The International Accounting Standards Board (IASB) has issued IFRS 18 – Presentation and Disclosure in Financial Statements, introducing major changes to how financial performance is presented. Singapore is expected to adopt IFRS 18 into SFRS(I), with the effective date set for annual periods beginning on or after 1 January 2027.
Because IFRS 18 significantly restructures the profit or loss statement and introduces new disclosure requirements, companies should begin preparations early—especially since comparative information must also be restated under the new format.
1. Key Changes Introduced by IFRS 18
a. New Categories in the Statement of Profit or Loss
IFRS 18 introduces three mandatory categories:
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Operating
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Investing
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Financing
Companies will need to reclassify income and expenses to fit these categories, impacting how performance is presented.
b. Management-Defined Performance Measures (MPMs)
A Management-Defined Performance Measure (MPM) is a subtotal of income and expenses that:
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An entity uses in public communications outside financial statements; or
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An entity uses to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole.
Common examples include adjusted EBITDA, core profit, or other customized performance indicators. Under IFRS 18, companies must:
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Clearly define MPMs
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Reconcile them to the closest IFRS subtotal
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Ensure consistency in presentation and disclosure
This ensures transparency and allows users to understand how management evaluates performance, even if it differs from standard IFRS measures.
c. Enhanced Disaggregation Requirements
Entities must provide more detailed breakdowns of income and expenses. Broad or aggregated line items will no longer suffice.
d. Disclosure on “Unusual” Income and Expenses
IFRS 18 requires specific disclosure for items not expected to recur in the near term, improving transparency for users.
2. Key Impact on Singapore Companies
1. Comparatives Must Be Restated
One of the most critical implications is that companies will need to:
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Restate all comparative periods in accordance with IFRS 18
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Reclassify prior-year income and expenses
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Update all MPM disclosures for prior periods
This means companies effectively need to be ready one year earlier, as 2026 numbers will also need IFRS 18 formatting for 2027 reporting.
2. Revision of Chart of Accounts and Accounting Policies
The new structure requires:
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Re-mapping accounts
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Revising internal definitions of operating, investing, and financing activities
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Aligning MPMs with IFRS definitions and reconciliation requirements
3. System and ERP Changes
Companies may need to:
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Enhance data capture granularity
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Adjust ERP mapping to support new P&L categories
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Build new reporting templates
4. Impact on KPIs, Covenants and Communication
Changes in subtotals and classifications may affect:
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KPI calculations
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Bank covenants
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Investor reporting metrics
5. More Extensive Notes and Narrative Disclosures
Companies must prepare for:
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New reconciliations
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Expanded explanations for MPMs
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Detailed categorisation disclosures
3. What Companies Should Do Now to Prepare for 1 January 2027
1. Conduct a Gap Assessment Immediately
Identify:
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New presentation requirements
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Classification impacts
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Data gaps for disaggregation
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Changes needed to KPIs and covenants
2. Prepare for Comparative Restatement
Start by:
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Re-mapping 2024–2026 trial balances
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Assessing which data may be missing or insufficient
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Adjusting systems to capture the right level of detail for prior-year restatement
3. Update Chart of Accounts and Policies
Define:
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Operating vs investing vs financing
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Rules for consistent classification
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MPM definitions and reconciliation processes
4. Upgrade Systems and Reporting Tools
Ensure ERP and reporting systems can:
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Capture granular expense classifications
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Track unusual items
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Produce IFRS 18-compliant statement formats
5. Train Finance Teams and Align Stakeholders
Finance and operational teams need training on:
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New P&L categories
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Disaggregation expectations
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MPM reconciliation disclosures
Engage:
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Banks
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Audit committees
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Investors
6. Begin Dry Runs Before 2026
Perform early mock restatements to identify issues with:
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Classification inconsistencies
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Missing granularity
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KPI impacts
Conclusion — Prepare Early, Because Comparatives Must Also Change
Although IFRS 18 becomes effective on 1 January 2027, the requirement to restate comparative information means Singapore companies must be IFRS 18-ready well before 2026. Early preparation is essential to avoid compliance gaps, rushed system changes, and reporting disruptions.
If you need help with gap assessments, comparative restatement planning, policy updates, or end-to-end IFRS 18 implementation, you can always reach out to us for support.