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ACCAIFRS 18 Has Replaced IAS 1 in ACCA FR and SBR — What Changed and What You Must Now Know
IFRS 18 was issued by the IASB in April 2024 and became examinable in ACCA Financial Reporting (FR) and Strategic Business Reporting (SBR) from the September 2025 session onward. IAS 1 — the standard that governed income statement and balance sheet presentation for decades — is no longer examinable. This is one of the most significant syllabus changes for FR and SBR candidates in years.
The Core Change: Five Mandatory Income Statement Categories
The most testable change in IFRS 18 is the restructuring of the income statement into five mandatory categories. Under IAS 1, entities had significant flexibility in how they structured their statement of profit or loss. IFRS 18 removes that flexibility.
| Category | What goes here | Exam note |
|---|---|---|
| Operating | Revenue, cost of sales, selling and administrative expenses, and other items from the entity's main business activities | Most income and expenses will fall here; this is the default category |
| Investing | Income from assets that generate returns largely independently of other resources — e.g., dividends from equity investments not accounted for by equity method, returns from investment property | Distinct from the operating activities of the main business |
| Financing | Interest expense, fair value changes on financial liabilities measured at FVPL, expected credit losses on financial assets at FVOCI | Reflects the cost of the capital structure |
| Income taxes | Current and deferred tax — now a separate mandatory standalone category | Previously often buried within the P&L subtotals; now explicitly separated |
| Discontinued operations | Results meeting IFRS 5 definition — separately presented as before | No change in principle here; IFRS 5 continues to govern recognition |
Management Performance Measures (MPMs) — New Concept
IFRS 18 introduces the concept of Management Performance Measures — subtotals of income and expenses that management uses in public communications outside the financial statements (e.g., in earnings announcements, investor presentations). "Adjusted EBITDA" and "Underlying profit" are common examples.
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| Requirement | Detail |
|---|---|
| What qualifies as an MPM | Any income/expense subtotal used by management in external communications that is not defined by IFRS |
| Disclosure requirement | Reconciliation from the MPM to the most directly comparable IFRS subtotal in the income statement |
| Why the MPM is useful | Management must explain, in a labelled note, why the MPM provides useful information about financial performance |
| Audit scope | MPMs presented within the audited financial statements are subject to audit procedures |
| Where disclosed | In a single note within the financial statements, clearly identified and labelled |
What SBR Candidates Also Need to Know: IFRS S1 and IFRS S2
Alongside IFRS 18, the SBR syllabus now explicitly examines the interaction between IFRS Sustainability Disclosure Standards (IFRS S1 and IFRS S2) and the European Sustainability Reporting Standards (ESRS). Integrated Reporting has been removed from the SBR syllabus.
| Standard | Scope | SBR exam focus |
|---|---|---|
| IFRS S1 | General sustainability-related financial disclosures — governance, strategy, risk management, metrics and targets | Understanding the four pillar structure; how S1 requires forward-looking information |
| IFRS S2 | Climate-related disclosures specifically | The four pillars applied to climate: governance of climate risk, climate strategy, climate risk management, GHG metrics and targets |
| ESRS | European equivalent — mandatory for large EU entities | SBR now tests candidates on the similarities and differences between IFRS S1/S2 and ESRS; convergence areas and divergences |
| Integrated Reporting (IR) | Previously a SBR topic | Removed from the SBR syllabus from September 2025 onwards — no longer examinable |
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