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Get ready for the new IFRS presentation and disclosure requirements

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Victor Chan

International Director, Global IFRS Services, Ernst & Young Global Limited

6 minute read 03 Feb 2026
Related topics
IFRS
Assurance

IFRS 18 sets new presentation and disclosure requirements likely to affect most companies reporting under IFRS standards.

In brief

  • IFRS 18 represents a major overhaul of financial statement presentation requiring most IFRS reporters to update the structure of their income statement.
  • Companies must use judgment and technical knowledge to interpret new concepts, reassess classifications, and resolve new accounting issues that may arise.
  • Successful transition to IFRS 18 requires multidisciplinary cooperation on new performance measures and systems.

IFRS 18 Presentation and Disclosure in Financial Statements introduces new requirements for presentation and disclosure in financial statements that will likely impact most, if not all, companies that prepare financial statements in accordance with IFRS accounting standards. Specifically, IFRS 18 requires companies to classify all income and expenses included in the statement of profit or loss into one of five categories, with three of them being new, and to present new mandatory subtotals of “operating profit or loss” and “profit or loss before financing and income tax”. Companies also need to provide disclosures related to management-defined performance measures or MPMs, which are non-GAAP measures, in a single note to the financial statements.

In addition, there is enhanced guidance on the aggregation and disaggregation of information across all the primary financial statements and the corresponding notes to the financial statements. Companies are required to label and describe the items presented or disclosed in the financial statements in a clear way that faithfully represents the characteristics of those items.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027 and the effective date of the standard in a jurisdiction will depend on the regulatory requirement in that jurisdiction. IFRS 18 is to be applied retrospectively for comparative periods.

Some companies are in the advanced stages of implementing the standard. What are some of the lessons learnt so far on the successful execution of the implementation project?

Ensure thorough understanding of the new requirements and concepts

IFRS 18 introduces new requirements and concepts to be applied when classifying income and expenses into one of the five categories, namely, operating, investing, financing, income taxes and discontinued operations. For example, the classification of an income or expense item depends on, among others, the company’s main business activities, a new concept not found in other IFRS accounting standards. Similarly, MPMs constitute a new concept that is different and narrower in scope than non-GAAP measures found in the management discussion and analysis section of the annual report. Throughout IFRS 18, these and other concepts require companies to evaluate the classification of an income or expense in the specific circumstances as they apply to them.

To achieve a high quality outcome, the implementation team needs to be well versed in the standard and capable of exercising judgment throughout the process.

As such, the project plan needs to allow sufficient time for the necessary analysis, which is often a key success factor of the project.

In addition, companies need to allow time and resources for additional accounting issues to be resolved that were not included in the original project plan. For example, some implementation teams have identified additional accounting issues related to the aggregation or disaggregation of financial statement line items during the implementation of IFRS 18.

Refresh communication with investors as part of the implementation project

MPMs are subtotals of income and expenses that, among others, a company uses in public communications, typically investor presentations, press releases and other documents included in the annual or interim report, outside the financial statements. Management uses MPMs to communicate to users of financial statements its view of aspects of the financial performance of the company as a whole.

In conjunction with the implementation project, many companies often review their communication with investors with the objective of overhauling the manner and the content of such communication by including revised or new performance measures. For example, companies may want to remove overlapping or outdated performance measures and introduce new ones that better reflect their current business model and strategic focus.

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Given that investor communication drives what constitutes MPMs and, hence, the disclosure in financial statements, implementation teams will need to fully understand investors' perspectives and take them into account when evaluating their impact under IFRS 18.

 

Include IT, investor relations and legal professionals in implementation teams for effective oversight

Changing the presentation and disclosure in financial statements may also require changes to information systems that collect and summarize financial data. As explained earlier, investor relations professionals will have a key role in understanding investor information needs, especially those related to performance measures and how the company will meet such needs in the revised communication. At the same time, legal professionals need to ensure that the changes will comply with the applicable securities laws. In some cases, in implementing the new presentation and disclosure in financial statements under IFRS 18, companies may need to refine or clarify some of the applicable bank covenants or terms of employee bonus arrangements. With team members drawn from various functions, a company will also need to establish an effective governance structure to facilitate collaboration in the team and provide sufficient oversight to the project. 

 

Given the feedback by companies that have already made significant progress in their implementation projects, it is clear that companies need to plan and execute the project in a timely manner in order to ensure smooth transition when the standard becomes effective. Time is running out for calendar year-end companies that need to apply the standard in 2027 as they will also need to restate the comparatives for 2026.

 

The implementation project for IFRS 18 could derive additional tangible benefits for the companies applying it; key to attaining these benefits is that it is done in conjunction with parallel initiatives to improve the company’s overall investor communication. To achieve this, the implementation team will need members with diverse expertise — in addition to accounting skills — underpinned by an effective governance structure to ensure the project’s success.

Summary

IFRS 18 brings significant changes to presentation and disclosure in financial statements, including new income and expense categories, mandatory subtotals, and management performance measure (MPM) disclosures. Successful implementation requires deep understanding of the new concepts, sufficient time for analysis and issue resolution, and cross-functional collaboration — including IT, investor relations, and legal professionals. Effective planning, strong governance, and refreshed investor communications are key lessons learnt so far in the work to achieve a smooth transition and the potential for improved stakeholder engagement.

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Victor Chan

    About this article

    Photographic portrait of Victor Chan
    Victor Chan
    International Director, Global IFRS Services, Ernst & Young Global Limited
    Develops insights on applying IFRS to emerging accounting issues. Focuses on leases, crypto-assets, investment property and latest standard-setting activities. Enjoys relaxing with family.
    Related topics
    IFRS
    Assurance

    EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.