1.7 ICFR Considerations
Entities need to have effective ICFR to support the judgments they use in applying the segment guidance
and to monitor for changes in the management approach or changes to other facts and circumstances
that might result in different segment reporting. In prepared remarks, staff from the OCA reminded
registrants and auditors of the importance of effective internal controls related to segment disclosures
by observing the following at the 2015 AICPA Conference on Current SEC and PCAOB Developments:
The guidance on segment reporting requires the application of reasonable judgment. Effective [ICFR] supports
those judgments, including the judgments needed in the determination of operating segments, aggregation,
and entity-wide disclosures. Input from, and interaction with, the [chief operating decision maker (CODM)] may
be an important element in the design of effective ICFR in regard to how the CODM allocates resources and
assesses performance. In addition, documenting the design and effective operation of management’s controls
over these judgments is an integral part of management’s support for the effectiveness of its ICFR, and will be
essential to the auditor’s ability to evaluate these controls. [Footnote omitted]