IFRS 18 Presentation and disclosure in financial statements

Responding to investor calls for more relevant and comparable information, IFRS 18 Presentation and Disclosure in Financial Statements aims to provide greater consistency in presentation of financial statements, and more disaggregated information.

Replacing IAS 1 Presentation of Financial Statements, IFRS 18 will change how organizations present their results on the face of the income statement and disclose information in the notes to the financial statements. This includes disclosure of certain ‘non-GAAP’ measures – management-defined performance measures (MPMs) – which will now form part of the audited financial statements.

IFRS 18 adoption will have downstream effects that extend beyond finance. Organizations should consider the following as they determine the extent to which they may be impacted:

• New judgements and assessments, such as assessment of what the organizations main business activities are, which income and expenses belong in each category, and more
• New or updated processes and systems, including changes to charts of accounts, updates to transaction reporting systems, consolidation processes, and more Introduction of the new Canadian Entrepreneurs’ Incentive
• Arrangements linked to financial performance should be reviewed and possibly amended, along with underlying KPI targets and budgeting, performance reporting, and forecasting processes
• Communication to investors and other stakeholders, including early communication on how reported information will change, revisiting non-GAAP measures discussion in the front-half of annual report, and more.

The standard will be effective from January 1, 2027 and early adoption is permitted. This means for organizations with December year-ends, any changes to systems, processes and controls should be in place from January 1, 2026. Additionally, organizations will be required to present the new income statement categories and subtotals in the interim financial statements in the first year of applying IFRS 18.

Now is the time to prepare. Explore our materials to learn more about IFRS 18 and contact our team to discuss the potential impact on your organization and understand the evolving proposals.

KPMG Canada’s professionals are ready to support your organization with the transition to IFRS 18. Our team of technical accountants, financial reporting specialists and systems transformation professionals bring deep experience in accounting standard changes and knowledge applicable at each stage of the transition process.

Workshops to explain the new requirements and highlight key differences to your current reporting

Design how you will apply the new standard, including decisions on fundamental judgements and exploring strategies for how existing systems, processes and controls could support your future reporting requirements

Impact assessment designed to capture and prioritize the impacts to your processes, people and systems, used to inform your roadmap to transition

Transformation executing on each stage of the roadmap, from project mobilization to the effective date and beyond

Reporting your new income statement format and/or note disclosures with drafts prepared or reviewed by technical accounting and financial reporting professionals