IFRS 18 “Presentation and Disclosure in Financial Statements”
A New Standard for Financial Statement Presentation – Effective in Taiwan from 2028
In 2024, the International Accounting Standards Board (IASB) issued a new standard — IFRS 18 Presentation and Disclosure in Financial Statements, which is set to take effect internationally on January 1, 2027. According to the announcement by Taiwan’s Financial Supervisory Commission (FSC) on September 25, 2025, public companies in Taiwan will adopt IFRS 18 starting from fiscal year 2028 (Year 117), with early adoption permitted.
For non-public companies that prepare financial statements in accordance with T-IFRS, early adoption is also allowed once IFRS 18 is endorsed by the FSC. Alternatively, they may adopt the standard starting from the same fiscal year as public companies (2028).
IFRS 18 will replace the existing IAS 1. While it does not change the recognition or measurement of financial figures, the standard significantly reshapes the presentation structure and disclosure requirements of financial statements. These changes are expected to have a substantial impact on financial reporting processes, system design, and internal controls.
Five Key Changes Introduced by IFRS 18
1. Standardized Income Statement Structure
Companies must present subtotals such as Operating Profit and Profit Before Financing and Income Taxes. Income and expenses are now categorized into operating, investing, financing, income tax, and discontinued operations.
For example: Foreign exchange gains/losses previously shown under non-operating items must now be classified based on their nature — e.g., FX gains/losses on trade receivables should be included in operating activities.
2. Disclosure and Audit of Management-Defined Performance Measures (MPMs)
If a company uses subtotal performance indicators like EBITDA or Adjusted Net Profit in external communications, it must disclose their definitions and calculation methods, and include them in the scope of audit.
For example: If “Adjusted Operating Profit” is used in press releases or investor presentations, the company must disclose the adjustment items and provide a reconciliation to financial statement line items.
3. Enhanced Disclosure of Expense Classification
When the income statement is presented by function (e.g., cost of sales, administrative expenses), companies must disclose more detailed information on the nature of expenses to improve transparency and comparability.
For example: Previously, only “cost of sales” was presented. Under IFRS 18, companies must disclose the nature of expenses included within it, such as depreciation, employee benefits, impairment losses and reversals, and inventory write-downs and reversals.
4. Cash Flow Statement Alignment
The indirect method must now start with Operating Profit, enhancing consistency across reports.
For example: Entities previously starting with “Profit Before Tax” must revise their reporting format.
5. More Granular Line Item Classification
Use of generic categories like “Other” is discouraged, requiring clearer and more specific disclosures.
For example: “Other income” must be broken down into specific items such as interest income, rental income, etc.
Challenges and Preparation for IFRS 18 Implementation
- Redesign of reporting systems and chart of accounts
- Pressure to ensure consistency across group reporting
- Complex identification and disclosure of MPMs
- Updates to internal controls and reporting processes
Potential Benefits of IFRS 18 for Financial Reporting
- Improved transparency and comparability
- Enhanced quality of financial communication
- Greater consistency in group reporting
- Strengthened reliability and quality of financial statements
If you would like to understand how IFRS 18 may impact your company and how to prepare effectively, please contact the Forvis Mazars Taiwan team. We are ready to support you with professional insights and practical solutions.