IASB’s IFRS 18 presentation and disclosure in financial statements
The International Accounting Standards Board has published a new accounting standard, IFRS 18 – effective on or after 1 January 2027, with early application permitted. It aims to enhance transparency, usefulness and comparability for investors on companies’ performance and it is replacing IAS 1.
However, the new standard will not change how companies recognise and measure items in the financial statements. IFRS 18 is expected to:
- require presentation of two new defined subtotals in the income statement – operating profit and profit before financing and income taxes – which are expected to improve comparability among companies by creating a consistent structure for the income statement
- require disclosure of management-defined performance measures (MPMs) – subtotals of income and expenses not specified by IFRS accounting standards that are used in public communications to communicate management’s view of an aspect of a company’s financial performance. A reconciliation between the MPMs and the most directly comparable totals or subtotals specified by IFRS accounting standards is also required to provide transparency on the entity-specific performance measures
- enhance the general and specific requirements for aggregation and disaggregation to help a company to provide useful information. The specific requirements include those for disaggregation of ‘other’ balances, presentation of operating expenses in the income statement and disclosure of specified operating expenses by nature included in each function line item
- require limited changes to IAS 7, Statement of Cash Flows, to improve comparability by specifying a consistent starting point for the indirect method of reporting cash flows from operating activities and eliminating options for the classification of interest and dividend cash flows.
ACCA welcomes your views on a number of questions around this new standard:
- How familiar are you with this new standard?
- Do you think this new standard will enhance the overall decision usefulness of IFRS financial statements?
- What rough costs (as a percentage) do you think this new standard will have on your organisation?
- To what extent do you think this standard could improve access to finance?
When replying, please state whether you are a user or preparer, and send your comments to ukpolicy@accaglobal.com.
FRC NHS audit market study
Delays in the production of audited accounts have also limited the ability of the Comptroller and Auditor General in signing off central government accounts. This is linked to limited capacity and capability in the local audit system as a whole.
While this has been acute in the local government sector, inter-dependencies in the local audit market mean this has had a knock-on impact in other sectors including NHS and health audits.
The Financial Reporting Council has carried out previous reviews covering this market – predominantly focusing on local government audits – and is not aware of a detailed NHS audit market assessment. The scope of the market study is limited to external audit of NHS trusts, foundation trusts and ICBs and does not include other types of NHS organisation or other types of assurance.
We are keen to hear from organisations and individuals involved in the NHS audit market, as well as any relevant parties who wish to comment and contribute to ACCA’s response.
Please consider the following questions:
- How well do you think the NHS audit market is functioning?
- What issues do you think are affecting this market?
- What, if any, barriers do audit firms face in entering and expanding in the market?
- To what extent are there constraints on audit firms’ capacity to supply NHS audits?
- How effective is the process for selecting and appointing NHS auditors?
- What do NHS bodies expect from their audits and are their expectations being met?
- What distinguishes NHS audits and to what extent do the current audit (and reporting) frameworks serve the needs of NHS bodies?
- What, if any, changes are required to ensure a well-functioning NHS audit market?
Please send any comments to ukpolicy@accaglobal.com.
