Get ready for IFRS 18 Presentation and Disclosure in Financial Statements
New accounting standard IFRS 18, which replaces current IAS 1 Presentation of Financial Statements will be effective from 1 January 2027. It will be applied retrospectively and available for early adoption.
IFRS 18 aims to deliver more consistent, comparable and transparent information to investors. The way companies present their results on the face of the the income statement and disclose information in the notes to the financial statements will change – this includes disclosures of certain measures (management performance measures) – which will now form part of the audited financial statements.
The main changes will be the introduction of a more structured income statement and, in particular, the newly defined "operating profit" subtotal (investing and financing activities are now specifically excluded) and a requirement for all income and expenses to be allocated between three new distinct categories based on the company's main business activities. IFRS 18 also requires some measures to be disclosed in the financial statements to explain a company's financial performance and introduces a narrow definition for “management performance measures”. Finally, the new standard provides guidance on the grouping of information in the financial statements - whether the information is included in the primary financial statements or is further disaggregated in the notes. Companies are also discouraged from labelling items as "other”.