For most finance teams, the income statement is not simply a report. It is the product of account mappings, hierarchies, consolidation logic, and calculation rules embedded within the financial reporting process. As a result, when the presentation of the income statement changes, the underlying structures that support it often need to be redesigned as well. That is the practical challenge introduced by IFRS 18.
Issued by the International Accounting Standards Board (IASB) in April 2024, IFRS 18 replaces IAS 1, which had governed the presentation of financial statements since 1997. The new standard does not change how organizations recognize or measure financial information. Instead, it focuses on how financial performance is presented in the income statement and what additional disclosures must accompany it.
The standard takes effect for annual periods beginning on or after January 1, 2027, and applies retrospectively. It sorts income and expenses into five categories: operating, investing, financing, income taxes, and discontinued operations. It also adds two required subtotals: operating profit and profit or loss before financing and income taxes. Classification depends partly on an entity's main business activities, so a bank, for example, will place interest income differently from a manufacturer.
Beyond the statement itself, three areas carry most of the implementation effort.
Subtotals like adjusted EBITDA or adjusted operating profit, when used in public communications, now need disclosure in a single note within the audited financial statements. Each measure requires:
An explanation of what it represents
A description of how it is calculated
A reconciliation to the closest IFRS subtotal
The tax and non-controlling interest effect of each adjustment
Ratios such as gross margin or return on equity fall outside the definition, as does free cash flow. A useful early step is identifying which existing metrics are in scope.
Metrics built on the IAS 1 structure may no longer line up with the new subtotals. Gross profit percentage, for example, will need a bridge to operating profit.
For calendar-year reporters, the 2027 financial statements will include 2026 figures restated under the new structure. Most of 2026 has already closed under IAS 1, so for many teams the restatement work has started, whether they planned it or not. Implementing the new classifications now allows finance teams to validate them during live close cycles, reducing the risk and effort of recreating an entire year of comparative information under tight reporting deadlines.
Updating the layout of the income statement is the manageable part. Most of the effort goes into the structures that feed it. Moving an account into a new category means reviewing the mappings, hierarchies, and calculations connected to that account. Interest income, investments in associates, and FX differences require the most judgment. Accounts that net revenue and costs together need to be separated before they can be classified.
This work also depends on accounting decisions. System changes can be finalized once the finance team and its auditors have agreed on how each item should be classified.
In OneStream, IFRS 18 presentation can sit alongside existing statutory and management reporting in the same application. The new structure can run in parallel before it becomes mandatory, and MPM reconciliations draw on the same data as the financial statements. When MPM adjustments are held in dedicated members, each reconciling item traces back to the underlying entity-level data.
There is more than one way to implement this. The main considerations are whether to change historical data or leave it as loaded, how much to rely on journals, and how far to automate. Each approach carries different implications for audit traceability and ongoing maintenance.
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