The International Accounting Standards Board (IASB) introduced IFRS 18 – Presentation and Disclosure in Financial Statements on April 9, 2024, marking a pivotal advancement in financial reporting standards. This new standard supersedes IAS 1, aiming to enhance the clarity and comparability of financial statements across diverse industries.
Key Highlights of IFRS 18:
- Structured Statement of Profit or Loss: IFRS 18 mandates a defined structure for the statement of profit or loss, introducing categories and required subtotals such as ‘operating profit or loss’ and ‘profit or loss before financing and income taxes.’ This structured approach reduces diversity in reporting and facilitates better comparisons between companies.
- Management-Defined Performance Measures (MPMs): The standard requires entities to disclose MPMs in a single note, providing reconciliations to IFRS-defined subtotals and explanations of why these measures are reported. This enhances transparency and allows users to understand management’s perspective on financial performance.
- Enhanced Aggregation and Disaggregation: IFRS 18 sets out requirements to help companies determine whether information about items should be presented in the primary financial statements or in the notes, providing principles for determining the level of detail needed for the information. This ensures that financial statements offer a useful structured summary of an entity’s recognized assets, liabilities, equity, income, expenses, and cash flows.
For a comprehensive understanding of IFRS 18 and its implications on financial reporting, we invite you to download our detailed PDF guide. This resource delves into the standard’s requirements, offering valuable insights for professionals aiming to align with the latest financial reporting practices.
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