• Skip to content
  • Skip to navigation
Contact us
Grant Thornton logo
  • Insights
  • About us
  • Contact us
  • English
Global site
  • Global site
  • Africa
  • Americas
  • Asia Pacific
  • Europe
  • Middle East
    Services
    • Japan Desk
    Audit and Assurance
    We deliver value-added audit and assurance services to our clients, helping them manage their fiscal responsibilities with prudence and foresight.
    See Overview
    • Audit approach overview
      Our audit approach will allow our client's accounting personnel to make the maximum contribution to the audit effort without compromising their ongoing responsibilities
    • Annual and short period audit
      At P&A Grant Thornton, we provide annual and short period financial statement audit services that go beyond the normal expectations of our clients. We believe strongly that our best work comes from combining outstanding technical expertise, knowledge and ability with exceptional client-focused service.
    • Review engagement
      A review involves limited investigation with a narrower scope than an audit, and is undertaken for the purpose of providing limited assurance that the management’s representations are in accordance with identified financial reporting standards. Our professionals recognize that in order to conduct a quality financial statement review, it is important to look beyond the accounting entries to the underlying activities and operations that give rise to them.
    • Other Related Services
      We make it a point to keep our clients abreast of the developments and updates relating to the growing complexities in the accounting world. We offer seminars and trainings on audit- and tax-related matters, such as updates on Accounting Standards, new pronouncements and Bureau of Internal Revenue (BIR) issuances, as well as other developments that affect our clients’ businesses.
    Tax Advisory and Compliance
    We help you identify the opportunities and pitfalls that can significantly affect your...
    See Overview
    • Tax advisory
      With our knowledge of tax laws and audit procedures, we help safeguard the substantive and procedural rights of taxpayers and prevent unwarranted assessments.
    • Tax compliance
      We aim to minimize the impact of taxation, enabling you to maximize your potential savings and to expand your business.
    • Corporate services
      For clients that want to do business in the Philippines, we assist in determining the appropriate and tax-efficient operating business or investment vehicle and structure to address the objectives of the investor, as well as related incorporation issues.
    • Tax education and advocacy
      Our advocacy work focuses on clarifying the interpretation of laws and regulations, suggesting measures to increasingly ease tax compliance, and protecting taxpayer’s rights.
    Advisory Services
    We believe there is an optimal solution to every business challenge. Using our Firm's breadth and depth of specialized expertise, we work with you to find...
    See Overview
    • Business risk services
      Our business risk services cover a wide range of solutions that assist you in identifying, addressing and monitoring risks in your business. Such solutions include external quality assessments of your Internal Audit activities' conformance with standards as well as evaluating its readiness for such an external assessment.
    • Business consulting services
      Our business consulting services are aimed at addressing concerns in your operations, processes and systems. Using our extensive knowledge of various industries, we can take a close look at your business processes as we create solutions that can help you mitigate risks to meet your objectives, promote efficiency, and beef up controls.
    • Transaction services
      Transaction advisory includes all of our services specifically directed at assisting in investment, mergers and acquisitions, and financing transactions between and among businesses, lenders and governments. Such services include, among others, due diligence reviews, project feasibility studies, financial modelling, model audits and valuation.
    • Forensic advisory
      Our forensic advisory services include assessing your vulnerability to fraud and identifying fraud risk factors, and recommending practical solutions to eliminate the gaps. We also provide investigative services to detect and quantify fraud and corruption and to trace assets and data that may have been lost in a fraud event.
    • Cyber advisory
      Our focus is to help you identify and manage the cyber risks you might be facing within your organization. Our team can provide detailed, actionable insight that incorporates industry best practices and standards to strengthen your cybersecurity position and help you make informed decisions.
    • ProActive Hotline
      Providing support in preventing and detecting fraud by creating a safe and secure whistleblowing system to promote integrity and honesty in the organisation.
    Business Process Solutions
    We provide solid, first-rate support for your key accounting and administrative activities, such as outsourced accounting, payroll, and accounting-related...
    See Overview
    • Accounting services
      At P&A Grant Thornton, we handle accounting services for several companies from a wide range of industries. Our approach is highly flexible. You may opt to outsource all your accounting functions, or pass on to us choice activities.
    • Staff augmentation services
      We offer Staff Augmentation services where our staff, under the direction and supervision of the company’s officers, perform accounting and accounting-related work.
    • Payroll Processing
      Payroll processing services are provided by P&A Grant Thornton Outsourcing Inc. More and more companies are beginning to realize the benefits of outsourcing their noncore activities, and the first to be outsourced is usually the payroll function. Payroll is easy to carve out from the rest of the business since it is usually independent of the other activities or functions within the Accounting Department.
