IFRS 18 becomes effective for annual reporting periods beginning on or after 1 January 2027, replacing IAS 1 Presentation of Financial Statements. That sounds like a 2027 problem, but for many finance teams, it isn’t.

IFRS 18 is applied retrospectively. For companies reporting on a calendar-year basis, 2026 is the comparative period that will sit alongside the first IFRS 18 reporting year. That means decisions about classification, presentation, data availability and reporting processes cannot reasonably wait until the 2027 year-end close.

And there is another issue. Understanding the accounting requirements is only the first part of the implementation. Once Finance decides how the requirements apply, the reporting environment needs to produce the numbers.

That means looking beyond the financial statements themselves at the chain behind them:

Source data → mappings → consolidation → financial statements → disclosures → ESEF/XBRL

For some companies, existing processes and systems will support the change with relatively limited adjustments, but for others, IFRS 18 may expose gaps that were already hiding behind spreadsheets, manual mappings and year-end workarounds.

The question for Finance is therefore not simply:

“Do we understand IFRS 18?”

It is also:

“Can our current reporting environment actually produce it?”

IFRS 18 is more than a new income statement

IFRS 18 Presentation and Disclosure in Financial Statements replaces IAS 1 and introduces a more defined structure for how companies present financial performance.

One of the most visible changes is the statement of profit or loss.

Income and expenses are classified into defined categories, including operating, investing and financing, alongside income taxes and discontinued operations. IFRS 18 also introduces two defined subtotals: operating profit and profit before financing and income taxes.

The objective is greater consistency and comparability. Investors should be better able to understand how companies perform without having to navigate substantially different income statement structures from one company to another.

But the practical implications extend further.

Management-defined performance measures

This change introduces disclosure requirements for certain management-defined performance measures, or MPMs.

These are subtotals of income and expenses used in public communications outside the financial statements to communicate management’s view of an aspect of financial performance, subject to the definition and scope set out by IFRS 18.

For companies using measures such as adjusted operating profit or other management-defined subtotals, the question is no longer only how those measures are presented to investors.

Finance needs to determine which measures meet the IFRS 18 definition of an MPM and, where applicable, provide the required disclosures, including reconciliations to the most directly comparable subtotal or total specified by IFRS Accounting Standards.

That introduces questions around governance, consistency, calculations, source data and traceability.

Aggregation and disaggregation

IFRS 18 also strengthens requirements around how information is grouped and separated in financial statements.

This may sound like presentation detail, but it can have a very practical consequence.

A company may determine that information currently aggregated into one reporting line needs to be presented or disclosed differently. If the underlying chart of accounts, reporting model or source systems do not capture that information at the necessary level of detail, presentation becomes a data problem.

Cash flow implications

IFRS 18 also introduces limited changes to the statement of cash flows, including changes associated with the starting point for the indirect method and classification of interest and dividend cash flows.

Taken individually, none of these changes necessarily requires a major technology project.

Taken together, however, they create a reason to test whether the existing reporting architecture can support the new requirements consistently, repeatably and with an appropriate level of control.

Why IFRS 18 implementation starts before 2027

For calendar-year companies, the headline date of 1 January 2027 can be misleading. The first IFRS 18 financial statements will include comparative information. Because the standard is applied retrospectively, companies need to consider how information for the comparative period will be produced under the new presentation requirements.

That brings 2026 into the implementation timeline. A company that waits until the 2027 reporting cycle to perform detailed mapping could discover that information required for the comparative period was not captured in a way that can easily be reconstructed.

The practical question is therefore not simply whether the accounting team can redesign the income statement. It is whether the organisation can reproduce the required information from its existing data.

Consider a multinational group with multiple ERP systems, local charts of accounts and a group consolidation model.

The group may determine the correct IFRS 18 classification centrally. But those classifications still need to be translated into reporting rules across different entities and data sources.

