IFRS 18 Presentation and Disclosure in Financial Statements

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IFRS 18 introduces a comprehensive framework for presenting and disclosing financial statements, improving consistency, comparability, and transparency of reported performance. We help organisations prepare for IFRS 18 by reviewing reporting structures, systems, and disclosures to ensure compliance while maintaining clear and meaningful performance communication.

Overview and summary of IFRS 18

IFRS 18 replaces IAS 1 and represents the most significant change to financial statement presentation in over 20 years. The standard is designed to make financial statements easier to understand and more comparable by providing clear guidance on how income, expenses, and certain performance metrics are presented. Key features include a structured approach to the statement of profit or loss, mandatory subtotals to improve consistency, and formal recognition of Management-Defined Performance Measures (MPMs). The standard also provides guidance on aggregation and disaggregation, ensuring material information is presented clearly.

Effective date and transition

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with retrospective application required. 

For entities with a December year-end: 

  • 2027 will be the first annual reporting period under IFRS 18 
  • 2026 will need to be restated as the comparative period 

 
Importantly, some IFRS 18 requirements also apply to interim financial reports prepared under IAS 34. This means that for calendar year-end entities, the new presentation and disclosure requirements will apply from the first interim reporting period in 2027 (e.g., 30 June 2027 half-year or Q1 2027 quarterly reports). Comparative interim information presented in 2027 will also need to reflect the new requirements. 

Key areas of focus 

The introduction of IFRS 18 may affect how organisations report results and communicate performance. Areas that typically require careful consideration include: 

Statement of profit or loss 

All income and expenses must now be classified under a clear framework (Investing, Financing, Operating, Income taxes, and Discontinued operations). Existing classifications, particularly for interest, foreign exchange, fair value adjustments, and investment income, will need review. 

Management-Defined Performance Measures (MPMs) 

Under IFRS 18, certain performance metrics used internally by management, like adjusted profit or EBITDA, must be disclosed and reconciled to the official IFRS totals, with a clear explanation of their relevance to users of the financial statements. 

Presentation and disclosures 

The standard introduces principles for aggregation and disaggregation to ensure line items and notes are clear, transparent, and focused on material information. 

Consequential updates 

IFRS 18 introduces consequential changes to standards such as IAS 7 (Statement of Cash Flows) and IAS 33 (Earnings per Share). 

Common challenges 

Implementing IFRS 18 can have practical and commercial impacts, including changes to reported operating results, performance metrics used in remuneration schemes, debt covenant calculations, and analyst models. Organisations may also need to adjust their chart of accounts, reporting systems, and investor communications. 

IFRS 18 insights and publications 

The following guides provide useful information and advice on IFRS 18: 

How we can help with IFRS 18 

IFRS 18 is not merely a presentation update. It may affect: 

  • Reported operating results 
  • Performance metrics used in remuneration schemes 
  • Debt covenant calculations 
  • Analyst models 
  • Investor communications 
  • Systems and chart of accounts structures 

We can help you prepare for and implement IFRS 18. Timely preparation will help avoid mistakes and nasty surprises. You can make an enquiry using the form on this page or just get in touch with one of your key contacts.

Your Key Contact

Ollie Chinneck

Ollie Chinneck

Partner, External Audit - Technology and Gaming
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Rachel Turner

Rachel Turner

Partner, Financial Reporting Advisory
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