Changes to IFRS standards

Chris Smith Date published: Mar 25, 25

In April, the IASB introduced IFRS 18, focusing on the presentation and disclosure of financial statements. This was followed in May by the release of IFRS 19, which addresses disclosures for subsidiaries without public accountability. Both standards mark significant advancements in International Accounting practices.

IFRS 18

This replaces IAS 1 and is effective for accounting periods beginning on or after 1st January 2027.  The main changes relate to:

• The structure of the profit or loss account
• Additional disclosures for management-defined performance measures
• Enhanced principles on aggregation and disaggregation

Due to feedback from investors on the lack of comparability, IFRS 18 now requires subtotals for ‘Operating profit or loss’, ‘Profit or loss’ and ‘Profit or loss before financing and income taxes’, with some exceptions.  It also provides guidance for entities to classify items into a defined structure which comprises of three categories, operating, investing and financing.

IFRS 18 also introduces specific disclosure requirements related to the statement of profit or loss in relation to management defined performance measures. These are sometimes referred to as ‘alternative performance measures’ or ‘non-GAAP measures’. IFRS 18 defines a subset of these measures, which relate to an entity’s financial performance as management-defined performance measures.  Information related to these measures should be disclosed in the financial statements in a single note, including a reconciliation between the management defined performance measures and the most similar specified subtotal in IFRS Accounting Standards. This will effectively bring a portion of non-GAAP measures into the financial statements.

IFRS 18 also provides enhanced guidance on the principles of aggregation and disaggregation, which focus on grouping items based on their shared characteristics. These principles are applied across financial statements, and they are used to define which line items are presented in the primary financial statements and what information is disclosed in the notes.

IFRS 19

IFRS 19 specifies reduced disclosure requirements that an eligible entity is permitted to apply instead of the disclosure requirements in the other IFRS standards. This standard is effective for accounting periods beginning on or after 1 January 2027.

An entity may elect to apply this Standard in its consolidated, separate or individual financial statements if at the end of the reporting period, it is a subsidiary, it does not have public accountability and it has an ultimate or intermediate parent that produces consolidated financial statements available for public use that comply with IFRS. 

Public accountability is defined as an entity whose debt or equity instruments are traded in a public market or it is in the process of issuing such instruments for trading in a public market or it holds assets in a fiduciary capacity for a broad group of outsiders as one of its primary businesses, e.g. banks, insurance companies.

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