing performance of the operating segments. Here the Managing Director performs it. A specific title or a group is not required, though it may be a group of executive directors.

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