IFRS 18: are you prepared for implementation?

The introduction of IFRS 18 Presentation and Disclosure in Financial Statements (effective for accounting periods beginning on or after 1 January 2027) will change how businesses present and explain results. It could include changes to the presentation of key metrics used by management, investors and lenders, so businesses should be aware that there could be implications beyond statutory reporting.

Key considerations

When your business applies IFRS 18, you should expect changes to:

Statement of profit or loss structure

IFRS 18 introduces mandatory totals and sub-totals (such as operating profit) within the statement of profit or loss, and requires all income and expenses to be classified into five defined categories. These categories are operating, investing, financing, income taxes and discontinued operations and they are intended to improve comparability between entities. This aligns more closely with existing categories in the statement of cash flows. Applying these categories will require judgment, and you will need to ensure judgments are applied consistently and supported by appropriate analysis.

Management performance measures (MPMs)

If your business reports adjusted or alternative performance measures to explain your results, including public communications outside the financial statements, IFRS 18 will require a single note which will collate additional details on all MPMs. The note will need to include a definition of the MPM, why it’s used and a reconciliation to the closest IFRS-specified subtotal.

Aggregation and disaggregation

Enhanced guidance may require you to revisit existing line items and disclosures across your financial statements and notes.

Wider implications for reporting and governance

IFRS 18 is a presentation standard, but its impact will extend beyond the financial statements. You may need to consider:

• how internal management reporting aligns with external financial reporting;
• if performance measures used internally remain appropriate; and
• how results and performance trends are explained to stakeholders.

Early preparation is advised

IFRS 18 is effective for accounting periods beginning on or after 1 January 2027. It must be applied retrospectively, with comparative information restated. This may require additional analysis and reconciliation work, placing pressure on finance teams. Businesses are advised to:

• review current profit or loss structures;
• identify management performance measures; and
• assess the impact on systems, processes and controls.

How we can help

We’re helping businesses understand the implications of IFRS 18 and prepare for implementation. Our support includes impact assessments, reviews of management performance measures, and advice on transition and disclosure requirements.

If you would like to discuss how IFRS 18 may affect your business, please contact our team.