IFRS 18: keys to updating your accounting systems

IFRS 18, issued in 2024, introduces key changes to improve the transparency and comparability of financial statements, such as a standardised structure in the income statement and new rules for disclosing management-defined performance measures. It will be applicable from January 2027 to facilitate a clearer and more consistent financial analysis.

Main changes:

1. A standardised income statement structure. The standard establishes a clear and consistent structure for income statements, with defined categories of income and expenses (operation, investment and financing). This facilitates comparability between companies and allows investors to more accurately identify the main components of performance.

2. Greater transparency into performance metrics. IFRS 18 requires companies to provide a detailed explanation of the non-financial performance metrics they use, such as EBITDA or gross margin. This ensures that investors understand how these metrics are calculated and their relationship to the subtotals that appear in the income statement.

3. A more useful sorting of information. The standard provides more specific guidelines on how to organise information in financial statements, ensuring that investors find relevant information for analysis easily.

Key Investor Benefits:

• Greater comparability: the standardised structure of the income statement facilitates comparison between companies in different industries.
• Better decision-making: More transparent and comparable information allows investors to more accurately assess the performance of companies and make better-informed investment decisions.
• Increased confidence in financial reporting: IFRS 18 reinforces confidence in the quality and reliability of financial statements.

Is your company ready?

Impacts Changes in IT systems and accounting processes.

Action: Adapt current practices to meet the new requirements.

Start the transition to IFRS 18 now: simplify and strengthen the presentation of your financial statements!

_{Source: International Accounting Standards Board (IASB). (2024). Nueva norma de contabilidad NIIF ayudará a los inversores a analizar el rendimiento financiero de las empresas.}