IFRS 18 and the Future of Financial Performance Reporting: Challenges, Implications, and Roadmap for Implementation
Abstract
The current study examined the introduction of International Financial Reporting Standard 18 (IFRS 18) and its implications for the future of financial performance reporting globally, with a focus on emerging economies, such as Nigeria. IFRS 18 represents a pivotal shift from previous reporting standards by mandating standardized presentation formats. This includes defined subtotals, such as operating profit and requiring disclosures of Management Performance Measures (MPMs). These changes aim to enhance transparency, comparability, and decision-usefulness of financial statements for investors and stakeholders. However, the implementation of IFRS 18 presents considerable challenges, including the need for extensive capacity building among preparers, auditors, and regulators, as well as the integration of new reporting technologies and systems. This study explored the conceptual foundations of IFRS 18 within accounting theory. Moreover, it also reviewed the practical challenges faced by firms and analysed the broader implications for corporate governance and investor confidence. Comparative insights from jurisdictions with advanced IFRS adoption provided valuable lessons for Nigeria and similar emerging markets. The study further proposed a roadmap for effective implementation, emphasizing regulatory support, professional training, and stakeholder engagement as critical success factors. Ultimately, IFRS 18 offered an opportunity to elevate financial reporting quality and foster sustainable economic development through improved corporate accountability and transparency. This article contributed to scholarly discourse by linking theoretical perspectives with practical solutions to facilitate the transition to IFRS 18.
Downloads
References
Abdelghani, E., & Aziz, D. (2025). From IAS 1 to IFRS 18: Effects on the readability, comparability, and interpretation of financial performance: A proactive theoretical study. African Scientific Journal, 3(32), 953–979.
Agoglia, C. P., Doupnik, T. S., & Tsakumis, G. T. (2011). Principles-based versus rules-based accounting standards: The influence of standard precision and audit committee strength on financial reporting decisions. The Accounting Review, 86(3), 747–767. https://doi.org/10.2308/accr.00000045
Apochi, J. G., & Mustapha, L. O. (2022). IFRS adoption and financial reporting quality in Nigeria: A conceptual approach. European Journal of Accounting, Auditing and Finance Research, 10(6), 9–18. https://doi.org/10.37745/ejaafr.2013/vol10n6pp918
Armstrong, C. S., Barth, M. E., Jagolinzer, A. D., & Riedl, E. J. (2010). Market reaction to the adoption of IFRS in Europe. The Accounting Review, 85(1), 31–61. https://doi.org/10.2308/accr.2010.85.1.31
Barker, R., & Schulte, S. (2017). Representing the market perspective: Fair value measurement for non-financial assets. Accounting, Organizations and Society, 56, 1–14. https://doi.org/10.1016/j.aos.2014.12.004
Barth, M. E. (2018). The future of financial reporting: Insights from research. Abacus, 54(1), 66–78. https://doi.org/10.1111/abac.12115
Barth, M. E., Landsman, W. R., & Lang, M. H. (2008). International accounting standards and accounting quality. Journal of Accounting Research, 46(3), 467–498. https://doi.org/10.1111/j.1475-679X.2008.00287.x
Callao, S., Jarne, J. I., & Laínez, J. A. (2007). Adoption of IFRS in Spain: Effect on the comparability and relevance of financial reporting. Journal of International Accounting, Auditing and Taxation, 16(2), 148–178. https://doi.org/10.1016/j.intaccaudtax.2007.06.002
Cascino, S., Clatworthy, M. A., García Osma, B., Gassen, J., & Imam, S. (2021). The usefulness of financial accounting information: Evidence from the field. The Accounting Review, 96(6), 73–102. http://dx.doi.org/10.2139/ssrn.3008083
Chan, V. (2024, May 14). IFRS 18 changes financial performance reporting. EY Global. https://www.ey.com/en_gl/insights/ifrs/ifrs-18-changes-financial-performance-reporting
Creswell, J. W., & Poth, C. N. (2018). Qualitative inquiry and research design: Choosing among five approaches (4th ed.). Sage.
Deloitte. (2024). Get ready for IFRS 18. https://www.deloitte.com/uk/en/services/consulting/blogs/2024/get-ready-for-ifrs18.html
DiMaggio, P. J., & Powell, W. W. (1983). The iron cage revisited: Institutional isomorphism and collective rationality in organizational fields. American Sociological Review, 48(2), 147–160. https://doi.org/10.2307/2095101
Egbunike, P. A., Jesuwunmi, C. A., Adewoyin, A. O., & Ogunmeru, A. O. (2018). Empirical appraisal of IAS16 disclosures compliance level of listed cement manufacturing firms in Nigeria. International Journal of Economics and Business Administration, 4(2), 56–76.
Elliott, B., & Elliott, J. (2008). Financial accounting and reporting. Pearson Education.
Ezejelue, A. C. (2012). A primer on international accounting. Educational Books and Investment Ltd.
Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
Hail, L., Leuz, C., & Wysocki, P. (2010). Global accounting convergence and the potential adoption of IFRS by the US (Part I): Conceptual underpinnings and economic analysis. Accounting Horizons, 24(3), 355–394. https://doi.org/10.2308/acch.2010.24.3.355
Hendriksen, E. S., & Van Breda, M. F. (1992). Accounting theory (5th ed.). Irwin.