    Japan Desk
    Japan Desk
    See Overview
    Careers
    Careers
    • FAQs
    Careers
    With our unique culture and opportunities, our organisation is a place where you can grow. Wherever you are in your career, we help you to make a difference...
    See Overview
    Why Grant Thornton is a great place to work
    We value each of the 50,000 people in our member firms equally and appreciate every contribution across Grant Thornton.
    See Overview
    • Our values
      Grant Thornton prides itself on being a values-driven organisation and we have more than 38,500 people in over 130 countries who are passionately committed to these values.
    • Global culture
      Our people tell us that our global culture is one of the biggest attractions of a career with Grant Thornton.
    • Learning & development
      At Grant Thornton we believe learning and development opportunities allow you to perform at your best every day. And when you are at your best, we are the best at serving our clients
    • Global talent mobility
      One of the biggest attractions of a career with Grant Thornton is the opportunity to work on cross-border projects all over the world.
    • Diversity
      Diversity helps us meet the demands of a changing world. We value the fact that our people come from all walks of life and that this diversity of experience and perspective makes our organisation stronger as a result.
    • In the community
      Many Grant Thornton member firms provide a range of inspirational and generous services to the communities they serve.
    • Behind the Numbers: People of P&A Grant Thornton
      Discover the inspiring stories of the individuals who make up our vibrant community. From seasoned veterans to fresh faces, the Purple Tribe is a diverse team united by a shared passion.
    Opportunities
    If you wish to develop your talents to the fullest and build a fulfilling career, join P&A Grant Thornton, where you will be part of a dynamic...
    See Overview
    • Fresh Graduates
      Fresh Graduates
    • Students
      Whether you are starting your career as a graduate or school leaver, P&A Grant Thornton can give you a flying start. We are ambitious. Take the fact that we’re the world’s fastest-growing global accountancy organisation. For our people, that means access to a global organisation and the chance to collaborate with more than 40,000 colleagues around the world. And potentially work in different countries and experience other cultures.
    • Experienced hires
      P&A Grant Thornton offers something you can't find anywhere else. This is the opportunity to develop your ideas and thinking while having your efforts recognised from day one. We value the skills and knowledge you bring to Grant Thornton as an experienced professional and look forward to supporting you as you grow you career with our organisation.
    FAQs
    If you would like to join Grant Thornton, you may have a few questions about our organisation, how we do business, our culture and our global opportunities....
    See Overview
    Industries
    Industries
    • Consumer products
    • Education
    • Energy and natural resources
    • Financial services
    • Not for profit
    • Outsourcing
    • Public sector
    • Real estate and construction
    • Technology, media and communications
    • Travel, tourism and leisure
    • Retail industry
    Industries
    By ensuring that our clients are matched with professionals most familiar with their industry, P&A Grant Thornton aims to provide a seamless onboarding...
    See Overview
    Consumer products
    Emerging markets and shifting consumer demand are creating new opportunities in food and beverage, with business leaders investing in new products, markets,...
    See Overview
    Education
    Our vision is to help learning institutions and business organisations go beyond and create powerful learning cultures through technology integration,...
    See Overview
    Energy and natural resources
    Energy markets worldwide are undergoing major changes. P&A Grant Thornton can help you understand and navigate ensuing challenges and make sure you have the...
    See Overview
    Financial services
    Optimism is slowly returning to the global economy, but the financial services industry needs to regain the trust of public and private bodies. To truly go...
    See Overview
    Not for profit
    Across the globe, not for profit organisations are increasingly expected to deliver more, while at the same time facing cuts in government funding and...
    See Overview
    Outsourcing
    The outsourcing industry is one of the fastest growing sectors in the Philippines. Growth in the industry is at an annual average rate of 20%. The industry is...
    See Overview
    Public sector
    Across the globe, countries are moving towards leaner, more commercial, locally focused, and responsive government and public sectors. At P&A Grant Thornton,...
    See Overview
    Real estate and construction
    Opportunity and optimism have emerged within the retail estate and construction industry. At P&A Grant Thornton, it’s our goal to help you benefit from these...
    See Overview
    Technology, media and communications
    At P&A Grant Thornton, we’ll work with you to capitalise on all opportunities, manage the inherent risks the industry has to offer, and provide relevant...
    See Overview
    Travel, tourism and leisure
    Dynamic businesses need to move with speed and purpose if they want to capitalise on opportunities in hospitality and tourism. At P&A Grant Thornton, we know...
    See Overview
    Retail industry
    With operational cost, price competition, and currency volatility, pressure on profits continues to pile on retailers. Advancements in e-commerce are also...
    See Overview
    • Contact us
    • English
    1. Home
    2. Alerts and Publications
    3. Technical Alerts
    4. Accounting Alerts
    5. 2024
    6. IFRS 18 - The New Presentation and Disclosure Standard