That can involve:

• reviewing group and local charts of accounts;
• reassessing reporting mappings;
• identifying where additional granularity is needed;
• changing financial statement templates;
• determining how MPM information is calculated and reconciled;
• preparing comparative information;
• updating disclosure processes;
• assessing the downstream effect on ESEF/XBRL reporting.

The earlier those dependencies are identified, the more options Finance has.

Where IFRS 18 becomes a reporting and systems question

IFRS 18 does not require companies to replace their finance systems.

That distinction matters.

The objective should not be to turn a new accounting standard into an automatic technology transformation project.

Instead, Finance should ask a more useful question:

Can our existing reporting environment support the requirements efficiently and with sufficient control?

Start with the data.

Does your chart of accounts provide enough granularity?

An IFRS 18 classification decision is only operational if the relevant transactions can be identified. If several economically different items currently sit within the same account or reporting line, Finance may need additional detail to classify or disclose them appropriately. Sometimes that information already exists elsewhere in the ERP or consolidation environment. Sometimes it can be derived through mappings. And sometimes the current reporting structure simply does not capture it.

The readiness exercise should identify which situation applies before teams start building manual workarounds.

Do existing mappings still work?

Many group reporting environments depend on mappings between local accounts, group accounts, reporting lines and consolidation structures.

IFRS 18 can make those mappings an important implementation workstream.

A mapping designed around the current income statement may no longer produce the intended result under the new structure. One existing group account may need to feed different reporting categories depending on the underlying transaction or business activity.

That does not automatically mean redesigning the chart of accounts.

It does mean testing whether current mapping logic remains sufficient.

Can consolidation produce the required output?

In complex groups, the financial statements are the final output of a long process.

Data enters from multiple entities. Local accounts are mapped. Adjustments are posted. Intercompany transactions are eliminated. Currency translation occurs. Consolidation rules are applied. Reporting lines are populated.

IFRS 18 sits at the end of that chain — but implementation can reach back through it.

Finance should therefore test whether the consolidation environment can support revised statement structures, classifications, comparative reporting and disclosure data without creating a second reporting process outside the controlled consolidation environment.

If the answer is yes, the implementation may primarily involve configuration and mapping changes.

If the answer is no, IFRS 18 may expose a broader reporting limitation worth addressing.

Where are spreadsheets doing the work?

Spreadsheets are not automatically a problem.

But an IFRS 18 readiness exercise is a useful moment to identify where important reporting logic exists only in manual files.

If classifications, MPM reconciliations, disclosure calculations or comparative adjustments require extensive offline manipulation, Finance should understand the associated workload and control implications before the first mandatory reporting cycle.

The objective is not “remove Excel because IFRS 18 says so.” It doesn’t.

The objective is to decide deliberately which activities belong in a controlled reporting process and which manual steps remain proportionate.

Management-defined performance measures deserve particular attention

MPMs are one of the most discussed elements of IFRS 18, and for good reason.

Many companies communicate performance using measures that go beyond the subtotals specified by IFRS Accounting Standards.

These measures can be important to management, investors and analysts. They can also be produced through processes that developed independently of statutory reporting.

IFRS 18 brings certain management-defined performance measures into the financial statement disclosure framework.

That creates several implementation questions.

First, companies need to identify which measures used in public communications fall within the IFRS 18 definition.

Second, they need to establish the required reconciliation to the most directly comparable IFRS subtotal or total.

Third, they need to ensure the underlying adjustments and calculations can be reproduced and governed.

This is where an apparently disclosure-focused requirement can become a reporting-process issue.

If an adjusted performance measure is currently calculated in an investor-relations spreadsheet using inputs collected after the close, Finance may need to reconsider how that process connects to the controlled reporting environment.

The same applies to consistency.

If different departments use slightly different versions of an adjusted metric, IFRS 18 implementation is a good reason to establish clear ownership, definitions and calculation logic.

For many organisations, the MPM workstream therefore needs participation from more than Accounting.

Financial Reporting, Controlling, Investor Relations, Consolidation and potentially Tax and IT may all need to be involved.

