The European Financial Reporting Advisory Group (EFRAG) has released its Draft Endorsement Advice (DEA) on IFRS 18: Presentation and Disclosure in Financial Statements and is inviting stakeholders to submit comments by 26 March 2025. EFRAG’s preliminary assessment concludes that IFRS 18 meets the criteria for endorsement within the EU, and it recommends the standard for endorsement.
Objective of IFRS 18
The main objective of IFRS 18 is to enhance the usefulness of the financial statement presentation and disclosures, addressing stakeholder requests for more transparent and meaningful information regarding companies’ financial performance. The standard aims to improve how companies communicate financial data, helping investors make more informed decisions and providing a better basis for comparison across companies.
Key New Requirements under IFRS 18
- Presentation of New Subtotals: IFRS 18 introduces defined subtotals in the statement of profit or loss, ensuring consistent classification of income and expenses into five categories.
- Disclosure of Management-Defined Performance Measures (MPMs): The standard requires companies to disclose MPMs, providing clearer insights into business performance.
- Enhanced Grouping and Aggregation Requirements: IFRS 18 improves how financial information is grouped, aggregated, and disaggregated, both in the primary financial statements and accompanying notes.
EFRAG’s Preliminary Assessment
EFRAG believes IFRS 18 satisfies the technical endorsement criteria, highlighting that the standard was issued following extensive consultations and input from stakeholders, including European voices. While EFRAG acknowledges that some concerns and mixed views were raised by stakeholders on certain issues, it considers these concerns insufficient to prevent IFRS 18 from meeting the necessary technical standards.
EFRAG further asserts that IFRS 18 will improve financial reporting, strike a reasonable balance between costs and benefits, and will not have an adverse impact on the European economy, including financial stability and growth.