Preparing for IFRS 18: What finance teams need to do before 2027

While many discussions around IFRS 18 focus on the technical requirements, finance teams should be asking a different question: what do we need to do now to prepare?

The answer goes beyond accounting policies. Successful implementation will require organisations to review their reporting processes, financial statement structures, performance metrics and supporting technology.

What is changing under IFRS 18?

IFRS 18 introduces new requirements designed to improve the consistency and comparability of financial reporting.

Some of the most notable changes include:

• New mandatory subtotals in the statement of profit or loss, including Operating Profit and Profit Before Financing and Income Taxes

• Additional disclosure requirements for Management-Defined Performance Measures — specifically, subtotals of income and expenses (not cash flow measures or balance sheet subtotals) that are used in public communications outside the financial statements to reflect management’s view of financial performance. Under IFRS 18, these must be disclosed in the financial statements, reconciled to the nearest IFRS-defined subtotal, and are subject to audit

• Enhanced guidance on the aggregation and disaggregation of financial information

• Greater consistency in how financial performance is presented across organisations

• Changes to the statement of cash flows, including a requirement to use operating profit (rather than profit before tax) as the starting point under the indirect method, and the removal of the option to classify interest and dividends received or paid in either operating or financing cash flows

Although these changes do not alter the underlying recognition and measurement requirements of IFRS Accounting Standards, they will affect how information is presented and communicated to stakeholders.

Why preparation should start now

While the effective date may seem some way off, organisations should avoid leaving preparations until the last minute.

Like many major accounting standard updates, IFRS 18 requires retrospective application, meaning comparative information will need to be presented under the new framework. This can create significant challenges if the necessary data, reporting structures and processes are not in place early enough.

For many finance teams, implementation is likely to involve more than updating financial statement templates.

Four areas finance teams should review

1. Financial statement presentation

Organisations should assess how current profit and loss statements align with the new IFRS 18 structure. The standard introduces five defined categories for classifying income and expenses: operating, investing, financing, income taxes, and discontinued operations. All items must be allocated to one of these categories, which replaces the flexible structure previously permitted under IAS 1.

Understanding where existing line items and subtotals fit within the new presentation requirements will help identify potential changes well ahead of the first reporting period.

2. Performance measures and reporting metrics

Many organisations report alternative or adjusted performance measures alongside statutory results.

IFRS 18 introduces additional disclosure requirements around these metrics, meaning finance teams should review which measures are used, how they are calculated and whether supporting documentation is sufficient.

3. Data collection and reporting processes

The new disclosure requirements may require information that is not currently captured in a structured or consistent way.

Early assessment can help identify gaps in data collection processes and avoid manual workarounds closer to implementation.

4. Technology and workflow readiness

As reporting requirements become more complex, technology plays an increasingly important role in maintaining efficiency and compliance.

Finance teams should evaluate whether their current reporting tools can support new disclosures, comparative reporting requirements and evolving regulatory expectations without increasing manual effort.

For organisations looking to modernise their financial reporting processes, our on-demand webinar, Transform your financial reporting: work smarter with Caseware Financials, explores how cloud-based financial statement preparation can help streamline workflows, improve collaboration and support compliance with evolving reporting requirements.

Turning compliance into an opportunity

Although IFRS 18 introduces additional reporting requirements, it also presents an opportunity for organisations to modernise their financial reporting processes.

Many finance teams are using upcoming regulatory changes as a catalyst to review existing workflows, reduce manual tasks and improve the consistency of financial statement production.

Solutions such as Caseware Financials can help organisations manage changing reporting requirements, automate financial statement preparation and streamline disclosure management — making it easier to adapt as standards evolve.

Looking beyond IFRS 18? Watch our on-demand webinar, UK accounts reform: Latest developments and practical implications, for practical insights into evolving reporting requirements, digital filing and regulatory change.