How CCH Tagetik can support IFRS 18 implementation

Once the readiness assessment is complete, some companies will conclude that their current environment can support IFRS 18 with relatively limited changes.

Others may identify more significant gaps across mappings, consolidation, disclosures or reporting workflows.

This is where technology becomes relevant, not because IFRS 18 mandates a particular platform, but because the reporting process has to operationalise the accounting decisions.

CCH Tagetik provides capabilities across data preparation, consolidation, financial reporting and disclosure that can support IFRS 18 implementation.

For organisations already using CCH Tagetik, IFRS 18 readiness should include an assessment of how the existing configuration needs to change.

For organisations reviewing their reporting architecture more broadly, IFRS 18 may become one input into a larger decision about whether the current environment remains fit for purpose.

Complex reporting environments don’t necessarily require more manual work. See how HSE accelerated group consolidation and reporting by 30% with CCH Tagetik and Inulta.

Financial statement structures and mappings

CCH Tagetik can support financial statement structures and mappings required to translate underlying financial data into the new reporting presentation.

This can help Finance manage revised classifications without building a parallel reporting process outside the core financial reporting environment.

For groups with multiple charts of accounts or source systems, centralised mapping and reporting logic can be particularly important.

Consolidation and reporting

IFRS 18 does not change the fundamental purpose of consolidation, but the output of the consolidated process needs to support the new presentation.

A connected consolidation and reporting environment can help ensure that changes made to classifications and reporting structures flow through consistently to the consolidated financial statements.

It also reduces the risk of maintaining one set of logic for consolidation and another for the final report.

Comparative information

Because transition requires retrospective application, comparative information is a practical implementation consideration.

A controlled reporting environment can help Finance apply revised structures and mappings to comparative periods, test results and document the transition.

The complexity will depend heavily on the organisation’s existing data model and historical information.

MPM workflows

Wolters Kluwer has introduced CCH Tagetik capabilities aimed specifically at IFRS 18 implementation, including workflows for management-defined performance measures and related calculations.

This can help move MPM processes closer to the controlled finance reporting environment rather than leaving important calculations disconnected from statutory reporting.

Disclosure management

IFRS 18 also creates new disclosure requirements. CCH Tagetik Disclosure Management can connect financial data with the document-production process, helping Finance maintain consistency between numbers, tables and narrative disclosures.

This matters because IFRS 18 implementation does not end when the consolidated trial balance is complete.

The final output still needs to become a controlled financial report.

The important point, however, is not that every IFRS 18 implementation needs CCH Tagetik.

It is that IFRS 18 readiness should determine what needs to change first. Technology should follow the diagnosis, not precede it.

IFRS 18 and ESEF/XBRL: the change continues into the digital filing

For companies subject to ESEF reporting, it has another downstream consequence.

Changes to the financial statements need to be reflected in the structured digital report.

ESMA has specifically addressed IFRS 18 implementation from an ESEF perspective and has highlighted the need for issuers to reassess their existing markup.

The 2025 ESEF taxonomy includes IFRS 18-aligned elements, including elements supporting the new mandatory subtotals and classifications.

This creates a remapping exercise for issuers.

Existing taxonomy mappings need to be reviewed against the new IFRS 18 presentation. Extension elements previously created by an issuer may need to be reconsidered where the updated taxonomy now provides an appropriate standard element.

Anchoring relationships may also need to change.

And importantly, this work does not concern only the current reporting year. Comparative information needs to be considered as part of the transition.

The reporting chain therefore continues:

IFRS 18 accounting decisions
↓
Financial statement structure
↓
Reporting data and mappings
↓
Disclosures
↓
ESEF/XBRL mapping
↓
Digital filing

This is one reason treating this change as an isolated accounting-policy project can create problems later.

The financial statement team may complete its work correctly, only for the organisation to discover downstream that its existing taxonomy mapping, extensions or reporting templates also require substantial changes.

Review existing taxonomy mappings

Companies should identify which existing mappings are affected by changes to the statement of profit or loss and other IFRS 18 requirements.

This should include a review of both standard taxonomy elements and company-specific extensions.

