New standard issued! IFRS 18 Presentation and Disclosure in Financial Statements

New standard issued! IFRS 18 Presentation and Disclosure in Financial Statements

• 17 April 2024
• Accounting
• South African Accounting Academy

IFRS 18 replaces IAS 1 Presentation of Financial Statements. It carries forward many requirements from IAS 1 unchanged.

The International Accounting Standards Board (IASB) has completed its work to improve the usefulness of information presented and disclosed in financial statements. The new Standard, IFRS 18 Presentation and Disclosure in Financial Statements, will give investors more transparent and comparable information about companies’ financial performance, thereby enabling better investment decisions.

IFRS 18 introduces 3 sets of new requirements to improve companies’ reporting of financial performance and give investors a better basis for analysing and comparing companies:

1. Improved comparability in the statement of profit or loss (income statement)
2. Enhanced transparency of management-defined performance measures
3. More useful grouping of information in the financial statements

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, but companies can apply it earlier. Changes in companies’ reporting resulting from IFRS 18 will depend on their current reporting practices and IT systems.

IFRS 18 represents the most significant change to companies’ presentation of financial performance since IFRS Accounting Standards were introduced more than 20 years ago. It will give investors better information about companies’ financial performance and consistent anchor points for their analysis.

IFRS 18, the Illustrative Examples (worked examples for aspects of IFRS 18, including flowcharts relating to key requirements in IFRS 18) and the Basis for Conclusions (explanation of the IASB’s considerations in developing the requirements in IFRS 18) are available to IFRS Digital subscribers at https://www.ifrs.org/news-and-events/news/2024/04/new-ifrs-accounting-standard-will-aid-investor-analysis-of-companies-financial-performance/.

Support to implement IFRS 18 will be available via the IFRS 18 implementation webpage. https://www.ifrs.org/content/ifrs/home/supporting-implementation/supporting-materials-by-ifrs-standards/ifrs-18.html

Click here to download a 1-page overview of IFRS18:

https://www.ifrs.org/content/dam/ifrs/project/primary-financial-statements/ifrs-standard/ifrs18-one-page-april2024.pdf

Relevance to Auditors, Independent Reviewers & Accountants:

• As an auditor and independent reviewer, you need to consider your clients’ compliance with accounting standards.
• As an accountant and compiler of financial statements, you need to consider amendments to standards that are issued by the standard-setting bodies, e.g. IASB, IAASB, etc.
• This new IFRS18 will affect all your clients who use IFRS Accounting Standards.

Relevance to Your clients:

• An entity compiling filing financials need to consider amendments to standards that are issued by the standard-setting bodies, e.g. IASB, IAASB, etc.
• This new IFRS18 will affect all companies using IFRS Accounting Standards.

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