    Accounting Alert

    14 May 2024

    Accounting Alerts

    • 2024
    • 2023
    • 2022
    • 2021
    • 2020 2020
      • Extension of Deadline for Submission of Forms/Notices
      • Online and Manual Submission of Forms/Notices Pursuant to SEC MC 28-2020
      • COVID-19 Accounting Implications for CFOs - Debt Modifications
      • Discussion Paper 'Business Combination under Common Control'
      • SEC Memorandum Circular No. 32 series of 2020
      • SEC Memorandum Circular No. 31 series of 2020
      • SEC Memorandum Circular No. 28 series of 2020
      • Insights into PFRS 16 - Lease Incentives
      • IASB issues Interest Rate Benchmark Reform Phase 2
      • IFRIC 23 - Uncertainty Over Income Tax Treatments
      • COVID-19 Going Concern Considerations
      • Extension of Deadlines and Interim Procedures for the Submission of Printed/Hard Copies of Annual Reports
      • IASB Defers the Effective Date of IAS 1 Amendments
      • Guidelines on the Electronic Submission of the Annual Report and Audited Financial Statements to BSP
      • Filing of Annual Reports During the Temporary Closure of the SEC Main Office until July 26, 2020
      • Work Suspension at the SEC Main Office and Extension of Deadlines for Certain Corporations
      • Adjustment of Deadlines for Submission of Annual Reports to the SEC and Other Announcements
      • Amendments to IFRS 17 and IFRS 4
      • Filing of Reports and Other Documents in SEC Main Office during Temporary Closure
      • Options for the Submission of Reports, Applications and Other Documents to the SEC During Community Quarantine
    • 2019 2019
      • SEC Extends Deadline for Annual and Quarterly Reports for...
      • Deferral of IFRIC Agenda Decision on Over Time Transfer of Constructed Goods (PAS 23) for Real Estate Industry
      • Implementation of IFRS 17, Insurance Contracts
      • Amendments to Regulations on Financial Audit of Banks and Non-Bank Financial Institutions
      • Navigating the Changes to IFRS 2020
      • SEC Memorandum Circular No. 2 - 2020 Filing of Annual Financial Statements and General Information Sheet
      • IASB issues Classification of Liabilities as Current or Non-current (Amendments to IAS 1)
      • GTI IFRS News Q4 2019
      • Insights into PFRS 3: Definition of a Business
      • IASB issues Interest Rate Benchmark Reform
      • Insights into PFRS 16: Presentation and Disclosure
      • Insights into PFRS 16: Lease Payments
      • Insurance Commission's Guidelines on Lease Accounting for Insurance and Reinsurance Companies
      • GTI IFRS News Q1 2019
      • Application Deferral of PIC Q&A 2018-H and 2018-14
      • Sustainability Reporting Guidelines for Publicly-Listed Companies
      • Insights into PFRS 16: Sale and Leaseback Accounting
      • Insights into PFRS 16: Transition Choices
      • Use of the New General Information Sheet (GIS) Form
      • 2019 Filing of Annual FS and GIS
      • Navigating the Changes to IFRS 18
      • Insights into PFRS 3: Definition of a Business
      • GTI IFRS News Q2 2019
      • Rules on Material Related Party Transactions for Publicly-listed Companies
      • BOA Repealed Resolutions on FS Compilation Services
      • GTI IFRS News Q3 2019
      • 2019
    • 2018 2018
      • Insights into IFRS 16
      • SEC Memorandum Circular 2018-14 – PFRS 15 Implementation Issues Affecting Real Estate Industry
      • Accounting for Client Money
      • Third Quarter Edition of IFRS News
      • Accounting for Crypto Assets
    • 2017
    • 2016
    • 2015
    • 2014
    • 2008
    • 2007
    • 2006
    • 2005

