Yes, IAS 1 Presentation of Financial Statements will be replaced by IFRS 18 Presentation and Disclosure in Financial Statements, effective for annual reporting periods beginning on or after January 1, 2027. While many existing IAS 1 principles are carried forward, IFRS 18 introduces mandatory structure changes to the statement of profit or loss, including new defined subtotals (like operating profit) to improve comparability.
Summary. IFRS 18 replaces IAS 1 Presentation of Financial Statements as the primary source of requirements in IFRS accounting standards for financial statement presentation which will provide better information to users.
IFRS 18 'Presentation and Disclosures in Financial Statements' has been published in April 2024. The International Accounting Standards Board (IASB) has published its new standard IFRS 18 'Presentation and Disclosures in Financial Statements' that will replace IAS 1 'Presentation of Financial Statements'.
It responds to longstanding stakeholder concerns regarding the lack of detailed guidance in IFRS on the classification of income and expenses in the statement of profit or loss. The IFRS 18 standard is effective for annual reporting periods beginning on or after 1 January 2027, with retrospective application required.
Evolution: IAS standards were issued by the IASC before being replaced or updated by IFRS after 2001.
IAS 1, in place since 2007, allowed flexibility in how entities presented their profit or loss — but this led to inconsistencies, limited comparability, and vague subtotals. IFRS 18 addresses these issues by: Standardizing income statement structure. Requiring clear subtotals like Operating Profit.
The IASB has issued IFRS 18 Presentation and Disclosure in Financial Statements, which replaces IAS 1 Presentation of Financial Statements effective 1 January 2027.
IFRS 15 replaces both IAS 11 and IAS 18 as well as SIC 31, IFRIC 13, IFRIC 15 and IFRIC 18 and establishes a single, comprehensive framework for revenue recognition.
IFRS 18 will impact all companies across different industries. Although companies' net profit will remain unchanged, many will see changes to the structure of their income statement. For some, the changes will be significant, depending on their current presentation practice under IFRS® Accounting Standards.
The primary difference between IAS and IFRS is the shift from a more prescriptive, rules-based type (IAS) to a more flexible, principles-based type (IFRS).
Key changes introduced by IFRS 18
Items are aggregated based on shared characteristics and judgment is required. Totals, subtotals and line items should be described and labelled in a way that faithfully represents the characteristics.
IFRS 19 aims to create a more attractive option for subsidiaries without public accountability. Eligible entities are now able to elect to apply IFRS 19, which allows for specific reduced disclosures in most topic areas. IFRS 19 provides a solution that can alleviate the reporting burden for in-scope entities.
One of the most immediate challenges is the mandatory restructuring of the income statement. IFRS 18 requires businesses to present income and expenses in three clearly defined categories: operating, investing, and financing, along with a required subtotal for operating profit.
IFRS 18 is effective for reporting periods beginning on or after 1 January 2027.
IFRS 18 is expected to improve the quality of financial reporting by defining categories and subtotals in the statement of profit or loss, requiring the disclosure of MPMs, and introducing enhanced requirements for grouping of information in the primary financial statements and the notes.
IFRS 18 sets out overall requirements for the presentation and disclosure in financial statements. It requires an entity to present a complete set of financial statements at least annually, with comparative amounts for the preceding year (including comparative amounts in the notes).
Deloitte has developed high-quality e-learning modules to help users develop their knowledge and application of the basic principles and concepts of the IFRS (International Financial Reporting Standards) Accounting Standards, IAS® Standards and IFRIC® Interpretations.
IFRS 18 is more than a presentation change—it's an opportunity to enhance how your business communicates performance. Early adopters can strengthen investor confidence, streamline reporting processes, and turn greater transparency into trust and a competitive advantage.
The company uses several International Financial Reporting Standards for accounting policies regarding fixed assets, depreciation, impairment of assets, borrowing costs, provisions, and more.
IFRS 18 will replace IAS 1 Presentation of Financial Statements. IFRS 18 will introduce three key new requirements on presentation and disclosures in the financial statements, with a focus on the income statement and reporting of financial performance.
IFRS 9 replaced IAS 39 in January 2018 because it was too complex, inconsistent, and impractical in a modern financial world. Accountants, regulators, and financial institutions often call IAS 39 one of the most confusing standards ever written.
IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027, with earlier application permitted.
The IAS 1 amendments clarify that when assessing if the host liability should be classified as current or noncurrent, the company can ignore conversion options that are recognized as equity.
IAS 1 and IFRS 1 are largely the same, with the only difference being their terminology - IAS refers to older standards while IFRS refers to newer standards. IAS 1 establishes the overall criteria for financial statement presentation, including structural rules and minimum content standards.
IFRS will require expenses to be classified into categories such as operating, investing, and financing while US GAAP will not impose such classifications. Both require disclosure of natural expenses in the footnotes (if not on the face of the financial statements).