[Opinion] Navigating IFRS 18 | The New Frontier in Financial Statement Reporting and Presentation

Dr. Garima Bansal – [2024] 161 taxmann.com 469 (Article)

“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.”

Andreas Barckow, IASB Chair

What is the need of IFRS 18?

In order to fulfill investors demand for better and important information regarding company’s financial statements, IASB issued IFRS 18 Presentation and Disclosure in Financial Statements on 09th April, 2024. IFRS18 replaces IAS1 Presentation of Financial Statements which lacked detailed information on classification of income and expenses, subtotals within each classification and aggregation/disaggregation of information. This indeed contributed to diversity in practice among entities. Consequently, investors faced difficulties in analysing and comparing financial performance across different companies and ultimately difficulty in making informed decisions.

Journey of IFRS 18

Figure 1 shows the journey of IFRS 18 that began in April 2016 and ended on April 2024.

The journey of IFRS 18 began in April 2016 when the Board first discussed the project. Following deliberations, in May 2019, it was decided that the next step would be the publication of an exposure draft rather than a discussion paper. Subsequently, on 17 December 2019, the exposure draft, identified as ED/2019/7 General Presentation and Disclosures, was published, inviting comments from stakeholders, with the deadline set for 30 June 2020. Recognising the importance of stakeholder feedback, the comment period on the exposure draft was extended until 30 September 2020, ensuring comprehensive input from the accounting community. Finally, on 9 April 2024, IFRS 18 Presentation and Disclosure in Financial Statements was officially issued. The standard is set to become effective for the first annual IFRS financial statements of entities, starting from periods beginning on or after 1 January 2027.

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