Most conversations about a new accounting standard begin with its effective date. For IFRS 18 that is the wrong place to start, because the effective date is not the deadline. The deadline has already been running for most of a year.
IFRS 18 was issued by the IASB on 9 April 2024 and applies to annual reporting periods beginning on or after 1 January 2027. It is applied retrospectively, with comparatives restated. An entity with a December year end publishing its 2027 financial statements therefore has to present restated 2026 comparatives, prepared on the IFRS 18 basis.
Which means the data has to exist for 2026. Not the analysis, not the disclosure drafting, the underlying classified data. An entity that has been capturing on the new basis through this year has a mapping exercise ahead of it. An entity that has not is facing a reconstruction, working backwards through a general ledger that was never built to answer the question being asked of it.
It is now September. Three quarters of the comparative year is booked.
What actually changes
IFRS 18 replaces IAS 1. That framing matters, because a replacement invites a reconsideration of presentation from first principles rather than a search for the amended paragraphs. Three things change in substance.
The shape of the income statement
Income and expenses are classified into five categories, of which operating, investing and financing are new. These feed two subtotals that every entity must now present:
Operating profit or loss, drawn from the operating category. And profit or loss before financing and income taxes, being operating plus investing.
Operating profit was already the most quoted figure in most results announcements, and until now it has been undefined. Entities presented it, but each decided for itself what belonged in it, which is precisely the comparability problem the standard sets out to close.
The category names are borrowed from the cash flow statement and the definitions are not. An existing IAS 7 policy choice does not determine the IFRS 18 category, and assuming otherwise is the first mistake most readers make.
This is worth stating plainly in any internal briefing, because the words operating, investing and financing already mean something specific to everyone in a finance function. The IFRS 18 categories share the vocabulary and carry different definitions. Anyone reading a set of accounts on the assumption that the two align will draw conclusions the statements do not support.
Management-defined performance measures
The second change is the one that tends to make boards uncomfortable, and it is the one worth raising first if you want the conversation to be taken seriously.
A management-defined performance measure is a subtotal of income and expenses that an entity uses in public communications outside the financial statements, to convey management’s view of some aspect of financial performance, and which is not already specified by IFRS 18 or another standard.
Adjusted EBITDA qualifies. So do underlying profit, normalised earnings, and the rest of the family, the moment they appear in a results announcement or an investor presentation.
For each one, the entity must now disclose a clear label and description, what aspect of performance it is meant to represent and why management believes it is useful, how it is calculated, and a reconciliation to the closest IFRS-specified subtotal.
The practical effect is a change of venue. These measures have lived in the investor deck, outside the audited statements and outside the auditor’s scope. They now sit inside the financial statements, next to the statutory figure they adjust, with the bridge between the two set out explicitly. Any adjustment that has been quietly improving the presented number becomes visible, labelled, and explained.
Aggregation and disaggregation
The third change is less discussed and will generate more work than expected. The standard sets out enhanced principles for grouping line items based on shared characteristics: the more similar the items, the more appropriate aggregation is, and the more dissimilar they are, the more disaggregation is required. These principles apply across the primary statements and the notes.
In practice this is an attack on the line called other expenses, which in most sets of accounts has become the place where anything awkward or immaterial-in-isolation accumulates until it is collectively material.
Why banks are affected most
For financial institutions the classification question is not a matter of tidying up presentation. It determines the shape of the entire income statement, and it turns on a single judgement.
The categories depend on what constitutes the entity’s main business activity. That judgement decides whether interest and similar items belong in the operating category or the financing category. For a manufacturer, interest is a financing cost. For a bank, lending is the business, so the same item belongs somewhere quite different. Insurers and investment funds face their own versions of the question.
Get that judgement wrong and it is not a misclassified line. It is operating profit, the most quoted subtotal in the accounts, reported on a basis the entity cannot defend. It is also exactly the point an auditor will probe, because it is the judgement with the widest consequences and the least mechanical answer.
The judgement needs to be made deliberately, documented with its reasoning, and made once rather than rediscovered by whoever is preparing the disclosures in early 2027.
The regulators are already signalling
ESMA issued a public statement on IFRS 18 implementation in February 2026, setting out what a European regulator expects preparers to show. That is a useful document well beyond Europe, because it is the clearest available indication of how a supervisor reads the standard rather than how a preparer would like to.
As at September 2026 we are not aware of IFRS 18 specific guidance from the CBUAE, the SCA or the DFSA. The reasonable planning assumption for a UAE entity is that the standard applies as issued by the IASB, and that any local guidance arrives late enough that it cannot be a reason to wait. It is worth confirming the position rather than assuming it, since this is the kind of thing that moves quietly.
What the remaining months are for
There are two conversations available, and only one of them is cheap.
The first is happening now and runs until the year end. It asks whether the entity is capturing data on the new basis, and for most mid-market entities the honest answer is no. The work is a readiness assessment and a chart of accounts mapping. Every profit and loss line assigned to a category, the main business activity judgement made and written down, and every measure used in public communications tested against the MPM definition.
The second conversation starts in January and asks how to restate a comparative year that was never captured correctly. It is more expensive, considerably more painful, and almost entirely avoidable by having the first conversation in time.
There is one further deadline that gets missed because everyone anchors on the year end. The 2027 interim statements are also in scope. For a December year end entity, the first time this becomes real in public is a half year, not a full year. That pulls the effective deadline forward by six months from where most implementation plans have quietly placed it.
The standard is not conceptually difficult. Its categories are intelligible, its subtotals are defined, and its disclosure requirements are clear. The difficulty is entirely one of sequencing, and the sequence has a fixed start date that has already passed.
This article reflects the position as at September 2026, against IFRS 18 as issued on 9 April 2024 and the ESMA public statement of February 2026. It is general commentary rather than advice on any particular entity, and specific application should be confirmed against the standard itself and current guidance. Riskweise provides IFRS 18 readiness and mapping support and does not provide audit or assurance opinions.