Susan Maina is a content writer at Mugo and Company, where she simplifies Accounting, Auditing, and Forensic Audit services with her finance expertise.
LinkedIn >>Everything Kenyan Businesses Need to Know About Operating Segments
Table of Contents
If you’re running a business in Kenya and want to enhance transparency while meeting international accounting standards, understanding IFRS 8 segment reporting in Kenya is crucial.
This standard helps companies break their operations into clear parts called Operating Segments – making it easier for investors, regulators, and stakeholders to see how each part performs.
At Mugo & Company, we don’t just help you understand IFRS 8 – we provide assurance services in Kenya that ensure your segment reporting is accurate, compliant, and investor-ready.
Whether you manage a listed company, a bank, or a large public entity, this 2025 guide simplifies IFRS 8 segment reporting, explaining what it is, why it matters, and how Kenya has adopted it.
An Operating Segment is a distinct part of your business that:
| Criteria | Explanation |
|---|---|
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Earns revenue and incurs expenses
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This includes transactions within the company.
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Is regularly reviewed by the Chief Operating Decision Maker (CODM)
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The CODM is the person or group who allocates resources and assesses performance
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Has separate financial information available
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Even if it’s not currently generating revenue but has that capacity.
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This segmentation helps you understand and report on different business areas clearly.
The main goals of IFRS 8 segment reporting in Kenya are to:
Who must comply with IFRS 8 segment reporting in Kenya?
| Entity Type | Details |
|---|---|
|
Publicly listed companies
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Companies listed on Nairobi Securities Exchange (NSE) or preparing to list
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Public interest entities
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Banks, insurers, parastatals, and regulated financial firms
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Voluntary adopters
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Companies choosing full IFRS compliance
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Note: Small and medium enterprises (SMEs) typically follow IFRS for SMEs, which excludes segment reporting.
A reportable segment is an operating segment meeting at least one of these thresholds:
| Threshold Type | Criteria |
|---|---|
|
Revenue
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≥ 10% of combined external and intersegment revenue
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Profit or Loss
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≥ 10% of the greater total profit or total loss among all segments
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Assets
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≥ 10% of combined segment assets
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Also, the 75% Revenue Rule requires that reportable segments cover at least 75% of total external revenue.
If not, more segments must be disclosed even if they don’t meet the 10% thresholds.
Segments can be aggregated if they share:
This simplifies reporting without losing meaningful detail but requires management’s judgement.
Companies must disclose:
| Disclosure Area | Details |
|---|---|
|
Segment Identification
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How segments are defined and their products/services
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Judgements
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How and why segments were combined
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Financial Results
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Profit/loss, revenue, assets, liabilities per segment
|
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Reconciliations
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Linking segment data to consolidated financial statements
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Major Customers
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Customers contributing ≥ 10% of revenue
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Geographic Info
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Revenue and assets by location
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These disclosures build trust by showing how different parts of the business perform.
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BOOK MY FREE CONSULTATION| Advantage | Explanation |
|---|---|
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Transparency
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Provides a clearer picture of business performance across units
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Alignment with management
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Reflects internal reporting and decision-making processes
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Better decision-making
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Helps investors and stakeholders understand risk and opportunities
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Flexibility
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Allows aggregation of similar segments for simpler reporting
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Compliance
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Meets global financial reporting standards enhancing credibility
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| Disadvantage | Explanation |
|---|---|
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Complexity
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Can be challenging for companies without strong internal systems
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Subjectivity
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Requires judgement in identifying CODM and segment aggregation
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Disclosure Burden
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Extensive disclosures may be seen as costly or cumbersome
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Competitive Sensitivity
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Detailed segment info could reveal strategic business insights
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Inconsistent Application
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Differences in how companies interpret rules can reduce comparability
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Kenya adopted IFRS 8 segment reporting around 2009 in line with global standards. It’s mandatory for:
The Institute of Certified Public Accountants of Kenya (ICPAK) plays a key role in supporting IFRS adoption and compliance.
1. What’s the difference between IAS 14 and IFRS 8 segment reporting?
IFRS 8 uses a management approach, meaning it is based on the internal reports reviewed by the Chief Operating Decision Maker (CODM).
IAS 14, on the other hand, applied fixed segment rules that were less flexible.
2. Who needs to apply IFRS 8 segment reporting in Kenya?
Listed companies, public interest entities, banks, insurers, large parastatals, and other entities adopting full IFRS standards must comply.
3. Is IFRS 8 segment reporting mandatory in Kenya?
Yes. It has been mandatory for qualifying companies since 1 January 2009.
4. What is CODM?
CODM stands for Chief Operating Decision Maker – the person or group within an organisation responsible for resource allocation and reviewing segment performance.
5. How can I ensure my IFRS 8 compliance is accurate and investor-ready?
Accurate IFRS 8 reporting requires clear identification of segments, proper application of the aggregation rules, and complete disclosures. This is where working with an expert makes a difference.
Mugo & Co provides professional IFRS advisory and assurance services in Kenya – ensuring your reporting meets global standards while remaining practical and cost-efficient.
IFRS 8 segment reporting in Kenya offers a transparent window into how businesses perform across different areas.
By correctly adopting IFRS 8, Kenyan companies can not only boost compliance but also strengthen investor confidence.
At Mugo & Company, we combine technical expertise in IFRS 8 segment reporting with professional assurance services in Kenya – helping you meet global standards while making your reporting process efficient and accurate.
Make IFRS reporting simple, accurate, and audit-ready — with Mugo & Company’s expert Guidance
BOOK YOUR FREE CONSULTATIONWant expert help with IFRS 8 segment reporting and assurance services in Kenya? Contact Mugo & Company today for tailored support and compliance solutions.
This guide is for general information purposes and does not replace legal, accounting, or professional advice. Regulations may change after 2025, so we recommend consulting a qualified adviser for guidance specific to your situation.
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