Are Your Financial Reporting Systems and Policies Ready for HKFRS 18?HKFRS 18 Presentation and Disclosure in Financial Statements replaces HKAS 1 Presentation ofFinancial Statements and introduces significant changes to how entities communicate financialperformance in their financial statements. The standard is effective for annual periods beginning onor after 1 January 2027, with retrospective application. Although 2027 may seem distant,retrospective application means comparative information for 2026 must be restated. As a result,systems, policies and processes must be ready to capture and present information under the newstandard from as early as 1 January 2026. Now is the time to start implementation.This first newsletter in our series provides an overview of the major changes introduced by HKFRS18, their potential impacts, and the initial steps entities should be taking now. Future newsletters willexplore specific requirements and industry considerations in more detail.WHAT’S CHANGING UNDER HKFRS 18?HKFRS 18 NAVIGATORGETTING READYHKFRS 18 introduces three new categoriesfor classifying income and expenses:
operatinginvestingfinancingEntities are also required to present twonew defined subtotals in the statement ofprofit or loss:
operating profitprofit or loss before financing andincome taxesThe categories in the statement of profit or loss have differentmeanings to those in the statement of cash flows.To improve the transparency and disciplinein the use of performance measures,HKFRS 18 introduces new disclosurerequirements for MPMs. Entities arerequired to disclose MPMs in a single noteto the financial statements.MPMs are subtotals of income andexpenses other than those specified byHKFRS Accounting Standards, thatmanagement uses to communicate entities’financial performance publicly.HKFRS 18 provides enhanced guidance onhow financial information should be groupedin the primary financial statements and thenotes. Entities are required to:
aggregate items with similarcharacteristics, and disaggregate itemswith dissimilar characteristics;
group items in a way that does notobscure material information; anduse meaningful labels or descriptionsfor aggregated items.Operating profit or loss becomes themandatory starting point for the indirectmethod in the operating cash flows section ofthe statement of cash flows. In addition,existing accounting policy choices forclassifying interest and dividend cash flowsare removed.NEW STRUCTURE OF THESTATEMENT OF PROFIT OR LOSSMANAGEMENT‑DEFINEDPERFORMANCE MEASURES (MPMS)
GROUPING OF INFORMATIONCHANGES TO THESTATEMENT OF CASH FLOWSFEBRUARY 2026 ISSUE 1POTENTIAL IMPACT AREASThe transition to HKFRS 18 goes beyond changes to presentation and disclosure. It will affectfinancial reporting systems, accounting policies, internal reporting processes, managementcommentary and external communications.Financial ReportingSystemsAccounting PoliciesPeople and ProcessesRestructuring of the chartof accountsIntroduction of new datafields for classification anddisaggregationModifications to reportingtools for new subtotals andcategoriesDevelopment of newpolicies for MPMsidentification and disclosureUpdates to aggregation anddisaggregation policiesTraining for finance teamson new requirementsUpdates to period-endclose processes andreview proceduresPreparation of investorrelations for communicatingchangesYOUR READINESS CHECKLISTTo begin your HKFRS 18 journey, consider the following initial steps:
Conduct an impact assessment — Evaluate how the new requirements under HKFRS18 (e.g. new categories and subtotals) affect your current presentation and disclosure.Review your management-defined performance measures — Determine whethermeasures communicated to investors and analysts will meet the definition of MPMs andidentify any additional disclosures requirements.Engage your systems and IT teams — Assess whether your financial reporting systemscan accommodate the new classification structure and produce the required comparativeinformation.Educate stakeholders — Brief your board, audit committee, investor relations team andauditors on the expected changes and implementation timeline.Monitor developments — Stay alert to guidance from the HKICPA and other relevantbodies, including implementation support materials and any local considerations.HKFRS 18 NAVIGATORGETTING READYFEBRUARY 2026 ISSUE 1LOOKING AHEAD: OUR SERIESAll entities, across all industries, that apply HKFRS Accounting Standards will be impacted byHKFRS 18. The new standard represents a fundamental shift in how financial performance ispresented in the financial statements. At the same time, it provides an opportunity to enhancehow entities communicate their financial performance to users.To support entities through this transition, we are rolling out a series of implementation supportdesigned to equip entities with the insights needed to embrace this landmark reportingevolution.Over the coming months, we will publish eight further issues of HKFRS 18Navigator providing detailed technical guidance on specific aspects of HKFRS 18.The clock is ticking on the comparative period. Start yourassessment today.HKFRS 18 NAVIGATORGETTING READYFEBRUARY 2026 ISSUE 1H2
6.A deep-dive into Income,expenses & informationgrouping
7.Beyond the headlines:
Changes to other HKFRSAccounting Standards
8.Navigating IFRS agendadecisions on HKFRS 18
9.From theory to practiceQ2
3.Defining what you do:
Determination of mainbusiness activities
4.Management-definedPerformance Measures
5.Insights for financialinstitutionsQ1
1.Getting ready
2.Navigating the newstructureThis publication has been prepared by staff of HKICPA for information or illustration purposes. Members of theHKICPA and other users should also read the full HKFRS Accounting Standards, as found in the HKICPAMembers’ Handbook for further reference, and seek professional advice where necessary.
