IFRS 18 Redefines Financial Statement Presentation: What Every Accountant Must Know

The International Accounting Standards Board (IASB) issued IFRS 18 Presentation and Disclosure in Financial Statements in April 2024, replacing IAS 1 — marking the most fundamental redesign of financial statement presentation in decades. Entities must apply IFRS 18 for annual periods beginning on or after 1 January 2027. Comparative figures are required.

IFRS 18 fundamentally restructures the statement of profit or loss by requiring all companies to classify income and expenses into five defined categories: Operating, Investing, Financing, Income Tax, and Discontinued Operations. Furthermore, the standard mandates two new subtotals — Operating Profit and Profit Before Financing and Income Tax. This creates a more disciplined and comparable presentation across global entities.

Key Changes Under IFRS 18

■  Three new mandatory income statement categories replace the prior flexible structure.

■  Two required subtotals: Operating Profit and Profit Before Financing and Income Tax.

■  Management-Defined Performance Measures (MPMs) must now appear within the financial statements themselves. They must also be reconciled to IFRS-defined figures — ending unaudited commentary buried in narrative reports.

■  Enhanced guidance on aggregation, labelling, and location of items across primary statements and notes.

For accountants and auditors operating in the Eurasian region, IFRS 18 represents a critical transition. Early adoption is permitted and encouraged for entities seeking to align with leading global practice before the mandatory effective date. National standard-setters in multiple CIS jurisdictions are actively monitoring the IASB’s endorsement process.