IFRS 18: What Comes After the Initial Disclosure?

This article was published in Arabic on the Managing Partner's LinkedIn on 17 July 2026 and appears here in translation.

Why does the real work begin after the initial assessment is published?

The International Accounting Standards Board issued IFRS 18, Presentation and Disclosure in Financial Statements, to replace IAS 1, and the Saudi Organization for Chartered and Professional Accountants then endorsed it within the international standards endorsed in Saudi Arabia.

The Capital Market Authority subsequently permitted listed companies to adopt the standard early during 2026, required them to disclose an initial assessment of the expected impact, and tasked boards of directors with monitoring progress towards implementation. Companies have therefore already begun including these disclosures in their quarterly financial statements.

Publishing the disclosure, however, does not mean the entity is ready.

During my years as a partner at Deloitte and KPMG, I lived through the implementation of major new standards and amendments. I recall that one of the most challenging IFRS 15 questions looked simple at first: is the entity a principal in the contract or an agent?

In the view of some management teams, the decision was clear and settled. Analyzing the contracts against the requirements of the standard, however, led in some specialized activities to different conclusions, and affected revenue presentation, systems, the chart of accounts, performance indicators, and indeed the financial reporting system as a whole.

What I learned from those experiences is that the hardest implementation problems do not always start in the paragraphs that look complex; they can hide in a question everyone believes is easy. That is what I fear with IFRS 18.

The standard does not merely change the format of the income statement. It reclassifies income and expenses into new categories, mandates two new subtotals, "operating profit" and "profit before financing, zakat and income taxes", and brings certain performance measures that management uses in its public communications within the scope of the financial statements and their disclosures.

Net profit may remain unchanged while the operating profit that investors and financiers are accustomed to tracking changes. Effects may surface that were not visible when the initial disclosure was drafted.

A technical disagreement with the external auditor is not the problem. The problem is a disagreement that appears days before the financial statements are issued; at that point the discussion turns from a technical question into reclassification, data extraction, system changes, and rebuilding comparative figures under time pressure.

For December year-ends, the second half of 2026 is the right time for this work. Waiting until after the close will mean re-presenting the 2026 numbers at the same time as the 2027 reporting pressure.

The question the audit committee should be asking today is not: have we disclosed the standard?

It is: can we actually produce the 2026 numbers in the new format, and will they stand up to audit?

This article is reproduced here in translation of the original text as published at the source, and the views expressed are those of the author as at the date of publication.