Accounting standard 17 does not a prohibit the disclosure of additiona...
Understanding Accounting Standard 17
The paragraph discusses the flexibility allowed under Accounting Standard 17, which relates to segment reporting in financial statements. Here's a detailed breakdown:
Segment Information Disclosure
- **Additional Segment Information**: Organizations can disclose segment information that does not necessarily adhere to the same accounting policies used in their main financial statements.
- **Internal Use**: This additional segment information must be intended for internal use, specifically for the board of directors and the chief executive officer, who are responsible for making strategic decisions regarding resource allocation.
Decision-Making Purpose
- **Resource Allocation**: The primary purpose of providing this additional segment information is to facilitate informed decisions about how to allocate resources effectively across different segments of the business.
- **Performance Measurement**: It also helps in evaluating the performance of various segments, allowing management to assess which areas are performing well and which may require more attention or resources.
Clear Description of Measurement Basis
- **Basis of Measurement**: When presenting this additional information, companies must clearly describe the basis of measurement. This means explaining how the segment data is calculated and what accounting principles (if any) were used.
- **Transparency**: This requirement for clarity ensures that stakeholders understand the context and reliability of the segment information, even if it diverges from the main financial statements.
Conclusion
In summary, Accounting Standard 17 allows for the disclosure of segment information that may not align with standard accounting policies, provided it is clearly communicated and used internally for decision-making purposes. This flexibility supports better management oversight and strategic resource allocation.