    IFRS 18 - The New Presentation and Disclosure Standard

    This Accounting Alert is issued to circulate IFRS 18, Presentation and Disclosure in Financial Statements, effectively replacing IAS 1, Presentation of Financial Statements, for every reporting entity that currently uses International Financial Reporting Standards (IFRS). The objective of the Standard is to improve how information is communicated in the financial statements, particularly in the statement of profit or loss (SPL) and notes to the financial statements (NFS).

    Key Changes

    Changes to presentation requirements in SPL

    The Standard introduces two new defined subtotals:

    • Operating profit, and
    • Profit before financing and income taxes

    These new required subtotals are intended to increase comparability by ensuring that information presented for investors is consistent across different entities.

    Additionally, the Standard requires an entity to classify all income and expenses into one of the following five categories:

    • operating
    • investing
    • financing
    • income taxes, and
    • discontinued operations

    The investing category includes income and expenses from investments in associates, joint ventures and unconsolidated subsidiaries, cash and cash equivalents, and any other assets (such as cash and cash equivalents) that generate returns separately from the entity’s other resources.

    The financing category distinguishes between transactions that are solely for the purpose of raising finance, and those that are not. Income and expenses from all liabilities that result solely from the raising of finance are included in this category, along with some elements of interest income or expense recognized by applying other IFRS. This category, together with the subtotal for profit before financing and income taxes enables investors to assess the reporting entity’s performance before the effects of its financing.

    The income taxes and discontinued operations categories include income and expenses resulting from the application of IAS 12, Income taxes, and any related foreign exchange differences, and IFRS 5, Non-current assets held for sale and discontinued operations, respectively.

    Finally, the operating category includes all other items of income and expense that are not allocated to one of the other four categories. It is a default category, so it is important to note this category will include income and expenses from an entity’s main business activities, regardless of whether the income or expenses are volatile or unusual. The operating profit subtotal provides not only a measure of past performance, but also a starting point for forecasting an entity’s future cash flows.

    Foreign exchange differences

    IFRS 18 requires foreign exchange differences to be classified in the same category of the SPL as the income and expenses from items that gave rise to the foreign exchange differences. This means, for example, that foreign exchange differences on bank loans would be classified in the financing category. However, if classifying foreign exchange differences this way would involve undue cost or effort, an entity is permitted to classify them in the operating category. Careful attention should be given to specific requirements for classifying income and expenses from hybrid contracts and fair value gains and losses on derivatives.

    Entities with specified main business activities

    While the above applies to most entities, it is complicated for reporting entities such as investment firms, financial institutions and insurers where their main business activities (for which income and expenses would usually be classified in the operating category), would fall into the definition of investing or financing activities.

    When a reporting entity has assessed that it invests in assets as its main business activity, income and expenses are split between the investing category and operating category, depending on how the underlying assets are accounted for. For all assets accounted for using the equity method, income and expenses are included in the investing category, and for all other assets income and expenses are included in the operating category.

    When a reporting entity has assessed that it provides financing to customers as its main business activity, it will classify income and expenses from liabilities relating to providing such finance in the operating category.

    The assessment of an entity’s main business activities is therefore going to be a key judgement which may significantly impact the geography of where items appear in the SPL. This is likely to prove particularly challenging for mixed groups and groups of reporting entities which provide multiple services.

    New requirements to be included in the NFS

    The Standard introduces new disclosures:

    • Management-defined performance measures (MPMs), and
    • Specified expenses by nature

    MPMs are subtotals of income and expenses other than those listed by IFRS 18 or specifically required by another IFRS, that an entity uses:

    • in public communications outside financial statements, and/or
    • to communicate to users of financial statements management’s view of an aspect of the financial performance of the entity as a whole.

