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By: Karan Marwah
10 Jun 20265 min read
I believe Ind AS 118 belongs in the third category. At first glance, it may look like another presentation and disclosure standard.
In simple terms, Ind AS 118 changes how companies present financial performance in the statement of profit and loss. It introduces greater structure around classification and presentation, brings in mandatory subtotals, sharpens expectations around management-defined performance measures, and may require organisations to revisit long-standing presentation choices.
Important, certainly.
But reducing Ind AS 118 to a reporting exercise would be missing the bigger story. Because this is not only about how companies present financial performance. It is increasingly about how they explain, govern, and stand behind performance. And that matters.
For years, CFOs have operated in a world where financial reporting and performance storytelling have existed side by side. The statutory numbers told one story. Management commentary, investor decks, board packs, adjusted metrics, and internal performance measures often added another layer of interpretation. There was nothing inherently wrong with that. Businesses are complex. Performance cannot always be understood through one number alone, though comparability has long been a challenge.
Two companies in the same sector could present performance differently, emphasise different metrics, and use different adjustments — making it difficult for stakeholders to compare like for like. Ind AS 118 moves the needle on this. The standard introduces greater structure around how financial performance is presented, including clearer categories within the statement of profit and loss and stronger expectations around management-defined performance measures. The technical changes are important. But the implications, in my view, go beyond technical reporting mechanics.
They extend into how organisations structure, govern, and operationalise financial performance itself. Organisations may need to revisit questions that often sit deep inside the reporting architecture:
For some businesses, this could amount to more than a reporting refresh. It could require rewiring parts of the financial reporting plumbing itself.
The CFO’s performance narrative may now come under greater discipline. Management-defined performance measures deserve particular attention here.
Many organisations, especially listed companies, communicate performance through a wider ecosystem of investor presentations, earnings materials, analyst discussions, and regulatory disclosures alongside the financial statements.
Greater scrutiny around MPMs is therefore not simply a question of “which metrics do we use?” It raises broader questions around consistency across reporting channels, data lineage, governance, auditability, and the rigour required to support measures that materially shape stakeholder understanding of performance.
That is not necessarily a bad thing. In fact, many finance leaders may welcome it. Because increasingly, credibility in financial communication is not built on presenting more numbers. It is built on presenting a clearer, more coherent explanation of performance.
That raises some important questions:
These are not technical accounting questions alone. They sit at the intersection of finance, investor communication, governance, and leadership.
They also have a communication dimension.
Finance teams may need to explain changes internally to boards, leadership teams, and business stakeholders who rely on familiar performance views. Externally, organisations may need to help investors, analysts, and the market distinguish between what has genuinely changed, what has merely been re-presented, and how performance should now be interpreted.
Which is precisely why CFOs should be paying attention now.
The other reason timing matters is that standards like these have a tendency to be underestimated early. Initially, they sit with accounting policy teams, technical specialists, or reporting functions. Then implementation approaches, and suddenly organisations realise the conversation extends much further. Presentation changes can influence KPI definitions. KPI definitions can influence internal reporting. Internal reporting influences board conversations, management incentives, and market narratives.
Underneath that sits another layer of complexity: systems mapping, chart-of-accounts logic, data quality controls, reporting hierarchies, and the practical challenge of ensuring consistent outputs across financial reporting, management reporting, and external disclosures.
By that stage, the work is no longer just about compliance. It is about alignment.
Questions around classification choices, treatment of management-defined measures, consistency across reporting channels, and governance over performance communication are unlikely to be resolved through accounting policy papers alone.
That is why I would argue that Ind AS 118 readiness should start with questions broader than “What changes in our financial statements?” The more useful questions may be:
For some organisations, the answers may be straightforward. For others, they may reveal hidden complexity. And perhaps that is the real value of this moment. Not simply complying with a new standard but using it as an opportunity to reassess how financial performance is measured, communicated, and understood.
The role of the CFO has evolved materially over the past decade. Today’s finance leaders are expected not only to ensure reporting integrity, but also to shape strategy, build stakeholder confidence, and translate complexity into clarity. Viewed through that lens, Ind AS 118 feels less like a narrow accounting update and more like a reflection of a broader shift in financial reporting - toward greater comparability, greater transparency and greater discipline around the performance narrative itself.
The organisations that treat it purely as a disclosure exercise will comply. Those that treat it as a broader conversation about reporting architecture, performance communication, stakeholder alignment, and decision credibility may extract something more valuable from it.
This article first appeared in the FE CFO on 10 June 2026.
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