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Enhanced IFRS Accounting Standard boosts financial performance analysis.

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New IFRS Accounting Standard to aid analysis | ICAEW

TLDR:

– New IFRS standard, IFRS 18, to aid financial analysis

– Introduces new subtotals in financial statements, new disclosure requirements, and guidance on grouping information

Key Elements:

On 9 April 2024, the International Accounting Standards Board (IASB) issued IFRS 18 Presentation and Disclosure in Financial Statements (IFRS 18), which aims to enhance transparency and comparability in financial reporting.

IFRS 18 introduces new subtotals in the statement of profit or loss, including operating, investing, and financing categories, along with required subtotals like ‘operating profit’ and ‘profit before financing and income taxes’. This will help standardize financial performance reporting across companies.

The standard also requires companies to disclose management-defined performance measures (MPMs) in their financial statements, providing clarity and comparability in how companies report their performance metrics.

Enhanced guidance on grouping of information in financial statements is also introduced, encouraging companies to present information in a structured and meaningful way, either in the primary financial statements or disclosed in the notes.

IFRS 18 is effective from 1 January 2027, with the option for early adoption, and companies are encouraged to start preparing by training staff, reviewing internal processes, and considering how reported information will change.

These changes aim to give investors better insight into companies’ financial performance, aiding in better investment decision-making.


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