    Alongside any MPMs that are disclosed, a reporting entity will also be required to disclose information including:

    • a reconciliation between the MPM and the most directly comparable IFRS 18 subtotal, total or subtotal required by another IFRS
    • a description of how the MPM communicates management’s view and how it is calculated\an explanation of changes to the MPMs disclosed or to how any of the measures are calculated, and
    • a statement indicating that measures used reflect management’s view of the financial performance of the entity as a whole and indicates that the measure may not always be directly comparable to any measures sharing similar labels and descriptions provided by other reporting entities.

    These disclosures will be required for any measure that meets the definition of a MPM and when applicable and they must be included in a single note in the reporting entity’s financial statements.

    Updated guidance for the aggregation and disaggregation of information

    The Standard provides specific guidance to ensure that aggregation and disaggregation in the financial statements is consistent and provides investors with the information they need for analysis. The basic principles set out in IFRS 18 require entities to:

    • aggregate or disaggregate items based on whether they share similar characteristics or have different characteristics
    • ensure that the method of grouping items does not obscure material information or reduce understanding, and
    • apply aggregation or disaggregation based on characteristics in both in the primary financial statements and the NFS

    Changes to how expenses in the operating category are presented

    Consistent with IAS 1, IFRS 18 requires an entity to present in a structured and meaningful way its operating expenses based either on their nature or their function. This means some entities might decide to classify some expenses by nature and other expenses by function. The Standard requires entities that present expenses classified by function to disclose the amount of depreciation, amortization, employee benefits, impairment losses and write-down of inventories included in each line in the operating category of the SPL.

    Consequential changes to other standards

    Consequential changes have been made to the standard on cash flow statements. IAS 7, Statement of Cash Flows, now requires entities to use the operating profit total as defined in IFRS 18 as the starting point for reporting cash flows from operating activities using the indirect method. In addition, the interest and dividend presentation alternatives that previously existed have also been removed to simplify practice and reduce diversity in preparation.

    Elsewhere, IAS 33, Earnings per Share (EPS), requirements have been amended to permit an entity to disclose additional EPS information over and above reporting basic and diluted EPS amounts. However, additional amounts can only be included in the EPS calculation if the numerator is either a total or subtotal identified in IFRS 18 or a MPM. IAS 34, Interim Financial Reporting, has also been updated to require disclosure of information about MPMs in interim financial statements and guidance is now provided on how subtotals should be dealt with in interim financial statements.

    Effectivity

    The Standard is effective from annual reporting periods beginning on or after 1 January 2027. Early adoption of the Standard is permitted. IFRS 18 must be applied retrospectively; restatement of all comparative information is required when the Standard is adopted.

    Share this page
    • Facebook
    • Twitter
    • LinkedIn
    • WhatsApp
    • Email

    CONNECT CONNECT

    • Meet Our People
    • Contact us
    • Our heritage
    • Locations

    ABOUT ABOUT

    • Careers
    • News Centre
    • ProActive Hotline

    LEGAL LEGAL

    • Privacy
    • Cookie policy
    • Disclaimer
    • Site map

    Our Core Services Our Core Services

    • Audit and Assurance
    • Tax Advisory and Compliance
    • Advisory Services
    • Outsourcing and Managed Services
    • Japan Desk

    Follow usFollow us

    ‘Grant Thornton’ refers to the brand under which the Grant Thornton member firms provide services to their clients and/or refers to one or more member firms, as the context requires. ‘GTIL’ refers to Grant Thornton International Ltd (GTIL). P&A Grant Thornton is a member firm of GTIL. GTIL and each member firm of GTIL is a separate legal entity. GTIL is a nonpracticing, international coordinating entity organised as a private company limited by guarantee incorporated in England and Wales. GTIL does not deliver services in its own name or at all. Services are delivered by the member firms. GTIL and its member firms are not agents of, and do not obligate, one another and are not liable for one another’s acts or omissions. The name ‘Grant Thornton’, the Grant Thornton logo, including the Mobius symbol/ device are trademarks of GTIL. All copyright is owned by GTIL, including the copyright in the Grant Thornton logo; all rights are reserved.