Stakeholders are invited to submit comments on the [Draft] Endorsement Criteria Assessment of IFRS 18 Presentation and Disclosure in Financial Statements published on 9 July 2025.
Updated: 9 July 2025. This article has been updated to reflect the publication of the [Draft] ECA, which is now available for public consultation.
The International Accounting Standards Board (IASB) published IFRS 18 Presentation and Disclosure in Financial Statements in April 2024. IFRS 18 is a new IFRS Accounting Standard that sets out general presentation and disclosure requirements that apply across the primary financial statements and the disclosure notes and replaces IAS 1 Presentation of Financial Statements.
IFRS 18 aims to improve how companies communicate in their financial statements and responds to investor demands for better information about a company’s financial performance. IFRS 18 has an effective date of 1 January 2027 (earlier application permitted), subject to its endorsement by the UK Endorsement Board (UKEB).
IFRS 18 affects all entities that use IFRS to produce their financial statements. The Standard does not change the recognition and measurement of the components of financial statements. However, it introduces certain enhancements, including:
- two newly defined subtotals to be presented on the statement of profit or loss (including operating profit), and a new set of requirements for classifying income and expenses into defined categories;
- disclosures of information about some performance measures defined by management – IFRS 18 identifies these as “management-defined performance measures” (MPMs); and
- enhanced requirements for aggregation and disaggregation of information presented in the primary financial statements or disclosed in the notes.
UK registered companies that use UK-adopted IFRS when preparing their financial statements can only use IFRS 18 once it has been adopted for use in the UK. It is the UKEB’s responsibility to endorse and adopt international accounting standards for use in the UK.
The UKEB has considered whether IFRS 18 meets the statutory endorsement criteria and has issued its conclusions in its [Draft] Endorsement Criteria Assessment ([Draft] ECA). The [Draft] ECA will be open for comment until 7 October 2025.
Why are UK stakeholders’ views important for this consultation?
Stakeholder feedback is important to the UKEB so it can:
- test tentative conclusions that IFRS 18 aligns with the needs of UK entities preparing financial statements, users of financial reporting, and any other stakeholders affected;
- identify potential challenges or benefits associated with IFRS 18; and
- ensure that endorsement of IFRS 18 for use in the UK meets the broader goal of maintaining high-quality financial reporting that supports users’ decision-making and enhances management accountability.
Stakeholder feedback will therefore help the UKEB decide whether the Standard is, overall, suitable for use in the UK.
Who should respond to this consultation?
Any UK stakeholders that could be impacted by the endorsement and adoption of IFRS 18.
What is in the [Draft] ECA?
The [Draft] ECA presents the work conducted by the UKEB to assess whether IFRS 18 meets the UK’s statutory requirements for adoption of IFRS as set out in Regulation 7 of Statutory Instrument 2019/685 (SI 2019/685).
Criteria for adoption
The UKEB’s assessment addresses the three endorsement criteria (set out in SI 2019/685). For each of these criteria the assessment considers the Standard as a whole as follows:
- Whether IFRS 18 meets the criteria of understandability, relevance, reliability and comparability (referred to as the technical accounting criteria) required of the financial information needed for making economic decisions and assessing the stewardship of management. The [Draft] ECA includes an analysis of the general requirements of IFRS 18 as well as detailed analysis of specific issues where stakeholders raised some practical challenges, as follows:
- The classification of income and expenses from associates and joint ventures, accounted for using the equity method, in the investing category.
- The accounting policy choice for the classification of income and expenses for entities that provide financing to customers.
- The disclosure of the income tax effect and the effect on non-controlling interests (NCIs) in the MPM reconciliation.
- Whether IFRS 18 is likely to be conducive to the long-term public good in the UK. This assessment considers:
- whether IFRS 18 is likely to improve the quality of financial reporting in the UK;
- the costs and benefits likely to result from the use of IFRS 18 in the UK; and
- whether the use of IFRS 18 is likely to have an adverse effect on the economy of the UK, including on economic growth.
- Whether IFRS 18 contains any requirement that would prevent accounts (both individual and consolidated) prepared using IFRS 18 from giving a true and fair view. This assessment considered the impact of IFRS 18 and its interaction with other UK-adopted international accounting standards.
The Board also considered whether IFRS 18 is likely to lead to a significant change in accounting practice (as set out in Regulation 11 of SI 2019/685), which determines whether a post implementation review is required, in line with legislation.
The Board also considered whether IFRS 18 is likely to lead to a significant change in accounting practice
In its endorsement assessment, the UKEB tentatively concludes that:
- IFRS 18 meets the technical criteria for endorsement. It notes that the Standard sets out clear principles that can be applied to the financial statements, which will result in understandable, relevant, reliable and comparable information for users of the financial statements.
- The adoption of IFRS 18 would be conducive to the UK public good. It notes that implementing IFRS 18 is expected to lead to improvements in the quality of financial reporting in the UK through the provision of additional useful information for users. Research indicates that users anticipate significant benefits from the application of IFRS 18, while preparers indicated that the one-off and ongoing costs as a result of applying IFRS 18 are expected to be contained. Preparers expect ongoing costs to be much lower than one-off costs, and to be subsumed into business as usual within a few years. The analysis of wider economic effects suggests that IFRS 18 may benefit preparers in the medium to long term and that it is not expected to lead to other economic effects that are detrimental to the UK economy, including on economic growth.
- IFRS 18 is not contrary to the principle of true and fair view. The assessment does not identify any requirement of IFRS 18 that would prevent individual or consolidated accounts prepared using IFRS 18 from giving a true and fair view of the entity’s assets, liabilities, financial position and profit or loss.
What evidence did the UKEB use for this assessment?
Stakeholder engagement aimed at obtaining input to support the [Draft] ECA has spanned several months. The UKEB has based its assessment in the [Draft] ECA on evidence gathered by means of:
- engagement with its Advisory and Working Groups;
- two surveys, one for preparers and one for users (including feedback from small and medium-sized listed entities);
- triangulating the survey results via 15 preparer interviews;
- a questionnaire for auditors; and
- a webinar poll.
The UKEB also engaged bilaterally with preparers, users, UK regulators, accounting professional bodies, industry associations and other national and regional standard setters to understand their views on costs and benefits associated with the adoption of IFRS 18.
Supporting stakeholders
As well as assessing the suitability of IFRS 18 for use in the UK, the UKEB has produced educational material to support stakeholders. This includes:
- a webcast introducing the IFRS 18 [Draft] Endorsement Criteria Assessment;
- a webcast with IASB Board Member Nick Anderson exploring the implications of IFRS 18; and
- a webinar on IFRS 18 carried out jointly with the IASB, which included participation of a panel of preparers and a user of accounts.
For more information on the UKEB’s work on IFRS 18, visit its IFRS 18 endorsement project page.
Denise Durant, Project Director, UK Endorsement Board, and Stefano Alderighi, Project Director, UK Endorsement Board.
