Editor’s note: This article follows from the article “IFRS 18: A Fundamental Redesign of Financial Statement Presentation”.
Adopting IFRS 18, Presentation and Disclosure in Financial Statements, will not be a simple tick-box exercise. Successful implementation requires early planning and close coordination between finance teams, auditors, and technology providers.
The standard, which replaces IAS 1, Presentation of Financial Statements, becomes mandatory for annual reporting periods beginning on or after 1 January 2027 and requires retrospective application. This means restating prior-year financial statements in line with the new classification and disclosure requirements. Companies need to present at least one year of comparative information under the new structure, so they will need to remap, adjust, and restate prior-period data.
In addition, transition disclosures are critical. Notes must clearly explain the reclassification of figures between IAS 1 and IFRS 18, particularly where introducing new subtotals, such as operating profit and profit before financing and tax.
For most companies, a practical first step will be to develop detailed mapping tables that align legacy statements with IFRS 18 categorisation: operating, investing, financing, income taxes, and discontinued operations. This process will not only ensure compliance but also provide a road map for systems and processes to follow in future reporting periods.
Technology and data implications
Implementing IFRS 18 will reshape not only accounting policies, but also how financial data is captured, structured, and reported. Finance teams will need to work closely with IT and system providers to ensure platforms can handle the new requirements.
Companies must update their enterprise resource planning (ERP) and reporting systems to support IFRS 18’s categories as well as mandatory subtotals such as operating profit. This requires greater data granularity so that companies can disaggregate line items, restate prior-year figures, and provide audit-ready reconciliations.
Modern automation and artificial intelligence (AI) tools can ease the transition by mapping historic data into the new categories, generating reconciliations, and validating prior-period disclosures. And to ensure what management tracks internally aligns with what investors see externally will require redesigned dashboards.
For many finance teams, this won’t just be a compliance exercise — it’s a chance to modernise systems, streamline processes, and better align internal decision-making and external reporting.
In this Q&A, three experts — Michael Tyson, ACMA, CGMA, group CFO at Enterprise Group Plc, Ghana; Hafiz Khalid Mahmood, FCMA, CGMA, senior finance manager at Servis Industries Ltd., Pakistan; and Imran Ul Haq, ACMA, CGMA, head of group treasury at Fauji Fertilizer Company Ltd., Pakistan — offer insights and tips on preparing for IFRS 18 adoption. (Responses have been edited for length and clarity.)
What impact will the updated IFRS 18 standard have on your organisation and sector?
Michael Tyson: At this stage we see impacts on our chart of accounts, which will go to the heart of how we capture accounting data, data disclosed in the financial statements and annual accounts, and business key performance indicators (KPIs), especially those related to the profit and loss account.
Hafiz Khalid Mahmood: IFRS 18 will enable clearer segmentation between retail and wholesale performance; improved visibility of financing costs, especially for seasonal buying and planning; and greater scrutiny of management-defined performance measures (MPMs) used in board and investor reporting. These changes will enhance comparability across retail chains and strengthen investor confidence.
Imran Ul Haq: Resource pressure is already evident. Finance teams and auditors are busy with sustainability reporting and with IFRS 17 in the insurance sector. IFRS 18 preparation will compete for the same people, technology budgets, and project time during 2025 through 2027. Local formats and rule books may require updates to reference the new subtotals and the note disclosures.
What will be the impact on your financial reporting systems, processes, and controls?
Tyson: We will need to redefine and rework the financial reporting systems and adjust our processes and control systems to accommodate the requirements of the new standard.
Mahmood: Microsoft Dynamics 365, our financial reporting infrastructure, is well positioned to adapt to the required changes. The chart of accounts can be reclassified to accommodate IFRS 18 categories, whilst customising financial statement layouts will incorporate new subtotals and MPM reconciliations. In addition, enhanced tagging and classification will support disaggregation requirements.
We are also reinforcing controls around MPM governance, to ensure consistency and auditability, and expense classification, particularly for shared services across retail and wholesale operations.