IFRS Foundation. (2024). IFRS 18: Presentation and disclosure in financial statements. https://www.ifrs.org/issued-standards/list-of-standards/ifrs-18-presentation-and-disclosure-in-financial-statements/
International Accounting Standards Board. (2025). IFRS 18: Presentation and disclosure in financial statements. Paragraphs IN1–IN5, 2–3. https://www.ifrs.org/issued-standards/list-of-standards/ifrs-18-presentation-and-disclosure-in-financial-statements/
International Sustainability Standards Board. (2023). IFRS S1 General requirements for disclosure of sustainability-related financial information. https://www.ifrs.org/content/dam/ifrs/publications/pdf-standards-issb/english/2023/issued/part-a/issb-2023-a-ifrs-s1-general-requirements-for-disclosure-of-sustainability-related-financial-information.pdf?bypass=on
Jensen, M. C., & Meckling, W. H. (1976). Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics, 3(4), 305–360. https://doi.org/10.1016/0304-405X(76)90026-X
KPMG. (2024). IFRS 18 Presentation and disclosure in financial statements. https://assets.kpmg.com/content/dam/kpmgsites/xx/pdf/ifrg/2024/isg-talkbook-presentation-and-disclosure-in-the-financial-statements.pdf.coredownload.pdf
Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525–622. https://doi.org/10.1111/1475-679X.12115
Li, S. (2010). Does mandatory adoption of international financial reporting standards in the European Union reduce the cost of equity capital? The Accounting Review, 85(2), 607–636. https://doi.org/10.2308/accr.2010.85.2.607
Mongrut, S., & Winkelried, D. (2019). Unintended effects of IFRS adoption on earnings management: The case of Latin America. Emerging Markets Review, 38, 250–262. https://doi.org/10.1016/j.ememar.2018.11.004
Mudel, S. (2015). Creative accounting and corporate governance: - A literature review. SSRN. https://ssrn.com/abstract=2708464 or http://dx.doi.org/10.2139/ssrn.2708464
Nobes, C., & Parker, R. (2016). Comparative international accounting (13th ed.). Pearson.
Ofoegbu, G. N., & Odoemelam, N. (2018). International Financial Reporting Standards (IFRS) disclosure and performance of listed companies in Nigeria. Cogent Business & Management, 5(1), Article e1542967. https://doi.org/10.1080/23311975.2018.1542967
Okike, E. N. (2007). Corporate governance in Nigeria: The status quo. Corporate Governance: An International Review, 15(2), 173–193. https://doi.org/10.1111/j.1467-8683.2007.00553.x
Okpala, C. O. (2021). IFRS adoption and the value relevance of accounting information: Evidence from the Nigerian capital market. Journal of Accounting and Finance in Emerging Economies, 7(2), 123–134.
Oyedokun, G. E., Babajide, T., & Adeyemo, K.A. (2021). Integrated reporting and financial performance of Nigerian deposit money banks. Global Research Journal of Economic and Social Development, 1(1), 1–12.
PricewaterhouseCoopers. (2025). IFRS 18 is here: Redefining financial performance reporting. https://www.pwc.com/mt/en/publications/other/ifrs18-is-here.html
Samuel, E. N., Eno, U., & Uwem, E. U. (2024). Impact of IFRS 18 implementation in financial reporting. Journal of Accounting and Financial Management, 10(10), 132–143.
Sanusi, L. S. (2010). The Nigerian banking industry: What went wrong and the way forward. Central Bank of Nigeria. https://www.cbn.gov.ng/OUT/SPEECHES/2010/THE%20NIGERIAN%20BANKING%20INDUSTRY%20WHAT%20WENT%20WRONG%20AND%20THE%20WAY%20FORWARD_FINAL_260210.PDF
Schipper, K. (2007). Required disclosures in financial reports. The Accounting Review, 82(2), 301–326.
Scott, W. R. (2015). Financial accounting theory (7th ed.). Pearson
Suchman, M. C. (1995). Managing legitimacy: Strategic and institutional approaches. Academy of Management Review, 20(3), 571–610. https://doi.org/10.5465/amr.1995.9508080331
Uwaigbe, U., Uadiale, O., & Olubukunola, A. U. (2012). Corporate governance and financial reporting quality in Nigeria. International Journal of Business and Social Science, 3(6), 219–225.
Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory. Prentice-Hall.
Copyright (c) 2025 Godwin Emmanuel Oyedokun, Ismaila Olotu ABDULLAHI, Dr, Phillip Oyesola OYEDOKUN
This work is licensed under a Creative Commons Attribution 4.0 International License.
JFAR follows an open-access publishing policy and full text of all articles is available free, immediately upon acceptance. Articles are published and distributed under the terms of the Creative Commons Attribution 4.0 International License. Thus, work submitted to UMT Journals implies that it is original, unpublished work of the authors; neither published previously nor accepted/under consideration for publication elsewhere. On acceptance of a manuscript for publication, a corresponding author on the behalf of all co-authors of the manuscript will sign and submit a completed Author Consent, Copyright, and Declaration Form.
