IFRS 18

IFRS 18 Presentation and Disclosure in Financial Statements

Timeline

IFRS 18 Presentation and Disclosure in Financial Statements was published by the International Accounting Standards Board (IASB) on 9 April 2024. IFRS 18 will be effective for annual reporting periods beginning on or after 1 January 2027 with earlier application permitted.

Background

IFRS 18 includes new requirements for presentation and disclosure in the financial statements, with a focus on the income statement. The IASB developed these requirements in its Primary Financial Statements (PFS) project. The IASB undertook this project in response to investors' concerns about the comparability and transparency of companies’ performance reporting.

In December 2019, the IASB published the Exposure Draft ED/2019/7 General Presentation and Disclosures (ED). The UKEB Secretariat response to the ED was submitted in September 2020. The UKEB Secretariat’s Feedback Statement (published in October 2020) summarises the outreach work undertaken, stakeholder views, and the final position on the proposals in the ED.

Refer to this project webpage for details of the UKEB’s influencing project on the ED. 

Main requirements in IFRS 18

IFRS 18 is expected to:

• require presentation of two new defined subtotals in the income statement—operating profit and profit before financing and income taxes—which are expected to improve comparability among companies by creating a consistent structure for the income statement.
• require disclosure of management-defined performance measures (MPMs)—subtotals of income and expenses not specified by IFRS Accounting Standards that are used in public communications to communicate management’s view of an aspect of a company’s financial performance. A reconciliation between the MPMs and the most directly comparable totals or subtotals specified by IFRS Accounting Standards is also required to provide transparency on the entity-specific performance measures.
• enhance the general and specific requirements for aggregation and disaggregation to help a company to provide useful information. The specific requirements include those for disaggregation of ‘other’ balances, presentation of operating expenses in the income statement and disclosure of specified operating expenses by nature included in each function line item.
• require limited changes to IAS 7 Statement of Cash Flows to improve comparability by specifying a consistent starting point for the indirect method of reporting cash flows from operating activities and eliminating options for the classification of interest and dividend cash flows.

UKEB outreach

Educational Video on IFRS 18

We have published a series of webcasts explaining the main requirements of IFRS 18.

• IFRS 18 Presentation and Disclosure in Financial Statements Webcast - Full version
• Topic 1 Requirements for new categories and subtotals in the income statement
• Topic 2 Management-defined performance measures
• Topic 3 Aggregation and disaggregation of information
• Topic 4 Limited changes to IAS 7 Statement of Cash Flows

Educational and Outreach Webinar on IFRS 18

The UKEB held a webinar on Monday 29 July 2024 to discuss the key requirements of IFRS 18 Presentation and Disclosure in Financial Statements and its implications. This event featured a presentation by IASB Member Nick Anderson on the main requirements of IFRS 18 and a discussion of the key issues by a panel of preparers and a user of accounts. The UKEB also shared the timeline and planned activities for its endorsement work of IFRS 18. 

A recording of this webinar is available here.  

The slide deck used for this webinar is also available and can be found here.

Preparer and user surveys

The UKEB has launched surveys for UK users and preparers of financial statements to gather their views on IFRS 18. The surveys have been closed on 30 September 2024. The information collected from this survey is intended to help the UKEB assess the impact of IFRS 18 on UK organisations adopting the Standard if it were adopted for use in the UK. Responses will be used by the UKEB as evidence for the assessment of the endorsement and adoption of IFRS 18.

Other planned outreach activities

More detailed information on other planned outreach activities will be published in due course. If you would like to contribute to outreach work on this project, please email IFRS18@endorsement-board.uk.

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UKEB meetings

Meetings related to the endorsement of IFRS 18 are as follows:

• 23 February 2024: Project Initiation Plan
• 28 March 2024: Updated Project Initiation Plan