Background

The IASB undertook the primary financial statements project in response to investors' concerns about the comparability and transparency of entities’ performance reporting and took up discussions in the project in April 2016.

It continued discussions through May 2019 with the scope slowly taking shape during that time and (i) a fundamental revision of the statements of financial position, cash flows and changes in equity, (ii) guidance on the content of OCI and timing of recycling, (iii) segment reporting, and (iv) the presentation of discontinued operations being excluded from the scope of the project.

Rather, the Board decided to focus on four main areas:

1. Introduction of defined subtotals and categories in the statement of profit or loss
2. Introduction of requirements to improve aggregation and disaggregation
3. Introduction of disclosures about Management-defined Performance Measures (MPMs) in the notes to the financial statements
4. Targeted improvements to the statement of cash flows by amending IAS 7 Statement of Cash Flows

An exposure draft of a proposed new standard was published on 17 December 2019 whereby related requirements in IAS 1 Presentation of Financial Statements were proposed to be brought forward to the new standard with limited wording changes. Other requirements of IAS 1 were proposed to be moved to IAS 8 and IFRS 7.

The IASB discussed feedback on the exposure draft in December 2020 and January 2021 and redeliberated the proposals from March 2021 to June 2023. The IASB published the new IFRS 18 Presentation and Disclosure in Financial Statements on 9 April 2024.

Scope

IFRS 18 applies to all financial statements that are prepared and presented in accordance with IFRS Accounting Standards.

Overview

The main changes in the new standard compared with the previous requirements in IAS 1 comprise:

• The introduction of categories and defined subtotals in the statement of profit or loss that aim at additional relevant information and provide a structure for the statement of profit or loss that is more comparable between entities. In particular:
  • Items of income and expense are required to be classified into categories in the statement of profit or loss:
    • Operating
    • Investing
    • Financing
    • Income tax
    • Discontinued operations
    Classification differs in some cases for entities that, as a main business activity, provide financing to customers or invest on assets
  • Entities are required to present the following subtotals:
    • operating profit or loss
    • profit or loss before financing and income tax
    • profit or loss
    These subtotals structure the statement of profit or loss into categories, with no requirement to present category headings.
  • The line items listed in IFRS 18 are required to be presented unless doing so reduces how effective the statement of profit or loss is in providing a useful structured summary of the entity’s income and expenses
• The introduction of requirements to improve aggregation and disaggregation that aim at additional relevant information and ensure that material information is not obscured. In particular:
  • IFRS 18 provides guidance on whether information should be in the primary financial statements (whose role is to provide a useful structured summary) or in the notes
  • Entities are required to identify assets, liabilities, equity, income and expenses that arise from individual transactions or other events, and to classify them into groups based on shared characteristics, resulting in line items in the primary financial statements that share at least one characteristic. These groups are then separated based on further dissimilar characteristics, resulting in the separate disclosure of material items in the notes. There may be a need to aggregate immaterial items with dissimilar characteristics to avoid obscuring relevant information. Entities should use a descriptive label or, if that is not possible, provide information in the notes about the composition of such aggregated items.
  • Stricter guidance is introduced on whether the analysis of operating expenses is by nature or by function. The presentation should be in a way that provides the most useful structured summary of operating expenses by considering several factors. Presentation of one or more line items for operating expenses classified by function requires disclosure of amounts for five specified expenses, e.g. depreciation.
• The introduction of disclosures on Management-defined Performance Measures (MPMs) in the notes to the financial statements that aim at transparency and discipline in the use of such measures and disclosures in a single location. In particular:
  • MPMs are defined as subtotals of income and expenses that are used in public communications with users of financial statements outside the financial statements, complement totals or subtotals included in IFRSs, and communicate management’s view of an aspect of an entity’s financial performance.
  • Accompanying disclosures are required to be provided in a single note including:
    • A description of why the MPM provides management’s view of performance
    • A description of how the MPM has been calculated
    • A description of how the measure provides useful information about an entity’s financial performance
    • A reconciliation of the MPM to the most directly comparable subtotal or total specified by IFRSs
    • A statement that the MPM provides management’s view of an aspect of the entity’s financial performance
    • The effect of tax and non-controlling interests separately for each of the differences between the MPM and the most directly comparable subtotal or total specified by IFRSs
    • In cases of a change in how the MPM is calculated, an explanation of the reasons for and the effect of the change

The targeted improvements to IAS 7 aim at improved comparability between entities. The changes include:

• Using the operating profit subtotal as the single starting point for the indirect method of reporting cash flows from operating activities; and
• Removing the presentation alternatives for interest and dividends.

