Global financial reporting is facing the biggest transformation in many years. With the publication of the new accounting standard IFRS 18, the International Accounting Standards Board, or IASB for short, is ushering in a completely new era for annual financial statements. The new standard for Presentation and Disclosure in Financial Statements replaces the previous core standard IAS 1 and fundamentally reorganizes the presentation and disclosures in the financial statements. The clock is ticking for international accounting companies, as the official first-time application is mandatory for financial years beginning on or after January 1, 2027. As a fully adjusted comparative period from the 2026 financial year must be available for these first IFRS 18 financial statements, controlling is already in the middle of the transition process. The primary objective of the new regulations is to massively increase the comparability and transparency of financial information worldwide in order to provide users of financial statements with a precise picture of the actual earnings situation.
The new structure of the income statement
Probably the most radical change concerns the structure of the income statement. Previously, IAS 1 gave companies considerable freedom in the structure and definition of subtotals within the income statement. In practice, this meant that key figures such as the operating result were interpreted and calculated very differently by company management. This is now a thing of the past. IFRS 18 ends the era of free formatting and forces all income and expenses into a strictly defined corset of three new main categories and two mandatory subtotals.
The allocation to these categories follows a clear logic based on the core business and the financing structures. The core area is the operating category. All income and expenses resulting from the company’s main business activities are included here, regardless of whether they are recurring or one-off effects. The investing category includes income and expenses from assets that generate income independently of the main operating activity, such as returns from associates or real estate investments. The financing category bundles all effects resulting from the procurement of capital, as well as interest expenses in accordance with IAS 19 and similar effects. This strict tripartite division ultimately creates a completely new transparency that makes a company’s profit and loss immediately legible for investors and analysts and comparable across sectors.
| Strukturelement | Bisherige Struktur nach IAS 1 | Neue Struktur nach IFRS 18 |
|---|---|---|
| Gliederungsprinzip | Hohe Flexibilität, Formate oft stark vom Unternehmen individuell geprägt. | Strikte Vorgabe von drei definierten Kategorien für Erträge und Aufwendungen. |
| Operatives Ergebnis | Keine standardisierte Definition, oft als EBIT oder EBITDA frei berechnet. | Verbindliche Zwischensumme Operating Profit als Pflichtkomponente für alle. |
| Finanzierung und Steuern | Häufige Vermischung von operativen Finanzerträgen und echten Finanzierungskosten. | Klare Trennung in separate Kategorien für Finanzierung und Ertragsteuern. |
| Vergleichbarkeit | Eingeschränkt durch unterschiedliche Definitionen von Non-GAAP-Größen. | Maximale Vergleichbarkeit durch standardisierte Berechnungslogiken. |
Transparency through Management Defined Performance Measures
In addition to the new structure of the income statement, IFRS 18 brings another massive change for financial reporting. It concerns the key performance indicators defined by company management. These so-called management-defined performance measures play a central role in financial management. Until now, many companies have used such non-GAAP key figures to communicate their very own view of profit and business success. However, there was often a lack of clear traceability. The new accounting standard now forces controlling to provide maximum disclosure.
As soon as a performance indicator is used publicly in corporate communications, it must be explained in detail in a central note. Even more decisive, however, is the reconciliation requirement. In future, controlling must provide a complete and transparent explanation of how these internal management defined performance measures can be reconciled to the official IFRS subtotals. These new regulations put an end to non-transparent calculation logic and ensure that users of financial statements can objectively assess actual financial performance.
Stricter rules for aggregation and disaggregation
Another key objective of the new standard is the final elimination of unclear collective items. Stricter rules for aggregation and disaggregation ensure that the presentation and disclosures in the financial statements are much more detailed. The traditional hiding of material amounts in items such as other income or other expenses will no longer be permitted in future.
Instead, the regulation requires financial information to be broken down strictly on the basis of common and non-common characteristics. As soon as an item contains material and independent information for investors, it must be disclosed separately. These strict requirements for disaggregation are forcing companies to thoroughly revise their chart of accounts and accounting processes in order to be able to provide the required data granularity in the systems at the push of a button.
Die 3 Säulen des IFRS 18
Strikte Aufteilung der Erträge und Aufwendungen in die Bereiche operativ, investiv und Finanzierung.
Verbindliche Definition und lückenlose Überleitung von internen Leistungskennzahlen auf die IFRS-Zwischensummen.
Verbot von intransparenten Sammelposten und die strikte Pflicht zur granularen Aufteilung nach gemeinsamen Merkmalen.
Challenges in IT implementation and conversion
The theoretical requirements of IFRS 18 sound logical, but the real test lies in the practical implementation. The changeover is by no means a purely financial issue, but a far-reaching IT project. Existing ERP systems and BI platforms must be adapted to the new requirements. This primarily concerns the chart of accounts and the complex mapping of data flows. In order to map the required disaggregation and the new categories, numerous posting processes must be completely redesigned at a much more granular level.
There are also far-reaching consequential changes for other established standards. For example, IFRS 18 entails mandatory adjustments to the cash flow statement in accordance with IAS 7 and the regulations on accounting policies in accordance with IAS 8. In future, the newly defined operating result will be the uniform starting point for determining cash flow from operating activities using the indirect method. These far-reaching changes in the regulation mean that the entire financial information must be reconsidered and linked in a new system.
The time pressure for controlling is enormous. As the first-time application applies to financial years from 2027, the comparative period for 2026 must already be calculated in full in accordance with the new guidelines. Those who do not start analyzing and technically adapting their systems now risk incorrect disclosures in the notes and considerable complications during the audit.
Preparation begins now
The publication of IFRS 18 marks a historic milestone in global financial reporting. The implications go far beyond a mere cosmetic restructuring of the income statement. The declared aim of the changes is to achieve unprecedented transparency for all users of financial statements. For controlling, this development means that familiar structures will be completely broken up and replaced by stricter, standardized reporting formats. Companies should see these massive changes as a strategic opportunity. It is the perfect time to fundamentally clean up internal data structures and set up a future-proof, high-performance system landscape.
Frequently asked questions
How much effort is involved in converting to the new standard?
The effort involved depends heavily on the quality of the existing data structure. Initial assessments by large auditing firms such as KPMG show that the challenges are enormous. Companies with a historically grown, fragmented system landscape have to reckon with complex IT projects lasting several months.
Do the new regulations also affect banks and insurance companies?
Yes, the basic disclosure requirements apply across all sectors. However, there are very specific adjustments for financial institutions and insurance companies, as their core operating business is strongly characterized by traditional financing aspects. The allocation of income and expenses is defined differently here according to the main economic activity.
When is the ideal time to start a project?
The starting signal must be given immediately. As 2026 is the mandatory official comparative period, the upstream systems and consolidation tools must be fully IFRS-ready by the turn of the year at the latest. This article provides you with a concise overview, but the actual implementation now requires immediate internal analyses and architectural decisions.
