IFRS 18 implementation checklist: what to do and in what order

IFRS 18 looks like a presentation change, but it reaches into the ledger, the consolidation system, loan agreements and bonus schemes. This checklist puts the work in a sensible order for a finance team with a December year end.

By Awais Jameel, Chartered Accountant. Reviewed by Hamza Fida, Chartered Accountant. Checked against official sources on . 3 minute read.

Short answer

To implement IFRS 18, classify every income and expense account into the new categories, decide which published measures are management-defined performance measures, update the chart of accounts and reporting systems, restate the comparative year with its reconciliation, and tell lenders, investors and remuneration committees how reported figures will change. Most of the work can and should be done on 2026 data.

At a glance

Start
Account classification
Biggest judgement
Main business activities and MPMs
Systems
Chart of accounts and consolidation mapping
Dry run
On 2026 figures
Outside finance
Covenants, bonuses, investor reporting
Go live
1 January 2027
IFRS 18 implementation checklist: what to do and in what orderStart: Account classification; Biggest judgement: Main business activities and MPMs; Systems: Chart of accounts and consolidation mapping; Dry run: On 2026 figures; Outside finance: Covenants, bonuses, investor reporting; Go live: 1 January 2027.KEY FACTS AT A GLANCEIFRS 18 implementation checklist: what to do andin what orderStartAccount classificationBiggest judgementMain business activitiesand MPMsSystemsChart of accounts andconsolidation mappingDry runOn 2026 figuresOutside financeCovenants, bonuses,investor reportingGo live1 January 2027Checked against official sourcesTax BakersIFRS 18 implementation checklist: what to do and in what orderStart: Account classification; Biggest judgement: Main business activities and MPMs; Systems: Chart of accounts and consolidation mapping; Dry run: On 2026 figures; Outside finance: Covenants, bonuses, investor reporting; Go live: 1 January 2027.KEY FACTS AT A GLANCEIFRS 18 implementation checklist:what to do and in what orderStartAccount classificationBiggest judgementMain business activities and MPMsSystemsChart of accounts and consolidation mappingDry runOn 2026 figuresOutside financeCovenants, bonuses, investor reportingGo live1 January 2027Checked against official sourcesTax Bakers
Key facts at a glance, as set out in this guide.

What are the steps?

  1. Assess main business activities

    Decide, with evidence, whether the group or any subsidiary invests in assets or finances customers as a main business activity. This sets the classification rules for everything else. See main business activities.

  2. Classify every account

    Tag each income and expense account as operating, investing, financing, income taxes or discontinued operations. Flag accounts that mix categories, such as exchange differences and miscellaneous income. The IFRS 18 income statement mapper (Excel) gives you a working list.

  3. Resolve the judgement areas

    Exchange differences, derivatives, interest on non-borrowing liabilities, and income from assets held alongside the main business. Document each conclusion and agree it with your auditors.

  4. Choose the expense presentation

    Nature, function or mixed. If any line is by function, build the data for the five specified expenses by nature. See aggregation and disaggregation.

  5. Identify performance measures

    List every measure used publicly and test it. For each management-defined performance measure, set up the tax and non-controlling interest calculations. Use the MPM reconciliation template (Excel).

  6. Update systems

    Split mixed accounts, add category attributes to the chart of accounts, and rebuild the consolidation and reporting pack mappings. Group reporting packs from subsidiaries need the new split too.

  7. Restate the comparative year

    Produce the 2026 income statement and cash flow statement on the new basis, with the line-by-line reconciliation. Use the Comparatives restatement workbook (Excel) and the Cash flow statement template (Excel).

  8. Review agreements and targets

    Find every covenant, bonus target, earn-out and tax or regulatory calculation that refers to operating profit, EBIT, EBITDA or operating cash flow, and decide whether it follows the new figures or needs a frozen definition.

  9. Draft the disclosures

    The new notes, the transition reconciliation and the accounting policy wording. Draft them on 2026 numbers so the first interim report in 2027 is not the first attempt.

  10. Brief the people who use the numbers

    The board, audit committee, lenders, analysts and budget holders. A fall in operating profit caused only by reclassification needs explaining before it is published.

What is a workable timeline?

WhenWhat
Now to the end of 2026Steps 1 to 6; parallel run of at least two quarters
Year-end close, early 2027Restate 2026; draft disclosures; brief the audit committee
First quarter or half year of 2027First interim report in the new layout, with the comparative reconciliation
Early 2028First annual financial statements under IFRS 18

What goes wrong most often?

  • Treating it as a year-end exercise. The interim report comes first, and the comparative year is already running.
  • Leaving exchange differences in one account. They now go to up to three categories. See foreign exchange and derivatives.
  • Forgetting subsidiaries. Each reporting entity makes its own assessment, and group packs must carry the split.
  • Missing the tax and non-controlling interest effects for adjusted measures, which are rarely tracked by adjustment today.
  • Overlooking contracts that quote operating profit.

How much work is it?

For a single company with a simple ledger, a few weeks. For a group with several ledgers, a consolidation system and published adjusted measures, plan for several months, most of it in systems and data. The accounting conclusions are usually reached quickly; getting the data to follow them takes longer.

Getting ready for IFRS 18?

We help finance teams map their income statement to the new categories, restate comparatives and prepare the new disclosures.

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Questions people ask

When should IFRS 18 implementation start?

Now. The comparative year is restated, so for a December year end the 2026 figures are already affected.

Does IFRS 18 affect loan covenants?

It can, where a covenant refers to operating profit, EBITDA or operating cash flow as reported in the financial statements.

Do subsidiaries need to apply IFRS 18 separately?

Yes, if they prepare IFRS financial statements, and their assessment of main business activities can differ from the group's.

How long does IFRS 18 implementation take?

From a few weeks for a single company with a simple ledger to several months for a group with several systems and published adjusted measures.

Sources

Every fee, date and rule on this page was taken from these official and primary sources.

  1. IFRS Foundation: IFRS 18 Presentation and Disclosure in Financial Statements
  2. Australian Accounting Standards Board: AASB 18, the Australian equivalent of IFRS 18 (full text)
  3. IFRS Foundation: IFRS 18, the new requirements (presentation)

Rules and fees change. If you are reading this long after October 4, 2026, confirm the figures with the source before you rely on them.

IFRS 18IFRS 18 transition: dates, restated comparatives and the reconciliationIFRS 18Management-defined performance measures (MPMs) under IFRS 18IFRS 18IFRS 18 explained: what changes and when

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This guide is general information. It is not tax or legal advice for your situation.