Ind AS 118 Self-Assessment
Ind AS 118 Self-Assessment
Ind AS 118 ‘Presentation and Disclosure in Financial Statements’ is set to bring significant changes to the presentation and disclosure of financial statements, with implications for how businesses report and communicate financial performance.
It brings a more structured approach to how financial performance is presented and communicated. The three key changes are:
1. Structured statement of profit or loss: Income and expenses are classified into operating, investing, and financing categories, with two new mandatory subtotals: operating profit and profit before financing and income taxes. Further, expenses within operating profit may be presented by nature or by function, depending on which is most relevant to the company.
2. Management-defined performance measures (MPMs): Certain performance measures communicated outside the financial statements, such as adjusted EBITDA, must be disclosed in a single note to the financial statements. The note must include a reconciliation to the most directly comparable specified subtotal, together with the related income tax and non-controlling interest effects.
3. Enhanced aggregation and disaggregation: The Standard introduces tighter principles for grouping items and limits the use of 'other' categories in the financial statements.
In practice, the standard is as much a finance transformation exercise as an accounting one. Chart of accounts mapping, system and data-capture changes, MPM governance, and communication with investors and lenders all need to be planned well ahead of the transition date. The Standard is effective for annual periods beginning 1 April 2027, with restatement of comparatives for the financial year 2026-27.
Understanding the potential areas of impact early can help businesses plan ahead. BDO India’s Ind AS 118 Self-Assessment provides an indicative view of the relative complexity of your business’s transition based on your responses. The assessment can help you understand potential areas that may warrant further consideration as your organisation prepares for the transition.
Get your Complexity Scorecard
It brings a more structured approach to how financial performance is presented and communicated. The three key changes are:
1. Structured statement of profit or loss: Income and expenses are classified into operating, investing, and financing categories, with two new mandatory subtotals: operating profit and profit before financing and income taxes. Further, expenses within operating profit may be presented by nature or by function, depending on which is most relevant to the company.
2. Management-defined performance measures (MPMs): Certain performance measures communicated outside the financial statements, such as adjusted EBITDA, must be disclosed in a single note to the financial statements. The note must include a reconciliation to the most directly comparable specified subtotal, together with the related income tax and non-controlling interest effects.
3. Enhanced aggregation and disaggregation: The Standard introduces tighter principles for grouping items and limits the use of 'other' categories in the financial statements.
In practice, the standard is as much a finance transformation exercise as an accounting one. Chart of accounts mapping, system and data-capture changes, MPM governance, and communication with investors and lenders all need to be planned well ahead of the transition date. The Standard is effective for annual periods beginning 1 April 2027, with restatement of comparatives for the financial year 2026-27.
Understanding the potential areas of impact early can help businesses plan ahead. BDO India’s Ind AS 118 Self-Assessment provides an indicative view of the relative complexity of your business’s transition based on your responses. The assessment can help you understand potential areas that may warrant further consideration as your organisation prepares for the transition.
Get your Complexity Scorecard