(d) Information Required for Primary and Secondary Segments. The disclosure re-
quirements of IAS 14R and the North American standards are very similar. For pri-
mary segments, IAS 14R disclosure requirements include: revenue, result, assets, li-
abilities, capital expenditures, depreciation, noncash expenses other than
depreciation, and equity method income. For secondary segments, IAS 14R requires
disclosure of revenue, assets, and capital expenditures. One study^18 found that a ben-
efit of the revision of IAS 14 has been a significant increase in the number of items
of information disclosed for each primary and secondary segment.
The study noted that of considerable concern is the finding that under IAS 14R,
when geographic regions constitute the secondary segments, many companies con-
tinue to utilize the broad, vague geographic groupings for which the original version
of IAS 14 was often criticized. An example is provided by the geographic groupings
(secondary segments) reported by Bayer (see Exhibit 22.4). Analysts argue that dis-
aggregated data based on geographical areas that blend too many diverse countries
are of limited usefulness.
IAS 14R also encourages disclosure of segment cash flow information and allows
for matrix reporting. A matrix presentation gives information on the interrelationship
of the line of business and geographic segments. Hence, within each line of business
a company reports data for each geographic region. Examples of matrix reporting are
provided later in this chapter.
(e) IAS 14R and SFAS 131 Compared. While IAS 14R and the North American stan-
dards are similar, there are important differences in addition to those noted above.
IAS 14R requires a standardized measure of segment result for all segments, whereas
the North American approach allows for the disclosure of any profitability measure
that is used internally. In addition, IAS 14R requires that segment information be pre-
pared according to the accounting policies adopted for the consolidated financial
statements, whereas the North American approach accepts internally reported infor-
mation, even if it is prepared using accounting standards that differ from GAAP (i.e.,
those used in the consolidated accounts).
(f ) Illustration. Exhibit 22.4 utilizes Bayer’s 2001 segmental reporting to illustrate
the disclosure requirements of IAS 14R. In addition to IAS 14R required and recom-
mended disclosures, Bayer provides a considerable number of voluntary disclosures.
These voluntary disclosures will be further discussed in Section 22.5.
As noted in Exhibit 22.4, Bayer Group is managed on the basis of 14 business
groups, which for the purpose of reporting primary segments are aggregated into
seven segments. For each primary segment, Bayer provides the following required
disclosures: sales, intersegment sales, operating result, total assets, equity-method in-
come, capital expenditures, amortization and depreciation, and liabilities. Bayer ad-
ditionally reports segmental data for four geographic regions. The required disclo-
sures include: sales, total assets, and capital expenditures.
As noted previously, IAS 14R recommends the disclosure of segment cash flow
data. While Bayer discloses “gross cash flow” for both primary business segments
and secondary geographic segments, the information may be of somewhat limited
usefulness as it ties back to “gross cash provided by operating activities” in the con-
22 • 16 SEGMENTAL AND FOREIGN OPERATIONS DISCLOSURES(^18) Id.