New standard for presentation and disclosures in financial statements

IFRS 18: New regulations, consequences, implementation

Personen, die Finanzdaten, Finanzfinanzierungen oder Buchhaltungsstatistiken überprüfen
  • Article
  • 3 minute read
  • 31 May 2024

On 9 April 2024, the International Accounting Standard Board (IASB) published the new accounting standard IFRS 18 – Presentation and Disclosure in Financial Statements. IFRS 18 replaces the previous standard IAS 1 – Presentation of Financial Statements. It aims to improve the presentation of financial information and make financial statements more transparent and easier to compare.

The application of IFRS 18 will be mandatory for financial years beginning on or after 1 January 2027 and for the respective comparative period 2026. What significant changes does the standard entail? And what requirements do you need to prepare for?

The added value of our services

  • Compliance with regulatory requirements: We support you in reliably fulfilling all the new requirements of IFRS 18.
  • Quick initial indication: Our AI-driven tool provides you with a first indication of the changes in the statement of profit and loss.
  • Integrated project approach: With our integrated project approach, we provide you with comprehensive support – from technical impact analysis to implementation in your IT landscape and processes.
  • Modern tools and systems: We use the latest technologies to guarantee an efficient changeover.

Your expert for questions

Verena Glutting, Director bei PwC Deutschland

Verena Glutting
Director, Financial Reporting at PwC Deutschland
Phone: +49 171 7614784

From analysis to implementation

Two new mandatory subtotals

What are the main requirements of the new IFRS 18 standard? It introduces two mandatory subtotals in the statement of profit and loss: operating profit or loss and profit or loss before financing and income taxes. These subtotals are based on the classification of income and expenses into the following categories: operating, investing and financing. In addition, the other categories of income taxes and the result from discontinued operations are also shown. Companies should therefore be sure to analyse how this affects their respective key performance indicators and control parameters.

The requirements of IFRS 18 also introduce additional disclosures in the notes, one of which relates to management-defined performance measures (MPMs). These are performance indicators communicated publicly by management outside the financial statements that are not specified by IFRS accounting standards.

Company-specific analysis required

It is therefore clear that the implementation of IFRS 18 requires a holistic approach. Companies have to analyse the extent to which they need to change processes and IT systems. As the classification of income and expenses depends on the main business activity, a company-specific analysis must show how IFRS 18 will affect the company's most important stakeholders.

Grafik: IFRS 18 Implikationen

Any questions?

Contact our experts

Indicative effects of IFRS 18 on the profit and loss statement

Companies must analyse in detail the mandatory introduction of subtotals for operating profit or loss and profit or loss before financing and income taxes, as well as the respective classification of income and expenses. In some cases, the classification of income and expenses will change, for example in the case of currency translation effects. This is because IFRS 18 requires these items to be recognised in the same category as the income and expenses that led to the translation differences.

Chart: Changes to the statement of profit or loss

Using AI for the implementation of IFRS 18

IFRS 18 introduces a new structure for the statement of profit and loss. To facilitate implementation, PwC uses AI enabled technology to facilitate the implementation. It uses the information from the annual report to quickly provide an initial indication of what changes the respective company needs to make to the structure and classification of income and expenses in the statement of profit and loss. This analysis serves as the basis for our integrated project approach to refine the strategy for the successful implementation of the new IFRS 18 standard.

women talking during meeting

Webcast series: PwC Accounting and Reporting Talks

The new accounting standard IFRS 18 “Presentation and Disclosure in Financial Statements” was published on 9 April 2024. With the new regulations, the IASB is responding in particular to demands from investors to improve reporting on the performance of companies in IFRS financial statements.

In the latest instalment of our webcast series PwC Accounting and Reporting Talks, we inform you about the key changes to the successor to IAS 1.

Watch now

Follow us

Contact us

Verena Glutting

Verena Glutting

Director, Financial Reporting, PwC Germany

Daniel MacLeod

Daniel MacLeod

Director, Transactions Accounting, PwC Germany

Michael Girlich

Michael Girlich

Senior Manager, Treasury Accounting & Financial Risk Management, PwC Germany