EFRAG has published its Draft Endorsement Advice (DEA) on IFRS 18 Presentation and Disclosure in Financial Statements and invites stakeholders to submit comments by 26 March 2025.
Objective of IFRS 18
IFRS 18 aims to improve the usefulness of information presented and disclosed in financial statements, particularly by addressing feedback from stakeholders, including users requesting better insights into companies’ financial performance. The standard affects how entities present financial information, aiming to provide investors with a clearer basis for analyzing and comparing companies’ performance.
Key New Requirements Under IFRS 18:
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Presentation of New Subtotals: The standard introduces defined subtotals in the statement of profit or loss, with a consistent classification of income and expenses into five categories.
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Disclosure of Management-Defined Performance Measures (MPMs): IFRS 18 mandates disclosures of MPMs to clarify company performance.
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Enhanced Grouping and Aggregation Requirements: It improves the grouping, aggregation, and disaggregation of information both in the primary financial statements and the notes.
EFRAG’s Preliminary Assessment
EFRAG believes that IFRS 18 meets the technical endorsement criteria. The standard was issued by the IASB following extensive consultations, including input from European stakeholders. While there were some concerns and mixed views on specific topics, EFRAG concludes that these do not prevent IFRS 18 from meeting the necessary qualitative technical criteria. Furthermore, EFRAG believes that IFRS 18 will improve financial reporting and provide a reasonable cost-benefit balance, without adverse effects on the European economy, financial stability, or economic growth. Thus, EFRAG recommends IFRS 18 for endorsement.
Invitation for Feedback
EFRAG invites stakeholders to provide feedback on its analysis by 26 March 2025.
For more information [here]