Across global capital markets, investors are demanding greater transparency, consistency and comparability in how organisations communicate financial performance. In response, the International Accounting Standards Board (IASB) introduced IFRS 18, a new financial reporting standard that brings greater structure and discipline to the presentation of financial statements.
As India moves towards adopting this framework through Ind AS 118, organisations will need to rethink not only how financial information is presented, but also how performance is defined, explained and communicated to stakeholders.
With implementation expected from 1 April 2027, the transition extends beyond financial statement presentation. It requires organisations to assess the impact on reporting frameworks, management-defined performance measures, systems, controls, governance processes and investor communication.
For many organisations, FY 2026–27 will effectively become the comparative period for transition, making early preparation critical to achieving a smooth and controlled implementation.
Five areas of change finance teams need to plan for
Re-aligned classification and presentation of the profit and loss account
Income and expenses to be classified as operating, investing, or financing, with captions for income taxes and discontinued operations, requiring a full redesign of existing reporting formats and underlying architecture driven by an assessment of an entity’s Main Business Activities.
Standardised subtotals with limited flexibility
Operating profit and profit before financing and tax become defined, mandatory subtotals, significantly reducing discretion in how performance is presented.
Management metrics under audit scrutiny
Measures such as adjusted EBITDA move into audited financial statements, requiring clear definitions, detailed reconciliations and full audit-level documentation.
A uniform presentation framework across entities
Clear rules govern line items, subtotals and disclosures, driving consistent presentation across all reporting entities within a group.
Higher standards for aggregation and disclosure
Stronger requirements now guide how information is grouped and disclosed across primary statements and notes, backed by documented judgement and structured decision-making.
What companies must disclose for performance measures
Ind AS 118 requires all MPM disclosures to be presented in a single note within the financial statements. For each measure, organisations must provide:
- How the measure is calculated, including methodology and judgements.
- A reconciliation to the most directly comparable defined subtotal.
- The aspect of performance the measure communicates and the rationale for its use.
- The income tax and non-controlling interest impact of each reconciling item.
Key considerations for organisations
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Alignment with evolving reporting frameworks
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Organisations will need to align with changes in financial statement presentation, including updates expected in Schedule III and SEBI reporting formats as Ind AS 118 takes effect.
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Implications for group reporting structures
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Classification under Ind AS 118 depends on the nature of the organisation’s activities. As a result, similar income and expense items may be categorised differently across entities, requiring adjustments to achieve a consistent group-level presentation.
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System and process alignment across entities
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Organisations with multiple reporting entities may need to redesign consolidation systems, mapping logic and reporting hierarchies to align classification and presentation across the group.
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Ind AS 118: Preparing for the new era of financial reporting
An overview of Ind AS 118, its impact on financial statement presentation, disclosures and comparability, with practical steps to prepare ahead of April 2027.
How Grant Thornton Bharat supports your Ind AS 118 journey
Implementation roadmap: A structured seven-step journey
Assess and diagnose
Design performance framework
Data and process readiness
ERP and system enablement
Policy and governance
Dry run and validation
Disclose and engage
The case for moving early
Ind AS 118 changes not just how financial performance is presented, but how it is defined, governed and communicated. Organisations that begin their transition planning now will be better placed to manage the complexity, meet the deadline with confidence, and build a reporting function fit for the standards that follow.
