The language of business is evolving towards greater clarity. The advent of International Financial Reporting Standard 18 (IFRS 18) marks a turning point in financial statement presentation, replacing the traditional IAS 1 framework.
Although its mandatory application begins in January 2027, the clock is already ticking. For organizations, 2026 will be the critical transition year, as it will be necessary to prepare comparative information under these new criteria.
Below, we look at the pillars of this change and why your company must act today.
1. A new architecture for the Income Statement
IFRS 18 is not a simple form adjustment; it is a profound restructuring designed to eliminate ambiguity. The objective is to allow investors and analysts to compare the operating performance of different companies under a consistent framework and without subjective interpretations.
2. Classification into three strategic categories
Under the new standard, all income and expenses must be rigorously classified into three categories:
- Operation: Includes the main activities that generate value in the business.
- Investment: It records income from assets independent from the main operation.
- Financing: Reflects the specific costs associated with raising capital.
This segmentation allows stakeholders to understand precisely where the company's profitability comes from.
3. Mandatory subtotals
In order to standardize the analysis, IFRS 18 introduces mandatory subtotals. The most relevant is Operating Income or Profit from Operations, which now becomes the official and homogeneous reference for measuring financial success, facilitating direct comparison between organizations in the same sector.
4. Management Metrics Transparency (MPM)
It is common for companies to use proprietary indicators, such as adjusted EBITDA, to explain their performance. IFRS 18 now requires that these Management Performance Measures (MPMs) meet two strict conditions:
- Be explained in detail in the notes to the financial statements.
- Be formally reconciled with the figures under accounting standards.
Why the urgency to prepare in 2025 and 2026?
The transition to IFRS 18 requires considerable effort beforehand. Since the 2027 financial statements will require comparative figures, the accounting systems and data capture processes must be ready to operate under the new logic as of January 1, 2026.
Waiting until the last moment is not an option. Companies should evaluate from now on:
- The adaptation of its ERP systems and accounting software.
- The reclassification of its accounts under the new categories.
- Training of the financial team in the new disclosure criteria.
Prepare today to report better tomorrow
IFRS 18 is, in essence, an opportunity to tell your company's financial story with greater transparency and professionalism. An orderly transition ensures not only regulatory compliance, but also stronger communication with your stakeholders and the market.
At Moore ULA, We accompany organizations in this process of change, providing the necessary technical advice to ensure that their financial information remains clear, timely and, above all, reliable.
