New standard for presentation and disclosure in financial statements (NZ IFRS 18)

In May 2024, the New Zealand Accounting Standards Board (NZASB) approved NZ IFRS 18 Presentation and Disclosure of Financial Statements for application by Tier 1 and Tier 2 for-profit entities preparing financial statements in accordance with New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) and New Zealand equivalents to International Financial Reporting Standards Reduced Disclosure Regime(NZ IFRS RDR) respectively.

Effective date

NZ IFRS 18 replaces NZ IAS 1 Presentation of Financial Statements and is effective for annual periods beginning on or after 1 January 2027.

What is NZ IFRS 18 about?

The aim of NZ IFRS 18 is to improve the comparability of financial performance between entities. While many requirements and disclosures contained in NZ IAS 1 remain unchanged, the ‘big ticket’ changes include:

• Income and expenses must be classified in the statement of profit or loss into one of five categories – investing, financing, income taxes, discontinued operations and operating (this is a residual category if income and expenses are not classified into any of the other categories)
• Two new mandatory subtotals – operating profit or loss, and profit or loss before financing and income taxes
• Strict rules for labelling, aggregation and disaggregation of items in the financial statements
• New disclosures about management-defined performance measures
• Amendments to the presentation requirements for interest income and expenses, and dividend income in the statement of cash flows.

Our publication provides more information about these changes.

Need help?

NZ IFRS 18 brings about significant changes to financial statements, requiring adjustments to current reporting systems and processes. Please contact our Financial Reporting Advisory team if you need help.

For more on the above, please contact your local BDO representative.

This article has been based on an article that originally appeared on BDO Australia, read the original article here.