HKFRS 18 Navigator Issue 1: Getting Ready
下载原件Are Your Financial Reporting Systems and Policies Ready for HKFRS 18?HKFRS 18 Presentation and Disclosure in Financial Statements replaces HKAS 1 Presentation ofFinancial Statements and introduces significant changes to how entities communicate financialperformance in their financial statements. The standard is effective for annual periods beginning onor after 1 January 2027, with retrospective application. Although 2027 may seem distant,retrospective application means comparative information for 2026 must be restated. As a result,systems, policies and processes must be ready to capture and present information under the newstandard from as early as 1 January 2026. Now is the time to start implementation.This first newsletter in our series provides an overview of the major changes introduced by HKFRS18, their potential impacts, and the initial steps entities should be taking now. Future newsletters willexplore specific requirements and industry considerations in more detail.WHAT’S CHANGING UNDER HKFRS 18?HKFRS 18 NAVIGATORGETTING READYHKFRS 18 introduces three new categoriesfor classifying income and expenses:
operatinginvestingfinancingEntities are also required to present twonew defined subtotals in the statement ofprofit or loss:
operating profitprofit or loss before financing andincome taxesThe categories in the statement of profit or loss have differentmeanings to those in the statement of cash flows.To improve the transparency and disciplinein the use of performance measures,HKFRS 18 introduces new disclosurerequirements for MPMs. Entities arerequired to disclose MPMs in a single noteto the financial statements.MPMs are subtotals of income andexpenses other than those specified byHKFRS Accounting Standards, thatmanagement uses to communicate entities’financial performance publicly.HKFRS 18 provides enhanced guidance onhow financial information should be groupedin the primary financial statements and thenotes. Entities are required to:
aggregate items with similarcharacteristics, and disaggregate itemswith dissimilar characteristics;
group items in a way that does notobscure material information; anduse meaningful labels or descriptionsfor aggregated items.Operating profit or loss becomes themandatory starting point for the indirectmethod in the operating cash flows section ofthe statement of cash flows. In addition,existing accounting policy choices forclassifying interest and dividend cash flowsare removed.NEW STRUCTURE OF THESTATEMENT OF PROFIT OR LOSSMANAGEMENT‑DEFINEDPERFORMANCE MEASURES (MPMS)
GROUPING OF INFORMATIONCHANGES TO THESTATEMENT OF CASH FLOWSFEBRUARY 2026 ISSUE 1POTENTIAL IMPACT AREASThe transition to HKFRS 18 goes beyond changes to presentation and disclosure. It will affectfinancial reporting systems, accounting policies, internal reporting processes, managementcommentary and external communications.Financial ReportingSystemsAccounting PoliciesPeople and ProcessesRestructuring of the chartof accountsIntroduction of new datafields for classification anddisaggregationModifications to reportingtools for new subtotals andcategoriesDevelopment of newpolicies for MPMsidentification and disclosureUpdates to aggregation anddisaggregation policiesTraining for finance teamson new requirementsUpdates to period-endclose processes andreview proceduresPreparation of investorrelations for communicatingchangesYOUR READINESS CHECKLISTTo begin your HKFRS 18 journey, consider the following initial steps:
Conduct an impact assessment — Evaluate how the new requirements under HKFRS18 (e.g. new categories and subtotals) affect your current presentation and disclosure.Review your management-defined performance measures — Determine whethermeasures communicated to investors and analysts will meet the definition of MPMs andidentify any additional disclosures requirements.Engage your systems and IT teams — Assess whether your financial reporting systemscan accommodate the new classification structure and produce the required comparativeinformation.Educate stakeholders — Brief your board, audit committee, investor relations team andauditors on the expected changes and implementation timeline.Monitor developments — Stay alert to guidance from the HKICPA and other relevantbodies, including implementation support materials and any local considerations.HKFRS 18 NAVIGATORGETTING READYFEBRUARY 2026 ISSUE 1LOOKING AHEAD: OUR SERIESAll entities, across all industries, that apply HKFRS Accounting Standards will be impacted byHKFRS 18. The new standard represents a fundamental shift in how financial performance ispresented in the financial statements. At the same time, it provides an opportunity to enhancehow entities communicate their financial performance to users.To support entities through this transition, we are rolling out a series of implementation supportdesigned to equip entities with the insights needed to embrace this landmark reportingevolution.Over the coming months, we will publish eight further issues of HKFRS 18Navigator providing detailed technical guidance on specific aspects of HKFRS 18.The clock is ticking on the comparative period. Start yourassessment today.HKFRS 18 NAVIGATORGETTING READYFEBRUARY 2026 ISSUE 1H2
6.A deep-dive into Income,expenses & informationgrouping
7.Beyond the headlines:
Changes to other HKFRSAccounting Standards
8.Navigating IFRS agendadecisions on HKFRS 18
9.From theory to practiceQ2
3.Defining what you do:
Determination of mainbusiness activities
4.Management-definedPerformance Measures
5.Insights for financialinstitutionsQ1
1.Getting ready
2.Navigating the newstructureThis publication has been prepared by staff of HKICPA for information or illustration purposes. Members of theHKICPA and other users should also read the full HKFRS Accounting Standards, as found in the HKICPAMembers’ Handbook for further reference, and seek professional advice where necessary.