Adapted and expanded from Dr. Ahmad Helwani’s original LinkedIn publication. This website edition includes current technical updates and practical examples.

The reporting deadline starts with your financial year

IFRS 18 replaces IAS 1 and applies to annual reporting periods beginning on or after 1 January 2027, with earlier application permitted. For a business applying full IFRS with a calendar year, the first mandatory annual period is therefore 2027. Establish the entity's reporting framework and year-end before setting the implementation timetable.

The change deserves attention before the first year-end close. Account mappings, reporting templates and the information used in public performance discussions may need review. Treating it as a final formatting exercise can leave finance teams reconstructing information under time pressure.

Understand what the new profit subtotals mean

IFRS 18 introduces defined categories and subtotals in the statement of profit or loss, including operating profit and profit before financing and income taxes. The statement also has income-tax and discontinued-operations categories. Classification needs to follow the standard's requirements; an existing account name is not a sufficient assessment.

The business model matters. Entities must assess whether investing in particular assets or providing financing to customers is a main business activity. A holding or financing business should not simply copy the mapping designed for a trading company. Document the reasoning for material classifications and review it with the reporting adviser.

Review adjusted performance measures carefully

Some subtotals used in public communications may meet the definition of a management-defined performance measure. The assessment considers whether the subtotal communicates management's view of an aspect of the financial performance of the entity as a whole and is neither listed in IFRS 18 nor specifically required by IFRS Accounting Standards.

Do not assume every KPI or every figure called EBITDA qualifies. Inventory the measures actually used, where they are communicated, their calculations and their purpose. Public communications can include management commentary, press releases and investor presentations. IFRS 18's definition excludes oral communications, their written transcripts and social-media posts. The communication and the measure both require assessment.

Make the reporting trail visible

For measures that meet the definition, prepare the required explanations and reconciliation to the most directly comparable IFRS subtotal or total, with the applicable supporting disclosures. Assign an owner to each calculation. A reader should be able to understand which items management adjusted and how the measure relates to the financial statements.

Illustrative example: a Dubai business publishes an adjusted profit figure after excluding a relocation expense. The team should retain the calculation and assess the measure under IFRS 18, rather than assuming the label adjusted makes it acceptable. Consistent definitions and documented explanations also help management understand changes between reporting periods.

Test the ledger and comparative information

Start with a sample trial balance. Map the material income and expense accounts, identify balances containing several types of transaction, and check whether additional detail is needed in the notes. IFRS 18 strengthens the principles for grouping and separating information; moving every unfamiliar item into other expenses is not a useful preparation method.

IFRS 18 requires retrospective application and restated prior-year comparative information. A calendar-year business first applying the standard in 2027 should therefore plan for its 2026 comparative data. Run a draft statement using the proposed format, reconcile it to the existing accounts and record unresolved classification questions before the reporting timetable becomes urgent.

A manageable preparation plan

Begin by confirming scope, reporting dates and responsible people. Then review the chart of accounts, assess material classifications and performance measures, prepare a sample reporting pack and obtain technical review. Keep a decision log so the same transaction receives consistent treatment across business units.

PLS can support the practical accounting work: cleaner account structures, reconciled schedules and reporting information ready for professional review. A structured preparation project gives the finance team time to resolve questions and helps owners understand how familiar performance figures will appear in the new financial statements.

Sources and further reading

Reviewed and expanded on 2 November 2026. Examples are illustrative. The treatment of a particular business depends on its facts and the rules applicable to the relevant period.