Identifying reportable segments

and management is a business segment or a geographical segment
based on the factors in the definitions in paragraph 5 but others
are not, sub-paragraph (b) below should be applied only to those
internal segments that do not meet the definitions in paragraph 5
(that is, an internally reported segment that meets the definition
should not be further segmented);
(b) for those segments reported internally to the directors and
management that do not satisfy the definitions in paragraph 5,
management of the enterprise should look to the next lower level
of internal segmentation that reports information along product
and service lines or geographical lines, as appropriate under the
definitions in paragraph 5; and
(c) if such an internally reported lower-level segment meets the
definition of business segment or geographical segment based
on the factors in paragraph 5, the criteria in paragraph 27 for
identifying reportable segments should be applied to that segment.
26. Under this Standard, most enterprises will identify their business and
geographical segments as the organisational units for which information is
reported to the board of the directors (particularly the non-executive directors,
if any) and to the chief executive officer (the senior operating decision maker,
which in some cases may be a group of several people) for the purpose of
evaluating each unit’s performance and for making decisions about future
allocations of resources. Even if an enterprise must apply paragraph 25
because its internal segments are not along product/service or geographical
lines, it will consider the next lower level of internal segmentation that
reports information along product and service lines or geographical lines
rather than construct segments solely for external reporting purposes. This
approach of looking to organisational and management structure of

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enterprise and its internal financial reporting system to identify the business
and geographical segments of the enterprise for external reporting purposes
is sometimes called the ‘management approach’, and the organisational 
components for which information is reported internally are sometimes called
‘operating segments’.