Effective date and transition

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027. The standard is applied retrospectively, with specific transition provisions, and early adoption is permitted.

Additional information

Website of the IFRS Foundation

• Press release
• Video message by the IASB Chair
• One-page quick view of IFRS 18
• Project summary
• Effects analysis
• Feedback statement
• Comparison of requirements in IAS 1 and IFRS 18
• Access to the standard, the illustrative examples, and the basis for conclusions (subscription required)

UK Accounting Plus

• Summary of IFRS 18 Presentation and Disclosures in Financial Statements
• Overview of the project history
• Updated EFRAG endorsement status report
• Need to know newsletter

The registration is open to interested companies and stakeholders. 

A summary of the agenda is set out below:

For more information, including on how to register, please see the event page on the EC website.

The 2022 update indicates that there has been only limited movement in the various practices among the sample of IFIs reviewed. The financial reporting frameworks applied by the IFIs continue to vary, with IFRS Accounting Standards being applied by the majority.

It was also observed that in some financial statements that adopted FAS (the accounting standards issued by the Accounting and Auditing Organization for Islamic Financial Institutions (AAOIFI)), IFRS Accounting Standards were typically applied for transactions that are not accommodated by FAS. However, the reverse was not noted for financial statements that asserted compliance with IFRS Accounting Standards. The study concludes:

This helps demonstrate that IFRS Accounting Standards as global financial reporting standards are generally able to accommodate a wide range of transactions including those related to Islamic finance.

Please click for access to the study on the AOSSG website.

The UKEB’s work is focused on influencing the development of high-quality international accounting standards that endorse the UK public good by ensuring transparency and comparability of financial information thereby sustaining confidence in the UK's capital markets.

The workplan for financial year 2024/25 will see the UKEB maintaining its focus on those aspects of the International Accounting Standards Board's (IASB's) agenda that are of highest priority to UK stakeholders.

The UKEB’s three-year strategy for the period 2022-25 was published in March 2022 following consultation. In the third year of the three-year strategy, the UKEB’s strategic objectives remain unchanged and it will continue to build on the previous year's work in order to achieve its three-year strategy.

The strategic objectives for 2024/25 include:

• influencing the IASB and other global players to help ensure the development of high-quality international accounting standards that promote transparency and comparability of financial information and the smooth functioning of capital markets; 
• assessing all new and amended international accounting standards for adoption in the UK on a timely basis; and
• maintaining a robust operations framework to support its strategic objectives.

The UKEB's 2024/25 budget is contained within the Financial Reporting Council's (FRC's) 2024-25 Plan and Budget which was concurrently published.

The 2024/25 Regulatory Strategy and feedback statement are available from the UKEB website.

ED/2023/5 was published by the IASB in November 2023.

The UKEB supports the IASB’s objectives in developing the Amendments and is broadly supportive of the proposals. Whilst supporting the proposals in the ED, the UKEB highlights the importance of providing clarity and minimising the risk of diversity in accounting practice in this complex area.  As such, the final comment letter sets out a number of observations and recommendations to enhance the proposals which have been identified from analysis and outreach with stakeholders.

The final comment letter and feedback statement are available on the UKEB website.

• New UK GAAP application for reporting periods ending 31 December 2023
• New UK GAAP application for reporting periods ending 30 September 2023
• New UK GAAP application for reporting periods ending 30 June 2023
• New UK GAAP application for reporting periods ending 31 March 2023
• New UK GAAP application for reporting periods ending 31 December 2022
• New UK GAAP application for reporting periods ending 30 September 2022
• New UK GAAP application for reporting periods ending 30 June 2022

The information below reflects developments to 9 May 2024 and will be updated through to 30 June 2024 to reflect new and revised financial and sustainability reporting requirements that need to be considered for financial reporting periods ending on 31 March 2024. For accounts approved after June 2024, please also refer to subsequent versions of this document for any new and revised IFRS Accounting and Sustainability reporting Standards that have additionally been issued that might require disclosure in the accounts under IAS 8:30.  The tables below also cover the sustainability disclosure standards published by the International Sustainability Disclosure Standards Board (ISSB).

A summary of the agenda is set out below:

Agenda papers for the meeting are available on the IFRS Foundation website.

The topics discussed at the meeting included:

• General IASB and IFRS Interpretations Committee update
  • Update on climate-related and other uncertainties in the financial statements
  • Update on Business combinations — Disclosures, goodwill and impairment
  • Other IASB update
  • IFRS Interpretations Committee update
• Financial instruments with characteristics of equity
• ISSB update
  • Update on recent deliberations and discussions of the ISSB

For more information, see the meeting summary on the IFRS Foundation website.

The full agenda for the meeting is summarised below.