IFRS 18 – Presentation and Disclosure in Financial Statements: Are You Ready for 2027?

IFRS 18 replaces IAS 1 as the standard governing presentation and disclosure in financial statements, and it changes more than the cosmetics of the income statement. The standard introduces defined subtotals — operating profit, profit before financing and income tax, and profit or loss — along with mandatory categorisation of income and expenses into operating, investing and financing classifications. For most businesses, this means the income statement will look meaningfully different from the version investors are used to.

The standard also introduces management performance measures as a formally defined, disclosed concept, which brings many of the adjusted or non-GAAP metrics companies already report into the audited financial statements — with reconciliation and disclosure requirements attached. Businesses that have historically presented adjusted EBITDA or similar measures outside the statutory accounts will need to decide whether those measures now qualify as management performance measures under the new definition, and if so, build the reconciliation and governance around them.

Although the mandatory effective date is for annual periods beginning on or after 1 January 2027, the comparative period requirement means the real transition work needs to happen during 2026. Finance teams need to remap their general ledger and reporting structures to the new categorisation, agree which metrics constitute management performance measures, and test the new statement formats well before the first mandatory filing.

Key actions to take now

• Map current income statement line items to the new operating/investing/financing categories
• Identify which adjusted metrics will qualify as management performance measures
• Build a 2026 comparative-period readiness plan, not a 2027 one
• Brief the audit committee early — disclosure governance needs sign-off before go-live