IFRS 18 in 2027: a preparation guide for IFRS reporting teams
IFRS 18 replaces IAS 1 for annual reporting periods beginning on or after 1 January 2027. For an entity with a December year-end that first applies IFRS 18 in its 2027 financial statements, the 2026 comparatives are restated too, so the data work starts with figures already in the ledger. Begin by confirming the entity's reporting framework and any local endorsement, then map existing income and expense lines and any adjusted profit measures you publish into the new structure.
Confirm the first reporting period
The IFRS Foundation states that IFRS 18 applies to annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. The test is when the annual period starts, not when a report is issued. Assuming mandatory first application and that IFRS 18 applies locally, a company with a 31 December year-end first applies it to the year starting 1 January 2027, and one with a 30 June year-end to the year starting 1 July 2027 and ending 30 June 2028. Early application would bring the first year forward.
Confirm the framework each entity reports under and any local endorsement requirements. The issue of IFRS 18 does not change UK GAAP, US GAAP or Indian accounting standards. In a group, subsidiaries that report locally under another framework may still need to supply data mapped for the consolidated IFRS statements.
Sources and context, checked :
What changes in the income statement
IFRS 18 introduces defined subtotals, including operating profit and profit before financing and income taxes. It also sets principles for grouping and separating information, which matters for large lines labelled "other".
The Foundation's non-authoritative project summary describes five income-and-expense categories: operating, investing, financing, income taxes and discontinued operations. Special rules apply when investing or providing finance is a main business activity. Check the full standard before accepting a classification.
Sources and context, checked :
Plan the restated comparative year
First application restates prior-year comparatives and affects interim reporting. A calendar-year entity first applying IFRS 18 in 2027 therefore needs its 2026 comparative figures in the new presentation.
That makes 2026 a practical test year. With most of the year already in the ledger, a team can map every income and expense account, find accounts that mix items from different categories, and fix the data before the year-end close rather than reworking it in 2027.
Sources and context, checked :
Identify your management-defined performance measures
Assess each public adjusted-profit subtotal against the standard's definition of a management-defined performance measure. Qualifying measures need a single disclosure note and a reconciliation to the most directly comparable total or subtotal specified by IFRS, including tax and non-controlling-interest effects.
An internal-only "core profit" figure is not automatically in scope. Free cash flow falls outside the definition because it is not a subtotal of income and expenses.
Sources and context, checked :
Build the mapping file
Keep one file that a reviewer can follow from source account to proposed presentation.
| Item | What to record |
|---|---|
| Scope | Reporting framework, local endorsement, first annual period and any early-application decision for each entity |
| Main business activity | Whether the entity invests or provides finance as a main activity, with the reasoning |
| Income and expense lines | Current line, source accounts, proposed category and any open question |
| Comparatives | Prior-period figures to re-present, the data source and the reviewer |
| Public measures | Name, calculation, closest IFRS subtotal, reconciling items and their tax and non-controlling-interest effects |
| Grouping | Aggregated lines that may need to be split or explained |
A task for this quarter
Before the 2026 year-end close, take the year-to-date trial balance, assign every income and expense account to a proposed category, and list each adjusted profit figure from your recent public communications with its calculation. Send the accounts you could not classify, and the measures you are unsure about, to the person responsible for accounting policy while there is still time to change the data.