The International Financial Reporting Standards (IFRS) are evolving, and IFRS 18 is a major new standard that will come into force from 2027. Particularly challenging is the retrospective application, which forces companies to have implemented the adjustments as early as 2026. CFOs should therefore deal with the requirements at an early stage and develop a clear strategy.
What will change with IFRS 18?
IFRS 18 entails significant changes in financial reporting. The aim is to provide an even more transparent and comparable presentation of company performance. The main innovations include:
- Revised segment reporting: Companies need to present their business segments in more detail and consistency. For example, corporations must align their internal segment structures more closely with the actual control mechanisms. If a company has different business units, such as an industrial company with an automotive division and an electronics division, these segments need to be more clearly defined and provided with specific performance indicators.
- Extended disclosures: The requirements for the disclosure of financial information are increasing considerably. In the future, companies will have to explain in more detail which assumptions and valuation methods are behind the reported figures. For example, estimation methods for provisions and valuations of assets need to be explained more transparently in order to increase comprehensibility for investors and auditors.
- Clearer distinction between operating and non-operating income: While income from operating and non-operating activities has been mixed in some cases, IFRS 18 calls for a stricter separation. For example, profits from the sale of operating equipment will be reported separately in the future so as not to distort the operating result. This means that CFOs need to revise existing reporting structures and ensure that their financial systems can accurately reflect this distinction.
- Impact on the cash flow statement: The new requirements may also affect the presentation of cash flows. For example, certain income that was previously recognized in operating cash flow could be shifted to investment or financing cash flow in the future. This could have implications for assessing a company’s financial health and requires a review of internal funding strategies.
- Possible adjustments in the chart of accounts: The new requirements may make it necessary to adapt the existing chart of accounts, especially if a more precise separation between operating and non-operating results is required. Companies should therefore check at an early stage whether their current accounting structure meets the new requirements or whether an adjustment is necessary.
How should CFOs proceed?
A structured approach helps CFOs efficiently address the challenges of IFRS 18:
- Conduct gap analysis: Review current reporting and identify adaptation needs.
- Adapt systems and processes: ERP systems and consolidation tools must be compliant with IFRS 18.
- Train employees: Accounting teams must be familiarized with the new requirements at an early stage.
- Communication with stakeholders: Investors, analysts and regulators expect clarity about the changes.
- Prepare for retrospective adjustment: Simulate the new regulations for 2026 at an early stage to avoid surprises.
Why an Interim Finance Manager Can Help
The implementation of a new IFRS standard requires specific expertise and additional capacity. An experienced interim finance manager can relieve CFOs in a targeted manner by:
- Conduct the gap analysis and create a roadmap,
- Optimizing existing processes and adapting them to the new requirements,
- leads employee training and ensures that the know-how is anchored in the company,
- The retrospective application coordinates and carries out tests at an early stage.
In a Nutshell
IFRS 18 brings with it far-reaching changes that require forward-looking planning. CFOs should provide IFRS 18-compliant data as early as 2026 and start implementing it early. An interim finance manager can serve as a valuable support to ensure smooth and efficient implementation.
Contact us at Appointment – Luc Widmer, we have proven experts in IFRS who will provide you with the necessary security.
