If your organization reports under International Financial Reporting Standards (IFRS), a significant shift is coming on Jan. 1, 2027, when IFRS 18, Presentation and Disclosure in Financial Statements comes into effect. While that may seem distant, preparing for this standard requires significant lead time, cross-functional coordination, and considerable work effort, depending on your organization’s complexity.
This article explored what’s changing under the new accounting standard. Now, it’s time to shift the focus to readiness, assessing your current state, and mapping out a practical IFRS 18 transition.
Assess your IFRS 18 starting point across five key areas
Transitioning to IFRS 18 will affect more than just your financial statement presentation. It will require coordination across finance, systems, governance, and policy functions.
Understanding where you are today is the foundation of any successful IFRS 18 transition. Organizations should evaluate their readiness across five dimensions. We’ve outlined these below, but keep in mind they’re not exhaustive and additional factors may need to be addressed based on your specific circumstances.
1. Presentation and classification
This is the cornerstone of IFRS 18 compliance, as it will dictate the scope of changes required across your systems and chart of accounts.
Key considerations:
- How closely does your current income statement align with the new IFRS categories?
- Do you have the data and controls in place to support the classification consistently?
- Will you need to modify your chart of accounts or reporting processes to comply?
- Are your current disclosures sufficient to meet the new disaggregation requirements?
2. Management-defined performance measures (MPMs)
MPMs are a new concept introduced by IFRS 18 and will now form part of audited financial statements. As a result, MPM reporting will be subject to rigorous review and audit. Because MPMs are new, significant judgement may be required, as understanding exactly what qualifies as an MPM under the standard may not always be straightforward or readily apparent.
Take stock of how your organization currently defines, calculates, and communicates non-GAAP measurements. Strong governance in this area will be essential for compliance and credibility.
Key considerations:
- Have you documented all non IFRS metrics communicated externally and assessed which of them qualify as MPMs under IFRS 18?
- Do you have a process for reconciling each MPM to the nearest IFRS subtotal?
- Is there a board approved policy on the creation, labelling, and use of MPMs?
- Do you maintain a change log for definitions and ensure consistency across periods and communications?
3. Chart of accounts
One of the most complex and resource-intensive aspects of implementing IFRS 18 will be updating systems and the chart of accounts to support the new way information needs to be presented.
Assess whether your current structure can accommodate these requirements or whether remapping is needed. Keep in mind that comparative figures may require restating, so early planning is critical.
Key considerations:
- Can your chart of accounts tag transactions to the new IFRS 18 categories (operating, investing, financing) in addition to income taxes and discontinued operations?
- Do your systems capture expenses by nature (e.g., depreciation, salaries, interest) to support note disclosures and disaggregation?
- For entities within a group that also report under other local frameworks, have you mapped IFRS classifications to local GAAP categories?
- Are prior years’ data retained at sufficient granularity to restate comparatives?
4. Systems and integration
To comply with IFRS 18, you may need to adjust your enterprise resource planning (ERP) system, reporting processes, and classification structure in your chart of accounts.
Key considerations:
- Does your ERP have the capability to add IFRS 18 dimensions or categories without manual workarounds?
- Are your consolidation tools configured to produce IFRS 18 compliant statements and notes automatically?
- Do you have systems or scripts that automate MPM reconciliations and comparative restatements?
- Can your financial reports be updated to handle IFRS 18’s requirements (MPM notes, category presentation)?
- Have you clearly assigned data ownership (e.g., finance vs. IT) for IFRS 18 tagging and reporting tasks?
5. Governance and change management
Board and audit committee oversight will be essential throughout the transition to IFRS 18, as will the development of updated policies and cross-functional coordination between finance, IT, legal, and investor relations. Early engagement with these stakeholders can help ensure alignment and minimize surprises down the road.
Key considerations:
- Do you have an IFRS 18 steering committee or project governance structure?
- Has management briefed the board or audit committee on IFRS 18 impacts and developed a training plan?
- Are finance, legal, investor relations, IT and operations engaged in transition planning?
- Do you have a plan for staff training, stakeholder communication, and managing change fatigue?
- Have you estimated and approved budgets for IFRS 18 transition (consulting, systems, training)?
IFRS 18 timeline: Four steps towards implementation
Once you understand your starting point, the next step is to map out a realistic timeline and road map. Transitioning for IFRS 18 isn't something that happens in a single quarter. It requires a phased approach that aligns resources, systems, and teams as you move from assessment to implementation.
Below is an overview of a typical IFRS 18 adoption process, outlining key priorities and a structured approach to guide you through implementation. This is a sample of the timeline that could be adjusted to fit within your organization’s timelines and constraints.
1. Establish your baseline
This phase is critical, as it sets the foundation for everything that follows. Without a clear understanding of your organization’s readiness and the effort required, it’s difficult to allocate resources effectively or set realistic expectations with stakeholders.
- Understand new disclosure demands and their implications.
- Evaluate how IFRS 18 may reshape your organization’s financial statements, chart of accounts, and system capabilities.
- Identify non-IFRS measures that could be considered MPMs.
- Educate your teams on the new technical requirements, templates, and reconciliations needed.
- Engage with external auditors to ensure alignment on key judgments and conclusions drawn.
2. Strategy and planning
Define your road map.
- Design your future-state income statement structure.
- Determine required updates to your chart of accounts and systems.
- Define change management and communication plans.
- Review your public communication in scope of IFRS 18 and identify which MPMs will need to be included as part of your financial statements.
- Engage early and regularly with your auditors to discuss emerging interpretations of IFRS 18 as they continue to develop through ongoing IFRS standard-setting and implementation discussions.
3. Deploy and transition
Execute system and process changes. This is where strategy turns into action. Testing is critical to ensure accuracy and minimize disruption.
- Configure systems and revise reporting templates.
- Update policies, disclosures, and governance documentation.
- Prepare newly required note disclosures, including MPMs and, in certain cases, reconciliations of total depreciation, amortization, employee benefits, and impairment losses and reversals.
- Conduct dry runs and comparative restatements.
- Once you’ve identified the required adjustments, develop a strategy to communicate the implications to key stakeholders, including executive leadership teams, the audit committee, and investor relations. Stakeholders will need clarity on how IFRS 18 affects performance metrics and on the narrative required to communicate those changes consistently.
4. Implement and maintain compliance
Transition to IFRS 18-compliant reporting.
- Finalize opening balances and comparative financial information.
- Prepare year-end financial statements under IFRS 18.
- Embed ongoing controls, governance, and training.
In conclusion, organizations that begin assessing their IFRS 18 readiness now will be in a far stronger position to manage the transition smoothly. Early action allows more time for testing, governance alignment, and internal communication, minimizing disruption when reporting deadlines arrive.
Originally published by BDO Canada. The information in this publication is current as of Jan. 22, 2026.
