IDEAS home Printed from https://ideas.repec.org/a/ers/journl/vxxviiy2024ispecialap265-275.html
   My bibliography  Save this article

IFRS 18: Advancing the Relevance and Utility of Financial Statements for Stakeholders

Author

Listed:
  • Przemyslaw Czajor

Abstract

Purpose: The main objective of the article is to present the main changes in the presentation of financial statements resulting from IFRS 18 that will affect financial reporting for periods beginning from 2027. The changes in the structure and content of financial statements are considered from the perspective of the needs of potential investors as well as other stakeholders. Design/Methodology/Approach: The main research method involved in this paper is desk research (scientific literature, reports, accounting standards, financial reports). The author also used deductive method analysing the content of accounting standards and supporting materials. Reasoning was conducted using inductive and deductive method. Findings: The paper shows that changes in the structure of IFRS’s financial statements are focused on the increasing value for investors and that they improve financial performance reporting. IFRS 18 has introduced an obligation to disclose more subtotals in the income statement as well as information about management-defined performance measures. On the other hand it has not defined any of popular non-GAAP measures. In the opinion of the author this accounting standard may still have a positive impact on transparency of financial statements reducing additional disclosures alongside with the presumed improvement in the quality of the financial result presented in the income statement. Practical Implications: The considerations may constitute an impact for the preparers of financial statements under IFRS to improve the informative value of the financial statements. The presentations of the main solutions resulting from IFRS 18 (as compared to IAS 1) may be of great importance as it allows readers from EU countries to familiarize themselves with these changes before they are officially published as Official Journal (after the changes are adopted by European Commission). Originality/Value: The paper presents the main changes introduced by IFRS 18 that should enhance the information value of financial statements. There is still more than two years before this IFRS comes into force, but familiarisation of preparers of financial statements with its requirements might be helpful. It always take time to prepare to new regulations.

Suggested Citation

  • Przemyslaw Czajor, 2024. "IFRS 18: Advancing the Relevance and Utility of Financial Statements for Stakeholders," European Research Studies Journal, European Research Studies Journal, vol. 0(Special A), pages 265-275.
    • Handle: RePEc:ers:journl:v:xxvii:y:2024:i:speciala:p:265-275
    as

