Most finance teams know IFRS 18 is coming. Fewer have worked out which of their reporting years it actually reaches. If you are searching for the IFRS 18 effective date, its scope or how the transition rules work, the question you are really asking is simple: when does the new presentation stop being a future project and start affecting figures you are producing now?
Why the effective date is only half the answer
An effective date tells you when a standard becomes mandatory. It does not, on its own, tell you which periods your first set of statements will present on the new basis. That depends on the transition method, on how many comparative periods you show and on whether you choose to apply the standard early.
What the lesson works through
- Scope: the single test that decides whether an entity’s financial statements fall inside IFRS 18.
- Replacement: which existing standard IFRS 18 supersedes and what it leaves to other standards.
- Effective date: how to read the mandatory date against a calendar year end.
- Counting periods: how many years of figures the first IFRS 18 statements carry.
- The timing election: applying from the mandatory date or adopting early, set out as equally permitted options with the consequences of each.
- Transition: the method the standard requires, the relief it offers and what that relief leaves in place.
The worked example
The lesson follows Marula Retail Group, a consumer goods retailer reporting in Rand with a December year end. Its stated facts are deliberately simple, and that is the point: change any one of them and the affected periods can change too. The example asks which year is the first under IFRS 18, which comparative appears on the new basis and whether the original annual report for that comparative year is reopened. It also covers the comparative notes and the limits of what one scenario can prove.
Start the lesson
Planning an IFRS 18 transition or preparing for an exam? Open the lesson in the Amatle Institute IFRS 18 course and work through Marula’s timeline for yourself.
Questions about this topic
Which entities have to apply IFRS 18?
The lesson sets out the scope test in IFRS 18 and applies it to a retail group's consolidated statements, so you can see how the test is worked against an entity's own facts.
Does early application of IFRS 18 change which comparative year is restated?
The lesson places applying from the mandatory date and adopting early side by side as equally permitted options, then follows each one through to its comparative period and its disclosures.
Is the original prior year annual report reopened when IFRS 18 is first applied?
That is one of the questions the Marula example works through, along with how the comparative is presented and what the transition relief does and does not remove.
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IFRS and SAM, one requirement at a time
Each week you get the Institute's new articles: one requirement of IFRS 17, IFRS 9, IFRS 15, IFRS 18 or SAM, worked on a South African case. You start with the free IFRS 18 readiness checklist, ten areas to work through before IFRS 18 takes effect, each with its paragraph reference.