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IFRS 18: A NEW ERA FOR FINANCIAL REPORTING –

WHAT LOCAL BUSINESSES NEED TO KNOW

Farouk Ebrahim, Audit (MPMs), which are now subject informative labels,
Partner and Financial to audit and regulatory scrutiny. generic terms like ‘other’
Accounting Advisory are discouraged.
Services Leader What’s Changing? 4. Consequential Amendments
1. Classification and ◆ Changes extend to other
he Presentation standards, including IAS 7
world of ◆ All income and expenses (cash flows), IAS 8 (now
Tfinancial must be classified into the ‘Basis of Preparation of
reporting five categories, improving Financial Statements’),
is about to comparability across entities IAS 33 (restricts additional
undergo a and industries. earnings per share
significant
transform- ◆ Operating profit/loss measures), and IAS 34
ation. The becomes a standardised (MPM disclosures in interim
International subtotal, reducing diversity reports).
Accounting Standards Board in reporting and making ◆ The terminology is updated:
(IASB) has introduced IFRS 18, a it easier for users to analyse ‘statement of financial
new standard that will replace IAS performance. performance’ replaces
1 for periods beginning on or after ◆ Non-recurring, unusual, or ‘statement of profit or loss
1 January 2027. Early adoption is volatile items are included in and other comprehensive
permitted, but full retrospective the operating category, income’, and ‘IFRS internally and externally, ■ Plan for system and process
application is required, including ensuring a complete picture Accounting Standards’ including with auditors, changes, including staff
reconciliations for comparative of business operations. replaces ‘IFRS/IFRSs/IFRS regulators, and investors. training and stakeholder
periods. This change is not just a Standards’. ■ Monitor Regulatory Guidance: engagement.
technical update, it’s a response to 2. Management-Defined Local requirements may differ, ■ Consult with advisors and
investor demand for clearer, more Performance Measures Practical Implications for Local so stay informed about updates auditors to ensure a smooth
comparable, and more transparent (MPMs) Businesses from regulators and industry transition and compliance
financial information. For local ◆ MPMs are subtotals of Transitioning to IFRS 18 will bodies. with IFRS 18.
businesses, understanding IFRS income and expenses used require careful planning and
18 is essential to stay ahead and in public communications to resource allocation. Here’s what Why Awareness Matters Conclusion
maintain trust with stakeholders. convey management’s view business leaders should consider: IFRS 18 affects all entities IFRS 18 represents a major
of performance. reporting under IFRS, across
Why IFRS 18? industries. The changes are step forward in financial
◆ Entities must disclose MPMs ■ Assess the Impact: Review reporting. While the effective
IFRS 18 addresses longstanding in a single note, including how the new categories and designed to improve transparency, date may seem distant, the
concerns about the comparability how they are calculated, subtotals affect your current comparability, and clarity for users transition process could require
and clarity of financial statements. why they are useful, and a reporting. Identify which of financial statements. For local considerable time and resources.
Investors and other users have reconciliation to the nearest income and expenses may need businesses, this means: Early preparation will help
struggled with inconsistent IFRS subtotal. to be reclassified. ■ Enhanced trust and credibility your business adapt smoothly
subtotals, opaque non-GAAP ■ Update Systems and Processes: with investors and stakeholders. and maintain its reputation for
measures, and confusing ◆ These disclosures will be Financial statement close transparency and reliability.
aggregation or disaggregation of subject to audit and increased processes, data collection, and ■ Better benchmarking and
information. The new standard regulatory scrutiny, requiring information systems may need decision-making. If you have questions about
aims to resolve these issues by collaboration across finance, updating to comply with the ■ Increased scrutiny of IFRS 18 or need guidance on
introducing: legal, and investor relations new requirements. performance measures – failure preparing your business for these
■ Five clear categories for income teams. ■ Train Staff: Ensure your to comply may affect investor changes, I invite you to contact
and expenses in the statement 3. Aggregation and finance team understands confidence and access to me directly. Let’s ensure your
of profit or loss: operating, Disaggregation capital. business is ready for the new era
investing, financing, income ◆ IFRS 18 provides enhanced the new standard, especially What Should Business Leaders of financial reporting. 
taxes, and discontinued guidance on grouping and the principles of aggregation/ Do Now?
operations. separating information, disaggregation and the T: +27 (0)31 576 8000
requirements for MPMs.
■ Two new mandatory subtotals: based on characteristics ■ Start by reviewing your current E: Farouk.Ebrahim@za.ey.com
operating profit/loss and profit/ such as nature, function, ■ Review Policies: Remuneration financial reporting practices W: www.ey.com
loss before financing and measurement basis, risk, policies and debt covenants and performance measures.
income tax. geography, and tax effects. tied to IAS 1 metrics may need ■ Identify any MPMs used in
■ Enhanced disclosure ◆ Entities must avoid renegotiation. external communications and
requirements for management- obscuring material ■ Engage Stakeholders: ensure robust documentation
defined performance measures information and use Communicate changes and disclosure.

ARE FOOD PRICES AFFORDABLE?

t first glance, South nutritious food, to live healthy, for health, child development, spent on food, families would still clear. An economy built on
Africa’s food inflation productive lives. and long-term productivity. fall far below the national food wages that do not cover basic
Astory for February 2026 The average household food The root of the problem is not poverty line. living costs is unsustainable.
looks relatively calm. According basket now costs about R5 384 food prices alone. It is income. The recently announced 5% Low consumer demand, poor
to data from the Pietermaritzburg per month. This basket reflects A worker earning the National increase in the minimum wage workforce health, and rising
Economic Justice and Dignity what low-income families Minimum Wage takes home offers little relief. Rising electricity social instability are not side
Group (PMBEJD), the average cost buy, not what they should be roughly R4 606 per month. After tariffs will absorb much of this effects; they are direct outcomes.
of a basic household food basket eating. When the cost of a basic, paying for transport to work and increase, leaving workers with Food prices may be holding
fell slightly from January and rose nutritionally adequate diet is basic electricity more than 60% a real wage adjustment closer steady. But until incomes catch
only marginally over the past year. to 3%, below inflation and
calculated, the figure rises to of this income is gone. What up with reality, affordability
But this apparent stability hides R6 460 for a large household. In remains is not enough to cover below what is needed to restore will remain South Africa’s
a much bigger problem: most simple terms, families are forced food, let alone essentials like purchasing power. real crisis. 
working families still cannot to underspend on food by around education, healthcare, or clothing. For businesses and
afford enough food, let alone 17%, with serious consequences Even if every remaining rand were policymakers, the message is Source: www.pmbejd.org.za

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