The impact of IFRS 8 on segmental reporting by Italian listed companies​

The budget for the financial year is a model, that is to say an overall and concise representation, of the management carried out during the administrative period. However, the totality and the summary should not be aimed at information flattening, because the attitude of the budget is the result of the ability of those who write it to combine the synthesis and immediacy with the richness and the deepening of the representation.
The civil norms on the financial statements are addressed both to the informative immediateness, through the obligatory and the standardization of the forms and the contents, and to the informative deepening: Consider the retail requirement for mandatory balance sheet and profit and loss statements and also for the notes to the financial statements.
A useful composition of immediacy and insight can be achieved by explaining the operating activity as a synthesis of meaningful joints. This refers to the breakdown of the company’s operating activity by management areas, that is to say, separating management from ancillary and active financial management, and in the context of the management characteristic to the articulation for areas or sectors of activity.

The operating management, understood as the whole of the operations of use of means finalized to the obtainment of revenues and proceeds, is synthesis of three business activities: characteristic, patrimonial and active financial institution. The first management comprises the activities of the typical business cycle of purchase-transformation-sale and should represent the heart of the entrepreneurial activity; the other two operations coincide with the extra-characteristic investment activity (asset and financial) and are placed in place alongside the characteristic management to create economic and/or financial synergies.
For the purposes of budgetary comprehensibility, the areas mentioned above must be summarised but not confused: through the budget it must be possible to recognise their individuality, so that the reader of the budget can appreciate the origin of the operating balance. It should be pointed out that the identification of these management profiles cannot derive exclusively from information found in the civil capital and profit and loss account schedules. Additional information from the internal entity which can be obtained from it in the notes to the financial statements is essential. For example, the distinction between characteristic income and ancillary income in civil law “A.5) other income and income is one of the conditions for outlining the characteristic management profile compared to that of ancillary management. The failure to publish data relevant to the analysis in question obviously has negative implications for the scope of the financial statements.
It is also important to distinguish, within characteristic management, the areas or sectors of activity identified on the basis of the criteria used internally for management purposes. Merging the different branches of the characteristic activity into a single aggregate prevents knowing the contribution of the different businesses to the formation of the global operativity.