IFRS 18 is one of the most significant presentation changes to IFRS financial statements in years. While it does not fundamentally change how companies measure financial performance, it changes how performance is presented and communicated.
The new standard becomes effective from 2027, but because comparative figures for 2026 will be required, finance teams should already be preparing their systems, processes, and reporting structures.
In a webinar with Exsitec and Konsolidator, financial reporting experts Edwin and Dina shared practical insights on what companies should focus on. Here are their four key tips for a smoother IFRS 18 implementation.
1. Review Your Chart of Accounts and Group Reporting Structure
One of the biggest impacts of IFRS 18 is the introduction of categories within the income statement:
- Operating
- Investing
- Financing
- Income taxes
- Discontinued operations
In addition to the new categories, IFRS 18 introduces mandatory subtotals including Operating Profit or Loss and Profit or Loss Before Financing and Income Taxes. Companies should ensure their chart of accounts and reporting structures can support these subtotals consistently across all reporting periods.
Many companies will need to add new accounts and redefine existing mappings to ensure transactions are reported in the correct category.
Particular attention should be given to items shifting from traditional financial income and expenses into the new investing and financing sections.
For example:
- Investment-related gains and losses must be classified within investing
- Expenses related to debt and borrowings belong in financing
- Fair value adjustments may need reclassification depending on the underlying asset or liability
The sooner these classifications are established, the easier it becomes to produce consistent reporting
2. Pay Close Attention to Foreign Exchange Differences
Foreign exchange differences represent one of the more detailed but important changes under IFRS 18.
The standard requires FX differences to be presented in the same category as the income or expense that generated them.
For example:
- FX differences from trade receivables shall be presented in the operating category
- FX impacts linked to investments shall be presented in the investing category
- FX impacts connected to financing activities shall be presented in the financing category
Foreign exchange differences represent one of the more detailed but important changes under IFRS 18.
The standard requires FX differences to be presented in the same category as the income or expense that generated them.
For example:
- FX differences from trade receivables shall be presented in the operating category
- FX impacts linked to investments shall be presented in the investing category
- FX impacts connected to financing activities shall be presented in the financing category
However, it is also recognized this may not always be possible in practice, and in certain circumstances the operating category can become the default classification. Companies should therefore focus on establishing a practical and consistent classification policy rather than relying solely on the nature of the underlying balance.
The requirement of classifying the FX often means companies need additional accounts in both ERP and consolidation systems to capture and classify FX differences properly.
Many organizations will find that their current setup does not provide the level of visibility required, making this an important area to review early.
3. Understand Your Business Activities Before Defining Classifications
A critical aspect of implementing IFRS 18 is the assessment of whether an entity has what the standard refers to as a specified main business activity. This assessment affects if certain income and expenses should be classified in the operating category or in investing and financing in the statement of profit or loss.
For example, a company that provides financing to customers may classify certain financing-related items differently than a company whose core business is manufacturing or software.
This means finance teams should not simply copy another company’s structure. Instead, they should assess:
- The nature of their business activities
- The purpose of assets and liabilities
- How transactions support their core operations
Getting these assessments right from the start reduces the risk of remapping and rework later in the implementation process.
4. Align Systems, Processes and People
IFRS 18 implementation is not only a reporting project. It is also a process and data project.
Changes often extend beyond the consolidation system and into local ERP systems where transactions originate.
Successful implementations therefore involve collaboration between:
- Group finance teams
- Local finance functions
- Consolidation specialists
- ERP-administrators
- Auditors
Turn compliance into opportunity
While IFRS 18 introduces new reporting requirements, it also presents an opportunity to improve financial reporting processes.
By reviewing account structures, improving transaction classification, and ensuring strong collaboration across finance functions, organizations can make the transition significantly smoother.
Most importantly, finance teams can spend less time on manual adjustments and more time analyzing performance and supporting business decisions.
Need help preparing for IFRS 18?
At Konsolidator, we help finance teams simplify group reporting and consolidation while maintaining full transparency, traceability, and audit readiness.
If you’re evaluating how IFRS 18 will impact your reporting structure, we’d be happy to discuss practical approaches and lessons learned from supporting finance teams through the transition.
