IFRS 18 Presentation and Disclosure in Financial Statements Set to Replace IAS 1

A new accounting standard designed to meet investor demand for better, more comparable information about companies’ financial performance, has been published by the International Accounting Standards Board (IASB).

IFRS 18 Presentation and Disclosure in Financial Statements will replace IAS 1 Presentation of Financial Statements. Its will affect all entities reporting under IFRS Accounting Standards.

The new standard will kick in for reporting periods beginning on or after 1 January 2027, with earlier application permitted. The adoption of IFRS 18 for use in the UK is subject to endorsement by the UK Endorsement Board (UKEB), expected in Q4 2025 at the earliest.

In addition to existing requirements brought forward from IAS 1, IFRS 18 contains three key new requirements, focusing on the statement of profit or loss (SOPL) and disclosures around financial performance. They are:

• The introduction of two new defined subtotals to be presented in the SOPL – operating profit or loss and profit or loss before financing and income tax.

• The additional disclosures on specified alternative performance measures, termed management-defined performance measures (MPMs). Subtotals of income and expenses used in public communications to communicate management’s view of financial performance, such as adjusted operating profit, will be in scope of this new requirement.

• Enhanced requirements on the grouping of information in the financial statements, namely aggregation and disaggregation. This includes requirements for presenting and disclosing operating expenses, plus guidance to determine if information should be included in the primary financial statements or disclosed in the notes.

Andreas Barckow, IASB Chair, commented: “IFRS 18 represents the most significant change to companies’ presentation of financial performance since IFRS Accounting Standards were introduced more than 20 years ago. It will give investors better information about companies’ financial performance and consistent anchor points for their analysis.” Support to implement IFRS 18 will be available via the IFRS 18 implementation webpage.

“IFRS 18 represents the most significant change to companies’ presentation of financial performance since IFRS Accounting Standards were introduced more than 20 years ago."

Andreas Barckow, IASB Chair