IFRS 18 Presentation and Disclosure in Financial Statements

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. 

IFRS 18 sets out overall requirements for the presentation and disclosure in financial statements. It requires an entity to present a complete set of financial statements at least annually, with comparative amounts for the preceding year (including comparative amounts in the notes). It replaces IAS 1 Presentation of Financial Statements. The IASB did not reconsider all aspects of IAS 1 when developing IFRS 18, but instead focused on the statement of profit or loss. The IASB retained some paragraphs from IAS 1 in IFRS 18 and moved some paragraphs from IAS 1 to IAS 8 Basis of Preparation of Financial Statements and IFRS 7 Financial Instruments: Disclosures.   

IFRS 18 aims to improve financial reporting by: 

• requiring an entity to present two new defined subtotals in the statement of profit or loss—operating profit and profit before financing and income taxes. 
• requiring an entity to disclose management-defined performance measures—subtotals of income and expenses not specified by IFRS Accounting Standards that are used in public communications to communicate management’s view of an aspect of a company’s financial performance; and 
• adding new principles for aggregation and disaggregation of items. 

In April 2001 the International Accounting Standards Board (IASB) adopted IAS 1 Presentation of Financial Statements, which had originally been issued by the International Accounting Standards Committee in September 1997. IAS 1 replaced IAS 1 Disclosure of Accounting Policies (issued in 1975), IAS 5 Information to be Disclosed in Financial Statements (originally approved in 1977) and IAS 13 Presentation of Current Assets and Current Liabilities (approved in 1979). 

In December 2003 the IASB issued a revised IAS 1 as part of its initial agenda of technical projects. The IASB issued an amended IAS 1 in September 2007, which included an amendment to the presentation of owner changes in equity and comprehensive income and a change in terminology in the titles of financial statements. In June 2011 the IASB amended IAS 1 to improve how items of other comprehensive income should be presented.

In December 2014 IAS 1 was amended by Disclosure Initiative (Amendments to IAS 1), which addressed concerns expressed about some of the existing presentation and disclosure requirements in IAS 1 and ensured that entities are able to use judgement when applying some of the existing requirements for presentation and disclosure and clarified the requirements in paragraph 82A of IAS 1 which are included in paragraphs 88–89 of IFRS 18.

In October 2018 the IASB issued Definition of Material (Amendments to IAS 1 and IAS 8). This amendment clarified the definition of material and how it should be applied by (a) including in the definition guidance that until now has featured elsewhere in IFRS Accounting Standards; (b) improving the explanations accompanying the definition; and (c) ensuring that the definition of material is consistent across all IFRS Accounting Standards. This amendment is included in Appendix A and paragraphs B1–B5 of IFRS 18.

In January 2020 the IASB issued Classification of Liabilities as Current or Non-current (Amendments to IAS 1). This clarified the criterion in IAS 1 for classifying a liability as non-current: the requirement for an entity to have the right to defer settlement of the liability for at least twelve months after the reporting period. These amendments are included in paragraphs 101, B99, B101, B102, B104, B105, B107 and B108 of IFRS 18.

In July 2020 the IASB issued Classification of Liabilities as Current or Non-current—Deferral of Effective Date which deferred the mandatory effective date of amendments to IAS 1 Classification of Liabilities as Current or Non-current to annual reporting periods beginning on or after 1 January 2023.

In February 2021 the IASB issued Disclosure of Accounting Policies which amended IAS 1 and IFRS Practice Statement 2 Making Materiality Judgements. The amendment amended IAS 1 to replace the requirement for entities to disclose their significant accounting policies with the requirement to disclose their material accounting policy information. The amendments are included in paragraph B112 of IFRS 18 and paragraphs 27A–27G in IAS 8 Basis of Preparation of Financial Statements.

In October 2022, the IASB issued Non-current Liabilities with Covenants. The amendments improved the information an entity provides when its right to defer settlement of a liability for at least twelve months is subject to compliance with covenants. The amendments also responded to stakeholders’ concerns about the classification of such a liability as current or non-current. These amendments are included in paragraphs B99, B100, B102 and B106 of IFRS 18.

In April 2024, the IASB issued IFRS 18 Presentation and Disclosure in Financial Statements. IFRS 18 sets out overall requirements for the presentation and disclosure in financial statements. The IASB did not reconsider all aspects of IAS 1 when developing IFRS 18, but instead focused on the statement of profit or loss. The IASB retained some paragraphs from IAS 1 in IFRS 18 and moved some paragraphs from IAS 1 to IAS 8 and IFRS 7 Financial Instruments: Disclosures.

Other Standards have made minor consequential amendments to IFRS 18, including IFRS 19 Subsidiaries without Public Accountability: Disclosures (issued in May 2024).