IASB Issues IFRS 18 Presentation and Disclosure in Financial Statements


In April 2024, the International Accounting Standards Board (IASB) issued IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 replaces IAS 1 Presentation of Financial Statements and is effective from 1 January 2027 but early application is permitted. All other requirements in IAS 1 which have not been changed have been transferred to IFRS 18 and other Standards. The introduction of IFRS 18 has also led to issuance of amendments in other IFRS Accounting Standards including on IAS 7 Statement of Cash Flows.


IFRS 18 aims to improve the communication by companies in their financial statements especially on information about financial performance in the statement of profit or loss.

It is a response to stakeholders’ feedback that statements of profit or loss vary in structure and content hindering comparability and making it difficult for investors’ analysis. Further, there has been a concern that measures defined by management are useful to investors, but companies may not elaborate how the measures are calculated and the reasons for their use.  Investors are also concerned that some companies don’t provide enough detailed grouped information (lack of appropriate aggregation and disaggregation in the financial statements) and there is obscuring of important information.

The standard is expected to contribute to better information enabling investors to make better decisions thus contribute to efficient and resilient capital markets.

Key Requirements

IFRS 18 introduces three key requirements:

  1. Presentation of New Defined Subtotals in the Statement of Profit or Loss

Under this, companies should report:

-Operating Profit; and

-Profit before financing and income taxes

Application of the new subtotals requires income and expenses to be classified into three new defined categories i.e. operating, investing and financing to ensure a consistent structure to the Statement of Profit or Loss.

The new subtotals will provide a consistent structure for the statement of profit or loss thus improve comparability. The changes will not affect how companies measure their financial performance and the overall profit figure.

  1. Disclosure of Management-defined Performance Measures

Several companies report alternative performance measures. When these measures meet the definition of management-defined performance measures (MPMs), the standard requires companies to make disclosure of reconciliations between those measures and subtotals listed in IFRS 18 or totals or subtotals required by IFRS Accounting Standards.

MPMs are subtotals of income and expenses used by companies to communicate management view of areas of the financial performance of the company as a whole. For instance Adjusted Profit or Adjusted EBITDA.

  1. Enhanced Requirements for Grouping (aggregation and disaggregation ) of Information

 IFRS 18 provides requirements to assist companies establish whether information about items should be placed in the primary financial statements or in the notes and sets principles for determining the level of detail required for the information. The standard also provides requirements for the presentation of operating expenses in the statement of profit or loss and disclosure of certain expenses by nature. It also provides further information on disclosure requirement on items grouped together and labelled ‘other’.