IFRS 18 becomes mandatory from the 2027 financial year. That sounds like ample time. It is not. And the consequences of failing to act are considerably more concrete than most CFOs assess today.
This article does not once again go through what IFRS 18 is. It describes what happens when a company has not yet substantially begun to prepare in 2026.
What an IFRS 18 set of financial statements without preparation specifically means
A company that has to prepare its first IFRS 18 financial statements in 2027 without sufficient preparation faces a situation that structurally resembles a reconstruction audit. The definition of operating activities must be decided at short notice under time pressure. The systems that are supposed to reflect these categorisations must be adapted at short notice without sufficient testing time. The comparative period must be restated, which, where there is no system support in place, requires manual work of considerable scope.
Each of these tasks alone is challenging under time pressure. All of them at the same time are a capacity crisis that burdens the entire 2027 financial statements process.
What auditors see when IFRS 18 is implemented unprepared
Auditors do not only see the figures. They see the quality of the categorisation decisions, the consistency of the MPM definitions, and the coherence between P&L categories and cash flow presentation.
A set of financial statements that was prepared under time pressure and in which the fundamental conceptual decisions have not been carefully thought through and documented shows this. The result: increased audit effort, increased audit costs, delayed completion of the financial statements.
What happens to capital market communication
IFRS 18 changes how key financial metrics are communicated. An EBIT that had a certain size under IAS 1 may look different under IFRS 18. This change must be explained to investors and analysts at an early stage. A company that communicates this change only with its first IFRS 18 financial statements creates confusion and possibly mistrust.
What can still be done now
Anyone who has not yet begun in 2026 has less time than would be ideal. But there is still time for substantial preparation, if it is begun immediately.
Step 1: Decision on the definition of operating activities.
Step 2: Review of all current MPMs against the IFRS 18 requirements.
Step 3: Systems analysis.
Step 4: Early involvement of the auditor.
What I bring to the table
I am Nicole Vekonj, Interim Manager Finance & Controlling. I support IFRS 18 implementations from the fundamental conceptual decision, through the systems implementation, to the communication with auditors.
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