    Download full text from publisher

    File URL: https://ersj.eu/journal/3650/download
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Niclas Hellman & Jordi Carenys & Soledad Moya Gutierrez, 2018. "Introducing More IFRS Principles of Disclosure – Will the Poor Disclosers Improve?," Accounting in Europe, Taylor & Francis Journals, vol. 15(2), pages 242-321, May.
    2. Dirk E. Black & Theodore E. Christensen & Jack T. Ciesielski & Benjamin C. Whipple, 2018. "Non†GAAP reporting: Evidence from academia and current practice," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 45(3-4), pages 259-294, March.
    3. Konstantinos Liapis & Eleftherios Thalassinos, 2013. "A Comparative Analysis for the Accounting Reporting of “Employee Benefits†between IFRS and other Accounting Standards: A Case Study for the Biggest Listed Entities in Greece," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 91-116.
    4. Wilson, Gp, 1986. "The Relative Information-Content Of Accruals And Cash Flows - Combined Evidence At The Earnings Announcement And Annual-Report Release Date," Journal of Accounting Research, Wiley Blackwell, vol. 24, pages 165-200.
    5. D. Balios & I. Basiakos & N. Eriotis & P. Kotsilaras & E. Thalassinos, 2021. "Financial Reporting Quality before and after the Greek Accounting Standards Adoption using NiCE Qualitative Characteristics Measurement Perspective of Competencies Towards Uniformity in Family Busines," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 11(2), pages 28-41.
    6. Ana Marques, 2017. "Non-GAAP earnings: international overview and suggestions for future research," Meditari Accountancy Research, Emerald Group Publishing Limited, vol. 25(3), pages 318-335, August.
    7. Kjell Magne Baksaas & Tonny Stenheim, 2019. "Proposal for improved financial statements under IFRS," Cogent Business & Management, Taylor & Francis Journals, vol. 6(1), pages 1642982-164, January.
    8. Elkins, Hamilton & Entwistle, Gary, 2018. "A commentary on accounting standards and the disclosure problem: Exploring a way forward," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 33(C), pages 79-89.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sascha B. Herr & Peter Lorson & Jochen Pilhofer, 2022. "Alternative Performance Measures: A Structured Literature Review of Research in Academic and Professional Journals," Schmalenbach Journal of Business Research, Springer, vol. 74(3), pages 389-451, September.
    2. repec:ers:journl:v:xxiv:y:2021:i:special1:p:468-493 is not listed on IDEAS
    3. Rep Ana, 2021. "Notes to the Financial Statements: Current State and Improvement," Business Systems Research, Sciendo, vol. 12(2), pages 60-78, December.
    4. Amitav Saha & Sudipta Bose, 2021. "Do IFRS disclosure requirements reduce the cost of capital? Evidence from Australia," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(3), pages 4669-4701, September.
    5. Gordon, Elizabeth A. & Gotti, Giorgio & Ho, Joanna H. & Mora, Araceli & Morris, Richard D., 2019. "Commentary: Where is International Accounting Research Going? Issues Needing Further Investigation," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 37(C).
    6. Radoslaw Ignatowski, 2024. "Bridging the Gap: How Polish GAAP Aligns with International GAAP," European Research Studies Journal, European Research Studies Journal, vol. 0(Special A), pages 228-239.
    7. Elkins, Hamilton & Entwistle, Gary & Schmidt, Regan N., 2021. "The influence of opportunistic capital structure disclosure in international financial reporting on nonprofessional investors," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 42(C).
    8. Florian Meier, 2020. "The Age of Cheap Money and Passive Investing: Are Pro Forma Earnings Value Relevant?," Journal of Finance and Investment Analysis, SCIENPRESS Ltd, vol. 9(2), pages 1-1.
    9. Eero Pätäri & Timo Leivo, 2017. "A Closer Look At Value Premium: Literature Review And Synthesis," Journal of Economic Surveys, Wiley Blackwell, vol. 31(1), pages 79-168, February.
    10. Bodnar, Gordon M. & Weintrop, Joseph, 1997. "The valuation of the foreign income of US multinational firms: a growth opportunities perspective," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 69-97, December.
    11. N. Eriotis & T. Kounadeas & K. Liapis & E. Poutos, 2019. "The Impact of IFRS Adoption by Greek Listed Companies on the Earnings Quality: An Empirical Investigation," International Journal of Finance, Insurance and Risk Management, International Journal of Finance, Insurance and Risk Management, vol. 9(3-4), pages 90-100.
    12. Dirk E. Black & Ervin L. Black & Theodore E. Christensen & Kurt H. Gee, 2022. "Comparing Non-GAAP EPS in Earnings Announcements and Proxy Statements," Management Science, INFORMS, vol. 68(2), pages 1353-1377, February.
    13. John Chalikias, 2015. "Greek Economy: 1950 - 2014: The 30 Year Road Leading to the Greek Financial Crisis and the IMF-EU-ECB Bail-Out: Investments and Exports Are the Way Out," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(1), pages 67-78.
    14. Claudia Arena & Simona Catuogno & Nicola Moscariello, 2021. "The unusual debate on non-GAAP reporting in the current standard practice. The lens of corporate governance," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 25(3), pages 655-684, September.
    15. Delia IANCU, 2019. "Comparative Analysis Of Fiscal Systems And Policies," Scientific Bulletin - Economic Sciences, University of Pitesti, vol. 18(3), pages 175-181.
    16. Laurion, Henry, 2020. "Implications of Non-GAAP earnings for real activities and accounting choices," Journal of Accounting and Economics, Elsevier, vol. 70(1).
    17. Grégoire Davrinche & Corinne Bessieux-Ollier & Guillaume Dumas, 2022. "Chapitre 10. L'adaptation de la communication financière face à la crise Covid-19 : le cas des résultats non-GAAP," Post-Print hal-03948425, HAL.
    18. Theodore E. Christensen & Enrique Gomez & Matthew Ma & Jing Pan, 2021. "Analysts’ role in shaping non-GAAP reporting: evidence from a natural experiment," Review of Accounting Studies, Springer, vol. 26(1), pages 172-217, March.
    19. Stephen Lin, 2006. "Testing the Information Set Perspective of UK Financial Reporting Standard No.3: Reporting Financial Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(7‐8), pages 1110-1141, September.
    20. Jack Flanagan & Greg Whittred, 1992. "Hooker Corporation: A Case For Cashflow Reporting?," Australian Accounting Review, CPA Australia, vol. 1(3), pages 48-52, May.
    21. N. N. Balashova & V. A. Melikhov & M.A. Ovchinnikov & E.M. Egorova & E.V. Tokareva, 2016. "Organizational and Methodological Approaches to Development of Accounting Policy for Formation of Integrated Accounting of Interrelated Agricultural Companies," European Research Studies Journal, European Research Studies Journal, vol. 0(2), pages 153-160.

    More about this item

    Keywords

    Financial statements; financial reporting; usefulness; accounting standards; non-GAAP measures.;
    All these keywords.

    JEL classification:

    • M40 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - General
    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • M48 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ers:journl:v:xxvii:y:2024:i:speciala:p:265-275. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Marios Agiomavritis (email available below). General contact details of provider: https://ersj.eu/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.