IFRS 18 Lands in 2027, So the Real Work Starts in 2026

IFRS 18 replaces the long serving IAS 1 and takes effect for annual periods beginning on or after 1 January 2027. It is the most significant redesign of the income statement in years, and because it applies retrospectively, most businesses need to be ready during 2026 rather than in the year of adoption.

Income and expenses are classified into defined categories covering operating, investing, financing, income taxes, and discontinued operations. The statement of profit or loss then presents two new required subtotals: operating profit, and profit before financing and income taxes.

For the first time, management defined performance measures, the adjusted figures that businesses like to present alongside statutory results, are brought into the audited financial statements and subjected to audit procedures. Numbers that used to live in an investor deck now sit inside the accounts.

Retrospective application means a company with a calendar year end must present 2026 as a comparative when it reports under IFRS 18 in 2027. In practice, the systems and mappings need to be capturing information the new way through 2026, not reconstructed afterward.

We recommend three steps this year: map your current line items into the new categories, agree which performance measures you will disclose and how you will define them, and check that your reporting system can produce the new subtotals cleanly. Boards and audit committees should see a readiness plan well before the 2027 reporting cycle begins.