IFRS 18

Today is Tuesday, 31 March 2026, and I am writing this from Swaraj Dweep (formerly known as Havelock Island), India.

I would like to thank the leadership for giving me the opportunity to share my thoughts. In our daily routine, working 10–12 hours a day, it is often difficult to find time for reflection and contribution. However, I am currently on a week-long holiday in Swaraj Dweep, which has given me the opportunity to pause and contribute meaningfully to the profession.

I would especially like to express my gratitude to the leadership, particularly President & CEO: Zubair Choudhry, for being consistently motivating, inspiring, and for guiding the profession in a progressive direction.

I would like to discuss IFRS 18, which is currently a highly relevant and widely discussed topic, as it is expected to impact almost all listed companies across the globe.

“IFRS 18 transforms financial reporting by introducing standardized categories, clear subtotals like operating profit, and enhanced disclosures for management-defined measures.”

Understanding IFRS in Canada

In Canada companies that are publicly accountable must prepare financial statements in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB).

Publicly accountable entities include listed companies, entities in the process of listing, financial institutions like banks, insurance companies, etc.

Private companies are not required to follow IFRS. They can choose between IFRS, or ASPE (Accounting Standards for Private Enterprises). Most private companies prefer ASPE because of simplicity, less disclosure requirements and cost effectiveness.

Similarly, Not-for-Profit Organizations (NFPOs) can choose IFRS, or Canadian Accounting Standards for Not-for-Profit Organizations (ASNPO).

Canada transitioned to IFRS in 2011, replacing Canadian GAAP for publicly accountable enterprises, thereby aligning its financial reporting framework with global standards.

Introduction of IFRS 18

In April 2024, the International Accounting Standards Board issued IFRS 18, ‘Presentation and Disclosure in Financial Statements’ in response to investors’ concerns regarding the comparability and transparency of entities’ performance reporting.

The new presentation requirements introduced under IFRS 18 are designed to enhance comparability in the financial performance of similar entities, particularly in relation to the definition and presentation of ‘operating profit or loss’.

IFRS 18 will be applicable for reporting periods beginning on or after 1 January 2027, with earlier application permitted.

The IFRS 18 aims to improve financial reporting by requiring:

• Presentation of new defined subtotals in profit or loss
• Disclosures about management-defined performance measures
• Enhanced requirements for grouping (aggregation and disaggregation) of information

Categories for Classifying Income and Expenses

Illustrative Statement of Profit and Loss as per IFRS 18 Classification

Impact on Statement of Cash Flows

Summary

IFRS 18 brings significant changes to presentation and disclosure in financial statements, including new income and expense categories, mandatory subtotals, and management performance measure (MPM) disclosures.

From an investor’s perspective, IFRS 18 makes financial statements easier to understand and more reliable for decision-making.

“Overall, for an investor, IFRS 18 simplifies analysis, improves trust in financial information, and helps in making better investment decisions without needing deep technical expertise.”