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1516. Defining reportable segments – a complex assignment problem in international accounting
Invited abstract in session WB-59: OR in Accounting: Planning, Taxation, and Reporting, stream OR in Financial and Management Accounting.
Wednesday, 10:30-12:00Room: S08 (building: 101)
Authors (first author is the speaker)
| 1. | Matthias Amen
|
| Chair for Quantitative Accounting & Financial Reporting, Bielefeld University |
Abstract
IFRS 8 "Operating Segments" requires the grouping of operating segments into aggregated segments. A differentiated, aggregated presentation of assets and liabilities, income and expenses has to be reported separately for these reportable segments. A reportable segment should consist of one or more operating segments that are similar. Not all operating segments need to be aggregated into one reportable segment. The problem can therefore be characterised as a binary assignment similar to the Knapsack problem.
IFRS 8 defines sets of different requirements for the definition of reportable segments. The overall objective is up to the reporting company itself. To this end, we use a technical objective function that aims to minimise the dissimilarity inside reportable segments. By choosing different values for a weighting parameter in the formal objective function, we can generate solutions with a different number of reportable segments.
We formulate and solve the problem using AMPL and standard solvers. This also enables a discussion of IFRS 8 to improve future standard setting.
Keywords
- Accounting
- Financial Modelling
- Combinatorial Optimization
Status: accepted
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