Get ready for IFRS 18

Key Highlights of IFRS 18

Statement of Profit or Loss:

• The introduction of two new subtotals: Operating profit or loss, Profit or loss before financing and income taxes.
• Income and expenses are classified into operating, investing, financing, income taxes, and discontinued operations.

Enhanced Disclosures:

• Focus on management-defined performance measures (MPMs), requiring detailed reconciliation and explanations.
• Guidance on aggregation and disaggregation to ensure financial statements provide helpful, structured summaries.

Updated Financial Statement Presentation:

• Operating expenses can now be presented using a hybrid approach of nature and function.
• Improved classification of income and expenses based on the underlying assets or liabilities, ensuring transparency.

Impact on Systems and Processes:

• Organisations may need to overhaul existing financial reporting systems to align with the new classification requirements.
• Early identification of alternative performance measures (APMs) that qualify as MPMs will ease compliance.

Transition Challenges:

• Restating comparative information from 1 January 2026.
• Integration of new requirements into interim financial statements for seamless reporting.

Alignment with Other Standards:

• Amendments to standards like IAS 7, IAS 8, and IAS 34 to support the transition.