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      What is AASB 18 and why does it matter?

      AASB 18 replaces AASB 101 Presentation of Financial Statements. 

      It standardises how entities present performance in the financial statements and increases transparency over key performance information – improving comparability across entities and industries.

      AASB 18 at a glance

      • What you’ll see

        A new structure for the statement of profit or loss (income statement) and a new note on management-defined performance measures.

      • What it means

        Profit subtotals and how income and expenses are grouped may change and increased transparency for management-defined performance measures.

      • Why it matters

        Greater comparability, but likely impacts systems, reporting packs and disclosures.

      Key changes introduced by AASB 18

      While AASB 18 primarily affects presentation, some transition choices involve accounting policy decisions that could affect opening retained earnings and future results.

      • New categories: Classify income and expenses into operating, investing, financing, discontinued operations and income tax (based on the entity’s main business activities).
      • Specified main business activities: Additional requirements apply to categorising income and expense if investing in assets or providing financing to customers.
      • New required subtotals: Operating profit and profit before financing and income tax.
      • Equity accounted investees: Always presented in investing category.
      • Operating expenses: Present by function, nature or a mixed approach.
      • FX and derivatives classification: Foreign exchange and derivative gains/losses are classified in the same category as the underlying transaction/risk being managed.

      • Grouping guidance: Clearer requirements on how to group and label information.
      • Less ‘other’: Limits on ‘other’ labels; if used, additional disclosures are required.
      • More notes (by function): Additional note disclosures if operating expenses are presented by function.

      • What is an MPM? A management-defined subtotal of income and expense not required by Australian Accounting Standards, used in public communications outside the financial statements, to communicate an aspect of the entity’s performance as a whole.
      • Disclosure and audit: MPMs must be disclosed in a single note, with reconciliations and are subject to audit.

      • Cash flow statement: Removal of optional classification for interest and dividends.
      • Statement of financial position: Goodwill is presented as a separate line item.

      • Equity‑accounted investments - policy election: Eligible entities may apply a one-off transition election to measure equity-accounted investments at fair value through profit or loss. An IASB exposure draft may change who is eligible for this election, with any amendment expected to align with effective date of AASB 18. Read our web article for an overview of the exposure draft.
      • Comparative reconciliation: A line‑by‑line reconciliation from the AASB 101 income statement to the AASB 18 presentation is required for the comparative period.
      • Management-defined performance measures (MPMs): MPMs must be identified from date of initial application, with comparatives provided.
      • Interim: The same transition requirements apply to interim financial reports on first time adoption.

      When effective and who impacted?

      Effective dates vary by reporter type. AASB 18 is applied retrospectively, so comparatives will be restated.

      • Who: Tier 1 for-profit entities
      • Effective: Annual periods beginning on or after 1 January 2027
      • What to do now: Treat FY26 as your comparative—confirm impacts, data needs and reporting pack changes.
      • Who: Tier 2 for-profit and not-for-profit entities
      • Status: Exposure draft issued to incorporate AASB 18 into AASB 1060 General Purpose Financial Statements – Simplified Disclosures for For-Profit and Not-for-Profit Tier 2 Entities
      • Effective: To be confirmed by the AASB
      • What to do now: Assess the exposure draft and identify system/reporting changes. Adoption of AASB 18 possible while remaining compliant with AASB 1060.
      • Who: Superfunds, not-for-profit Tier 1 entities and public sector entities
      • Effective: Annual periods beginning on or after 1 January 2028
      • Status: AASB consultation underway on sector-specific amendments
      • What to do now: Assess impacts, data needs and sector-specific amendments.

      Read our web article to gain an understanding of the proposed changes.

      What may change with implementation?

      • Systems, data and close process

        Update chart of accounts, mapping and reporting tags to support the new statement structure and disclosures—confirm your tools can deliver within relevant period end close timelines.

      • KPIs, targets and remuneration measures

        Check KPIs, covenants and incentive measures that reference profit subtotals—agree governance and messaging for any changes.

      • Management reporting, planning and investor messaging

        Refresh reporting packs and models—consider a parallel run to manage comparability and external guidance impacts.

      • Disclosures (including MPMs) and wider implications

        Define MPMs and build reconciliations and supporting documents to enable audit early—align financial statement disclosures with investor reporting.

      • Comparatives, transition effort and control environment

        Confirm transition approach and capture comparative data early—align with audit committee and auditors.

      How KPMG can help with implementation

      Speak with our specialists about how you can accelerate your AASB 18 implementation.   

      • Assess and plan

        Understand the changes to your existing reporting and what they mean for how you record transactions, manage data and run your close processes. 

      • Design and prepare

        Translate requirements into practical reporting designs, defined system changes and clear disclosures. Prioritise your key steps accordingly. 

      • Implement your plans

        Implement system and process changes and undertake testing to minimise the risk of surprises.

      • Support you through to “go-live”

        Support delivery through transition, including preparation of comparatives and first-year reporting.  

      Latest developments in interpretation

      Interpretation is still evolving.

      IFRIC deliberations continue to refine AASB 18 application before the effective date—monitor developments and refer to our IFRIC agenda decision page for updates.

      Learn more about AASB 18

      Read our First Impressions - Presentation and disclosure for a deeper technical overview of the changes, or watch our AASB 18 webinar series.

      Read First Impressions

      Watch our AASB 18 webinar for a high‑level introduction.

      Download webinar part 1 slides (PDF 3.5MB)

      Explore part 2 of our webinar series for deeper insights into specified main business activities (SMBA), MPMs and transition considerations.

      Download webinar part 2 slides (PDF 3.2MB)

      Contact KPMG’s AASB 18 specialists

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