IASB publishes IFRS 18

The primary objective of IFRS 18 is to improve the assessment of a company's performance by increasing comparability in presentation.

Therefore, the statement of profit or loss specifies which income and expense are to be allocated to the following newly defined categories:

• operating category,
  
• investment category,
• financing category.

Therefore, disclosure options no longer apply. Subtotals must be presented after the first two categories.

These principles are to be applied in the case of a non-specified main business activity. In the case of a specified main business activity (providing financing to customers, investing in particular types of assets), the requirements vary in detail.

In the cash flow statement, the disclosure options for dividends and interest received and paid are eliminated accordingly and the operating profit or loss subtotal is defined as the starting point when applying the indirect method.

A further aim of IFRS 18 is to provide useful company-specific information. Therefore, principles are made as to whether and how disclosures on so-called MPMs (management-defined performance measures) are to be made in the notes. In addition, the aggregation and disaggregation principles according to which disclosures are to be made in the notes are newly regulated.

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027. Early adoption is permitted. EU endorsement is still pending.

In the year of initial adoption, the previous year's comparative information must be restated. A reconciliation must be presented in the notes for the restatement of the comparatives in the statement of profit or loss.

IFRS 18 will replace the current IAS 1 Presentation of Financial Statements and will amend IAS 7 Statement of Cash Flows.

The press release is available for download on the IASB website.