Reassess extension elements and anchoring

Where an existing extension was created because no suitable taxonomy element previously existed, the updated taxonomy may now provide a standard IFRS 18 element.

Those extensions should be reviewed rather than automatically carried forward.

Where extensions remain necessary, associated anchoring relationships should also be reassessed.

Consider comparative information

The ESEF workstream needs to stay aligned with the financial reporting transition.

If comparative information is restated or re-presented under IFRS 18, the structured digital representation needs to follow the reporting outcome.

Test before filing time

Remapping should not be treated as a final formatting exercise.

Testing the XBRL/iXBRL output before the filing window gives teams time to identify taxonomy, anchoring, validation and consistency issues without adding them to an already compressed year-end process.

Inulta provides XBRL, iXBRL and ESEF services independently of the underlying consolidation platform. That means the digital-reporting workstream can be addressed whether a company uses CCH Tagetik or another reporting environment. For example, Inulta supports Spuerkeess with its ESEF/iXBRL reporting process, including tagging and validation, with zero post-submission errors or compliance issues reported in the case study.

How to assess whether your organisation is ready for IFRS 18

Before deciding on implementation, Finance should establish where the actual gaps are.

A useful starting point is to answer eight questions.

1. Have we mapped our current statement of profit or loss to the IFRS 18 structure?

If not, this is the logical first step. Reporting and systems decisions should follow the accounting assessment.

2. Can our existing data distinguish the information needed for the new classifications?

Look beyond the final statement. Determine whether source accounts, dimensions and reporting mappings contain enough detail.

3. Have we identified potential management-defined performance measures?

Review public communications, investor presentations, management commentary and other relevant communications alongside the financial statements.

4. Can our reporting and consolidation process produce the required output without significant new manual work?

If IFRS 18 requires another layer of offline calculations, understand why before accepting that as the permanent solution.

5. Can we produce the comparative information?

For calendar-year reporters, this means examining 2026 now, not in late 2027.

6. Have we assessed the disclosure impact?

Consider both the data needed and the process used to create, review and approve the final financial report.

7. Have we evaluated the ESEF/XBRL impact?

Existing mappings, extensions, anchoring relationships and templates should be reviewed against the IFRS 18-aligned taxonomy and the company’s revised financial statements.

8. Do the relevant teams have one implementation plan?

Accounting, Consolidation, Financial Reporting, Investor Relations, IT and Digital Reporting should not be running disconnected projects.

Find your IFRS 18 reporting gaps before deciding what to change

You do not need to redesign your reporting environment simply because IFRS 18 is coming.

But you do need to know whether your current one can support it.

Inulta’s IFRS 18 Reporting Readiness Assessment is designed to help finance teams identify the areas that deserve attention before the first mandatory reporting cycle.

The assessment looks across:

• financial statement structure;
• data and reporting;
• management-defined performance measures;
• comparative information and transition;
• consolidation and reporting processes;
• disclosures;
• ESEF/XBRL.

It takes approximately three minutes and provides an initial view of where further review may be required.

Take the IFRS 18 Reporting Readiness Assessment →

The objective is not to tell every company that it needs a new system.

It is to establish where the real implementation work sits.

For one organisation, the priority may be XBRL remapping.

For another, it may be MPM governance.

For a third, it may expose a reporting environment that depends on extensive manual mapping and spreadsheet-based adjustments.

The solution should follow the problem.

What should Finance teams do next?

The most useful implementation plan is not necessarily the most complicated one.

A practical sequence is:

Assess → Map → Identify gaps → Implement necessary changes → Test → Prepare digital reporting

Start by determining how this changes the company’s financial statements.

Then map those changes into the reporting environment.

Identify where current data, mappings, consolidation processes or disclosures cannot support the required outcome.

Only then decide what needs to change.

Where the existing environment is sufficient, avoid unnecessary transformation.

Where technology limitations create significant manual work, control issues or reporting risk, consider whether configuration changes or a broader reporting solution such as CCH Tagetik is justified.

