Key facts

IFRS 18 Presentation and Disclosure in Financial Statements is a new accounting standard issued in April 2024 that sets forth the requirements for the presentation and disclosure of information in financial statements.

It replaces IAS 1 and retains much of the existing IAS 1 guidance, but introduces new requirements, the most significant of which are related to:

• Enhanced structure of the statement of profit or loss:
• New classification rules for allocating income and expenses into specific categories (operating, investing, financing, income taxes, discontinued operations) with certain exceptions for entities that invest in assets and/or provide financing to the customers;
• New mandatory subtotals (operating profit, profit before financing and income taxes); and
• New guidance on presenting operating expenses (by nature, by function or both).
• Although it could change what an entity reports as its ‘operating profit or loss’, it will not impact the recognition or measurement of items within the financial statements.
• New disclosures on management-defined measures to enhance transparency and provide investors with a clearer understanding of how MPMs compare with IFRS-defined measures.
• Enhanced principles for aggregation and disaggregation, aiding in the determination of which line items are presented in primary financial statements and what information is disclosed in the notes.

More information about the changes the new standard will bring can be found in our article IASB issued new standard IFRS 18.

Implementation challenges

IFRS 18 requires several judgments and accounting policy choices to be made, which should be considered carefully. These decisions are not made in isolation – they will have cascading effects on subsequent implementation considerations. We will focus on implementation challenges during our autumn webcast and seminars on IFRS 18.

What should entities do now?

It is the optimal time to assess the impact of new requirements before the comparative period begins on 1 January 2026.

We recommend that our clients:

• Do not ignore the complexities that IFRS 18 is likely to introduce during its implementation.
• Familiarise themselves with the detailed requirements of IFRS 18.
• Appoint an IFRS 18 implementation leader or working group.
• Prepare a draft structure for the statement of profit or loss under IFRS 18 rules.
• Determine necessary changes in existing reporting systems and processes.
• Evaluate the need for additional presentation and disclosure enhancements in financial statements, based on the new aggregation and disaggregation requirements.
• Identify MPMs within the scope of IFRS 18 and prepare draft disclosures, including reconciliations.
• Seek support from external advisors if needed.

Searching for more information on IFRS 18?

If you want to get more details, you can find them on the IFRS Foundation webpage containing educational materials, webcasts and webinars and also on the Deloitte’s IAS PLUS webpage containing a summary of the Standard’s requirements.

How can Deloitte support its clients?

• We can deliver tailored workshops or training sessions explaining IFRS 18 requirements
• We can assist in assessing whether the client has any of the specified main businesses
• We can aid in determining the correct classification for each income and expense item
• We can help in understanding and applying specific IFRS 18 guidance for complex areas such as foreign currency differences, derivatives, and hybrid contracts
• We can identify necessary changes in internal reporting systems
• We can assess potential impacts of the revised profit or loss statement on KPIs and other arrangements with links to current IAS 1 profit or loss metrics
• We can prepare a mandatory reconciliation between the presentation of the statement of profit or loss for the comparative period under IAS 1 and its presentation in the first year (or interim period) under IFRS 18.
• We can assist in identifying MPMs and drafting a template disclosure note.

Who to contact?

If you require assistance in understanding any IFRS 18 topics, please contact Tomáš Kachlík, Head of the Accounting Advisory function.