IFRS 18: Advancing the Relevance and Utility of Financial Statements for Stakeholders
Purpose: The main objective of the article is to present the main changes in the presentation of financial statements resulting from IFRS 18 that will affect financial reporting for periods beginning from 2027. The changes in the structure and content of financial statements are considered from the perspective of the needs of potential investors as well as other stakeholders. Design/Methodology/Approach: The main research method involved in this paper is desk research (scientific literature, reports, accounting standards, financial reports). The author also used deductive method analysing the content of accounting standards and supporting materials. Reasoning was conducted using inductive and deductive method. Findings: The paper shows that changes in the structure of IFRS’s financial statements are focused on the increasing value for investors and that they improve financial performance reporting. IFRS 18 has introduced an obligation to disclose more subtotals in the income statement as well as information about management-defined performance measures. On the other hand it has not defined any of popular non-GAAP measures. In the opinion of the author this accounting standard may still have a positive impact on transparency of financial statements reducing additional disclosures alongside with the presumed improvement in the quality of the financial result presented in the income statement. Practical Implications: The considerations may constitute an impact for the preparers of financial statements under IFRS to improve the informative value of the financial statements. The presentations of the main solutions resulting from IFRS 18 (as compared to IAS 1) may be of great importance as it allows readers from EU countries to familiarize themselves with these changes before they are officially published as Official Journal (after the changes are adopted by European Commission). Originality/Value: The paper presents the main changes introduced by IFRS 18 that should enhance the information value of financial statements. There is still more than two years before this IFRS comes into force, but familiarisation of preparers of financial statements with its requirements might be helpful. It always take time to prepare to new regulations.