IFRS 18 in 2027: how to prepare your transition in practice

• IFRS 18 applies to annual reporting periods beginning on or after 1 January 2027.
• The standard is applied retrospectively: for a group with a 31 December year-end, the 2026 figures presented as comparatives will have to be restated under IFRS 18.
• The project therefore already covers the prior-year data.
• Changes may affect the chart of accounts, consolidation mapping, reporting packages, the statement of cash flows, MPMs, controls and financial communication.
• An initial assessment should confirm whether the data currently available is sufficient to produce this new information.

IFRS 18 is mandatory for annual reporting periods beginning on or after 1 January 2027. There is no general grace period allowing companies to continue under IAS 1 for several months before starting the transition.

Not every technical change has to go live on the same day. However, the financial reporting process must be able to apply IFRS 18 throughout 2027 and produce the required comparative information.

The availability of 2026 data therefore becomes critical. Some information can be retrieved after year-end, but insufficient granularity often means rebuilding analyses, searching for supporting evidence or multiplying manual adjustments.

The IASB (opens in a new tab) factored this constraint into its timeline. While the standard was being developed, some companies indicated they would need at least two years to adapt their accounting and IT systems, prepare for retrospective application and organise discussions with auditors and regulators.

The group chart of accounts and the consolidation mapping sit at the heart of the project. Each account must be linked to a line in the statement of profit or loss and to an IFRS 18 category, together with the information that supports that classification.

Difficulties arise when an aggregated balance combines several economic natures that must be classified differently. The data reported by entities then needs to be reviewed, and sometimes the structure of the consolidation reporting packages as well.

The mapping must assign each account to one of the five IFRS 18 categories: operating, investing, financing, income taxes and discontinued operations. What each category covers is explained in our article on the new standard.

For the consolidation team, each rule must become usable in the system: which accounts, which entities and which transactions feed which category. Entities whose main business activity is investing in assets or providing financing to customers apply specific requirements, which should be handled separately in the mapping.

Implementation becomes more complex when the available data is too aggregated to apply the new classifications.

Foreign exchange differences are a good example. When recognised in profit or loss, they are generally classified in the same category as the item that gave rise to them. A single FX amount reported by a subsidiary may therefore be insufficient when several underlying items need to be distinguished.

The same issue can arise for expenses presented by function and the related information by nature, for certain financial transactions, or for adjustments used in performance communication.

The impact assessment can be performed backwards from the future financial statements: for each piece of information required, trace the source data, check its level of detail and determine whether subsidiaries already report it.

IFRS 18 introduces specific requirements for Management-defined Performance Measures, or MPMs. These are certain subtotals of income and expenses used in public communications to convey management's view of the company's performance.

The review should cover all communication channels: earnings releases, investor presentations, annual reports and other publicly available documents.

When a measure meets the definition of an MPM, the company must, among other things, explain how it is calculated and why it is useful, and reconcile it to the most directly comparable IFRS subtotal. The related tax effects and the effects attributable to non-controlling interests must also be disclosed.

This reconciliation must remain reproducible from one period to the next and be documented well enough to be controlled. A calculation maintained outside the reporting process quickly creates traceability issues.

IFRS 18 amends IAS 7 (opens in a new tab); the new classification requirements are summarised in our article on the standard.

A company that previously used other options to classify interest and dividends must identify the reclassifications required. Under the indirect method, the reconciliation now starts from operating profit or loss, so the cash flow statement configuration needs to be reviewed accordingly.

The 2026 cash flow comparatives must be produced using the same rules as the 2027 financial year.

Retrospective application puts 2026 at the centre of the transition. Figures published under IAS 1 will need to be presented in the new IFRS 18 structure when they appear as comparatives.

The bridge between the two presentations is best kept within the consolidation process itself: source data, account, IFRS 18 mapping rule, any reclassification and target line.

KPMG (opens in a new tab) recommends building comparatives into the roadmap and, where possible, running parallel reporting in 2026 under both the existing framework and IFRS 18. Differences can then be identified and explained before the first mandatory publications.

A presentation rule is only validated once it has worked through a full close. Testing covers the mapping, classification rules, data reported by subsidiaries, eliminations, reclassifications, MPMs, the statement of cash flows and consistency checks.

EY (opens in a new tab) describes implementation as a phased journey: impact assessment, design, system and governance changes, then dry runs. The goal is stable, audit-ready reporting ahead of the first IFRS 18 deadlines.

There is no standard regulatory timeframe for an IFRS 18 project. It depends on the number of entities, how heterogeneous the charts of accounts are, the consolidation systems, the granularity available, the MPMs in use and the level of automation targeted.

A project launched a few months before the effective date should begin with a targeted diagnostic. Some changes can be scheduled gradually; others directly determine your ability to produce the comparatives and the first publications.

The review can focus on a few priority questions: does the current mapping support the five categories? Do subsidiaries report the required level of detail? Can the 2026 comparatives be rebuilt? Which published measures could be MPMs? Will the statement of cash flows need reclassifying? Are the rules documented and auditable?

The answers help distinguish configuration changes, new data collection requirements for subsidiaries, adjustments to group reporting and deeper changes to the consolidation system.

• Have we defined our future IFRS 18 statement of profit or loss?
• Can every group account be assigned to an IFRS 18 category in a documented way?
• Is the 2026 data required for the comparatives available?
• Do we need to collect certain information from subsidiaries at a more granular level?
• Which published measures could meet the definition of an MPM?
• Does our statement of cash flows require new reclassifications?
• Can we run IAS 1 and IFRS 18 reporting in parallel to control the transition?
• Can we carry out an IFRS 18 test close before the first mandatory publication?

The accounting decisions made during the project must then be translated into your tools: mapping dimensions, reporting package updates, classification rules, controls, comparative versions, MPM reconciliations and statement of profit or loss outputs.

This operational translation determines whether reporting can be repeated reliably at every close. A well-defined rule must be applied consistently across the group's entities, controlled at consolidation level and explained to the auditors.

AEXIS supports finance teams on consolidation, reporting and the evolution of financial processes. A conversation with Thomas Leduc can help review your current set-up, identify priority gaps and determine which changes to make before your first IFRS 18 publications.