The IASB has released IFRS 18, a new standard focusing on updates to financial statement presentation and disclosure, particularly regarding the statement of profit or loss.
Key aspects of IFRS 18 include structured categories for income and expenses, disclosure requirements for management-defined performance measures, and improved principles on aggregation and disaggregation. This standard replaces IAS 1, retaining many existing principles with limited changes.
While it doesn’t affect recognition or measurement, it may alter what entities report as ‘operating profit or loss’. Effective from reporting periods starting on or after January 1, 2027, IFRS 18 necessitates system and process adjustments for compliance, with specific emphasis on clear disclosure of management-defined performance measures and adherence to revised principles of aggregation and disaggregation.
All entities under IFRS standards will be impacted, requiring retrospective application and reconciliation for comparative information. Operational challenges associated with these changes should be addressed promptly, with auditors possibly facing extensive procedures to ensure completeness in identifying management-defined performance measures.
(Illustrative reporting format can be downloaded through the below link)
IFRS18 – General layout (Statement of Profit and Loss)
