IFRS 18 and the Updated IFRS for SMEs Standard
With the International Accounting Standards Board (IASB) releasing significant updates to financial reporting requirements, entities should begin preparing now. Two key developments, IFRS 18 Presentation and Disclosure in Financial Statements and the third edition of IFRS for SMEs will redefine how organisations present performance, revenue, and key transactions in their financial statements from 2027 onwards.
IFRS 18 – Presentation and Disclosure in Financial Statements
Issued in April 2024, IFRS 18 replaces IAS 1 and introduces substantial changes to the statement of profit or loss, non-IFRS performance measures, and overall financial reporting structure. What may first appear as a simple presentation update can bring complex challenges in implementation.
Why preparation is essential
While entities are already managing emerging requirements, the possibly pervasive impact of IFRS 18 means transition activities should begin early to avoid disruptions.
Major Update to IFRS for SMEs
The IASB has also released the third edition of IFRS for SMEs, the most substantial revision since its introduction. Intended for small and medium-sized entities without public accountability, the updated Standard aligns more closely with full IFRS in key areas.
The Impact of IFRS Changes on SMEs
The upcoming update to the IFRS for SMEs Accounting Standard will significantly increase the complexity of financial reporting for many small and medium-sized entities. The revision introduces a new revenue recognition model based on the core principles of IFRS 15, together with expanded requirements for fair value measurement, financial instruments, and business combinations. These changes require new processes, more detailed contract and data analysis, and additional technical expertise within finance teams.
Both standards require retrospective application and become effective for annual periods beginning on or after 1 January 2027, giving entities limited time to prepare.
What does this mean for you?
Although 2027 may seem distant, the changes may require substantial planning, system updates, and communication with stakeholders. We recommend beginning your implementation preparations early. Our team is ready to assist with:
- Impact assessment and transition planning.
- Training and awareness for finance teams.
- Updates to policies and reporting structure.
Get ready for IFRS 18
This publication sets out a high-level overview of IFRS 18’s new requirements, along with practical insights into the application challenges.