HKFRS 18 Presentation and Disclosure in Financial Statements

Technical Resources
This webpage contains pronouncements, guides and articles that are relevant to HKFRS 18 Presentation and Disclosure in Financial Statements.
 
Effective Date
Financial periods beginning on or after 1 January 2027. Earlier application is permitted.
 
Affected standards
Supersedes HKAS 1 Presentation of Financial Statements.
 
Why do we need a new Accounting Standard?
HKFRSs do not have detailed requirements on where to classify income and expenses in the statement of profit or loss; what subtotals to present above “profit or loss” in the statement of profit or loss; or how to group the information to be presented in the primary financial statements or disclosed in the notes.

This lack of detailed requirements leads to diversity in practice. Companies define their own subtotals and performance measures and group items in their own ways. Investors commented that this diversity makes it difficult to analyse and compare companies’ performance.

HKFRS 18 introduces three new sets of requirements to improve how companies communicate in their financial statements, with a focus on information about financial performance in the statement of profit or loss. The new requirements in HKFRS 18 will give investors more transparent and comparable information about companies’ financial performance, thereby enabling better investment decisions.

• Adding three defined categories and two subtotals to the statement of profit or loss makes companies’ financial performance easier to compare and provides a consistent starting point for investors’ analysis.
• Requiring companies to disclose information about management-defined performance measures increases discipline over their use and transparency about their calculation.
• Setting out requirements on whether information should be in the primary financial statements or the notes and providing principles on the level of detail needed improves effective communication of information.

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