Haq: Systems and data models often do not yet capture operating, investing, and financing tags at the transaction level. Upgrades and new controls will be required to produce reliable audited reconciliations for performance measures.
How are you preparing for this change?
Tyson: We have started engagement with some accounting firms to help us understand the standard’s requirements. We intend to train our finance team to deepen their knowledge of the standard and its requirements. Based on our understanding of the requirements, we will then reconfigure our chart of accounts to accommodate the requirements, which will make reporting easier.
Mahmood: Our phased implementation includes impact assessment — mapping current reporting structures to IFRS 18; system readiness — reclassifying Dynamics 365 modules and templates; pilot testing — running parallel reports to validate new formats; and stakeholder engagement — aligning internal leadership on expected changes.
Haq: Companies can begin a structured gap assessment by mapping current profit or loss lines to the IFRS 18 categories and identify areas that require additional disaggregation. They can use this mapping to brief the audit committee and to scope any system changes.
Further, companies can decide which performance measures they will continue to use, document the calculations, and prepare draft note disclosures with reconciliations. Also, by testing an example, such as adjusted EBITDA, companies can ensure clarity of the audit trail.
In addition, companies are recommended to build a timetable for comparative information, plan how 2026 will be restated, and how interim reports in 2027 will be prepared. Also, agree responsibilities between finance, IT, and external auditors early in the process and coordinate with sustainability reporting and, where relevant, other transitional programmes, for example IFRS 17. A combined plan reduces duplication and manages peak workloads more effectively.
Will the update mean a change in your communication strategy? If so, how?
Tyson: Yes. We will need to bring our stakeholders up to date on the standard and its requirements and the benefits to them. As part of communication and engagement, our businesses will be helped to redefine their KPIs to measure relevant business performance to propel business growth and in a sustainable manner.
Mahmood: IFRS 18 is reshaping how we communicate financial performance, so that investor presentations will include reconciliations of MPMs to IFRS-defined figures; board reports will emphasise operating profit and financing costs; and retail dashboards will be redesigned to reflect IFRS 18 subtotals, supporting strategic decisions.
Haq: Communication practices will need discipline. Where companies use adjusted measures in analyst briefings and investor decks, definitions should be stable, and reconciliations should be readily available to avoid confusion.
It’s recommended to prepare a communication plan for analysts, lenders, and other stakeholders, so that changes to subtotals and performance measures are understood before the first IFRS 18 reporting cycle.
What training, if any, are you providing for your finance staff and other employees?
Tyson: Training has been held for CFOs across our group to create awareness of the new standard and its requirements. Different training sessions will be provided for the finance teams, business leaders, and board of directors to enable them to have a better appreciation of the financial statements.
Mahmood: We are investing in targeted training programmes: finance team workshops — in-depth sessions on IFRS 18 and Dynamics 365 integration; leadership briefings — focused discussions on KPI interpretation and strategic implications with the leadership team; and cross-functional sessions — engaging IT, audit, and compliance teams to align on system and control changes.
A catalyst for transparency, efficiency, and alignment
IFRS 18 represents a significant shift in financial reporting in how organisations align internal processes with external expectations. To manage this change successfully, early planning is essential.
Finance teams should take the time to understand the new standard’s full impact, both technical and operational. This includes assessing the capabilities of current systems and whether updates will be needed to support future reporting requirements.
It’s also an opportunity to revisit how KPIs and internal metrics align with externally reported information. Ensuring consistency between internal decision-making and external communication will be critical, especially as stakeholders begin to interpret financial performance through the IFRS 18 lens.
Finally, audit processes and controls must evolve to support retrospective restatements, enhanced disclosures, and the new mandatory subtotals. With the right preparation, IFRS 18 can be a catalyst for greater transparency, efficiency, and strategic alignment in financial reporting.
Daniel Prendergast, FCMA, CGMA, is technical director–Professional Qualification, and Christian Gagiano, ACMA, CGMA, is associate technical director–Professional Qualification, both at the Association of International Certified Professional Accountants. To comment on this article or to suggest an idea for another article, contact Oliver Rowe at Oliver.Rowe@aicpa-cima.com.
