IFRS 18: What companies need to anticipate now
IFRS 18: What companies need to anticipate now
A structuring standard for financial statements
IFRS 18, published on April 19, 2024, will replace IAS 1 for financial years beginning on or after January 1, 2027. This new standard goes far beyond a simple update: it redefines the way financial statements are presented. IFRS 18 introduces a clearer, more structured format, better aligned with management performance.
It will apply to interim financial statements, and early adoption is permitted.
Please note that the official French version is not yet available. The translations used are those of FinHarmony, based on our in-depth analysis of the standard.
Three main categories for greater clarity
IFRS 18 introduces an income statement split into three categories:
Operating: reflecting the entity's main activity.
Investing: including assets that generate a largely independent return.
Financing: includes items relating to financial debts.
Classification depends on the nature of the assets and the entity's principal activity(ies).
The standard also imposes mandatory subtotals, and redefines the presentation of expenses by nature or purpose.
Key news
Removal of certain IAS 7 options: consistency between income statement and cash flow statement becomes essential.
Introduction of MPMs (Management Performance Measures): performance indicators defined by management, now monitored, reconciled and audited.
Strategic reflection on core business: the classification of a line as "operating" or "investing" may change depending on the group's business model.
Case studies, concrete impacts
The standard raises a number of questions:
How should income from cash investments in a banking activity be classified?
Where should capital gains on asset disposals be classified?
What should be done in the event of a change in principal activity or in the scope of consolidation?
IFRS 18 responds to these challenges with a rigorous approach that requires professional judgment and upstream preparatory work.
Why take FinHarmony's IFRS 18 training course?
Entitled "Preparing for the implementation of IFRS 18gives you the keys to :
Understand the practical impact of the standard on the structure of the income statement.
Master the new categories, their definitions and their logic.
Anticipate the impact on the cash flow statement, segment reporting and the notes to the financial statements.
Prepare financial analysts for evolving financial communications.
Identify the projects that need to be launched now to be ready in 2027.
Duration: 1 day | Next session: January 29 or July 7
Training reference: FHIF18
Need customized support?
FinHarmony can organize this in-company training, tailored to your specific issues, case studies and accounting organization.
Contact us at formation@finharmony.net to discuss.