And for companies subject to ESEF, include XBRL in the implementation plan from the beginning rather than treating it as the final step before filing.

IFRS 18 is an accounting standard.

But compliance ultimately has to emerge from real data, real systems and real reporting processes.

Understanding the requirements is the first step.

Making your reporting environment produce them is the next.

IFRS 18 FAQ

What is IFRS 18?

IFRS 18 Presentation and Disclosure in Financial Statements is a new IFRS Accounting Standard focused on how financial performance is presented and disclosed. It replaces IAS 1 Presentation of Financial Statements and introduces new requirements including defined subtotals in the statement of profit or loss, categories for income and expenses, disclosures for management-defined performance measures and enhanced aggregation and disaggregation requirements.

When does IFRS 18 become mandatory?

IFRS 18 is effective for annual reporting periods beginning on or after 1 January 2027. Earlier application is permitted.

Because IFRS 18 is applied retrospectively, companies should consider the impact on comparative information before the first mandatory reporting year. For calendar-year reporters presenting one comparative year, 2026 is therefore an important part of the implementation timeline.

Does IFRS 18 replace IAS 1?

Yes. IFRS 18 replaces IAS 1 Presentation of Financial Statements.

However, the IASB did not reconsider every requirement previously contained in IAS 1. Some requirements were retained in IFRS 18, while others were moved to other IFRS Accounting Standards.

Does IFRS 18 require comparative information?

Yes. it is is applied retrospectively, and financial statements include comparative information for the preceding period.

Companies should therefore assess whether historical data, mappings and reporting processes can produce the necessary comparative information under the new presentation requirements.

What are management-defined performance measures under IFRS 18?

Management-defined performance measures, or MPMs, are defined by IFRS 18 as subtotals of income and expenses that meet specified criteria, including being used in public communications outside the financial statements to communicate management’s view of an aspect of financial performance.

IFRS 18 introduces disclosure requirements for MPMs, including explanations and reconciliation to the most directly comparable subtotal or total specified by IFRS Accounting Standards.

Not every KPI or alternative performance measure is automatically an MPM.

Does IFRS 18 affect XBRL and ESEF reporting?

For companies subject to ESEF reporting, it can affect the digital markup of the financial statements.

ESMA‘s IFRS 18 implementation guidance specifically addresses the need to reassess existing ESEF markup. Companies may need to review taxonomy mappings, existing extension elements, anchoring relationships, templates and comparative information.

The ESEF taxonomy includes IFRS 18-aligned elements to support the new presentation requirements.

Do companies need new software for IFRS 18?

No. IFRS 18 does not require companies to purchase or implement a specific software platform.

The relevant question is whether the existing reporting environment can support the new requirements with an appropriate level of efficiency, consistency and control.

Some companies may require only changes to existing mappings, templates and reporting processes. Others may discover limitations in data granularity, consolidation, disclosures or reporting workflows that justify more significant technology changes.

How can CCH Tagetik support IFRS 18?

CCH Tagetik can support areas relevant to IFRS 18 implementation including data preparation, mappings, financial consolidation, financial statement structures, comparative reporting, management-defined performance measure workflows and disclosure management.

For companies already using CCH Tagetik, IFRS 18 readiness can identify configuration and reporting changes required within the existing environment.

For companies using other environments, the first step should still be a readiness assessment. A technology decision should follow identified reporting requirements rather than precede them.

What should companies do first to prepare for IFRS 18?

Start with an impact and readiness assessment.

Companies should understand how this changes their financial statements and then determine whether their current data, mappings, consolidation process, disclosure process and digital reporting setup can support those changes.

For companies subject to ESEF, XBRL implications should be included in the assessment rather than left until the first IFRS 18 filing.

Not sure where your biggest reporting gaps are?

Take Inulta’s IFRS 18 Reporting Readiness Assessment →

Get an initial view of the areas that may require attention across financial statements, data, reporting processes, systems, disclosures and ESEF/XBRL before your first IFRS 18 reporting cycle.