IFRS 18 – The New Look Profit and Loss Account

Why IFRS 18 Has Been Issued

• Summary of problems with the existing profit and loss presentation, and the additional information and questions often asked by analysts and other stakeholders
• The problems of aggregation and disaggregation, and the lack of consistency in reporting
• The increasing use of unregulated alternative performance measures (APMs), such as EBITDA
• Timetable for adoption and what happens on first-year transition

Overview of What the New Profit and Loss Account Will Look Like

• This IFRS 18 training explores the five new required subtotals of profit, as defined
• How to properly identify operating profits and losses, including more contentious issues relating to financing costs, revenues and foreign exchange
• Impact on interim accounts in year one and in subsequent years
• Impact on other group companies reporting under UK GAAP

Devil in the Detail – Other Supporting Notes and Disclosures Required

• Additional expense analysis now required in the notes – breaking down the cost of sales, for example, into its key parts
• What is a management-defined performance measure (MPM), and what information needs to be included in the financial statements?
• Interaction with other management reports, such as the Strategic Report
• Wider impact on cash flow reporting, tax expense and the activities of a diversified business group

Practical Issues and Other Considerations

• Changes that will be needed to the chart of accounts and other reporting systems
• Wider impact of any changes to financial KPIs: e.g. employee benefit and reward schemes
• Audit considerations regarding the subjective nature of disclosures – what would high-quality disclosures likely entail?
• Internal control and governance issues

Redcliffe’s IFRS 18 training specialist qualified in 1987 as a Chartered Accountant with Gilberts, a six-partner firm, following the completion of an accountancy foundation course. In the same year, he joined Binder Hamlyn to work in their Business Development Group.

By 1990, he joined a major training company to work as a trainer on their accountancy exam courses. Over the next four years, he taught auditing, intermediate financial reporting and taxation for ACA, ACCA, CIMA and AAT exams. He also taught the ACA multi-disciplinary case study.

He has delivered full-time courses organised for Deloitte, PWC and EY and was responsible for the ACA final-level auditing paper. In 1993, he became a director of post-examination CPD training for accountants. He was also responsible for financial training programmes for non-accountants, especially solicitors. Around this time, he also trained in International Accounting Standards (IFRS). This was initially for Ernst & Young’s non-UK-based professional staff in Europe.

Since 1998, he has been training on a freelance basis. He concentrates on financial training for both accountants and non-accountants, and specialises in IFRS and US accounting standards. For the past 30 years, our IFRS 18 training specialist has presented on both subjects throughout Europe. He has considerable experience in presenting training on the following topics:

• Accounting for financial instruments and insurance contracts
• IFRS reporting issues for energy and pharmaceutical businesses
• Completion accounts and the role of financial standards in corporate finance transactions
• Corporate financial accounting for business combinations (mergers, acquisitions and all joint and special purpose arrangements)

This technical IFRS 18 training brings all attendees up to speed with the new requirements of the International Financial Reporting Standards. It represents the most significant change in the presentation of IFRS financial statements for more than 15 years.

By the end of this half-day course, participants will be able to:

• Understand why the introduction of IFRS 18 has happened and its impact on financial statement presentation
• Identify and apply the five new required profit subtotals
• Correctly classify operating, investing and financing income and expenses
• Understand the new disclosure requirements, including Management-defined Performance Measures (MPMs)
• Assess the practical implications for systems, KPIs, governance and audit
• Confidently prepare and analyse an IFRS 18-compliant profit and loss account

• Finance professional involved in corporate reporting and controllership roles within an organisation
• IT and systems designers and suppliers
• Auditors - both internal and external
• Analysts - both internal and external

Redcliffe's IFRS 18 training gives a concise, practical overview of IFRS 18, giving participants the confidence to apply the new requirements immediately in real financial statements.

It provides a clear explanation of the new profit and loss structure and key subtotals. Attendees will now be able to present performance clearly and answer analyst and stakeholder questions with authority.

This course also provides practical guidance on judgmental areas such as operating profit, financing and foreign exchange. Participants should reduce risk, improve consistency and withstand audit and regulatory challenges.

We also explore in-depth coverage of new disclosures and Management-defined Performance Measures (MPMs). Attendees can replace unregulated metrics with compliant, transparent reporting along with insight into first-year transition, interim reporting and wider group impacts. This ensures participants can plan, avoid surprises and manage change across the business.

It will focus on systems, controls and governance implications, equipping attendees to drive IFRS 18 implementation, influence internal stakeholders and improve the quality of financial reporting.