IFRS 18: Are You Showing Enough? Aggregation & Disaggregation

1 SEP 2026

Assurance

Reporting Standards

A Brief Guide for Entities to Present and Disclose Their Financial Performance

IFRS 18 Presentation and Disclosure of Financial Statements

is not only changing the structure of the Statement of Profit or Loss
and introducing Management-Defined Performance Measures.
It also strengthens how accountants should think about
aggregation and disaggregation.

The Objective Is Simple

Financial statements should provide a useful summary without allowing
material information to disappear inside broad balances.

This does not mean showing every transaction separately.

It means finding the right balance between grouping information that
shares similar characteristics and separating information when
aggregation would obscure something material.

Similar Characteristics

Group information that shares similar characteristics.

Material Information

Separate information where aggregation would obscure
something material.

Useful Summary

Avoid turning the financial statements into a transaction-by-transaction listing.

From IAS 1 to IFRS 18: What Changes?

The underlying concepts are not entirely new.
IAS 1 already required material information to be presented separately
and items with similar characteristics to be aggregated.

IFRS 18 develops these principles into a more structured approach.

IAS 1 — BEFORE	IFRS 18 — NOW
Aggregate items with similar characteristics.	Identify the characteristics of items before deciding whether they should be aggregated.
Present material items separately.	Assess whether aggregation could obscure material information.
Significant preparer judgment over the level of detail.	More structured judgment over what to aggregate, what to disaggregate and where to disclose it.
Broad captions could contain several components.	Broad captions should be assessed to determine whether material or dissimilar components require further information.

The Accountant’s Question Is Changing

“What sits inside this line, and are we hiding information
that users need to understand?”

Example — Administrative Expenses

Assume the trial balance contains:
Administrative Expenses: $15,000,000.

Side-by-Side Comparison

IAS 1 — Typical Presentation	US $	IFRS 18 — More Informative Analysis	US $
Administrative Expenses	15,000,000	Administrative Expenses	15,000,000
		Employee costs	8,000,000
		Professional fees	3,500,000
		IT expenses	2,500,000
		Legal settlement	1,000,000
The total may be presented with limited breakdown.		Management assesses whether combining the components would obscure material information and whether further disaggregation is required.

The important point is not that IFRS 18 automatically requires all
the mentioned components to appear separately on the P&L.

The accountant must determine whether additional information is
necessary and where that information should appear.

That could mean separate presentation in the primary financial statement
or additional disaggregation in the notes.

Example — What Is Really Inside “Other Income”?

Consider another common account:
Other Income — $2,500,000.

IAS 1 vs IFRS 18

IAS 1 — Broad Caption	US $	IFRS 18 — Analyze the Components as Ledger Analysis Shows	US $
Other Income	2,500,000	Gain on disposal	1,000,000
		Government grants	800,000
		Dividend income	500,000
		FX gain	200,000
Total Other Income	2,500,000	Total Other Income	2,500,000
Different sources may sit within one broad account.		Determine whether aggregation remains appropriate or whether material information needs to be separately presented or disclosed.

This is where IFRS 18 can have a practical impact on the chart
of accounts and reporting structure.

If the accounting system only records
Other Income → $2,500,000,
the accountant may have difficulty producing the required analysis.

The books need to preserve enough information to identify
what generated the balance.

But IFRS 18 Does Not Mean “Show Everything Separately”

This is equally important.

Too much disaggregation can make financial statements less useful,
not more useful.

Imagine presenting telephone, mobile, internet, printer,
stationery, courier, office refreshments and small repairs
as separate P&L lines when none is individually material.

That would create clutter rather than insight.

Aggregate

Similar information should be grouped to provide a clear summary.

Disaggregate

Separate information enough to ensure material information
is not obscured.

Avoid

Too much insignificant detail that creates clutter rather than insight.

What Should the Accountant Consider?

Before grouping transactions together, consider their characteristics.

Nature

What is the expense or income:
salary, impairment, professional fee, grant,
litigation settlement, depreciation, etc.

Function

What activity does it support:
production, administration, selling, distribution, etc.

Other Characteristics

Do the items arise differently, have different measurement bases
or possess other characteristics that make separating them useful?

Materiality

Would hiding the component inside a larger balance reasonably
affect a user’s understanding of the financial statements?

These considerations help determine whether information
should be aggregated or disaggregated.

The Books Need to Be Ready

The change should not start when the financial statements are drafted.

Consider this existing structure:

BEFORE	IFRS 18-READY
Other Income: Everything is posted into one account.	Other Income: Government grants; Dividend income; Disposal gains; Foreign exchange gains.

This does not necessarily mean creating four new GL accounts.

The entity could instead use

sub-accounts, transaction codes, reporting dimensions,
ERP tags, or reliable supporting schedules.

What matters is that the accountant can move from:

Trial Balance

→

Account / Transaction Analysis

→

Characteristics

→

Aggregation Assessment

→

P&L Line / Note Disclosure

Primary Statement or Notes?

Disaggregation does not automatically mean adding another line
to the face of the P&L.

The primary financial statements should provide a useful structured summary.

The notes then provide the additional material information necessary
to understand that summary.

The accountant therefore has two decisions to make:

Does this information need to be disaggregated?
If yes, where should that information be presented —
on the primary statement or in the notes?

Accountant Readiness Checklist

Before IFRS 18 becomes effective:

Review broad captions such as Other Income, Other Expenses,
Administrative Expenses and Operating Costs.

Understand what transactions sit inside each material balance.

Identify components with different characteristics.

Assess whether aggregation could obscure material information.

Determine whether further information belongs on the primary
statement or in the notes.

Ensure the GL, sub-ledgers or reporting dimensions retain sufficient detail.

Establish controlled mappings from the accounting records
to financial statement lines and notes.

Document significant aggregation and disaggregation judgments.

Apply the approach consistently to comparative information.

Reassess the presentation when significant new or unusual transactions arise.

The Key Message

IFRS 18 does not require accountants to turn the financial statements
into a detailed general ledger.

Nor does it allow material information to disappear behind broad captions
such as “Other Income” or
“Administrative Expenses.”

Similar Information

Aggregate

Material Information That Could Be Obscured

Disaggregate

Too Much Insignificant Detail

Avoid

The ultimate question is:

“Does presenting these amounts together provide a useful summary —
or does it hide information users need to understand?”

This is the aggregation and disaggregation discipline
IFRS 18 brings into financial reporting.

Abbreviations

Abbreviation	Meaning
IFRS	International Financial Reporting Standards / IFRS Accounting Standards
IAS	International Accounting Standards
P&L	Statement of Profit or Loss / Profit and Loss
GL	General Ledger
ERP	Enterprise Resource Planning
FX	Foreign Exchange
FS	Financial Statements
TB	Trial Balance