What Are the Differences between TFRS/IFRS 18 and TAS/IAS 1?

TAS/IAS 1, published in 1997 and used for many years, is the "Presentation of Financial Statements" standard. It sets out how companies should organise their balance sheet, income statement and notes. Over time, however, this structure led to differing presentations between companies and made comparison harder for investors. This is where TFRS/IFRS 18 comes in, aiming for more consistent presentation and transparency — it formally replaces TAS/IAS 1 from 1 January 2027.

Main objectives of TFRS/IFRS 18

• Standardised income statement: Companies must now present on the same structure.

• Transparency and comparability: Key subtotals such as "operating profit" have been standardised.

• Information on management-defined performance measures (MPMs) and their reconciliation has become mandatory.

A revolution in the structure of the income statement

a) Mandatory classification into 5 categories:

• Operating
• Investing
• Financing
• Income taxes
• Discontinued operations

b) Required subtotals:

• Operating profit or loss
• Profit or loss before financing and income taxes
• Profit or loss for the period is retained; its definition is unchanged, but the subtotals are clarified

c) Detailed structure for presenting expenses:

• Operating expenses are presented by nature, by function or using a mix of both.
• For expenses presented by function, the amounts by nature of items such as depreciation, employee benefits, impairment losses and inventory write-downs are disclosed in the notes.

Management-defined performance measures (MPMs)

Companies must now disclose measures such as "adjusted profit" that they use in public communications in a single note to the financial statements. That note includes:

• How the measure is calculated,
• Why it provides useful information,
• A reconciliation to the most directly comparable subtotal specified in TFRS/IFRS

Because the note is part of the financial statements, it is within the scope of the audit.

Principles of aggregation and disaggregation

IFRS 18 introduces principles on how information should be grouped:

• Items with shared characteristics are presented together,
• Items with dissimilar characteristics are presented separately.
• It restricts the use of "other" labels, reducing ambiguity.

Interaction with other standards

• Many requirements of IAS 1 (for example, the current/non-current distinction) have been carried over unchanged into IFRS 18.
• Other sections have been moved to IAS 8 (renamed "Basis of Preparation of Financial Statements") or IFRS 7.

Transition and compliance

• Mandatory effective date: 1 January 2027 (early application permitted)
• The standard is applied retrospectively; on first application:
  • The income statement for the comparative period is restated,
  • For the comparative period, a reconciliation between the income statement line items presented under IAS 1 and those presented under IFRS 18 is disclosed in the notes.

Summary comparison table

Conclusion

TAS/IAS 1 provides only format and basic presentation rules. TFRS/IFRS 18, by contrast:

• Places the income statement on a common framework (5 categories, 2 new subtotals).
• Makes management-defined measures transparent (MPM note, reconciliation).
• Makes the entity's financial performance easier to understand and compare.
• Broadens the scope of required disclosures, calling for more detailed information in the notes.

Companies need to upgrade their systems and reporting infrastructure and update training and processes. For investors, the change means a clearer financial structure, and for analysts a more standardised one.